Appointment of trustees
(1) Trustees are appointed by or as provided in the trust instrument and in such number as may be provided therein.
(2) There are no restrictions imposed on the number of trustees that may be provided for in a trust instrument but—
(a) if there is only one trustee, the trustee shall be a trust company; and
(b) if there is more than one trustee, one of such trustees shall be a trust company.
(3) Where there is no trustee appointed or provided by the trust instrument or there is a vacancy among the trustees which cannot otherwise be filled, any of the surviving or continuing trustees, any beneficiary or the last former trustee, as the circumstances may require, may apply to the Court for the appointment of a new trustee.
(4) The Court may make an order appointing a new trustee where—
(a) in a case where an application under subsection (3) is made by a beneficiary, it is satisfied that the application made by the beneficiary has been served on the last former trustee or on at least one of the surviving or continuing trustees, if any;
(b) it has heard the representations made by the last former trustee, the surviving or continuing trustees or any beneficiary; and
(c) it has ascertained that the person indicated in the application or otherwise intended for the appointment as the new trustee is willing to act.
(5) Subject to the terms of the trust, a new trustee appointed under this section shall have the same powers, discretions and duties and may in all respects act as if he had been originally appointed a trustee by the trust instrument.
(6) On the appointment of a new trustee, anything requisite for vesting the trust property in, or under the control of, the trustee shall be done.
Acceptance of appointment as trustee
(1) No person shall be obliged to accept an appointment as trustee but if a trust company that is appointed as trustee does any act or thing in relation to the trust property consistent with the status of a trustee of that property, the trust company shall be deemed to have accepted the appointment as trustee.
(2) A trust company which has not accepted or which is not deemed to have accepted the appointment as trustee may disclaim such appointment within a reasonable period of time after becoming aware of it by giving a notice in writing to the settlor or to the other trustees.
(3) If the settlor is dead or cannot be found or is no longer in existence and there are no other trustees, the trust company disclaiming the appointment as trustee under subsection (2) may apply to the Court for relief from the appointment and the Court may make such order as it thinks fit.
Resignation of trustees
(1) Subject to subsection (2) and the terms of the trust, a trustee may resign his office by delivering to—
(a) the settlor or, in the absence of the settlor, at least one beneficiary; and
(b) in the case of a registered offshore trust, the Authority,
a notice in writing of his intention and the resignation shall take effect on the delivery of the notice.
(2) A resignation shall not have effect if—
(a) it is given in order to facilitate a breach of trust; or
(b) it would result in there being no trustee, unless, before the resignation takes effect, an application has been made to the Court for the appointment of a new trustee and a new trustee has been appointed.
Vacancy in a trust
(1) A trustee shall cease to be a trustee and his position as trustee shall be considered vacant upon—
(a) his removal as trustee by the Court;
(b) his resignation taking effect;
(c) the coming into effect of a provision in the terms of the trust under which the trustee is removed from office or otherwise ceases to hold office; or
(d) steps being taken for the winding up of the trust company acting as trustee.
(2) A person who ceases to be a trustee under this section shall do everything necessary to vest the trust property in the new or surviving or continuing trustees.
Duties of trustees
(1) A trustee shall in the execution of his duties and the exercise of his powers and discretion act with due diligence as would a prudent person to the best of his ability and skill, and observe the utmost good faith.
(2) Subject to the provisions of this Act, a trustee shall carry out and administer a trust according to the terms of the trust and shall—
(a) ensure that the trust property is vested in him or is otherwise under his control; and
(b) in so far as it is reasonable, preserve and enhance the value of the trust property.
(3) Except as otherwise permitted by this Act or as expressly provided by the terms of the trust, a trustee shall not—
(a) profit, directly or indirectly, from his trusteeship;
(b) cause or permit any person, other than a person properly appointed or delegated by the trustee under this Act or by the Court or pursuant to the terms of the trust, to profit, directly or indirectly, from such trusteeship; or
(c) on his own account enter into any transaction with the other trustees, or relating to the trust property, which may result in such profit,
without the approval of the Court.
(4) A trustee shall keep accurate accounts and records of his trusteeship and shall render an account of such trusteeship as required by the terms of the trust or by an order of the Court.
(5) A settlor or any of the beneficiaries may apply to the Court for an order to require the trustee to render an account of his trusteeship to any of them.
(6) A trustee shall keep the trust property distinct and separate from his own property and separately identifiable from any other property of which he is a trustee or to which he is beneficially entitled.
Duty of co-trustees
(1) Subject to subsection (2) and the terms of the trust, where there is more than one trustee, all the trustees shall—
(a) act jointly in the performance of their duties and the exercise of their powers; and
(b) not exercise any power or discretion unless they are all in agreement.
(2) Where the terms of the trust empower the trustees to act by a majority—
(a) a trustee who dissents from a decision of the majority of the trustees shall cause his dissent to be recorded in writing;
(b) no act, decision, power or discretion to be done, taken or exercised by the majority of the trustees shall, notwithstanding anything contained in the terms of the trust, be valid or have effect if it is done, taken or exercised without the agreement of the trust company acting as one of the trustees of the trust.
Impartiality of trustees
Subject to the terms of the trust and without prejudice to the exercise of a discretion conferred upon a trustee by the terms of the trust, a trustee shall be impartial and shall not execute the trust for the advantage of a beneficiary or a charitable purpose at the expense of another beneficiary or charitable purpose where there is more than one beneficiary or charitable purpose under the trust, or for the advantage of a beneficiary at the expense of the charitable purpose or vice versa, where the trust has only one beneficiary and one charitable purpose.
Powers of trustees
(1) Subject to the terms of the trust and to the provisions of this Act, a trustee shall have all the powers of a beneficial owner in relation to the trust property.
(2) A trustee shall exercise his powers in the interest of the beneficiaries and in accordance with the terms of the trust.
Letter or memorandum of wishes
(1) The settlor of a trust may give to the trustee a letter of his wishes or the trustee may prepare a memorandum of the wishes of the settlor with regard to the exercise of any functions conferred on the trustee by the terms of the trust.
(2) A beneficiary of a trust may give to the trustee a letter of his wishes or the trustee may prepare a memorandum of the wishes of the beneficiary with regard to the exercise of any functions conferred on the trustee by the terms of the trust.
(3) Where a trust is in favour of a class of persons, then a member of that class may give to the trustee a letter of his wishes, or the trustee may prepare a memorandum of the wishes of that member with regard to the exercise of any functions conferred on the trustee by the terms of the trust.
(4) Where a letter of wishes or a memorandum of wishes is given to or prepared by the trustee of a trust, then he may have regard to that letter or memorandum in exercising any functions conferred on him by the terms of the trust but shall not be accountable in any way for his failure or refusal to have regard to that letter or memorandum.
(5) No fiduciary duty or obligation shall be imposed on a trustee merely by the giving to him of a letter of wishes or the preparation by him of a memorandum of wishes.
Appointment of protector
(1) The terms of a trust may expressly provide for the appointment of a protector of the trust who shall be consulted upon by the trustee in the exercise of all or certain specified powers as may be provided in the terms of the trust, but if the protector of the trust cannot be found, the Court may upon an application by the trustee dispense with the requirement.
(2) Where the terms of the trust require the trustee to obtain the consent of the protector before exercising a power or discretion, the protector who so consents shall not by virtue of so doing be deemed to be a trustee.
(3) Unless otherwise expressly excluded by the terms of the trust, a protector shall have the power to remove a trustee or to appoint a new or additional trustee, but if the protector removes a trust company as trustee, the protector shall appoint another trust company as a new trustee in its place.
Delegation of powers by trustee
(1) A trustee shall not delegate his powers unless permitted to do so by this Act or by the terms of the trust or by the Court.
(2) A trustee may, unless the terms of the trust specifically provide to the contrary—
(a) appoint or delegate the management of the trust property to investment managers whom the trustee reasonably considers competent and qualified to manage the investment of the trust property;
(b) appoint an agent, whether a solicitor, banker, stockbroker or any other person, to transact any business or do any act required to be transacted or done in the execution of the trust or to hold any of the trust property; and
(c) authorize any such manager or agent to retain any commission or other payment usually payable for services of the description rendered.
(3) A trustee who in good faith and without neglect makes an appointment or a delegation in accordance with the provisions of this section shall not be liable for any loss arising to the trust in consequence thereof or from the default of any appointee or delegate if the trustee has exercised due skill and care in the selection of the appointee or delegate.
Power of attorney
(1) Unless the terms of the trust provide to the contrary, a trustee may, by power of attorney, delegate for a period not exceeding twelve months, the performance of any trust or function vested in him, either alone or jointly, as trustee except for the power to give powers of attorney under this section.
(2) A trustee who delegates a trust or function by a power of attorney under this section shall be referred to in this section as the “donor” and the person to whom the trust or function is delegated is referred to as the “donee”.
(3) A person who is the only other co-trustee of the donor shall not be the donee.
(4) The donor shall, within seven days of giving a power of attorney under this section, give written notice of such delegation to—
(a) any other person who under the terms of the trust has power, either alone or jointly, to appoint a new trustee;
(b) every co-trustee; and
(c) in the case of a registered trust, the Authority.
(5) The notice under subsection (4) shall state—
(a) the date of commencement and duration of the power of attorney;
(b) the name and address of the donee;
(c) the reason for giving the power of attorney; and
(d) the trust or function delegated.
(6) Failure of the donor to comply with subsection (4) or (5) shall not of itself, in favour of a person dealing with the donee, invalidate anything done by the donee.
(7) The donor is bound by and liable for all acts or defaults of the donee done or purportedly done under the power of attorney as if they were his own acts or defaults.
(8) The provisions of this section shall not apply to a trust company acting as trustee.
Accumulation, advancement or appropriation of trust property
(1) Where the terms of the trust direct or authorize the accumulation for a period of all or part of the income of the trust, the trustee shall distribute the income of the trust which is not accumulated as directed or authorized by the terms of the trust.
(2) Subject to the terms of the trust, and subject to any prior interest or charges affecting the trust property, where a beneficiary is a minor and whether or not his interest is a vested interest or an interest which will become vested on attaining the age of majority or a later age or upon the happening of any event, the trustee may—
(a) accumulate the income attributable to the interest of such beneficiary pending the attainment of the age of majority or such later age or the happening of such an event;
(b) pay to the parent or guardian or otherwise apply such income or part of it to or for the maintenance, education or other benefit of such beneficiary; or
(c) advance or appropriate to or for the benefit of any such beneficiary such income or part of such income.
(3) The receipt given by a parent or the lawful guardian of a beneficiary who is a minor shall be sufficient discharge to the trustee for a payment made under subsection (2).
(4) Subject to the terms of the trust and to any prior interest or charges affecting the trust property, the trustee may advance or apply for the benefit of a beneficiary part of the trust property prior to the date of the happening of the event upon the happening of which the beneficiary becomes entitled absolutely thereto.
(5) Subject to the terms of the trust, a trustee may appropriate trust property in or towards the satisfaction of the interest of a beneficiary in such manner and in accordance with such valuation as the trustee may think fit.
(6) Subject to the terms of the trust, any part of the trust property advanced, applied or appropriated under this section shall be brought into account in determining from time to time the share of the beneficiary in the trust property.
(7) No part of the trust property advanced, applied or appropriated as provided in this section shall exceed the presumptive, contingent or vested share of the beneficiary in the trust property.
Appointment or assignment of trust property
Where the terms of the trust confer on the trustee or on any other person power to appoint or to assign all or any part of the trust property or any interest in the trust property to, or to trustees for the benefit of, any person, such power shall, subject to the terms of the trust, have effect whether or not such person was a beneficiary of the trust immediately prior to such an appointment or assignment.
Remuneration and expenses
(1) A trustee shall not be entitled to any remuneration for services rendered unless authorized—
(a) by the terms of the trust;
(b) by the consent in writing of all the identifiable or ascertainable beneficiaries; or
(c) by an order of the Court.
(2) A trustee may reimburse himself or pay out of the trust all expenses and liabilities reasonably incurred by him in connection with the trust.
Confidentiality in relation to trusts
(1) Subject to the terms of the trust and to any order of the Court given on special and exceptional grounds, a trustee or any other person shall not be required to disclose to any person any document or information which discloses—
(a) his deliberations as to how he should exercise or has exercised his functions as trustee;
(b) the reasons for any decision made in the exercise of those functions;
(c) any material upon which such a decision was or might have been based;
(d) any part of the accounts of the trust; or
(e) any letter of wishes given by the settlor or beneficiary.
(2) Notwithstanding subsection (1), where a request for the disclosure of any document or information relating to or forming part of the accounts of the trust is made by a beneficiary under the trust or, in the case of a trust for a charitable purpose, by a charity referred to by name in the trust instrument as a beneficiary under the trust, the trustee shall be obliged to disclose the document or other information requested.
(3) Except as is required, permitted or otherwise provided by this Act, or by the terms of the trust or as may be necessary for the purposes of the trust, and notwithstanding the provisions of any other law—
(a) every trustee and every other person shall at all times regard and deal with all documents and information relating to a trust as secret and confidential;
(b) no trustee or other person shall at any time be required to produce to or before any court, tribunal, board, committee of inquiry or any other authority or to divulge to any such authority any matter or thing coming to his notice or being in his possession for any reason, where such matter or thing relates to a trust.
(3) Any trustee or other person who, except as is required, permitted or otherwise provided by this Act, or by the terms of the trust or by the Court, at any time communicates or attempts to communicate any matter or thing relating to a trust to any person shall be guilty of an offence.
Penalty: Imprisonment for five years or thirty thousand ringgit or both.
Liability for breach of trust
(1) Subject to the provisions of this Act and to the terms of the trust, a trustee who commits or concurs in a breach of trust shall, without prejudice to any other liability, be liable for—
(a) any loss or depreciation in value of the trust property resulting from the breach; and
(b) any profit which would have accrued to the trust had there been no such breach.
(2) In the case of a breach of trust committed or concurred in by a trust company acting as trustee, every person who, at the time of the breach, was a director of the trust company shall, subject to subsection (3), be deemed to be a guarantor of the trust company in respect of any damages and costs that may be awarded by the Court against the trust company in respect of the breach.
(3) The Court may relieve a director either in whole or in part from his personal liability as a guarantor if he satisfies the Court that he ought fairly to be so relieved because—
(a) he was not aware of the breach of trust or of the intention to commit it and, in being not so aware, was neither reckless nor negligent; or
(b) he expressly objected, and exercised such rights as he had by way of voting power or otherwise as a shareholder or director or other officer of the company, so as to try to prevent the breach of trust.
(4) A trustee shall not be liable for a breach of trust committed prior to his appointment, if such breach of trust was committed by some other person, but the trustee shall take all reasonable steps to remedy the consequences or any loss arising from such breach.
(5) A trustee shall not be liable for breach of trust committed by a co-trustee unless—
(a) he becomes or ought to have become aware of the breach or the intention of the co-trustee to the breach; and
(b) he actively conceals such breach or such intention or fails within a reasonable time to take proper steps to protect or restore the trust property or prevent such breach.
(6) Subject to the terms of the trust, a trustee shall not be liable—
(a) for the default of a co-trustee unless he—
(i) concurs in the default of that trustee; or
(ii) fails to take reasonable care to prevent it;
(b) for any loss to the trust property, unless such loss is due to—
(i) his wilful default, act or concurrence; or
(ii) his neglect or failure to exercise reasonable care to prevent such loss.
(7) Where there are two or more breaches of trust, a trustee shall not set off a gain from one breach of trust against a loss resulting from another breach of trust.
(8) Where two or more trustees are liable in respect of a breach of trust, their liability shall be joint and several.
(9) A beneficiary may, in respect of a liability to him for a breach of trust already committed, relieve a trustee of, or indemnify him against, such liability, if the beneficiary—
(a) has legal capacity;
(b) has full knowledge of all material facts; and
(c) has not been improperly induced by the trustee to give the relief or indemnity.
(10) The Court may relieve the trustee either in whole or in part from liability for a breach of trust if it is satisfied that the trustee has acted honestly and reasonably and ought in fairness to be excused in the circumstances.
(11) For the purposes of this section—
“director” means any person occupying the position of director of a company, by whatever name called, and includes a person who acts or issues directions or instructions in a manner in which directors of a company are accustomed to issue or act, and an alternate or substitute director, notwithstanding any defect in the appointment or qualification of such person;
“officer” in relation to a company includes—
(a) any director, secretary or employee of the company;
(b) a receiver and manager of any part of the undertaking of the company appointed under a power contained in any instrument; and
(c) any liquidator of a company appointed in a voluntary winding up, but does not include—
(i) any receiver who is not also a manager;
(ii) any receiver and manager appointed by the Court; or
(iii) any liquidator appointed by the Court or by the creditors.
Trustee acting in respect of more than one trust
(1) A trustee acting for more than one trust shall not, in the absence of fraud, be affected by notice of any instrument, matter, fact or thing in relation to any particular trust if the trustee has obtained notice of it by reason of acting or having acted for the purposes of another trust.
(2) A trustee of a trust shall disclose to any co-trustee any interest which he has as trustee of another trust if any transaction in relation to the first-mentioned trust is to be entered into with the trustee of the other trust.
Dealings with third parties
(1) Where in any transaction or matter affecting a trust, a trustee informs a third party that he is acting as trustee, a claim by such third party in relation thereto shall extend only to the trust property.
(2) Where in any such transaction or matter a trustee fails to inform a third party that he is acting as trustee and the third party is otherwise unaware of the fact, the trustee—
(a) shall be personally liable to such third party in respect thereof; and
(b) shall have a right to recourse to the trust property by way of indemnity against such liability, unless the trustee acted in breach of trust.
(3) Nothing in this section shall prejudice a trustee’s liability for breach of trust or any other liability under any law.
(4) In this section, “third party” means a person other than a settlor, trustee or beneficiary of the trust.
Constructive trustee
(1) Subject to subsection (2), where a person makes or receives any profit, gain or advantage from a breach of trust he shall be deemed to be a constructive trustee of that profit, gain or advantage.
(2) Subsection (1) shall not apply to a bona fide purchaser of property for value and without notice of a breach of trust.
(3) A person who is or becomes a constructive trustee shall deliver up the property of which he is a constructive trustee to the person properly entitled to it.
(4) This section shall not exclude any other circumstances under which a person may be or become a constructive trustee.
Indemnity of retiring trustee
(1) A trustee who resigns or is removed or otherwise ceases to be a trustee shall duly surrender trust property in his possession or control to the remaining surviving or continuing trustees or, where there are none, the trust property shall be held in abeyance until the appointment of a new trustee or trustees.
(2) A trustee who resigns or is removed or otherwise ceases to be a trustee may, before the surrender of trust property as required by subsection (1), reimburse himself or pay out of the trust any previous expenses and liabilities reasonably incurred by him in connection with the trust.
(3) A trustee who resigns or is removed or otherwise ceases to be a trustee and has complied with the requirements of subsection (1) shall be released from liability to any beneficiary, trustee or person interested under the trust for any act or omission in relation to the trust property or his duty as a trustee, except in respect of actions arising from any breach of trust to which such trustee or, in the case of a trust company acting as such trustee, any of its officers or employees, was a party or to which he was privy.
(4) A trustee who resigns or is removed or otherwise ceases to be a trustee shall continue to be liable to any beneficiary, trustee or person interested under the trust for the recovery from such trustee or, in the case of a trust company acting as such trustee, from any of its officers or employees, of trust property or the proceeds thereof in his possession or previously received by him and converted to his own use or not surrendered as required by subsection (1).
(5) Subject to the terms of the trust, the trustee shall not indemnify himself to an extent greater than is provided in this section.
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).
