TOPIC 1

1.1. Regulatory Framework for Business Entities

General Introduction: Business entities in South Africa operate within a
regulatory framework that includes common law principles and specific
legislation governing different types of entities. Key legislation includes:
 Common Law: Basic principles derived from judicial decisions and
customary practices.
 Companies Act 71 of 2008: Governs the formation, operation, and
dissolution of companies.
 Close Corporations Act 69 of 1984: Pertains to close corporations, a
specific form of business entity.
1.2. Background to the Companies Act
The Companies Act 71 of 2008 was enacted to modernize and streamline
company law in South Africa. It replaced the Companies Act 61 of 1973 and
introduced significant changes to corporate governance, shareholder rights, and
regulatory compliance.
1.3. The Role of the Company in SA and Factors Influencing Choice of
Business Form
Role of the Company:
 Companies play a crucial role in the South African economy by providing a
formal structure for conducting business activities, raising capital, and
limiting liability.
 Factors Influencing Choice of Business Form include liability protection, tax
implications, ease of formation, regulatory requirements, and the nature of
business activities.
1.4. Transitional Provisions
Transitional Provisions:
 The Companies Act 71 of 2008 includes transitional provisions to manage
the shift from the previous legislation (Companies Act 61 of 1973) to the
new regime.
 These provisions outline timelines and procedures for existing companies
to comply with new requirements.
1.5. Branches & Divisions
 Branches: A company may establish branches in different locations within
South Africa or internationally. Each branch operates as an extension of
the main company.
 Divisions: Companies can create divisions for operational purposes,
although legally they remain part of the main entity.
1.6. Forms and Nature of Business Entities
(Unincorporated/Incorporated)
 Unincorporated Entities: Includes sole proprietorships and partnerships
where owners have unlimited liability.
 Incorporated Entities: Companies and close corporations provide
limited liability to their owners/shareholders, protecting personal assets
from business liabilities.
1.7. Types of Companies
The Companies Act 71 of 2008 recognizes various types of companies:
 Private Companies (Pty) Ltd: Limits the transferability of shares and
prohibits offering shares to the public.
 Public Companies: Can offer shares to the public and must meet stricter
regulatory requirements.
 State-Owned Companies: Formed to undertake commercial activities on
behalf of the government.
 Non-Profit Companies: Established for charitable, cultural, or social
purposes rather than profit.
Relevant Sections and Legislation
Here are some key sections and parts of legislation related to the Companies Act
71 of 2008:
 Section 1: Definitions of terms used throughout the Act.
 Section 8: Requirements for incorporation of companies.
 Section 22: Provisions relating to directors and their duties.
 Section 38: Rules governing company names.
 Section 66: Requirements for shareholder meetings.
 Section 163: Dissolution and liquidation of companies.
 Schedule 1: Forms and templates for company registration and related
filings.
Conclusion
Understanding the regulatory framework and the Companies Act 71 of 2008 is
crucial for anyone involved in business or corporate law in South Africa. This
legislation provides the legal basis for the formation, governance, and dissolution
of companies, ensuring transparency, accountability, and protection for
stakeholders.

TOPIC 2
2.1. General Conceptual Introduction
Imagine a company like a superhero. Just as superheroes have their own identity
and can do things like save the day, companies have their own legal identity too.
This means a company can own property, make contracts, and be responsible for
its own actions, separate from the people who own or run it.

### 2.2. Acquisition of Legal Personality

When a company is created, it becomes its own "person" in the eyes of the law.
This happens through registration according to laws like the Companies Act in
South Africa. Once registered, the company can start doing business and acting
on its own behalf.

### 2.3. Consequences of Separate Legal Identity (Including Limited Liability)

- **Separate Identity:** Just like superheroes have their own identity apart from
their secret identities, companies can enter contracts, sue or be sued, and own
assets in their own name.

- **Limited Liability:** This means that if something goes wrong, like debts or
legal problems, the people who own the company (shareholders) are usually
protected. They can't usually be personally held responsible beyond their
investment in the company.

### 2.4. Common Law: Lifting of the Corporate Veil

Sometimes, the law allows the "veil" separating the company's actions from
those of its owners to be lifted. This usually happens if:

- The company is used to commit fraud or avoid legal responsibilities.

- There's no real difference between the company and its owners, so it's unfair
not to hold them responsible.

### 2.5. The Companies Act: Section 20(9)

Section 20(9) of the Companies Act in South Africa specifically deals with
instances where the corporate veil can be lifted to reveal the true nature of the
company's activities or to protect the interests of justice.
### Prescribed Readings Explained
 Salomon v Salomon and Co Ltd [1897] AC 22 (HL):
 Summary: Established the principle of separate legal personality for
companies. Mr. Salomon, by incorporating his business, successfully
separated his personal liability from that of the company, shielding himself
from its debts.
 Dadoo Ltd v Krugersdorp Municipal Council 1920 AD 530:
 Summary: Explored exceptions to the separate legal entity principle. The
court allowed the corporate veil to be pierced, holding shareholders liable
when the company was used to evade responsibilities or as a mere facade.
 Cape Pacific Ltd v Lubner Controlling Investments 1995 (4) SA 790
(A):
 Summary: Addressed the liability of parent companies for the actions of
subsidiaries. It examined situations where the corporate structure might
be disregarded to hold the parent company accountable for subsidiary
debts.
 Airport Cold Storage (Pty) Ltd v Ebrahim 2008(6) SA 585 (SCA):
 Summary: Focused on the personal liability of directors. The case
highlighted circumstances where directors could be held personally liable
for company debts due to negligence or failure to fulfill their duties.
 Ex Parte Gore and others NNO 2013 (3) SA 382 (WCC):
 Summary: Emphasized corporate governance and directors' duties. It
underscored the importance of directors acting in the best interests of the
company and the legal consequences if they fail to do so.
These readings provide examples and interpretations of how the law applies the
concept of separate legal personality and when exceptions might be made to
hold company owners personally responsible.

TOPIC 3
3.1. The Memorandum of Incorporation and the Company Rules
 Memorandum of Incorporation (MOI): This document sets out the
company's rights, duties, and rules for its shareholders, directors, and
other officers. It defines how the company will operate and manage its
affairs.
 Company Rules: These are the internal rules and regulations that govern
the company's management and operations, as stipulated in the MOI.
3.2. Legal Relationships Flowing from the Memorandum of
Incorporation
  The MOI establishes legal relationships between the company, its
shareholders, directors, and other stakeholders.
 It outlines rights and obligations, such as voting rights, dividend
entitlements, and procedures for decision-making.
3.3. Alterable/Non-alterable Provisions
 Alterable Provisions: Certain parts of the MOI can be changed through a
formal process, typically requiring shareholder approval and compliance
with the Companies Act.
 Non-alterable Provisions: Some provisions are fundamental and cannot
be altered. These may include the company's name, its registered office,
and the rights and responsibilities of shareholders.
3.4. Amending the Memorandum of Incorporation
 Amendments to the MOI require shareholder approval through a special
resolution.
 The Companies Act specifies procedures for amending the MOI, ensuring
transparency and compliance with legal requirements.
3.5. Ring-fenced Companies
 Ring-fenced companies are entities set up for specific purposes, often to
manage risks or separate activities from the main company.
 Their MOI may include provisions limiting their operations or financial
exposure to safeguard other parts of the business.
3.6. Shareholder Agreements
 Shareholder agreements supplement the MOI, detailing specific rights and
obligations among shareholders.
 These agreements often cover issues like share transfers, voting rights,
and dispute resolution mechanisms.
3.7. Definition & the Need for Pre-incorporation Contracts
 Pre-incorporation Contracts: Agreements made on behalf of a
company that has not yet been formally incorporated.
 Need: Allows individuals to enter into contracts on behalf of a future
company, enabling it to start operations immediately upon incorporation.
3.8. Who Can Represent the Company?
 Turquand Rule: Also known as the "indoor management rule," it allows
third parties dealing with the company to assume that internal company
procedures have been followed by those authorized.
 Common Law Rule: Requires third parties to ensure that those
representing the company have actual authority to do so.
 Section 20(7) (Companies Act, 2008): Provides guidelines on who can
act on behalf of the company and the extent of their authority.
 Gihwala v Grancy Property Ltd (2017):
 Directors have fiduciary duties to act honestly, in good faith, and in the
best interests of the company.
 Directors must exercise their powers for proper purposes and within the
scope of authority delegated to them.
 Breach of these duties can result in personal liability for directors.
 Royal British Bank v Turquand (1856):
 Established the "indoor management rule" or the "Turquand Rule."
 Third parties dealing with a company can assume that individuals acting
on behalf of the company (e.g., directors or officers) have the authority to
do so, based on the company's external representations.
 This rule protects innocent third parties who rely on the apparent authority
of company representatives, even if internal company procedures (like
board resolutions) were not followed.

TOPIC 4
4.1. Equity and Debt Financing
 Equity Financing: Involves raising capital by issuing shares to investors.
Shareholders become part-owners of the company and may receive
dividends if the company is profitable.
 Debt Financing: Involves borrowing money from creditors, such as banks
or bondholders, with the obligation to repay the principal amount plus
interest over time.
4.2. Public Offerings of Company Securities
 Public Offerings: Companies can raise funds by offering their securities
(such as shares or bonds) to the public through a stock exchange. This
allows a wider pool of investors to participate in financing the company.
4.3. Capital Regulation in Terms of the Companies Act: Abolition of
Capital Maintenance Rule
 Capital Maintenance Rule: Historically required companies to maintain
their share capital and protect creditors by restricting the distribution of
capital to shareholders.
 Abolition: The Companies Act in many jurisdictions, including South
Africa, has moved away from strict capital maintenance rules. This allows
companies more flexibility in managing their capital structure and
distributing profits to shareholders.
4.4. The Solvency and Liquidity Test
 Solvency Test: Requires directors to confirm that the company can pay
its debts as they become due and payable.
  Liquidity Test: Ensures that the company's assets are sufficient to meet
its liabilities within a reasonable time frame.
4.5. Shares as a Source of Finance
 Shares: Represent ownership in a company and can be issued to raise
equity capital.
 Types of Shares:
o Authorized Shares: Maximum number of shares a company can
issue as per its MOI.
o Issued Shares: Shares actually issued by the company to
shareholders.
o Unissued Shares: Authorized shares not yet issued and available
for future issuance.
4.6. Authorized, Issued, and Unissued Shares
 Authorized Shares: Maximum number of shares a company can issue as
per its MOI.
 Issued Shares: Shares that have been issued to shareholders and are
held by them.
 Unissued Shares: Authorized shares that have not yet been issued and
are available for future issuance.

TOPIC 5
5.1. The Role/Definition of Shareholders
 Definition: Shareholders are owners of the company who hold shares,
representing their ownership interest in the company.
 Role: Shareholders have certain rights, such as voting on key company
decisions (like appointing directors or approving major transactions) and
receiving dividends if declared by the company.
5.2. Shareholder Meetings
 Purpose: Shareholder meetings are held to make important decisions
affecting the company. These include:
o Electing directors.

o Approving financial statements.

o Amending the Memorandum of Incorporation (MOI).

o Declaring dividends.

 Types: Annual General Meetings (AGMs) are mandatory, while

Extraordinary General Meetings (EGMs) are called for specific urgent
matters outside the AGM schedule.
5.3. Board Meetings
 Purpose: Board meetings are held for directors to discuss and decide on
strategic matters and oversee the management of the company's affairs.
 Functions: Directors are responsible for making decisions in the best
interests of the company, ensuring compliance with laws and regulations,
and setting long-term goals.
The Board of Directors’ & Directors’ Duties
5.4. Duty of Care, Skill, and Diligence and the Business Judgment Rule
 Duty of Care: Directors must exercise reasonable care, skill, and
diligence when making decisions for the company. They should act
honestly and in good faith, with the level of care that an ordinary person
would exercise in similar circumstances.
 Business Judgment Rule: Protects directors from liability for decisions
made in good faith, based on reasonable information, and without conflicts
of interest. Courts generally defer to directors' business decisions unless
there's evidence of bad faith or gross negligence.
5.5. Liability of Directors
 Types of Liability:
o Civil Liability: Directors can be held personally liable for breaches
of duty, such as mismanagement or improper use of company
funds.
o Criminal Liability: In cases of serious misconduct or fraud,
directors may face criminal charges.
 Insurance and Indemnity: Companies can provide insurance or
indemnity to directors against certain liabilities to attract qualified
individuals to serve on the board.

5.6. Delinquent Directors/On Probation

 Delinquent Directors: Directors who breach their duties or fail to act in

the company's best interests may be removed from their position by
shareholders or through legal action.
 On Probation: Directors may face restrictions or probationary periods as
a result of misconduct or breaches, limiting their ability to serve on boards
in the future.

 Kaimowitz v Delahunt and Others 2017 (3) SA 201 (WCC): Directors

were held liable for breaching fiduciary duties through mismanagement.

 Kukama v Lobelo [2012] ZAGPJHC 60: Directors were found negligent

in their duties, leading to remedial actions by the court.

 Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD

168: Directors' discretion in dividend distribution was upheld, emphasizing
their fiduciary duties.
  Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378; [1967] 2 AC
134 (HL): Directors were accountable for receiving secret commissions,
highlighting fiduciary duty breaches.

 Industrial Development Consultants Ltd v Cooley [1972]: The

House of Lords found IDC liable for misrepresentation in its prospectus,
allowing Cooley to rescind the contract based on misleading information.

 Fisheries Development Corporation of SA Ltd v Jorgenson

[1980]: The court upheld FDC's right to retain Jorgenson's deposit as
liquidated damages for his failure to complete the purchase of shares.

TOPIC 8

8.1. Conceptual Background/Reform

 Close Corporation (CC): A close corporation is a type of business entity

that combines elements of partnerships and companies. It is designed for
small businesses with a limited number of members (typically 1 to 10).
 Reform: Close corporations were historically governed by the Close
Corporations Act of 1984 in South Africa. This Act provided a simplified
legal framework suitable for smaller enterprises compared to the more
complex requirements of companies.

8.2. Membership and Members’ Interests

 Membership: CCs are owned and managed by members, who are akin to
shareholders in companies but have more direct involvement in day-to-
day operations.
 Members’ Interests: Members' interests represent their ownership stake
in the CC and entitle them to share in profits, participate in management
decisions, and vote on important matters.

8.3. Duties Members Owe to the Close Corporation

 Duties: Members owe fiduciary duties to the CC, including loyalty, good
faith, and acting in the best interests of the corporation. They must avoid
conflicts of interest and disclose any potential conflicts.

8.4. Capacity and Representation of a Close Corporation

 Capacity: CCs have legal capacity to enter into contracts, acquire assets,
and incur liabilities in their own name, similar to companies.
 Representation: Members typically have authority to represent the CC,
but this may be restricted by the CC's founding statement (similar to a
memorandum of incorporation for companies).

8.5. Personal Liability of Members; S65

 Personal Liability: Members generally enjoy limited liability, meaning
their personal assets are protected from the debts and liabilities of the CC,
except in cases of fraud or wrongful trading.
 Section 65 (S65): Refers to the provisions in the Close Corporations Act
that outline the circumstances under which members may be held
personally liable, typically in cases of misconduct or where the CC's
separate legal personality is disregarded.

8.6. Advantages & Disadvantages of a CC

 Advantages:
o Simplicity: Less regulatory compliance compared to companies.
o Flexibility: Greater control for members in decision-making.
o Limited Liability: Members are generally not personally liable for
CC debts.
 Disadvantages:
o Limited Growth: May face challenges in raising capital compared
to companies.
o Perception: Less prestige or credibility compared to larger
corporate entities.
o Legal Changes: Subject to changes in close corporation legislation
and potentially more complex succession planning compared to
companies.

TOPIC 9

9.1. The Definition and Legal Nature of a Partnership

 Definition: A partnership is a business arrangement where two or

more persons (partners) carry on a business together with the
aim of making a profit.
 Legal Nature: Partnerships are governed by common law
principles and statutes (like the Partnership Act in various
jurisdictions), which outline the rights, duties, and obligations of
partners.

9.2. Essential Elements of Partnership Agreements

 Elements:
o Agreement: There must be an agreement, either written or
oral, between the partners to carry on a business.
o Profit Sharing: Partners share the profits and losses of the
business.
o Joint Ownership: Partners jointly own the business assets
and contribute to its management.

9.3. Natural Consequences of Partnership Agreements

 Consequences: Partners are agents of the partnership and each

other, meaning they can bind the partnership to contracts and
obligations. They also share in the profits and losses of the
business according to the agreed-upon terms.
 9.4. Types of Partnerships

 Types:
o General Partnership: Partners share equally in profits,
losses, and management responsibilities.
o Limited Partnership: Includes both general partners (who
manage the business) and limited partners (who invest
capital but have limited liability and no management
authority).
o Limited Liability Partnership (LLP): Partners have limited
liability for the debts of the partnership.

9.5. The Consequences of a Partnership

 Internal Relationship between Partners:

o Partners owe fiduciary duties to each other, including duties
of loyalty, care, and good faith.
o Decisions are typically made by consensus or as specified in
the partnership agreement.
 External Relationship between Partners and Third Parties:
o Partners can bind the partnership to contracts and
agreements with third parties.
o Each partner is personally liable for partnership debts and
obligations, unless it's an LLP or limited partnership where
limited liability applies.

9.6. Dissolution of a Partnership

 Dissolution: A partnership may be dissolved by mutual

agreement, expiration of its term, death or bankruptcy of a
partner, or court order.
 Consequences: After dissolution, the partnership assets are
liquidated to pay off creditors, and remaining assets are
distributed among the partners according to their shares.

 De Jager v Olifants Tin ‘B’ Syndicate 1912 AD 505: Established the entitlement of
partners to share profits and clarified distribution principles in mining syndicates.

 Pezzutto v Dreyer 1992 (3) SA 379 (A): Addressed dissolution issues and affirmed
equitable asset distribution principles among partners in a business venture involving
insurance policies.

TOPIC 6
6.1 Corporate Governance and Insider Trading
6.1.1 What is corporate governance and why is it important?
Corporate governance refers to the system of rules, practices, and processes
by which a company is directed and controlled. It essentially involves balancing
the interests of various stakeholders such as shareholders, management,
customers, suppliers, financiers, government, and the community. Good
corporate governance ensures transparency, fairness, accountability, and
responsibility in managing a company. It is important because:
 Accountability: Ensures that management is accountable to the board of
directors and ultimately to shareholders.
 Transparency: Provides clarity on how decisions are made and how they
affect stakeholders.
 Ethical Conduct: Encourages ethical behavior and integrity within the
organization.
 Long-term Sustainability: Helps in achieving long-term success and
sustainability by considering the interests of all stakeholders.
6.1.2 Principles of the King IV Code and Report
The King IV Code is a corporate governance code in South Africa that provides
guidelines and principles for good governance. Key principles include:
 Ethical leadership and corporate citizenship: Promoting ethical
behavior and responsible corporate citizenship.
 Stakeholder inclusivity: Considering and balancing the needs and
expectations of all stakeholders.
 Integrated thinking: Integrating governance, strategy, and performance
to create sustainable value.
 Risk management: Ensuring that risks are identified, assessed, and
managed appropriately.
6.1.3 Stakeholder relationships
Stakeholders are individuals or groups who have an interest in the activities of a
company and can affect or be affected by its actions. Managing stakeholder
relationships involves understanding their expectations, engaging with them
transparently, and balancing their interests with those of other stakeholders.
6.1.4 Concept of risk
Risk in the corporate governance context refers to the possibility of events
occurring that could have an impact on the achievement of the company's
objectives. Effective governance involves identifying, assessing, and managing
risks to ensure that they are within acceptable levels.
6.2 Insider Trading
Definition of insider trading
Insider trading refers to the buying or selling of a company's securities (such
as stocks or bonds) by individuals who have access to non-public, material
information about the company. This information gives them an unfair advantage
over other investors.
Regulation of insider trading
Insider trading is typically regulated to prevent unfair practices and to ensure
market integrity. Regulations often include:
 Prohibitions: Laws that explicitly prohibit trading based on non-public
information.
 Disclosure: Requirements for insiders to disclose their trades and
holdings.
 Penalties: Imposition of fines and other penalties for violations.
Defences of insider trading
Defences against insider trading allegations might include:
 Lack of materiality: The information was not significant enough to affect
the stock price.
 Public disclosure: The information was disclosed to the public before the
trade.
 Pre-existing plan: Trades made under a pre-existing plan that was not
influenced by inside information.
Insider trading in terms of the Companies Act 2008
In South Africa, insider trading is addressed under the Companies Act 2008,
which prohibits trading on the basis of inside information. The Act aims to ensure
fairness and transparency in the securities markets.

TOPIC 7
7. Business Rescue
7.1 Concept of Business Rescue
Business rescue is a legal process designed to rehabilitate financially distressed
companies, allowing them to reorganize and restructure their operations to avoid
liquidation.
7.2 Commencement
Business rescue proceedings can be initiated voluntarily by a company's board of
directors or through a court application by an affected person (such as a creditor
or shareholder).
7.3 Board Resolution
 Court Order by an Affected Person: Any affected person, such as a
creditor or shareholder, can apply to court for an order to commence
 business rescue proceedings if they believe the company is financially
distressed.
 Court Discretion: In certain circumstances, the court may initiate
business rescue proceedings at its discretion, even without a formal
application, if it deems it necessary for the company's rehabilitation.
7.4 Legal Consequences of Commencement of Business Rescue
Proceedings
Commencing business rescue proceedings has several legal implications:
 Moratorium on Legal Proceedings: Legal actions against the company
are generally stayed (suspended), giving it breathing space to negotiate
and implement a rescue plan.
 Management Continues: The company's management remains in
control of day-to-day operations, but under the supervision of a business
rescue practitioner.
7.5 Moratorium on Legal Proceedings
During the business rescue process, creditors are generally prohibited from
taking legal action against the company, providing it with a protected period to
focus on restructuring without immediate legal threats.
7.6 Effect on Contracts
 Continuation: Contracts entered into by the company before the
commencement of business rescue proceedings generally remain in force
unless modified or terminated as part of the rescue plan.
 Obligations: The company continues to be bound by its contractual
obligations unless otherwise agreed upon or affected by the rescue plan.
7.7 Effect on Shareholders/Directors
 Shareholders: Shareholders' rights may be restricted or suspended
during the business rescue process.
 Directors: Directors' powers are subject to oversight by the business
rescue practitioner, who may direct or limit their actions to ensure
compliance with the rescue plan.
7.8 Business Rescue Practitioner
 Role: A business rescue practitioner is appointed to oversee the process
impartially and independently.
 Responsibilities: They manage the company's affairs during the rescue
period, develop a viable rescue plan, and report progress to stakeholders.
7.9 Business Rescue Plan
 Purpose: The business rescue plan outlines the strategies and measures
to rehabilitate the company financially.
  Content: It includes proposals for restructuring debt, disposing of assets,
or other actions aimed at improving the company's financial position.
7.10 Termination of Rescue Proceedings
 Outcome: If the business rescue plan succeeds in rehabilitating the
company, the rescue proceedings may be terminated.
 Failure: If the rescue plan fails or is not approved, the company may face
liquidation or other consequences under the law.
TOPIC 10
10. Business Trusts
10.1 Definitions and Context in which Trusts Operate
A trust is a legal arrangement where a trustee holds and manages assets on
behalf of beneficiaries. Key definitions and contexts include:
 Trustee: The person or entity appointed to manage the trust assets.
 Beneficiary: Individuals or entities who benefit from the trust.
 Trust Property: Assets held in the trust for the benefit of the
beneficiaries.
 Trust Instrument: The document that establishes the trust and outlines
its terms.
10.2 Trusts & Companies Act
In South Africa, trusts are governed by the Trust Property Control Act, which sets
out the legal framework for the creation, administration, and termination of
trusts. The Companies Act may also intersect with trusts in cases where
companies are involved as trustees or beneficiaries.
10.3 Types of Trusts
Types of trusts include:
 Public Trust: Established for public benefit or charitable purposes.
 Private Trust: Set up for the benefit of specific individuals or families.
 Discretionary Trust: Trustees have discretion in how to distribute trust
assets among beneficiaries.
 Fixed Trust: Beneficiaries have fixed interests in the trust assets.
 Trading Trust: Operates with the purpose of carrying on a business.
10.4 Legal Nature of Trusts
Trusts are considered separate legal entities from their trustees and
beneficiaries. They can own assets, enter into contracts, and sue or be sued in
their own name.
10.5 Trust Formation
Trusts are formed by:
 Declaration: A person declares themselves as a trustee of specific assets
for the benefit of others.
 Trust Deed: A written document that outlines the terms and conditions of
the trust.
 Transfer: Assets are transferred into the trust by the settlor (creator of
the trust).
10.6 Consequences of Trusts
 Ownership: Legal ownership of trust assets vests in the trustee, while
beneficial ownership belongs to the beneficiaries.
 Administration: Trustees are responsible for managing trust assets and
administering them according to the trust deed and relevant laws.
10.7 Powers and Duties of Trustees
Trustees have fiduciary duties, including:
 Duty of Care: Act prudently and in the best interests of the beneficiaries.
 Duty of Loyalty: Avoid conflicts of interest and act impartially.
 Investment: Manage trust investments responsibly.
10.8 Rights of Beneficiaries
Beneficiaries have rights to:
 Information: Access information about the trust and its administration.
 Accountability: Hold trustees accountable for their actions.

Land and Agricultural Development Bank of South Africa v Parker

Separation between control and ownership(trustees) and enjoyment of
trust assets (beneficiaries) is at the very core of trust law
 Beneficial Interest: Receive benefits from trust assets as outlined in the
trust deed.

Standard Bank of South Africa Ltd v Swanepoel

 A trust is a legal entity although it does not have a legal personality
 Court held that a valid cause of action existed against Swanepoel as
the trustee as such he was liable to repay the loan