Part of a comprehensive analysis of the Trustees Act 1967
All Parts in This Series
Key Provisions of the Trustees Act 1967 on Investment Powers and Their Purpose
The Trustees Act 1967 sets out a comprehensive framework governing the investment powers and duties of trustees in Singapore. These provisions are designed to balance the trustees’ discretion in managing trust assets with the need to protect beneficiaries’ interests through prudent investment practices. Below is an analysis of the key statutory provisions and the rationale behind each.
"A trustee may make any kind of investment that the trustee could have made if the trustee were absolutely entitled to the assets of the trust." — Section 4(1)(a), Trustees Act 1967
Verify Section 4 in source document →
Section 4 grants trustees broad powers to invest trust assets as if they were the absolute owners. This provision exists to empower trustees with flexibility in investment decisions, allowing them to respond to changing market conditions and opportunities without being unduly restricted by traditional trust investment rules.
"A trustee must have regard to the standard investment criteria." — Section 5(1), Trustees Act 1967
Verify Section 5 in source document →
Section 5standard investment criteria, namely the suitability of investments to the trust and the need for diversification. This ensures trustees exercise due care and skill, avoiding over-concentration in risky assets and aligning investments with the trust’s objectives and beneficiaries’ interests.
"A trustee must ... obtain and consider proper advice." — Section 6(1), Trustees Act 1967
Verify Section 6 in source document →
"A trustee shall not be liable for breach of trust by reason only of the trustee continuing to hold an investment which has ceased to be an investment authorised." — Section 7, Trustees Act 1967
Verify Section 7 in source document →
Section 7
"A trustee lending money ... is not chargeable with breach of trust ... if ... acting upon proper advice ... and ... loan does not exceed two-thirds of the value." — Section 9(1), Trustees Act 1967
Verify Section 9 in source document →
"The trustee is only liable to make good the sum advanced in excess of the smaller sum with interest." — Section 10(1), Trustees Act 1967
Verify Section 10 in source document →
"Trustees ... may contract that such money must not be called in during any period not exceeding 5 years" and other powers. — Section 11, Trustees Act 1967
Verify Section 11 in source document →
Section 11
"Trustees may ... pay any trust money into a bank ... apply capital money ... purchase a dwelling house ... retain any dwelling house." — Section 12, Trustees Act 1967
Verify Section 12 in source document →
Section 12
Definitions in the Trustees Act 1967 and Their Significance
Clear statutory definitions underpin the application of the investment provisions, ensuring consistent interpretation and application by trustees and courts.
"Investment includes investment in assets that do not yield any income." — Section 4(2), Trustees Act 1967
Verify Section 4 in source document →
This broad definition in Section 4(2) clarifies that trustees may invest in capital growth assets or other non-income producing assets. This flexibility allows trustees to pursue a wider range of investment strategies tailored to the trust’s objectives.
"Proper advice means the advice of a person who is reasonably believed by the trustee to be qualified to give such advice by the person’s ability in and practical experience of financial and other matters relating to the proposed investment." — Section 6(4), Trustees Act 1967
Verify Section 6 in source document →
Section 6(4)
"Standard investment criteria ... (a) the suitability ... (b) the need for diversification ..." — Section 5(3), Trustees Act 1967
Verify Section 5 in source document →
Section 5(3)
"Dwelling house means a place of residence and includes a building or tenement wholly or principally used, constructed or adapted for human habitation." — Section 12(4), Trustees Act 1967
Verify Section 12 in source document →
Section 12(4)
Penalties and Liability for Non-Compliance
The Trustees Act 1967 does not prescribe explicit penalties for non-compliance with investment provisions. Instead, it delineates trustees’ liabilities and protections to balance accountability with practical considerations.
"A trustee shall not be liable for breach of trust by reason only of the trustee continuing to hold an investment which has ceased to be an investment authorised." — Section 7, Trustees Act 1967
Verify Section 7 in source document →
Section 7
"The trustee is only liable to make good the sum advanced in excess of the smaller sum with interest." — Section 10(1), Trustees Act 1967
Verify Section 10 in source document →
Section 10(1)
Cross-References to Other Legislation
The Trustees Act 1967 interacts with other statutes to provide a coherent legal framework for trustees’ investment activities.
"Held under a grant issued under the State Lands Act 1920." — Section 11(2), Trustees Act 1967
Verify Section 11 in source document →
Section 11(2)State Lands Act 1920, indicating that trustees’ powers to deal with land held under state grants are subject to that Act’s provisions. This ensures compliance with land tenure laws in trust dealings.
"In any manner specified in Part I, II or III of the First Schedule in force immediately before 15 December 2004." — Section 4(1)(b)(i), Trustees Act 1967
Verify Section 4 in source document →
Section 4(1)(b)(i)
"[Repealed by Act 45 of 2004]" — Section 8, Trustees Act 1967
Verify Section 8 in source document →
Section 8Act 45 of 2004, reflecting legislative updates to the trustees’ investment framework.
"This section applies to ... investments made before, on or after 26 June 1992." — Sections 9(2), 10(2), Trustees Act 1967
Verify source in source document →
Sections 9(2) and 10(2)
Conclusion
The Trustees Act 1967 establishes a balanced statutory regime empowering trustees with wide investment discretion while imposing duties of care, prudence, and reliance on expert advice. Its provisions protect beneficiaries by mandating suitability and diversification, limiting trustees’ liability, and integrating with other relevant legislation. Trustees must understand these provisions and their purposes to effectively administer trusts and mitigate risks.
Sections Covered in This Analysis
- Section 4 – Investment powers and scope
- Section 5 – Standard investment criteria
- Section 6 – Duty to obtain and consider proper advice
- Section 7 – Protection for continuing to hold unauthorised investments
- Section 9 – Lending money on security and liability limits
- Section 10 – Liability for excess advances
- Section 11 – Supplementary powers and cross-references
- Section 12 – Deposits, calls on shares, and dwelling houses
- Section 4(2), 5(3), 6(4), 12(4) – Definitions of investment, proper advice, standard investment criteria, and dwelling house
- Section 8 – Repealed provision
Source Documents
For the authoritative text, consult SSO.