Does signing a Trust Deed guarantee full protection?
A Trust Deed Is Not Automatically Protected by Law
- Signing a Trust Deed does not guarantee legal protection.
- Courts will examine both the document and its underlying purpose.
A Trust Deed Used to Circumvent Laws May Be Invalid
- A Trust Deed may be declared invalid if its purpose is to bypass legal, regulatory, or policy requirements.
A Well-Drafted Deed Is Not Necessarily Enforceable
- Even if the Trust Deed is properly drafted and executed, it may still be unenforceable if its purpose is unlawful.
Real Case: Hasmah v Kenny
- Kenny transferred company shares to Hasmah and signed a Trust Deed stating that Hasmah was merely a nominee while Kenny retained actual control.
- The Key Issue in the Case:
- The arrangement was intended to utilize Hasmah's Bumiputera status to create the appearance of compliance with Bumiputera equity requirements.
- The Court's Decision:
- The court found that the arrangement was designed to circumvent regulatory requirements. As a result, the Trust Deed was declared invalid.
Summary
- A Trust Deed is not an absolute legal safeguard.
- Courts will consider the true purpose behind the arrangement.
- Any arrangement intended to evade laws or policies may be ruled invalid regardless of the document's wording or structure.