This legal brief provides a comparative analysis between the current Trustees (Perpetual Succession) Act, Cap. 164 (TPSA), including recent amendments, and the proposed Trust Administration Bill, 2025 (TAB).
The review highlights the substantial and procedural reforms, explains how the Bill codifies existing common law doctrines, and assesses both the advantages and potential challenges of the proposed regime.
1. Context and purpose
The TPSA was initially enacted to provide for the incorporation of trustees for specific purposes, such as charitable, religious, and educational trusts. Its framework was procedural, focusing on incorporation and vesting of property. The substantive law governing trusts was largely left to common law and equitable principles inherited from English law.
The TPSA has been amended several times, notably in 2021 and 2024. The 2021 amendments formally introduced family trusts and the role of an enforcer, while the 2024 amendments transferred registration and oversight from the Principal Registrar of Documents to the Registrar of Companies (a position now centralized within the Business Registration Service, BRS).
The TAB represents a comprehensive reform initiative. It aims to repeal and replace the TPSA and the Public Trustee Act with a single, consolidated statute that covers the creation, registration, administration, and regulation of all types of trusts.
2. Key differences between the TPSA and TAB
Theme Trustees (Perpetual Succession) Act (TPSA, as amended) Trust Administration Bill, 2025 (TAB)
Scope Governs the incorporation of trustees for perpetual succession, including charitable, religious, educational, and family trusts, as well as some non-charitable purpose trusts. Introduces a comprehensive statutory regime covering all trusts, including charitable, private, family, and commercial trusts, replacing multiple existing acts.
Regulatory authority Registrar of Companies (within the BRS) has authority for incorporation, registration, and general oversight. Establishes a dedicated Registrar of Trusts (within the BRS) with expanded powers for registration, compliance monitoring, and enforcement.
Family trusts Recognized since 2021 amendments, which defined family trusts as non-trading entities for wealth planning. It allowed for incorporation with legal personality. Expands and consolidates the regulatory framework for family trusts, integrating them into a single, cohesive statute and providing more detailed rules on their operation.
Professional trustees The TPSA does not provide a licensing framework for professional trustees, though corporate trustees can be incorporated. Introduces a licensing framework for individuals and corporate entities acting as professional trustees, subject to qualification, fitness, and regulatory oversight.
Codification of common law Relies on codified principles from recent amendments, but many trust concepts still depend on imported English equitable doctrines. Explicitly codifies fiduciary duties, beneficiary rights, trustee liabilities, and remedies for breach, reducing reliance on inherited case law.
Administration Administrative provisions are largely limited to incorporation, filing returns, and the use of a common seal. Includes detailed provisions on accounts, audits, record-keeping, beneficiary rights to information, dispute resolution, and reporting obligations.
Beneficial ownership Amendments introduced basic beneficial ownership requirements, particularly for incorporated trusts. Mandates disclosure and registration of beneficial owners for all trusts, aligning Kenya with global anti-money laundering standards.
Perpetuity 2024 amendments abolished the 80-year limit for family trusts, allowing for perpetual succession. This restriction now only applies to immovable property. Continues to provide for perpetual succession for incorporated trusts and for unincorporated trusts as per their deed, subject to the perpetuities rules.
3. Implications of the proposed TAB
The TAB promises a significant modernization of Kenyan trust law with several advantages:
• Expansion of Trust Law: It moves beyond the narrow scope of the TPSA to encompass all trust types, providing a comprehensive legal basis for estate planning and wealth management.
• Legal Certainty: By codifying common law principles, the Bill provides clearer, more predictable, and more enforceable rules for trust management.
• Enhanced Accountability: The licensing of professional trustees and enhanced reporting obligations will improve fiduciary standards and protect beneficiaries from misconduct.
• Increased Transparency: Mandatory disclosure of beneficial ownership will boost transparency and help combat illicit financial flows.
4. Potential challenges and considerations
• Implementation and Transition: Transitioning existing trusts to the new regime may create legal uncertainty, especially without clear transitional provisions. The compliance window will require swift action from existing trusts.
• Compliance Costs: The new regulatory burdens, including licensing and ongoing reporting, could increase costs, particularly for smaller, community-based trusts.
• Centralized Power: The centralization of regulatory power in the Registrar may raise concerns about potential over-regulation if not balanced with proper checks and balances.
• Flexibility: Over-codification could potentially reduce the flexibility and adaptability previously offered by equitable principles.
5. Conclusion
The Trust Administration Bill, 2025, represents a transformative legislative initiative that modernizes Kenya’s trust law. It replaces the fragmented and historically-reliant TPSA framework with a comprehensive, codified, and professionalized regime.
While the reforms introduce new compliance obligations and potential implementation challenges, they promise to significantly enhance clarity, accountability, and certainty in the trust sector. This positions Kenya as a more attractive and reliable jurisdiction for wealth management and estate planning.
If you have any questions about this article, please reach us on info@smc-legal.com