- Municipal workers retain representation on the Tshwane Municipal Provident Fund Board, ensuring balanced governance.
- FSC Authority finds TMP Fund improperly excluded employer-appointed trustees from critical decision-making.
- Tribunal upholds Authority’s revocation of Rule Amendment 5, reinforcing trustees’ fiduciary duties and procedural fairness.
Municipal workers can breathe a sigh of relief following a ruling that preserves their representation on the Tshwane Municipal Provident Fund (TMP Fund) Board of Management.
The Financial Sector Conduct Authority (FSCA) revoked Rule Amendment 5, which had sought to remove employer-appointed trustees from the board, ensuring that workers’ and employer interests remain balanced in fund governance.
The dispute arose after the TMP Fund, in August 2024, amended its rules to reduce the Board of Management from eight to six members and remove employer-appointed trustees. The fund cited declining membership, rising costs, and the limited role of employer-appointed trustees as reasons for the change. In a certified resolution, the board claimed the amendment had been adopted following proper procedures.
However, the City of Tshwane, as the sole employer and sponsor of the TMP Fund, challenged the amendment. Officials argued that the removal of employer representatives compromised governance and fiduciary oversight, potentially jeopardising both employer and employee interests. The FSCA initially approved the amendment in September 2024, but subsequent scrutiny raised serious concerns about how the decision was reached.
Procedural flaws and exclusion of trustees
A detailed review revealed that employer-appointed trustees were excluded from the critical discussions during the board meeting. Minutes from 21 August 2024 indicated that the trustees were asked to leave while the amendment was debated and only informed of the decision afterward. The FSCA found this procedure violated the TMP Fund’s own rules, particularly regarding quorum and participation, and breached the trustees’ fiduciary duties.
The authority’s investigation showed that the amendment was not adopted for proper reasons, as the removal of employer-appointed trustees appeared to be influenced by irrelevant considerations. The TMP Fund argued that the trustees had been consulted before and after the meeting, but the minutes did not support this claim. The FSCA concluded that the employer-appointed trustees had been unjustly sidelined, depriving them of the opportunity to influence the outcome.
Tribunal upholds FSCA’s decision
The TMP Fund sought reconsideration of the FSCA’s revocation under Section 230(1) of the Financial Sector Regulation Act, arguing that the authority had exceeded its powers. The Tribunal, however, found that the FSCA acted within its legal mandate, noting that revocation was mandatory to uphold the integrity of the fund’s governance. The Tribunal emphasised that a majority decision is valid only if adopted at a quorate meeting with all trustees given an opportunity to participate.
Referencing South African trust law and previous court judgments, the Tribunal highlighted that trustees must act jointly, consult each other, and strive to reach agreement on disputed matters. Sidelining employer-appointed trustees violated these principles. The Tribunal concluded that the FSCA was correct to revoke Rule Amendment 5, dismissing TMP Fund’s application for reconsideration.
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