What does this mean for Trustees:
As a result of the aforesaid, certain amendments have been made to the Trust Property Control Act (“the Act”) – one of the significant changes is the inclusion of a “Beneficial owner” definition to the said Act, and as a result, trustees are now required to:
- Record and maintain beneficial ownership of the Trust,
- by keeping up-to-date records of the beneficial owners in the form of a trust register; and
- uploading the aforesaid with the Master's Office (online).
The definition of ‘beneficial owner’ includes the founder of the trust, all trustees of the trust, and all named beneficiaries mentioned in the trust instrument and if a named beneficiary in the trust instrument is a legal person, the trustees need to confirm who the natural person or persons who are in effective control of such entity or who are the owners of such an entity which qualifies as a beneficial owner.
In addition to the aforesaid, a definition for “accountable institutions” has also been included in the Act, and consequently, the aforementioned trust register must also record the prescribed details of every accountable institution which trustees use as agents to perform trustee functions and who provide any services to trustees.
The effective date for the implementation of the above was 1 April 2023, and failure by the trustees to comply with any of these obligations may result in a fine (up to R10million) or imprisonment for up to 5 years or both.
IT3(t)
The South African Revenue Service (SARS) has also issued a draft notice that requires trustees to submit an IT3(t) by 31 September 2023 which should include any amount vested in a beneficiary of a Trust in order to enable SARS to pre-populate beneficiary tax returns. Further information on this will be communicated in due course.
From the above, it is clear that trustees will need to be actively involved in trust administration to comply with these obligations and to ensure compliance.
What this means for Directors/Companies:
Directors are now also obliged to implement a Beneficial Ownership Register for Companies and to submit same to CIPC. The said register must be maintained, and all beneficial ownership changes should be recorded as and when same takes place, or alternatively the validity of the information should be confirmed on an annual basis.
The purpose for the Beneficial Ownership Register is to establish a repository/register of natural persons who own, or exercise control over legal entities, by assisting the necessary law enforcement with the relevant information when investigating who the ultimate owner/s of an entity is/are.
The “beneficial owner” in respect of a company, means an individual/natural person who directly or indirectly, ultimately owns 5% and more of that company, or exercises effective control of that particular company; including through
- the holding of beneficial interests in securities of that company;
- the exercise of, or control of the exercise of the voting rights associated with the securities of the company;
- the exercise of, or control of the exercise of the right to appoint or remove members of the board of directors of that company;
- the holding of beneficial interest in the securities, or the ability to exercise control, including through a chain of ownership or control of a holding company of that company;
- the ability to exercise control, including through a chain of ownership or control of a juristic person other than a holding company of the company, a body of persons corporate or unincorporate, a person acting on behalf of a partnership, a person acting in pursuance of the provisions of a trust agreement; or
- the ability to otherwise materially influence the management of that company.
The effective date for the above was 1 April 2023, however, Directors have 6 (six) months to file the Beneficial Ownership register with the CIPC.
For more information, please get in touch with your local Moore Firm.