By Anna Vayanos
As of 1 April 2023, trustees are required to meet certain new reporting obligations. These new changes were brought in as part of South Africa’s efforts against money laundering and the financing of terrorist activities, and will impact foundations and NPOs set up as trusts. Those foundations or organisations set up as non-profit companies have similar beneficial ownership requirements.
The requirements have been brought in rather speedily with no period of grace and so it is important for trustees to be aware of these and to act as soon as possible.
1. Beneficial ownership
Keeping of information
The trustees are now required to keep certain information on the “beneficial owners” of the Trust. A very wide definition of “beneficial owners” has been included in the Trust Property Control Act (the Act that governs trusts) and includes:
- a natural person who directly or indirectly owns the relevant trust property (for charitable trusts this would not really be applicable);
- a natural person who exercises control of the administration of the trust (this should in any event be the trustees);
- the trustees;
- the founders;
- any beneficiaries named in the trust deed;
- anyone else who controls the trust.
The definition also includes the persons who own or “control’ any founder, trustee or beneficiary that is a legal person (for example, a company), partnership or other trust.
The information required in respect of each “beneficial owner” includes:
- their full names;
- date of birth;
- passport or ID number (including type of document and country of issue);
- residential address (and address for service of notices, if different);
- other means of contact;
- tax number (where the person is a registered taxpayer in South Africa);
- class or category of beneficial ownership under which the person falls (for example, named beneficiary, founder or trustee);
- the date on which the person became a beneficial owner;
- the date on which the person ceased to be a beneficial owner (where applicable);
Where the person is a minor – this information must be provided in respect of his or her guardian.
The trustees must also keep a certified (or verified) copy of the ID or passport of the “beneficial owners”.
Beneficial ownership register
The information on the “beneficial owners” of a trust must also be submitted by the trustees to the Master of the High Court, who will keep an electronic register. This is currently required to be done through the following link to the Google Form ‘Master: Trust Beneficial Ownership Register’.
The electronic form is very basic in format and appears to be an interim system. A trustee or someone with a power of attorney needs to input the information.
According to the regulations, the information lodged with the Master and kept by the trustees must be made available to certain authorities (like the National Prosecuting Authority, SARS, the Financial Intelligence Centre), as the purpose of this is to create greater transparency.
It is not the intention that there will be public access to this information, rather only by the trustees lodging this, the Master and the various authorities.
2. Accountable institutions
Trustees are now also required to record information about the accountable institutions that the trustees engage with. “Accountable Institutions” would include attorneys, banks, trust companies, financial services providers, estate agents and attorneys to name a few.
This information is not required to be submitted but must be kept by the trustees who must also notify the accountable institutions of the fact that they are acting on behalf of a trust when they engage with them in that capacity, and that the transaction or business relationship involves trust property.
Information to be kept by the trustees includes:
- the name of the accountable institution (and identity number [if a person] or registration number);
- the nature of the functions for which the accountable institution is used as an agent to fulfil trustee functions;
- the nature of any services obtained;
- the date and nature of any transaction (if a single one) or the date and nature of the business relationship if the relationship is ongoing.
There has been quite an outcry about the fact that no period of grace has been given. Also, as mentioned, the beneficial ownership register is very rudimentary and has been set up through Google Forms which raises concerns about the safety of the information lodged.
Trustees find themselves between a rock and a hard place though – needing to comply as of 1 April.
Source: Originally published on www.annavayanos.co.za in March 2023
Anna Vayanos Philanthropy Consulting
Specialist advisor to donors and NPOs