Amendments To The Trust Property Control ACT 57 Of 1988

Miscellaneous

South Africa was recently grey listed by the Financial Action Task Force (FATF), however prior to this grey listing many attempts had been made to avoid this label being placed on South Africa. One of the many ways in which South Africa attempted to avoid being grey listed was to amend existing legislation such as the Anti-Money Laundering & Combatting Terrorism Financing Act. The proposed amendments to the Anti-Money Laundering & Combatting Terrorism Financing Act amended many other pieces of legislation inter alia the Trust Property Control Act (the Act). 

The Act first came into effect on 31 March 1989 with the purpose of regulating the further control of trust property and for the provision of matters concerned therewith. The Act governs all trusts where the ownership in property of one person is bequeathed to another person, a trustee or for the benefit of a person or class of persons.

The recent amendments made to the Act which are set to take effect from 1 April 2023 impose more obligations on the trustees and provide for the recording of information of accountable institutions and beneficial ownership among other things. Trustees are advised to familiarise themselves with the new amended provisions as non-compliance thereto can result in imprisonment up to 5 (five) years or a monetary fine. 

The most notable amendments are summarised below:

Masters Obligations

In terms of section 3 of the Act, the jurisdiction for the administration of trusts lies with the Master of the High Court. Any person who finds themselves appointed as a trustee to a trust may not hold that office or act in that capacity until he/she has been issued letters of authority by the Master of the High Court.  Additionally, a person appointed as a trustee outside the Republic of South Africa will only be able to dispose of property located in South Africa once written authorisation indicating same has been received from the Master. 

Throughout the Act reference is made to disqualified trustees or trustees disqualified from acting in such capacity. Disqualified trustees are regarded as:

  • An unrehabilitated insolvent;
  • A person convicted of fraud, theft or perjury; 
  • A person who has been removed from office as a result of misconduct or dishonesty; and 
  • A person who is barred from acting as a director of a company in terms of the Companies Act 2008. 
 

The proposed amendments now place an obligation on the Master to record and maintain a register of all persons disqualified from holding the office of a trustee, their identity/passport number and the grounds on which they have been disqualified. 

Obligations in relation to Trust Property

Previously section 11 of the Act provided for the registration and identification of trust property and how a trustee is required to ensure that the property held in his/her capacity as a trustee is registered as and identifiable as, trust property. 

The proposed amendment to the Act now makes it necessary for the trustee to record the details of accountable institutions used as agents in the performance of any of the trustee’s obligations and functions as it relates to the trust and/or trust property. The trustee is now required to record details of accountable institutions such as: 

  • The name of the accountable institution; 
  • If the accountable institution is a natural person or a person other than a natural person;
  • The name and identity/ registration number of the accountable institution; 
  • The date in which a business relationship was entered into by the trustee and accountable institution; and 
  • What services the accountable institution performs on behalf of the trustee.

Beneficial Ownership

The amendment to the Act has brought about requirements relating to the disclosure of beneficial ownership. Beneficial ownership usually refers to the situation where a person enjoys the benefit of ownership even though the title to a form of property is in another name. The definition of beneficial ownership in the Act and in relation to a trust is broader and further provides for the following to fall under beneficial ownership:

  • Each founder of the trust; 
  • Each beneficiary named in the trust deed; 
  • Each trustee of the trust; and  
  • A natural person who directly or indirectly owns the trust property, or a natural person who exercises control over the trust property. 
 

Furthermore, in addition to the broader definition of beneficial ownership section 11A introduces further obligations in relation to the administration of trusts, these include that: 

  • The Master is obligated to keep a register containing the prescribed information relating to beneficial ownership. This register must be electronic and must be accessible to all relevant parties via a username and password to allow them to update information and documents required.
  • The register kept by the Master must be established by the trustees and must record the beneficial ownership of the trust. 
  • The information contained in the register must be made available to any prescribed person by the trustee/s and/or Master. 
  • Lastly the trustee needs to have certified copies of the identification documents of each and every beneficial owner that corresponds with the personal details contained in the register (i.e., full names, date of birth, Nationality, ID no. etc). 

Non-compliance with trustees' obligations/ duties

It is prudent that all trustees familiarise themselves with the abovementioned amendments as failure to adhere to the trustees’ duties and obligations contained in the act can result in an offence which is punishable by imprisonment not exceeding 5 (five) years or a fine up to the sum of R 10 million (ten million rand) or in some circumstances both. 

Conclusion

In conclusion and from the abovementioned it is evident that the proposed amendments to the Act impose more stringent obligations and duties on trustees to a trust. Trustees are therefore urged to familiarise themselves with these amendments more specifically the disclosure obligations in order to safeguard against non-compliance and contravention of the act which can result in imprisonment and/or a fine.

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