Earlier this year on 1 April 2023, significant amendments to the Trust Property Control Act, 57 of 1988 ("the Act") came into effect. These amendments bring noteworthy alterations to the landscape of trust management and compliance.

One key amendment extends the requirement for transparency to companies, necessitating the disclosure of beneficial owners to the Companies and Intellectual Property Commission (CIPC). This amendment introduces a novel definition of a 'beneficial owner' within the Act, imposing an obligation on trustees to maintain comprehensive registers of beneficial ownership and meticulously record accountable institution details.

In accordance with this amendment, the expanded definition of a beneficial owner encompasses the following individuals or entities:

1. A natural person who, directly or indirectly, ultimately owns the relevant trust property.
2. A natural person who exercises effective control over the administration of trust arrangements established pursuant to a trust instrument.
3. Each founder of the trust.
4. Each trustee of the trust.
5. Each beneficiary explicitly named in the trust instrument or other founding document establishing the trust.
If a beneficial owner is a juristic person, the definition extends to the natural person who directly or indirectly owns or exerts effective control over that legal entity.

Consequently, under Section 11A of the Act, trustees must now:

1. Establish and document the beneficial ownership of the trust.
2. Maintain records of prescribed information pertaining to the trust's beneficial owners.
3. Submit a register containing prescribed information about beneficial owners to the Master's Office.
4. Ensure that the aforementioned prescribed information remains current and up to date.

For each trust, an extensive array of information is now required for each beneficial owner, including full names, date of birth, nationality, official identification document details (type and issuing country), residential address (if different from the residential address), the address for service of notices, alternative means of contact, the basis for the person's status as a beneficial owner, the date they assumed this role, and if applicable, the date they ceased to be a beneficial owner.

Additionally, trustees must retain certified copies of official identification documents for all identified beneficial owners. The Masters Office has provided a dedicated link on its website for the submission of this crucial information.

It is imperative to note that the individual completing the form concerning the beneficial owner link must possess a signed power of attorney (POA) as per a trustee's resolution. Furthermore, they are required to declare the following:
a. Trustees maintain certified ID copies of all beneficial owners of the trust.
b. They are authorized to handle this matter and verify the accuracy of the information and documentation submitted.
c. The information provided is truthful and accurate. Any inaccuracies will hold the trustees and the individual declaring the information responsible, with the Master of the High Court absolved of any consequences arising from misinformation.

With the implementation of the new Section 19(2) of the Act, trustees are now exposed to severe penalties for non-compliance. All trustees, including independent ones, and trust service providers should collaborate closely to meet these exacting trustee obligations promptly.

Given the potential for substantial fines or imprisonment, compliance with this new requirement is of utmost importance.

It is natural to have questions about data protection and concerns that institutions such as SARS and FIC will gain access to beneficial owner details. Moreover, the new definition of beneficial owners may appear to contradict the fundamental principles of a trust, where ownership and control are traditionally distinct from benefit and enjoyment. This raises questions about the terminology used in describing this definition and its potential to create misunderstandings regarding the rights and responsibilities of involved parties.

Nonetheless, these considerations do not negate the obligation that trustees must now fulfill to avert the consequences of non-compliance. Stay informed and prepared as these amendments come into effect to ensure your trust operates within the bounds of the law.