Beneficial Ownership – Master’s Portal and CIPC capturing

South Africa has been grey-listed by the Financial Action Task Force for not fully complying with international standards around the prevention of money laundering and combatting the financing of terrorism and proliferation.

One of the Acts passed by Parliament last year is the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act of 2022, this Act amends several existing Acts of Parliament including the Trust Property Control Act 57 of 1988 and the Companies Act, Act 71 of 2008.

TRUSTS

The new Act requires Trustees to keep a register of the Beneficial Ownership of a Trust. Failure to comply with the prescribed obligations is a criminal offence and on conviction relevant parties can be liable to a fine not exceeding R10 million, or imprisonment not exceeding five years, or both.

What is a Beneficial Owner – As per the definition in the Trust Property Control Act:

• a natural person who directly or indirectly ultimately owns the relevant Trust property;
• a natural person who exercises effective control of the administration of the Trust;
• each Founder of the Trust;
• each Trustee of the Trust;
• each Beneficiary referred to by name in the founding documents of the Trust.

What is legally required of the Trustees:

• to establish and record the beneficial ownership of the Trust;
• to keep up-to-date records of the beneficial ownership of the Trust;
• to keep a list of accountable institutions the Trust deals with;
• to keep a certified ID of all the beneficial owners of the Trust;
• to lodge a register of the beneficial owners of a Trust with the Master of the High Court.

Access to the information regarding Beneficial Ownership:

In terms of the Regulations, access to such information is restricted to various government bodies. The South African Revenue Service (SARS) will now pick up on Trusts that were never registered for tax and that have never filed tax returns. Failing to register for income tax is a criminal offence and has serious implications in terms of admin penalties. The said admin penalties can vary between R250.00 – R16 000.00 per month on non-compliance.

The Trust Property Control Act requires trustees to adhere to their administrative responsibilities in managing the trust on an ongoing basis.

Trusts that are not registered with the South African Revenue Service (SARS) including Trusts that are dormant, not actively trading or that do not have a bank account, must get their affairs in order.

Trust administration and services:

C2M Trust Management Services (Pty) Ltd will assist our clients in capturing the Beneficial Ownership of the Trust on the Master’s Office portal, at a cost of R1 250.00 (excluding VAT) per Trust.

A response is required to indicate whether or not you will be making use of our services. Kindly contact us on trusts@c2mca.co.za.

COMPANIES, CLOSE CORPORATIONS AND INCORPORATED

Companies and Intellectual Property Commission is currently planning to establish and implement a Beneficial Ownership register, to be released upon the approval of the Regulations, pursuant to the commencement of the General Laws Amendment Act of 2022.

A Beneficial Owner in respect of a Company is and individual who, directly or indirectly, ultimately owns that company by:

• having the ability to exercise control, including through a chain of ownership or control, of:
  • a juristic person other than a holding company of that company, e.g. a Trust;
  • 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
  • having the ability to influence the management of that company otherwise materially as per Regulation 32.
• having voting rights in the company;
• holding shares in the company;
• having a right to appoint or remove a director of the company;
• having the ability to exercise control, including through a chain of ownership or control, of a holding company of that company.

In preparation for the implementation of the said changes relative to entities other than Trust, we are preparing information accordingly and will advise once published.

Queries relative to Companies, Close Corporations and Incorporated can be directed to sec@c2mca.co.za.

C2M Chartered Accountants Incorporated is an accountable institution in terms of the Financial Intelligence Centre Act and therefore are also obliged to comply with the requirements set out in the Act.

We respectfully request all Trustees/Directors’ co-operation to meet the legal obligations bestowed upon them.