New Trustee Obligation to report to the Master of the High Court
As you may be aware, a new reporting obligation for Trustees was gazetted on 31 March 2023, which amended the Trust Property Control Act, Act 57 of 1998 (TPCA).
This means that with effect from 1 April 2023, Trustees are obligated to lodge and keep up-to-date records of the beneficial ownership of trusts. This amendment places a burden of responsibility on Trustees to maintain comprehensive data regarding beneficial ownership of trusts and to record the details with The Master of the High Court.
These obligations apply to all Trustees, regardless of the nature of the trust, or the value therein, including family trusts, business trusts, and public benefit organisation trusts.
Who is defined as a ‘beneficial owner’ of a trust?
The TPCA defines ‘beneficial ownership’ as the founders, trustees, named beneficiaries, and any individuals who exercise effective control of any trust.
A beneficial owner is always a natural person. In the instance where a legal entity fulfills the role of a beneficial owner, the natural person(s) who ultimately benefit(s) from the legal entity will need to be recorded as the beneficial owners of the trust.
What action is required?
Trustees are required to record the beneficial ownership data on the Master of the High Court’s online portal by manually uploading an electronic register of the detailed data on each beneficial owner. The Trustees are also reminded to keep certified copies of the ID documents of all beneficial owners.
Only Trustees are permitted to record the data with the Master of the High Court. However, a trust administrator can be given the authority to upload the beneficial ownership data on behalf of a Trustee with a Power of Attorney from the Trustees.
Consequences of non-compliance
Failure to comply with these requirements may result in a penalty of up to R10m and/or five years’ imprisonment for the Trustees. Additional sanctions may be applied by the Master of the High Court or the Financial Intelligence Centre.
It is likely that trust changes lodged with the Master of the High Court may trigger an inspection of the beneficial ownership database, resulting in penalties for non-compliance.
What can you do?
MD would be able to digitally submit all the mandatory information with the required authorisation from you authorising us to submit the required documents.
If we act as your trust administrators, we already have access to most of the information that will need to be submitted and we can apply our expertise in the fiduciary field to help you navigate these changes to the trust legislation to ensure compliance.
However, if we do not have this information on hand, we would work with you to collate the required details for submission and assist you in preparing and maintaining the ongoing requirements.
Our fees relating to this service will be based on the time spent by our trust administration department to prepare and submit the register to the Master, maintain the beneficial ownership details in the prescribed format, and to assist you, as the Trustees collecting, record and maintain details pertaining to Accountable Institutions that have dealings with you as the Trustees.
Please let us know if we may assist you by emailing Stephanie.Phillips@mdacc.co.za as a matter of urgency.