Requirements relating to trusts inter vivos and membership
Section 29 (1A) of the Close Corporations Act, 1984, in its amended form, now provides:-
"(1A) A natural or juristic person in the capacity of a trustee for a trust inter vivos may be a member of a corporation: Provided that –
- no juristic person shall directly or indirectly be a beneficiary of that trust;
- the member concerned shall, as between himself or herself and the corporation, personally have all the obligations and rights of a member;
- the corporation shall not be obliged to observe or have any obligation in respect of any provision of or affecting the trust or any agreement between the trust and the member concerned of the corporation; and
- if at any time the number of natural persons at that time entitled to receive any benefit from the trust shall, when added to the number of members of the corporation at that time, exceed 10, the provisions of, and exemption under, this subsection shall cease to apply and shall not again become applicable notwithstanding any diminution in the number of members or beneficiaries.".
In order to enable proper implementation of the new membership provisions and to register founding statements and amended founding statements where the trustee/s of trust inter vivos will become a member/s, certain information regarding the trust concerned will have to be provided in addition to the relevant CK forms. To this end the following documents will be required to be lodged together with form CK2 with CIPC:
- A certified copy of the Letter of Authority issued to the trustee/s of the trust by the Master of the High Court;
- In the case of multiple trustees, an originally signed special power of attorney by each of the trustees appointing one of them as the representative of the trustees for purposes of holding and dealing with the member’s interest in the close corporation concerned;
- A letter by the trustee, or in the case of multiple trustees, the representative trustee referred to in paragraph (2) above, in which he or she furnishes –
- the name, registration number and address of the trust;
- the names of all the trustees of the trust;
- the number of beneficiaries of the trust, current at date of the letter; and
- particulars of all the beneficiaries named in the trust deed, irrespective whether capital, income or other type of beneficiaries.
- A certified copy of the section/s in the trust deed defining and/or identifying the beneficiaries of the trust, whether capital, income or other type of beneficiaries.
- If the trustee is a juristic person, a letter on the letterhead of the juristic person, nominating a natural person as its representative.
An amended founding statement (form CK2) must be lodged whenever a change is made or occurs in respect of the particulars of –
- the trustees;
- the representative of the trustees;
- the representative of a juristic person which is a trustee; or
- the beneficiaries
The attention of accounting officers of close corporations is further invited to the duties of accounting officers as laid down in section 62 of the Close Corporations Act, 1984, and specifically paragraph (b) (i) of subsection (3), which reads as follows:
"(3) If an accounting officer of a corporation –
(b) during the performance of his duties finds-
that any change, during a relevant financial year, in respect of
any particulars mentioned in the relevant founding statement
has not been registered;
he shall forthwith by registered post report accordingly to the Registrar."
It follows that accounting officers of close corporations that have trustees of trusts inter vivos as members, should annually verify the number of beneficiaries of the trust concerned, firstly to ensure that the number of beneficiaries added to the number of members do not exceed 10 and, secondly, if any changes have taken place, that appropriate amendments have been registered.