Repeal of the Trust Property Control Act
The Regulation of Trusts Bill, 2026 (“the Bill”) is intended to repeal the Trust Property Control Act, 1988 (“TPCA”). It is welcomed as a long-overdue modernisation of South African trust law. The Bill codifies certain settled common-law principles as well as practice prevailing, such as the requirements for trust creation and independent trustee appointments by the Master, introduces administrative enforcement mechanisms, and aligns South Africa’s transparency framework with the standards of the Financial Action Task Force (“FATF”).
Trustees should be aware that the Bill also imposes a broad array of expanded trustee duties and practical requirements that, if enacted, may be extremely onerous.
Definition of “beneficial owner”
Concern was expressed as far back as 2022, when the TPCA was amended to insert the definition of “beneficial owner”, that the definition threatened to undermine established principles of our trust law relating to the ownership of trust assets and the vesting of rights. This concern may have been misplaced: the definition of “beneficial owner” is aimed at establishing which persons in relation to a trust are the persons whose identity and details must be established and disclosed by the trustee. The purpose is to avoid persons from hiding their identity and sheltering behind a trust for money laundering purposes; it is not to create new proprietary rights for persons labelled as “beneficial owners” of the trust. It is important to note that the term “beneficial owner” does not change the law regarding ownership of trust assets.
Expansion of “beneficial owner” definition
The Bill materially expands the definition of “beneficial owner”. In addition to founders, trustees, and beneficiaries referred to by name, the Bill now captures beneficiaries who are “identifiable” even if not named in the trust instrument. The definition of beneficiary also includes a discretionary beneficiary, although this was understood to have always been the case.
Where such a beneficiary is a juristic person, the trustee must trace through to the underlying natural person.
This has significant implications for Employee Share Ownership Plan (“ESOP”) trusts, community trusts, and charitable trusts with large or dynamic beneficiary pools.
Beneficial ownership registers
The Bill requires trustees to establish and maintain beneficial ownership records, lodge a register with the Master's Office, and update both the internal record and the Master's register within 10 days of any change.
Annual returns and financial statements
Trustees will be required to prepare annual financial statements and file annual returns. An exemption from preparing annual financial statements is available where the aggregate inflows and outflows of trust property during a financial year do not exceed thresholds to be determined by the Minister.
Lodgement of trust deed amendments
Notably, a trustee may not lodge an amendment to a trust deed unless the prescribed beneficial ownership information has been lodged with the Master and is up to date.
Trust creation requirements
The Bill codifies the requirements for creating a valid trust, including a clear intention, identification of trust property and beneficiaries, and the appointment of a trustee. A sole trustee may not be the sole beneficiary. Trusts that fail to meet the requirements may be declared invalid.
Enhanced trustee duties
Trustees must act with the care, diligence, and skill reasonably expected of a person managing the affairs of another. Importantly, any trust deed provision aimed at exempting a trustee from liability for breach of this standard is void. One cannot contract out of a mandatory statutory provision. The Bill also prescribes detailed investment considerations that trustees must be aware of.
Resignation and disqualification of trustees
Trustees may resign by giving a signed written notice of resignation to the Master, which resignation is effective from the date that the trustee receives the Master’s written acknowledgement of receipt of the resignation.
The grounds for disqualification were expanded and include insolvency, criminal convictions involving dishonesty or financial crime, removal from an office of trust, and being subject to United Nations financial sanctions.
Compliance notices and administrative fines
The Master may issue compliance notices to trustees who fail to meet their obligations. Failure to comply with a compliance notice may result in administrative fines payable by the trustee personally.
Criminal offences and penalties
The Bill introduces a range of criminal offences, including administering trust property without authorisation, failing to disclose a trustee capacity to accountable institutions, and intentionally recording or lodging incorrect beneficial ownership information. Penalties include fines of up to R10 million and up to five years imprisonment.
Community property trusts
The Bill prohibits the creation of a trust to administer property received by a community from the State.
Our view?
Several provisions of the Bill raise practical concerns that trustees must be aware of:
- The 10-day window for updating and lodging beneficial ownership changes may be impracticable, particularly for ESOP, community, and charitable trusts with frequently changing beneficiary pools. This is especially so given the difficulties with the Master's electronic platform.
- The expanded “beneficial owner” could oblige trustees of large statutory trusts to record a significant number of individual participants as beneficial owners.
- The consequence of invalidating trust deed amendments where beneficial ownership information is not fully “up to date”, coupled with personal liability for the trustee, is arguably disproportionate.
- The disqualification of trustees removed for non-compliance with beneficial ownership disclosure obligations, without distinguishing between wilful misconduct and administrative oversight, may discourage competent professionals from serving as trustees.
What must trustees do next?
The Bill has not yet been enacted. Nevertheless, trustees and trust practitioners should begin familiarising themselves with its requirements and assessing the impact. In particular, trustees of ESOP trusts, community trusts, and charitable organisations should evaluate the practical implications of the expanded beneficial ownership obligations.
*Reviewed by Dale Hutchison, Executive in ENS’ Tax practice
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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