Most people involved in the BEE world, including law firms are of the opinion that a Trust deed needs to fulfil all the requirements contained in Annexure B – D of the ownership code. These are the annexures that cover BBOS, ESOPs and Trusts. There are a number of problems with this approach
- All amendments to a trust deed including the replacement of trustees needs to be lodged with the Master of the High Court’s office
- The Master’s office is in a shambles it could take more than a year to get the updated Letter of Authority
- Annexures B (BBOS) and C (ESOPs) do not refer to Trustees and Trust Deeds. They specifically refer to Fiduciaries and a Constitution of the programmes.
- Annexure D refers directly to Trusts.
Studocu.com observes the following
While all trustees are fiduciaries, not all fiduciaries are trustees. Trustees specifically refer to individuals or entities managing assets in a trust, while fiduciaries have a broader scope and can include other roles where a duty of loyalty and care is required.
This is further corroborated by the 2008 Verification Manual that requires verification agents to interview trustees or “equivalent representative of scheme”.
It makes sense to have two documents when it comes to BBOS or ESOPs. The first is the Trust Deed. The requirements for the trust deed are far simpler than those of the BBOS. In fact there is no racial requirement for Trustees at all. This document should be broadly drafted to accommodate BEE requirements as well as the standard essentialia of a trust deed. What it should do as well is refer to the Constitution of the Broad-based Ownership Scheme or ESOP.
A Constitution is a far more fluid and adaptable document. It does not need to go to the master’s court and also does not have to be unnecessarily complex. One of the requirements is that the Constitution must be made available to beneficiaries in a language that they are familiar with.
Contact us for a free consultation
Anyone who has a trust and have gone through a verification knows how complicated it is. It can substantially simplified with a constitution. Please contact us to discuss to understand what a BBOS or ESOP Constitution should look like and how to go about drafting this document.
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Rudolf Rautenbach |
Paul Janisch |
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083 759 0374 |
083 227 1375 |