The Fiduciary Institute of Southern Africa (Fisa) says it is “exceedingly disappointed” after its submissions on the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill were “ignored”.
The National Assembly’s Standing Committee on Finance (Scof) adopted the Amendment Bill on Friday. The DA and the ACDP reserved their positions on the bill.
National Treasury made only “cosmetic” refinements to those clauses in the bill that will have an impact on the Trust Property Control Act, Fisa said in a statement.
“Fisa made a comprehensive, user-friendly submission, co-authored by two of the top trust law experts in South Africa, professors Francois du Toit and Bradley Smith, which appears to have been essentially ignored,” the organisation said. (Click here to download Fisa’s submission.)
“The changes fly in the face of South African trust and property law and, in certain instances, conflict with other provisions in the Trust Property Control Act.
“If finally adopted by Parliament and signed into law by the president, the changes could have a devastating effect on the cost of proper trust administration, particularly in the case of smaller trusts where vulnerable beneficiaries need benefits intended for them to be protected effectively,” Fisa said.
Read: Fisa makes urgent submission to Parliament on ‘beneficial ownership’ relating to trusts
Refinements, not major changes?
Scof was scheduled to adopt the bill on Thursday night. But the absence of MPs and technical problems on the meeting platform resulted in the meeting being adjourned to Friday morning.
Stakeholders will have to study the revised bill, once it is released, to see exactly what has changed. However, based on Treasury’s presentation to the committee, it seems there have been “refinements” (as Treasury put it) but not significant changes.
Treasury previously announced what is perhaps its most significant concession to stakeholders’ submissions, amending the provisions that affect the non-profit sector.
The latest iteration of the bill’s amendments to the Non-profit Organisations Act confirms that it will not be compulsory for all non-profits to register with the Department of Social Security. Registration will be mandatory only for organisations that make donations to organisations or individuals outside South Africa or that provide humanitarian, religious or cultural services outside the Republic.
Organisations that must register will be given a period in which to do so, which period will be announced in the Government Gazette.
Financial Sector Regulation Act
The definition of “beneficial owner” to be inserted into the Financial Sector Regulation Act has been simplified to “a natural person who, directly or indirectly, ultimately owns a financial institution or exercises effective control of that financial institution”.
Companies Act: reporting requirements of listed companies
Treasury’s latest proposal is to insert a definition of an “affected company” into the Companies Act, to distinguish between the reporting requirements of all companies, on the one hand, and listed companies and private companies controlled by or subsidiaries of listed companies, on the other. The latter are “affected companies”.
All companies will have reporting requirements in relation to beneficial ownership and beneficial interest, but as a result of stakeholder submissions, Treasury said it has refined the amendments to the Companies Act to provide for “appropriate” reporting requirements for listed companies. Some of the other refinements to the amendments are intended to provide for that appropriate approach.
Read: Amendments could result in companies moving their primary listing, says JSE
Treasury said it has revised the amendments to the definition of “beneficial owner” to take into account the context of the Companies Act.
A minimum threshold has been introduced in respect of affected (listed) companies’ obligation to compile a beneficial interest register: it is persons who hold at least 5% of the company’s shares.
In terms of a further refinement, affected (listed) companies are excluded from the requirement to file a record of beneficial owners with the Companies and Intellectual Property Commission.
Without demur
Treasury’s proposed changes elicited scant response from the MPs, except for the ACDP’s Steven Swart, who asked questions mainly to clarify aspects of the amendments to the NPO Act.
The committee also adopted its report on the bill. The report notes that the Minister of Finance, in response to a letter from Scof, clarified that the Presidency, in July, granted National Treasury an exemption from the requirement to conduct an assessment of the Amendment Bill’s socio-economic impact.
The report said Scof “does not encourage the processing of legislation in this fashion but understands the urgency of preventing South Africa from being grey-listed by the Financial Action Task Force in February 2023”.
Read: MPs decline to process omnibus anti-grey-listing bill
The National Council of Province’s Select Committee on Finance is scheduled to hold public hearings on the Amendment Bill on 22 November.
