CAN YOU TRUST YOUR TRUSTEES?

  • Posted on: 4 February 2019
  • By: Hilton Johnson

Ownership has always been one of the most contentious elements within a B-BBEE transaction. Many companies have however recently opted to set up various different trust structures. If these are strategically thought out and have both the input of legal and tax experts they have the potential to be extremely valuable, in leading transformation within a business.

Often there is a perception that the trust is just passive and is just dictated to by the company.  However within the codes it is extremely clear that the relationship that exists between the company and a trust needs to be at arms- length, failing which the transaction is deemed to be fronting. 

The failure of a trustees to comply with the trust deed may just be downfall at verification, when the ownership points cannot be claimed………
 

Only a compliant trust is sustainable!