Under the B-BBEE Act, a Trust can be used to facilitate ownership by employees, communities, or other similar collective groups. For the purposes of achieving B-BBEE objectives, black people may hold their rights of ownership in a measured entity through some form of a vehicle such as a Trust.
There are different types of Trust that can be utilized to achieve the B-BBEE ownership thresholds.
Employee Share Ownership Programme (Employee Trust)
Broad Based Black Ownership trust
Educational Trust
Educational trusts are the holdings of the Trust under which the dividend flow can only be used for educational purposes. In the cases where the Trust becomes operational, the trustees should control the assets of the Trust. Even, according to the terms/articles of the Trust, the Trust must pay for the beneficiary's education.
Educational Trust rules and Regulations will be set out in the Trust deed whereby the Trustees will implement and regulate that the Trust deed’s set rules are abide to and will represent the black beneficiaries voting right.
It will always be advised to ensure that beneficiaries of the Trust are broad as possible and not to limit the distribution toward education to a specific class of individuals.
Beneficiaries will therefor change each year and can be utilized with each declaration of dividends. That is what South Africa requires. More educational opportunities for our youth and disadvantage people.
Contact us today for assistance in implementing and Educational Trust and more of its benefits.
Article By:
Francois le Sueur: Executive Consultant - Compliance Hub
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