The Professional Provident Society Limited (PPS), the specialist South African financial-services provider to graduate professionals, is to restructure its holding company from a company limited by guarantee to a trust, as a consequence of the new Companies Act, 2008, which is currently scheduled to replace the existing Companies Act, 1973, on April 1 2011.
The new Act does not provide for companies limited by guarantee, which is the type of company originally chosen by PPS as its holding company to facilitate membership. In order to protect the interests of its 200 000 or so members and preserve its ethos of mutuality under the new Act, PPS will be restructured as a trust, which is the legal vehicle most suited to this purpose.
How will members be affected?
PPS exists solely for the benefit of its members — members share in the profits of PPS through its unique policyholder Surplus Rebate Account (SRA). Over the past five years, PPS has generated in excess of R7,5-billion in profits for its policyholders. Members’ profit allocations to their policyholder surplus rebate accounts will remain unaffected.
CEO Mike Jackson says that members will still be in substantially the same position: benefits and rights will remain the same and there are no tax implications for members, either. Current members will automatically become members of the trust and will retain their voting rights.
PPS members will be required to vote on the proposed restructure at a general meeting to be held on March 16 2011.
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