In 2022, section 88 of the Companies Act was amended to allow a trust to be entered in the share register where the beneficial owner is a trust, departing from the previous position under which trusts could not be so entered. The legal position, as it was previously, aligned with Botswana’s long‑standing principle that a trust is not a legal person, as confirmed in Maje v Bokamoso Private Hospital Trust. This amendment therefore raises a central question: can a non‑person be a shareholder at all and, if so, by what legal mechanism will its shareholder rights and obligations be recognised and enforced?
The Amendment to Section 88
In 2022, section 88 of the Companies Act was amended to allow a trust to be entered in the share register where the beneficial owner is a trust. Before this amendment, section 88 prohibited a trust from being entered in the share register, and that position was consistent with Botswana’s long-standing legal principle that a trust is not a legal person, as confirmed in Maje v Bokamoso Private Hospital Trust and Another 2012 (1) BLR 1017 (HC).
The amendment to section 88 has therefore introduced a significant shift. Section 57 provides that a share is issued when the name of the holder is entered in the share register, while section 90 defines a shareholder as the person whose name is entered in that register as holder of one or more shares. This means that once a trust is entered in the share register, shares are taken to have been issued to that trust, and the trust becomes the shareholder for purposes of the Act.
Shareholder Rights
The consequences of being entered in the share register extend throughout the full structure of shareholder rights and obligations. This means that a trust, as shareholder, is entitled to exercise shareholder rights, including:
- the right to vote;
- the right to dividends authorised by the board; and
- the right to participate in surplus assets on winding up.
The Questions That Arise
If company law grants these rights to a trust, while Botswana trust law remains clear that a trust has no legal personality, important questions immediately arise:
- who exercises the voting rights?
- who receives dividends in law?
- who comes before the court when shareholder rights must be enforced or challenged?
These questions are not limited to shareholder rights alone, but extend to whether a trust is equally a shareholder for purposes of bearing duties, being bound by the constitution, and litigating in relation to those rights.
Maje v Bokamoso
To answer these questions, the case of Maje v Bokamoso becomes particularly important. The case confirms that a trust is not a legal person in Botswana law.
Thus, while section 88 may permit a trust to appear in the share register as a shareholder, trust law still poses a deeper and more difficult question: can a non-person truly hold and enforce the full package of shareholder rights and obligations in its own name?
Conclusion
The significance of section 88 is therefore more than a mere drafting change to the share register. Read together with sections 57 and 90, it allows a trust to be treated as a shareholder. Yet Maje v Bokamoso Private Hospital Trust reminds us that a trust has no legal personality and cannot sue or be sued in its own name. Until these positions are properly reconciled, the entry of trusts as shareholders will continue to raise difficult questions about rights, obligations, enforcement, and standing under Botswana law.
KLP Consulting and Services provides specialist legal and tax advisory services in Botswana. This commentary reflects legal analysis only and does not constitute legal advice. Contact us to discuss the implications of trust structures and shareholding arrangements under Botswana law.
