PPS reaffirms its commitment to the principle of mutuality
Company to restructure as a consequence of the new Companies Act, 2008
Professional Provident Society Limited (PPS), the specialist South African financial services provider to graduate professionals, has announced plans 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 1 April 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 members and to preserve its unique ethos of mutuality under the new Act, PPS will be restructured as a trust, which is the legal vehicle most suited to this purpose. The trust deed will substantially replicate the provisions of the current articles of PPS Limited.
PPS still embraces an ethos of mutuality, which means that it exists solely for the benefit of its members. Thus, members share in the profits of PPS through its unique policyholder Surplus Rebate Account (SRA). In the last 5 years, PPS has generated in excess of R7.5 billion in profits for its policyholders.
According to Mike Jackson, CEO of PPS, the proposed restructure is being undertaken purely as a consequence of the changed company legislation. “Members, for all practical purposes, find themselves in substantially the same position in the new structure, including existing policy benefits. Members’ profit allocations to their policyholder surplus rebate accounts will remain unaffected.
Operationally, the activities of PPS Insurance, PPS Investments, PPS Beneficiaries Trust, Professional Medical Scheme Administrators and other PPS subsidiary companies, will continue to function as per the current mutual model.”
The announcement comes during a year in which PPS, founded by a group of dentists in 1941, celebrates its 70th anniversary. PPS has, over the years, grown to become the largest multidisciplinary group of graduate professionals in the world, with membership exceeding 200,000 professional members.
PPS members will be required to vote on the proposed restructure at a general meeting to be held on 16 March 2011.
