As a business owner in South Africa, you are required to implement a new administrative procedure either as a one-time task or whenever there are changes in your shareholders.
Here is a brief overview of all the essential information you should be aware of concerning beneficial ownership registration. (Updated July 2024)
What are the legal requirements?
On 29 December 2022, the South African government confidently introduced the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, causing a significant shift in the regulatory landscape for the Companies Act 71 of 2008, effective from 1 April 2023.
These amendments now mandate the maintenance of records of beneficial owners and their regular disclosure to the CIPC.
The primary objective behind these revisions is to equip authorities with comprehensive information to combat money laundering, financial crimes, and uphold regulatory compliance.
Deadline for Beneficial Ownership Registration
The new deadline for filing beneficial ownership to CIPC is within 30 days of the company's next anniversary date (similar to annual returns) or within 10 days of incorporation if they were registered after 24 May 2023.
As of 1 July 2024, a hard-stop functionality has been implemented which will check if there has been a beneficial ownership filing within the same calendar year as the annual return filing for that company. Unless you have filed your beneficial ownership for that calendar year, you'll be unable to file your annual return.
Who are the beneficial owners?
The beneficial owners are the individuals who ultimately own or control a company, either directly or indirectly, by holding a beneficial interest of 5% or more in the company or share class (although CIPC only record beneficial owners with 5% or more in the company). Typically, these are the shareholders or members of a company.
In the case of a PTY, shareholders if they are:
Individuals holding 5% or more of the issued shares
Companies with beneficial owners holding a beneficial interest of 5% or more in the original company
Trusts with beneficiaries (although this information is not required by CIPC as it's submitted to the Master of the High Court)
In the case of a CC or PLC, members holding 5% interest or more in the company.
In the case of an NPC with members, the members would be the beneficial owners.
In the case of an NPC without members, the directors would be the beneficial owners.
In the case of an SOC where a shareholder is a minister, the minister would be the beneficial owner.
Who needs to file a beneficial ownership?
The following types of companies are required to file beneficial ownership to CIPC:
Private Companies ("PTY")
Close Corporations ("CC")
Non-Profit Companies ("NPC")
State Owned Companies ("SOC")
Personal Liability Company ("PLC")
Public Companies ("LTD") - while these records are kept by a competent authority such as the Johannesburg Stock Exchange ("JSE"), they are still required to submit a register of beneficial owners as per the Companies Regulations (as amended).
Conclusion
We advise clients to refer to the CIPC User Guidelines on Beneficial Ownership which detail the process of beneficial ownership filings. At Labyrinth, we are able to assist with the determination of beneficial owners, advise on the filing requirements, and submit the filing on your behalf.
Contact us if you need any assistance.
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