Posted by: KMG KOPELA TRADING ENTERPRISE on 03/09/2024

Beneficial ownership

Beneficial ownership

Beneficial ownership: What is it, and how does one comply with the CIPC reporting requirements?

The CIPC recently launched the Beneficial Ownership Register, which allows for the filing of beneficial ownership information and documentation for companies and close corporations in South Africa.

Background

In February 2023, South Africa was put onto the FATF “Grey List”, resulting in South Africa being required to have increased monitoring due to various strategic, regulatory, and compliance deficiencies. In response, and with the strategic deficiencies then identified, the CIPC issued an action plan to ensure that the competent authorities and regulatory bodies have timely access to accurate and verified beneficial ownership information on legal persons, and further authorising the CIPC to apply sanctions for breaches and/or violations by legal persons of beneficial ownership obligations.

The purpose of the Beneficial Ownership Register is to ensure that companies, including non-profit companies and close corporations, keep a record of natural persons who own or control the legal entity and provide the CIPC with a detailed mechanism to maintain accurate and updated beneficial ownership information of complex corporate structures so that the relevant law enforcement authorities and regulatory bodies can swiftly identify who enjoys ownership of various corporate vehicles.

What is beneficial ownership?

In respect of a company, a beneficial owner is an individual who, directly or indirectly, ultimately owns the company or exercises effective control thereof.

So, what information must be declared on the Beneficial Ownership Register?

Importantly, it is only high-level information of the beneficial owner that needs to be disclosed, such as the full name, date of birth, identity or passport number, residential and postal address, and email address (if applicable) of the individual, and the extent of ownership or effective control which the individual has of the company.

The possible consequences of non-compliance

Failure to submit the required beneficial ownership information is tantamount to non-compliance with the Companies Act, which could result in court-ordered administrative fines. Where applicable, filing beneficial ownership information is now a legislative requirement.

Non-compliant beneficial ownership information filings will trigger possible investigations and sanctions, including compliance notices, administrative fines, and the disqualification of directors. 

At K M G Kopela Trading Enterprise we can help you navigate these new requirements should you need our assistance.