Understanding Beneficial Ownership Filing In South Africa

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In South Africa, all companies and close corporations must disclose beneficial ownership information to the Companies and Intellectual Property Commission (CIPC).

South Africa Corporate/Commercial Law

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What You Need to Know About Filing Beneficial Ownership Information with CIPC

Did You Know?

In South Africa, all companies and close corporations must disclose beneficial ownership information to the Companies and Intellectual Property Commission (CIPC). Failure to comply can lead to administrative fines and even deregistration of the entity.

Why Is Beneficial Ownership Reporting Required?

In February 2023, South Africa was placed on the Financial Action Task Force (FATF) Grey List, highlighting gaps in anti-money laundering and counter-terrorism financing regulations. In response, the CIPC implemented a Beneficial Ownership Register to increase transparency and prevent corporate entities from being used for illegal activities.

Since 24 May 2023, filing beneficial ownership details with the CIPC has been mandatory for all companies and close corporations.

Who Qualifies as a Beneficial Owner?

A beneficial owner is a natural person who:

• Exercises effective control over a legal entity.
• Derives financial or other benefits from the entity.
• Owns more than 5% of the company's shares or securities.

Ownership or control below 5% does not need to be reported to the CIPC.

Deadlines for Filing Beneficial Ownership Information

• New entities (registered after 24 May 2023): Must submit their beneficial ownership information within 10 business days of incorporation.
• Existing entities (registered before 24 May 2023): Must file their beneficial ownership information along with their annual returns.
• Updating records: Any changes in beneficial ownership must be reported to CIPC within 10 business days.

What Happens If You Don't Comply?

• Failure to file on time may result in administrative fines.
• Entities that do not submit their beneficial ownership data cannot file their annual returns, which can lead to deregistration by the CIPC.
• The CIPC may issue a compliance notice, and non-compliance could lead to court-imposed penalties under the Companies Act.

Will the Public Have Access to This Information?

No. The disclosed beneficial ownership data will not be publicly available. However, law enforcement agencies and relevant authorities will have access to the register for investigations and regulatory purposes.

Final Thoughts

Filing beneficial ownership information is a critical compliance requirement for businesses in South Africa. Companies should ensure they meet their obligations to avoid penalties and potential deregistration. If you are unsure of your obligations, seeking legal advice is highly recommended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.