Key Beneficial Ownership Requirements from the Amended Companies Act and its Regulations

Following SA’s recent Greylisting by the Financial Action task Force (FATF) on the 24th of February 2023, there has been a need to act on addressing the shortcomings which contributed to the Greylisting. It is within this context that updates have recently been made to the Companies Act 71 of 2008 and its Regulations.

On 24 May 2023, the promulgation of the Amended Companies Regulations gave full effect to the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022. The Companies and Intellectual Property Commission (CIPC) implemented a beneficial ownership register from 1 April 2023 which is now mandatory from 24 May 2023. This will enable the CIPC to maintain a register of all the beneficial owners of all companies. This is seen as a mitigation measure as companies and other legal structures are often used for money laundering and terrorism financing activities. 

So what are the new CIPC requirements?

All relevant companies and close corporations (entities) are required to file their beneficial interest register or share/securities register with the CIPC.

• All entities incorporated after 24 May 2023 are required to do so within 10 business days of their incorporation.
• All entities incorporated before 24 May 2023 are required to do so on the anniversary of their incorporation from 24 May 2023 onwards. 

All changes to an entity’s beneficial ownership will need to be filed with the CIPC within 10 business days of the change going forward.

Who is a beneficial owner?

A beneficial owner, in respect of a company, means an individual/natural person, who directly or indirectly, ultimately owns 5% or more of the company or exercises effective control of a company.

The exercise of effective control can be through holding beneficial interests in the shares of a company, exercising the right to appoint or remove the directors of a company and the ability to materially influence the management of a company etc.

Is your entity an affected company or not?

An ‘affected company’, is a regulated company as per section 117 (1) (i) of the Companies Act (which includes a public company, a state owned company (unless exempt) or a private company in certain circumstance as defined in the Act), and a private company that is controlled by or a subsidiary of a regulated company. 

It is important to know whether your entity is an affected company or not as this affects the type of register that is required for filing. Affected companies are required to file a beneficial interest register with the CIPC. All other companies (those which are not defined as ‘affected companies’) are required to file a securities (share) register which must include information on the natural persons who are the beneficial owners of the company. Where shares are held by one person for another person’s beneficial interest, the beneficial interest holders must be included.

Conclusion

It has been 4 months since the beneficial ownership register became mandatory. The latest notice from the CIPC is encouraging all entities to file their information by 1 October 2023. If you need assistance with filing your beneficial ownership information, please contact our team using the details below.

Contact Us

Email: info@sapientisadvisory.com

Website: www.sapientisadvisory.com 

Telephone: 011 540 0317