CIPC Beneficial Ownership

On 24 May 2023, CIPC implemented the filing of Beneficial Ownership information annually or within 10 days of a change occurring along with the Annual Return of the company or close corporation. This was introduced due to the amendments brought by the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act 22 of 2022, which amended the Companies Act 71 of 2008 (“the Act”).

Initially, customers were able to file their Annual Returns without having a Beneficial Ownership declaration for the entity, however, CIPC is now strictly enforcing Beneficial Ownership declarations to be done by companies and close corporations with effect from 1 July 2024.

CIPC has introduced a hard-stop functionality on Annual Return filings that will prevent companies and close corporations from filing Annual Returns unless they have filed their Beneficial Ownership information for that calendar year.

The system will check if a Beneficial Ownership filing has been received for the same calendar year as the Annual Return is being filed. If there is no Beneficial Ownership filing found for the entity, you will not be able to file your annual return for that year.
Companies and close corporations that do not comply with this can face many consequences such as:

• Penalties for late Annual Return filings
• Enforcement action may be taken by CIPC
• Referral for deregistration
• Final deregistration

Ensure that you have filed your Beneficial Ownership information if you have not already so that when you are required to file the Annual Return, you will not face any challenges.

Companies Amendment Regulations, 2024 (Amendment Regulations)
The amendments to the Companies Act are in relation to beneficial ownership and gives the Companies and Intellectual Property Commission (CIPC) a mandate to request companies to file and update Beneficial Ownership information.

Change in legislation.
The Companies and Intellectual Property Commission (CIPC) have implemented a Beneficial Ownership (BO) register. The aim of the BO register is to have a repository/register of natural persons who own or exercise control over legal entities; to assist law enforcement with relevant information when it comes to their investigations of who the ultimate owners of an entity are; and to mitigate the risks identified in the national risk assessment where legal persons were identified as vehicles prone to abuse for money laundering and terror financing activities.

 

FREQUENTLY ASKED QUESTIONS ON BENEFICIAL OWNERSHIP
What is Beneficial Ownership?
In respect of a company, means an individual who, directly or indirectly, ultimately owns that company or exercises effective control of that company.

Who is a Beneficial Owner?
An individual/ natural person who, directly or indirectly, ultimately owns 5% and more of a company or exercises effective control of a company.

Can a company/Trust be a Beneficial Owner?
No, only a natural person can be considered a beneficial owner.

Who must file beneficial ownership information?
All companies registered with the CIPC are required to file Beneficial Ownership information.

What is the minimum Threshold before a person can be considered a Beneficial Owner?
5% (five percent)

Does the filing of the BO information replace the filing of the CoR39 (change of directors)?
No, CoR39 deals with directors, tasked with the day-to-day business and affairs of the company, whilst BO deals with unknown owners who ultimately owns a legal entity or exercises effective control of an entity.

If the details of the BO changes, can the BO filing be done any time?
Yes, whenever there are changes on the BO, a company has (five) days to update its BO register.

What companies apply?
Pty Ltd, Trusts, Non-Profit Companies

Non- compliance consequences
A compliance notice may be issued in terms of section 171 of the Companies Act and an administrative penalty of over R1 million or 10% of the entity’s turnover may be imposed in terms of section 175 of the Companies Act in the case of non-compliance.

What yourChartered Accountant can do
If you want to make use of our services for the Beneficial Ownership filling
We can file on your behalf and update your Beneficial Ownership register through a written mandate.

Documents Required
•Original Mandate (Please complete template provided)
•Certified ID
•Securities Register (Shareholder Certificate)
•Beneficial Interest Register / Shareholders register

yourCA will not be held responsible for non-compliance it is the duty of the directors to comply with the companies act.