What is Beneficial Ownership?
Beneficial ownership involves identifying the natural persons who ultimately own or control a legal entity, such as a company. This information is vital for combating financial crimes, including money laundering and corruption. Properly documenting beneficial ownership is not just a legal requirement; it is a proactive step toward creating a fair and accountable business environment.
The CIPC is to keep a register of beneficial ownership (BO) for companies and close corporations. The register to be kept is for the applicable companies and close corporations to submit any beneficial ownership information relating to that entity. Anyone with more than 5% beneficial ownership of a company or close corporation must submit (file) with the CIPC, the requisite information.
Who needs to file 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).The following types of companies are not required to file beneficial ownership to CIPC:
- Primary Co-Operative (“co-op”)In terms of who can file beneficial ownership, anyone who has been mandated by the company to file this information may do so.
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 beneficiariesIn 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.
Why are Beneficial Ownership Submissions Important?
- Legal Compliance:
- Numerous jurisdictions mandate businesses to submit accurate and up-to-date beneficial ownership information. Failure to comply with these regulations can result in legal consequences and substantial financial penalties.
- Enhanced Transparency:
- Transparent business practices build trust among stakeholders, including customers, investors, and partners. Clear documentation of beneficial ownership demonstrates a commitment to integrity and accountability.
- AML Legislation Compliance:
- Beneficial ownership submissions are closely tied to Anti-Money Laundering legislation. By identifying and documenting the individuals behind a business, authorities can better assess and mitigate the risks associated with money laundering and illicit financial activities.
- In order to register Beneficial Ownership, the following documents must be in place:
- Beneficial Ownership Disclosure
- Beneficial Ownership Mandates
- Beneficial Interest Register
- Beneficial Interest Share Register
- Certified ID Copypies of beneficial owners
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When is the deadline for filing to CIPC?
The original deadline was 1 October 2023, which was 6 months from the commencement of the General Laws Amendment Act.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.
Companies are also required to file any changes to this information within 10 days of changes occurring.
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.
ADDITIONAL INFO:
Refer to the following video for additional information in understanding how the process is carried out;
The video is posted under the channel SA Accounting Network by Heinrich Grove
USER-GUIDELINES-BO-LEGISLATIVE-REQUIREMENTS_Aug-23-1.pdf
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