Written by Jerusha Naidoo
On May 24, 2023, Government Notice 48648 containing the Companies Amendment Regulations was published by the Minister of Trade, Industry, and Competition in conjunction with the Companies and Intellectual Property Commission (CIPC). It is now a requirement for juristic persons, registered with the CIPC to submit and maintain Beneficial Ownership data. (Beneficial ownership regime by the CIPC).
What is Beneficial Ownership?
Entities are now required to maintain an ownership register and submit information to CIPC.
Impact of the Proposed Amendment
Juristic persons registered with the CIPC, such as companies, close corporations, profitable, nonprofit, external, and non-exempt state-owned companies, are now required to create and maintain a Beneficial Ownership Register for a natural person holding 5% or more Beneficial Ownership in an entity, effective from 1 October 2023.
Beneficial Ownership data is required to be submitted and registered on the CIPC platform followed by a Beneficial Ownership Confirmation Certificate being issued by CIPC as proof of compliance.
Practical Considerations
A person who, directly or indirectly “ultimately owns that company or exercises effective control over that company” is said to have “beneficial ownership” of that company.
Beneficial Ownership includes situations where a person:
- Has a beneficial interest in the shares of a company.
- Exercises or controls the exercise of voting rights associated with shares of a
company. - Exercises or controls the exercise of the right to appoint or remove directors of a
company. - Is able to exercise control, including through a chain of ownership or control, of a
legal entity, body of persons, partnership, or a person acting under the provisions of a
trust agreement (i.e., a trustee or beneficiary). - Can materially influence the management of a company in any other manner.
Further Compliance
Failure to establish and maintain a Beneficial Ownership Register along with the supporting documentation required annually may have severe implications on firms and their directors, as has been made abundantly clear by the CIPC. Investigations, compliance notifications, severe fines, penalties, as well as potential disqualification from serving as a business director, are all potential repercussions.
The Takeaway
We can assist with your company’s registration and ongoing compliance requirements. If
these matters are of interest to you, please do not hesitate to reach out to us at
cosec@afa.global
