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NewsFinancial ServicesIntroduction of the Beneficial Ownership Register

Introduction of the Beneficial Ownership Register

CIPC

The introduction of the Beneficial Ownership Register by the Companies and Intellectual Property Commission (CIPC) of South Africa represents a significant effort to enhance financial transparency and combat financial crimes. Beneficial ownership is a crucial concept in this context, and compliance with reporting requirements is essential. Here’s a summary of key points from the provided information:

1. Background:

– South Africa sought to improve mechanisms for timely and accurate beneficial ownership information following assessments by the Financial Task Force (FATF).
– In February 2023, South Africa was placed on the FATF “Grey List” due to deficiencies in strategic, regulatory, and compliance areas.
– The CIPC formulated an action plan to provide competent authorities with swift access to accurate beneficial ownership information and enforce sanctions for non-compliance.

2. The Beneficial Ownership Register:

– The CIPC established the Beneficial Ownership Register on its e-services platform, operational since April 1, 2023.
– It requires companies, including non-profit entities and close corporations, to maintain accurate records of individuals who own or control the legal entity.
– The register enables law enforcement agencies and regulatory bodies to identify the beneficiaries of corporate entities.

3. Understanding Beneficial Ownership:

– Beneficial ownership refers to individuals who directly or indirectly own or control a company.
– The CIPC’s register focuses on individuals holding more than a 5% beneficial ownership stake.
– Ownership or control below this threshold is exempt from reporting.

4. Information to Report:

– Individuals with beneficial ownership must provide key information, including their full name, date of birth, identity or passport number, address, and email (if applicable), along with the extent of their ownership or control.

5. Exemptions from Reporting:

– Certain cases, such as trusts, require beneficial ownership information to be declared with the Master of the High Court.
– Some companies, like those listed on local stock exchanges or certain state-owned companies, are exempt from filing beneficial ownership information.

6. Reporting Requirements:

– Authorized individuals must submit relevant documents, including the company’s securities register and copies of beneficial owners’ identity documents or passports.
– Beneficial ownership information must be reported or updated within specific timelines.
– Starting from October 1, 2023, annual updates are required alongside yearly returns or confirmation of no changes.

7. Consequences of Non-Compliance:

– Failure to submit the required beneficial ownership information can lead to court-ordered administrative fines.
– Compliance with beneficial ownership reporting is now a legislative requirement, with potential investigations and sanctions for non-compliance, including compliance notices, administrative fines, and director disqualification.

In summary, the Beneficial Ownership Register aims to increase transparency and accountability in South Africa’s corporate sector. Companies and close corporations must adhere to the reporting requirements to avoid legal consequences and ensure compliance with the Companies Act and related regulations.



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