Beneficial Ownership Register
Companies must adhere to the new “Beneficial Ownership Register” platform that has been released by the Companies and Intellectual Property Commission (CIPC).
Businesses must now notify the CIPC of their beneficial ownership by October 2023 in response to concerns expressed by the Financial Action Task Force (FATF) regarding the nation’s shortcomings in the fight against financial crime and money laundering.
This implies that the “warm body” behind a company may no longer remain anonymous. Anyone who owns an asset that has value or has a more complicated ownership structure is affected significantly by this.
The CIPC will consider the company to be non-compliant if this information is not updated and maintained, but more crucially, it will make the company less competitive in practically every area of business, including putting the company’s banking ties at danger.
The FATF recommended that corporations that violate their requirements to maintain beneficial ownership should face sanctions, and the government has followed this advice.
Although there are a few new forms that businesses must fill out to comply with the CIPC, beneficial ownership registration is likely the most crucial.
Companies and close corporations, including for-profit and nonprofit organisations, must now create and maintain a Beneficial Ownership Register. However, listed companies that meet the criteria to be considered affected corporations are subject to a slightly different set of rules under the rules of Beneficial Ownership.
A person who “ultimately owns the company or exercises effective control of the company,” whether directly or indirectly, is said to have “beneficial ownership” of that company.
- the holding of beneficial interests in the securities of the company
- the control of voting rights
- the control of the right to appoint or remove board members
- the control of beneficial interests in the securities of a holding company of that company
- the ability to exercise control of a juristic person other than a holding company, a body of corporate or unincorporate persons, a person acting on behalf of a partnership, or a person acting in terms of the provisions of a trust agreement
- the ability to otherwise materially influence the management of the company.
Individuals holding more than 5% Beneficial Ownership in a company are required by law to provide the CIPC with their information. Additionally, updates must be made to Beneficial Ownership within five days of any changes.
A confirmation certificate will be issued after the data has been entered on the CIPC’s platform.
Companies and their directors may suffer if a Beneficial Ownership Register is not created and kept up to date. Investigations, compliance notices, harsh penalties and fines, as well as possible disqualification as a company director, are all possible outcomes.
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Kindly note this article is intended for general information purposes only and does not constitute accounting, tax, nor regulatory related advice. Should you need advice, please contact one of our practitioners.