Beneficial ownership reporting: What is new and relevant

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On 1 April 2023, the Companies and Intellectual Property Commission (CIPC) launched its Beneficial Ownership Register. All corporate vehicles registered with the CIPC – including private companies, close corporations, non-profit companies, state-owned companies, personal liability companies, and public companies – are required to file their beneficial ownership declarations. This requirement stems from the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, which amended the Companies Act 71 of 2008.

Effective 1 July 2024, the CIPC began enforcing the filing of beneficial ownership declarations in conjunction with the filing of annual returns. In practice, this means that the entity’s beneficial ownership declaration must be submitted within 30 days of the entity’s anniversary date, coinciding with the annual return deadline. The CIPC enforces the beneficial ownership declaration through the implementation of a “hard-stop functionality” on its electronic platform. When attempting to file the annual return, the system checks whether the beneficial ownership declaration has been filed within the same calendar year. If the beneficial ownership declaration has not been submitted or is not up to date, the entity will be precluded from filing its annual return.

Failure to file the beneficial ownership declaration (and, by extension, the annual return) within 30 days of the entity’s anniversary date will result in a penalty. This penalty, which is based on the entity’s turnover, can range from R50 to R1 000 and is payable along with the annual return fee. In the event of non-compliance with these two mandatory filings, the CIPC may also take further action, including investigations, the issuing of compliance notices, or even initiating the deregistration process, leading to the entity’s removal from the CIPC’s active records. Deregistration effectively withdraws the entity’s juristic personality, meaning the entity will cease to exist. This could have significant implications, such as the inability to access services from banks and other service providers essential to the entity’s business activities.

The CIPC intends for entities to file their beneficial ownership declaration only once. Any changes to beneficial ownership information, such as a new shareholder, must be filed within 10 days of the change. Thereafter, entities will simply confirm the accuracy of the information on record with the CIPC when filing their annual return annually. However, until the CIPC introduces this confirmation functionality, entities will be required to submit a new filing each year. It is also important to note that each new or amended filing requires a new mandate to be signed. This mandate, typically provided to the filer in the form of an ordinary board resolution, must be signed by the majority of a company’s directors or all the members of a close corporation. The CIPC recently emphasised the importance of using a company letterhead for this mandate. While a custom letterhead with a logo is not required, the CIPC requires that the letterhead include the entity’s information, such as the name, registration number, place of incorporation, registered, business, and postal address, as well as a contact number and email address.

Understanding and complying with these requirements is crucial to avoiding disruptions in company operations. Ensuring that beneficial ownership information is up to date and correctly filed is essential for maintaining compliance and avoiding unnecessary penalties.

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