CIPC | Beneficial ownership reporting and annual returns

In response to South Africa being greylisted due to non-compliance with international standards relating to the prevention of money laundering and terrorist financing, Parliament enacted the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act (“the Amendment Act”).

The Amendment Act mandates the Companies and Intellectual Property Commission (“CIPC”) to oblige companies and close corporations to file their annual return, together with their beneficial ownership declaration and securities register or beneficial interest register, as applicable, within 30 business days of the entity’s anniversary date.

CIPC has communicated that, as of 15 April 2024, it will strictly enforce the filing of beneficial ownership information together with the filing of annual returns. As a result, if an entity fails to file its beneficial ownership information with CIPC on time, it will be precluded from filing its annual return.

Should an entity fail to timely file its beneficial ownership information as contemplated above, the entity may—

• incur penalties for the late filing of annual returns; and/or
• be subject to investigation by CIPC into the administration and governance processes of the entity and/or the issuing of a compliance notice; and/or
• be referred for deregistration due to non-compliance.

CIPC recently introduced a foreigner assurance process whereby a foreigner is verified by CIPC and added to its database. In terms of this process, CIPC requires foreigners to provide their personal information, including a notarised copy of their passport.

Once the aforementioned information is provided to CIPC, a one-time pin (“OTP”) is sent by CIPC to the foreigner’s cell phone number and email address. This OTP must be relayed back to CIPC by the foreigner to finalise the process.

This presents a potential challenge for entities where a foreigner is a beneficial owner of the entity, as CIPC will not allow the filing of a foreigner’s beneficial ownership information if the foreigner has not first undergone the foreigner assurance process. This can lead to a delay in the filing of a company’s annual return which, in turn, can lead to the repercussions mentioned above.

It is therefore crucial that an entity timely files its beneficial ownership information with CIPC to avoid any of the aforementioned repercussions.

Any queries regarding beneficial ownership reporting and how it relates to the filing of annual returns can be directed at pty@asl.co.za.