BENEFICIAL OWNERSHIP
Beneficial Ownership (BO) refers to the individuals who ultimately own or control a company or legal entity, regardless of whether they are listed in the official records. Recognising these individuals is vital for promoting transparency, preventing financial crimes such as money laundering and terrorism financing, and maintaining accountability within corporate structures.
The Financial Action Task Force (FATF) is a global inter-governmental body that promotes policies and sets international standards relating to the combating of money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction. Following an evaluation in 2021, South Africa was found to have strategic Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) deficiencies, and was subsequently placed under “increased monitoring”, otherwise referred to as “greylisting”. The government adopted an action plan to address the identified deficiencies. Among these, South Africa had to ensure that competent authorities have timely access to accurate and up-to-date BO information on legal persons and that sanctions are applied for breaches of violations by legal persons to BO obligations.
Following the FATF recommendations, South Africa has made significant steps to enhance corporate transparency around beneficial ownership. Amendments to the Companies Act, 71 of 2008, introduced by the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act, 22 of 2022, have mandated clearer reporting and documentation of beneficial ownership. On 1 April 2023, the Companies and Intellectual Property Commission (CIPC) launched the Beneficial Ownership Register. This platform requires all corporate entities registered with the CIPC (with the exception of co-operatives) to submit their beneficial ownership information, effective from 24 May 2023.
Starting from 1 July 2024, a hard stop functionality was introduced that require all companies and close corporations to submit Beneficial Ownership Declarations alongside their Annual Returns. Entities are required to file Annual Returns, Beneficial Ownership Declarations, and a security register and/or beneficial interest register each year within 30 business days following the anniversary date of their incorporation. Entities that are BO non-compliant will not be able to continue and finalise their Annual Return submission, resulting in penalty fees for late submission or ultimately deregistration of the company.
Despite the annual filing obligation, newly incorporated entities are mandated to file their BO information within 10 business days of their incorporation. All other entities are required to file amended BO declarations within 10 business days of any changes occurring to their BO information.
Every entity is responsible for submitting accurate, complete and verified beneficial ownership information to the CIPC. Providing false or misleading information is an offence under the amended Companies Act, and violations will result in enforcement actions, including sanctions such as a referral to the NPA for criminal prosecution. CIPC’s BO system therefore allows companies to immediately amend and resubmit BO filings to correct any incorrect or incomplete information in a company’s BO submission. The CIPC has also implemented a reviewer system to inspect and analyse submissions, allowing for clarification or corrections as needed. Alerts for necessary re-submissions are communicated via email. This not only ensures compliance with the law but also helps companies to maintain accurate records.
The CIPC is committed to improve service delivery and user experience, particularly for supporting foreign participation in corporate structures. Effective from 16 February 2024, the Foreigner Assurance process was integrated with the beneficial ownership submission system. The exclusively online Foreigner Assurance service on the CIPC’s e-Services platform enables foreign nationals to electronically submit their information, accompanied by a certified passport or foreign identity document, for verification prior to engaging with CIPC’s platforms. This integration ensures that Beneficial Ownership declarations by foreign nationals are cross-verified with the Foreigner Assurance database, thus strengthening the accuracy and integrity of our corporate registers.
The CIPC is dedicated to assist South Africa’s alignment with the FATF recommendations by promoting compliance among corporate entities and instituting enforcement actions against non-compliant entities. There are several consequences a company or close corporation may face if beneficial ownership information is not up to date. The entity may incur penalties for the late filing of Annual Returns, enforcement action may be taken by the CIPC through investigation into the administration and governance processes of a business and even the issuing of a compliance notice; and/or referral for deregistration and even final deregistration due to non-compliance.
The enforcing of beneficial ownership filing should however not be seen as a punitive measure, but rather as a collective effort to promote transparency and to minimize the risk of financial crimes in South Africa. In the words of the CIPC Commissioner, Adv. Rory Voller “Promoting a culture of transparency and integrity can elevate South Africa as one of the sought after investor friendly destinations and thereby unlock progress towards economic growth and development.”
To view the list of entities that are non-compliant with beneficial ownership requirements, click here.
Click here for BO technical troubleshooting FAQ
Click here for Step-by-Step Guides.
Click here for guidance on the required contents of the Mandate, and the Securities and Beneficial Interest Registers.
Click here for a Securities Register template.
Click here for FAQ’s on Beneficial Ownership.
Click here for webinars on Beneficial Ownership.
Click here for the CIPC service standards. Service Standard is dependent on payment for the transaction being made.
For enquiries, send an email to: beneficialownershipenq@cipc.co.za
Definitions:
“Affected” company: any regulated company including the following:
- All Public companies, including public companies listed on a stock exchange.
- State owned companies.
- Any private company regulated by the Takeover Regulations and which experienced a transfer of more than 10% of its securities as a result of an amalgamation or merger during the previous 24 months.
- Any subsidiary of an affected company.
“Non-affected” company: any company that is not classified as an “affected” company.
“Beneficial interest”: the right or entitlement of a person, through ownership, agreement, relationship or otherwise, alone or together with another person to—
- receive or participate in any distribution in respect of the company’s securities;
- exercise or cause to be exercised, in the ordinary course, any or all of the rights attaching to the company’s securities; or
- dispose or direct the disposition of the company’s securities, or any part of a distribution in respect of the securities.
‘‘Beneficial owner”: an individual who, directly or indirectly, ultimately owns the company or exercises effective control of the company, including through:
- the holding of beneficial interests in the securities of the company;
- the exercise of, or control of the exercise of the voting rights associated with securities of the company;
- the exercise of, or control of the exercise of the right to appoint or remove members of the board of directors of the company;
- the holding of beneficial interests in the securities, or the ability to exercise control, including through a chain of ownership or control, of a holding company of the company;
- the ability to exercise control, including through a chain of ownership or control, of—
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- a juristic person other than a holding company of the company;
- a body of persons corporate or unincorporate;
- a person acting on behalf of a partnership;
- a person acting in pursuance of the provisions of a trust agreement; or
- the ability to otherwise materially influence the management of the company.
Links to relevant CIPC Notices:
Customer Notice 2023: Implementation of the beneficial ownership regime by the Companies and Intellectual Property Commission (CIPC)
Customer Notice 53 of 2023: Enforcement of beneficial ownership filings and securities registers as from 01 October 2023
Customer Notice 40 of 2023: Securities register and beneficial interest register functionality release
Customer Notice 5 of 2024: Enforcement of beneficial ownership filings and securities registers
Customer Notice 12 of 2024: Beneficial ownership register
Customer Notice 13 of 2024: Foreigner assurance process integration with beneficial ownership
Customer Notice 26 of 2024: Incorporating beneficial ownership information with annual return filings for companies and close corporations
Customer Notice 39 of 2024: Incorporating beneficial ownership information with annual return filings for companies and close corporations
Customer Notice 54 of 2024: Enforcement of beneficial ownership filings and securities registers
Customer Notice 58 of 2024: Notice of Beneficial Ownership (BO) non-compliance
Customer Notice 61 of 2024: Additional function on Beneficial Ownership Declaration service – complex structures
Media release 11 of 2023: CIPC implements a beneficial ownership interface
Media release 4 of 2024: CIPC to enforce beneficial ownership declaration with annual return filings for companies and close corporations
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