New Rules to Shine Light on Company Ownership: CIPC Cracks Down on Financial Crimes

• The Companies and Intellectual Property Commission (CIPC) has issued new filing requirements for Beneficial Owner information, aiming to enhance transparency and combat financial crimes. This follows the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022.
• The term “beneficial owner” refers to an individual who directly or indirectly owns or exercises effective control over a company. All entities are required to file Beneficial Ownership Information if they meet a threshold of 5% of ownership and/or control. Different filing requirements apply to “affected companies” and non-affected companies.
• Non-compliance with these requirements is an offence under the Companies Act, potentially leading to a compliance notice and an administrative penalty. The CIPC has made the filing of Beneficial Ownership Information available on its website, providing additional resources and information.

In a move to enhance transparency and combat financial crimes, the Companies and Intellectual Property Commission (CIPC), a member of the dtic group, has issued Guidance Note 2 of 2023, outlining new filing requirements for Beneficial Owner information. The guidance is issued under Regulation 4(1)(a) of the Companies Act Regulations, 71 of 2008, and is designed to provide recommended procedures, standards, and best practices.

The new requirements are a result of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, which amended the Companies Act and gave the CIPC the authority to request companies to file and update Beneficial Owner information. The Minister of Trade, Industry and Competition, along with the CIPC, published the Companies Amendment Regulations under Government Notice 48648 on May 24, 2023.

The term “beneficial owner” is defined as an individual who directly or indirectly owns a company or exercises effective control over it. This control can be exercised through various means, including holding beneficial interests in the company’s securities, exercising voting rights, appointing or removing board members, or having the ability to materially influence the company’s management.

The new regulations stipulate a threshold of 5% of ownership and/or control for all entities required to file Beneficial Ownership Information. Companies not classified as “affected companies” must file their securities register, which should include beneficial interest holders. Affected companies, defined as regulated companies or private companies controlled by or a subsidiary of a regulated company, must file their Beneficial Interest register as prescribed in the regulations.

Certain entities, such as affected companies listed on a local stock exchange, are exempt from filing a register of Beneficial Owners if such information is already kept at the stock exchange or any authorized institution. Non-profit companies with members are required to file a register containing details of their members, including those who exercise effective control.

Entities incorporated after May 24, 2023, must file records of their beneficial owner within 10 days of incorporation. Entities incorporated before this date must file their Securities Register or Beneficial Interest Register as part of their Annual Returns filing process from May 24, 2023. Non-compliance with these requirements is an offence under the Companies Act, and may result in a compliance notice and an administrative penalty.

The CIPC has made the filing of Beneficial Ownership Information available on its website, www.cipc.co.za, under e-Services. Additional information, including a FAQ section, is also available on the website.