Alana-Lee Slinger | Candidate Attorney | Gillan & Veldhuizen Inc | mail me |
The Companies and Intellectual Property Commission (CIPC) has introduced new obligations for reporting beneficial ownership information. The deadlines are tied to each company’s date of inception. Businesses must declare their beneficial owners within 30 days of their anniversary date, similar to annual return filings.
Newly registered companies incorporated after May 24, 2023, must file within ten days of incorporation. The aim here is to bring transparency and accountability to corporate ownership structures.
South Africa is aligning with global trends, where transparency is a crucial aspect of responsible corporate governance.
Why beneficial ownership matters for companies
Beneficial ownership regulations serve multiple purposes. They help authorities and government bodies identify the real beneficiaries of a business’s activities and assets. This aids in curbing the misuse of corporate structures for illicit purposes.
Complex ownership layers can obscure true owners, making it harder to detect fraud, tax evasion, and other criminal activities.
For companies, understanding and reporting beneficial ownership is essential to avoid penalties. Compliance is no longer optional. It applies to all types of businesses, from small family enterprises to large corporations. Non-compliance risks fines and reputational damage, as clients and partners expect businesses to uphold transparency standards.
Beneficial ownership disclosure deadline
The CIPC has set specific timelines for beneficial ownership declarations. These depend on the company’s anniversary date or incorporation date for those registered after May 24, 2023.
Filing deadlines include:
- 30 days from the company’s anniversary date (similar to annual returns).
- 10 days from incorporation for companies registered after May 24, 2023.
Failure to report within these deadlines can result in penalties or enforcement actions.
Who qualifies as a beneficial owner?
Identifying beneficial owners can be challenging, especially for businesses with complex or international ownership structures.
According to the Financial Action Task Force (FATF) and CIPC guidelines, a beneficial owner is someone who:
- Directly or indirectly holds a substantial portion of ownership or voting rights (often 25% or more).
- Exercises significant control over the company, such as an influential board member.
- Holds an interest that benefits them financially or otherwise, without being explicitly listed as a shareholder.
Businesses must identify individuals or entities with substantial control or influence over the company. Companies with intricate ownership structures should consult professional advisors for assistance in the compliance process.
Steps for filing beneficial ownership information
The CIPC offers an online platform to streamline the submission process.
Here are the steps to follow:
- Identify beneficial owners – ensure clarity on who qualifies under the guidelines.
- Collect documentation – gather identification and records for each beneficial owner to ensure accurate submissions.
- Submit via CIPC’s portal – follow the online submission process and complete all required fields accurately.
- Maintain records – keep detailed records of submissions for future audits or regulatory reviews.
Penalties for non-compliance
Failing to declare beneficial ownership within the prescribed period can lead to significant consequences, including administrative penalties. The consequences aren’t only financial. Reputational risks can be severe, as beneficial ownership compliance is now a standard in most sectors.
Non-compliance may complicate audits, lead to investigations, and attract regulatory scrutiny. Businesses also risk losing trust among stakeholders who increasingly value transparency.
Proactive steps for businesses
With the CIPC beneficial ownership disclosure deadline approaching, businesses must act promptly. Ensuring beneficial owners are accurately identified and declarations submitted on time safeguards against penalties. It also promotes a more transparent and trusted corporate landscape.
