Staff Writer | 10 July 2023
The Companies and Intellectual Property Commission (CIPC) has released its new ‘Beneficial Ownership Register’ platform that companies must fulfil, says Micaela Paschini, an attorney at Tax Consulting SA.
Paschini said that businesses are now required to declare their beneficial ownership to the CIPC before October 2023, following concerns raised by the Financial Action Task Force (FATF) over the country’s failings in terms of financial crime and anti-money laundering.
This means the ‘warm body’ that sits behind a company can no longer remain off the record.
She said this has far-reaching implications for anyone who owns an asset which is either of value or has a more complex ownership structure.
Failure to update and maintain this information will result in the CIPC considering the company as non-compliant, but more importantly, it weakens the company in almost every aspect of doing business, including placing the banking relationships at risk, Paschini said.
The FATF, of which the government has adhered to its recommendations, said that sanctions should be applied to companies that breach their beneficial ownership obligations.
The functionality for the declaration of Beneficial Ownership has been added to the CIPC’s e-services landing page.
Although there have been a handful of new documents companies must complete to comply with the CIPC, beneficial ownership registration is probably the most urgent, she said.
Companies and close corporations are now required to establish and maintain a Beneficial Ownership Register, including:
Non-exempt state-owned companies
Listed companies who qualify as affected companies are, however, subject to a slightly different set of requirements, but the concept of Beneficial Ownership remains the same, said Paschini.
“Beneficial Ownership”, in relation to a company, refers to a person who, either directly or indirectly, “ultimately owns that company or exercises effective control of that company,” said Paschini.
Some examples of Beneficial Ownership include where a person:
Has a beneficial interest in the shares of a company;
Exercises, or controls the exercise of, voting rights associated with shares of a company;
Exercises, or controls the exercise of, the right to appoint or remove directors of a company;
Is able to exercise control, including through a chain of ownership or control, of: a legal entity, body of persons, partnership, or a person acting under the provisions of a trust agreement (i.e. a trustee or beneficiary);
Can materially influence the management of a company in any other manner.
To comply with regulations, individuals holding more than 5% Beneficial Ownership in a company must submit their information to the CIPC. Furthermore, any changes in Beneficial Ownership must be updated within five days of the change.
Once the information has been captured on the CIPC’s platform, it is processed, and a confirmation certificate will be issued.
“Failing to establish and maintain a Beneficial Ownership Register may prove dire for companies and their directors alike. One may face investigations, a compliance notice, severe penalties and fines, and directors of companies may be disqualified,” said Tax Consulting SA.
Paschini said that the compliance burden ultimately rests on shareholders, directors and owners of companies to comply with the CIPC’s new requirements.
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.