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The real reason you have to file a Beneficial Ownership Disclosure

If you’re a business owner, you should by now have received a notice from the CIPC (Companies and Intellectual Property Commission) notifying you of yet another new administrative burden, that is, to file your Beneficial Ownership Disclosure before a certain date, failing which you’ll be subjected to all manner of punishment. But what is a Beneficial Ownership Disclosure, and why do you have to file it?


The CIPC continues to expand its powers of inspection into your company transactions.
The CIPC continues to expand its powers of inspection into your company transactions.

What is Beneficial Ownership?

It is essentially a disclosure of who truly owns your company, and who truly benefits from its ownership. It is a disclosure of the ultimate beneficiaries, i.e. shareholders of the company – those who benefit when a company makes profit.

 

For smaller companies, the answer may be straightforward – the sole director and 100% shareholder of the company is its only beneficial owner. But what happens in Group Holdings structures, or companies where a beneficial owner is a foreign company or foreign national?

 

What happens if your company structure has been designed with specific asset protection goals in mind, and the new Beneficial Ownership rules diminish this protection?

 

SA’s Beneficial Ownership initiative follows an escalating international trend to control all information and close all loopholes, ostensibly for prevention of money laundering which supports terrorism – a noble goal. But [in our opinion], it’s also about helping the state to uncover every opportunity for taxation.

 

Furthermore, in South Africa, these requirements are imposed concurrently with state efforts to enforce compliance with demographic goals, like BEE compliance and sector transformation plans now required.

 

These are the real reasons companies are being forced to file these disclosures. As with all things in life, those who break the rules and seek to commit crime, ruin it for everyone else, resulting in escalating government interference in what decisions a business owner is allowed to make. Like it or not, we now have increased disclosure laws which all businesses must follow.

 

The Law

The rules are promulgated in the latest amendments to the Companies Act 71 of 2008. The amendments, mandate the CIPC require companies to file and update Beneficial Ownership information.

 

Who is a beneficial owner? 

A beneficial owner is a natural person who directly or indirectly owns at least 5% of a company or has effective control over it.

 

 Do I have to comply with these new regulations?

Yes, unfortunately. It’s law. It’s legislation backed not only by anti-money-laundering goals, but more dangerously, tax collection goals. So it will be an almost impossible battle attempting to resist this.

 

 What happens if you don’t file beneficial ownership disclosure?

 You will not be compliant with these regulations, which will result in a compliance notice and administrative fines.

  1.  You will also not be allowed to file annual returns for the company, which will result in a separate set of fines.

  2.  Ultimately, continued non-compliance can result in company de-registration, a court-ordered administrative fine of 10% of the company's turnover or R1 million, whichever is greater, and criminal liability.

 

I don’t want to disclose the identity of certain shareholders or companies who are beneficiaries in my company. What can I do to get around these regulations?

There seems to be very little one can do to circumvent these regulations, which require in-depth information disclosures like the names, ID numbers and addresses of shareholders.

 

 Aren’t these regulations an infringement on the privacy of shareholders?

Yes, certainly. Unfortunately, the state permits itself an infringement on our privacy where doing so suits its aims, and it creates gaps in the legislature to accommodate this. You’ll find these gaps in POPIA (The Protection of Personal Information Act) as well as the Constitution.

 

What can I do to protect my assets and companies?

There are still measures which can be taken to protect assets and favourable tax structures. Contact us for a bespoke analysis of your asset protection plan.

 

What information is required to file a Beneficial Ownership Disclosure?

You need to prepare information on shareholding in your company, including:

  1. Share certificates

  2. Securities register

  3. Information on shareholders and directors.

Contact us for assistance in filing your Beneficial Ownership Disclosure.

 

 How much does it cost to file a Beneficial Ownership Disclosure?

Price for simple company structures: R1,725 incl. VAT per company, including consultation and advice + paperwork and filing *. Note: as attorneys filing your company information on your behalf, we are responsible for accurate reporting and must first advise you as the to correct structuring and any risks in your Beneficial Ownership structure. We do not submit filings without first inspecting your company structure.

 

Price for drafting of above documents for BO declaration, if not yet created: additional R1,725 incl. VAT per company.

Price for more complex company structures: POA

 If you are already subscribed to our Commercial Legal Counsel retainer, this service is already included – please contact us to arrange a meeting to file your declaration well within time.

 * Prices valid for Q1 2025

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