Surprisingly, many companies remain blissfully unaware of the new company reporting requirements introduced by the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act 22 of 2022 (“Amendment Act”). The Amendment Act introduces changes to the company environment (effective 1 April 2023) which will have an administrative impact on South African companies. In this article we delve into the ‘what’ and ‘when’ of these new reporting requirements.

Beneficial ownership register

The Amendment Act requires that the South African Companies and Intellectual Property Commission (“CIPC”) must establish and implement what is to be known as a beneficial ownership register aimed at identifying the ultimate owner(s) of a company. This development is based on the introduction of a ‘beneficial ownership’ definition in the Amendment Act and subsequent proposed regulations both of which amends the Companies Act 71 of 2008 (“Companies Act”). The amendments to the Companies Act are set out in sections 55 through 60 of the Amendment Act and place heavy emphasis on ‘beneficial ownership’, the maintaining of beneficial ownership records, and reporting thereon. In addition, mechanisms have been introduced by which the CIPC can keep and update accurate beneficial ownership information.  

Obligations for companies

Prior to the Amendment Act, the CIPC, as registrar and regulator of companies, only held records of legal owners and the management of entities in the form of directors in the case of companies and members in the case of close corporations. As of 01 April 2023, the CIPC has now also been empowered to collect and keep ‘beneficial ownership’ information, and may request companies to file and update its ‘beneficial ownership’ information as and when applicable. This ‘beneficial ownership’ registry will undoubtedly also be shared with enforcement agencies as part of the efforts to combat money laundering and terrorism financing in South Africa.

Section 56 of the Amendment Act amends section 33 of the Companies Act to enable the CIPC to keep accurate and updated beneficial ownership information. These changes require a company to provide the CIPC (when it files its annual return) with a copy of the company’s securities register as required in terms of section 50 of the Companies Act, and a copy of the register of the disclosure of beneficial interest as required in terms of section 56(7)(aA) of the Companies Act.

When filing its beneficial ownership information with the CIPC, the board of directors of the company may mandate, in writing, any person of its choosing to make such a filing. The mandated person will have to produce the written mandate before it may transact on the CIPC’s beneficial ownership register.

A grace period of six months (commencing 01 April 2023) has been allowed for companies to file their beneficial ownership information. Thereafter, companies will typically submit their beneficial ownership information annually when it files its annual return, and when there is a change to its beneficial ownership, within five days of any such change.

Supporting information required

Along with the beneficial ownership of a company, the relevant company through its mandated representative, must submit the following additional supporting information when making its filing:

• Mandate of the filer of the information.
• Company’s securities register.
• Certified identity copies (or passport copies if applicable) of the beneficial owners.
• Any other supporting document as the CIPC may demand.

Once the CIPC has received all the necessary information and documentation from the relevant company, it will issue the company with a reference number to track the filing and, provided that the filing is done correctly, issue a confirmation certificate confirming that the company has satisfactorily filed its beneficial ownership with the CIPC. How long it will take the CIPC to issue such a confirmation certificate, is unclear at present, with the CIPC stating that it will follow a risk-based approach in its reviews of filed information and that it will publish turnaround times.

Consequences of non-compliance

Companies are obliged, notwithstanding that there may have been no changes to its beneficial ownership, to file its beneficial ownership annually when filing its annual returns to confirm the validity of the already filed information. Non-compliance or failure to correctly disclose and file with the CIPC may result in possible business restrictions, a company’s business status being amended by the CIPC from ‘in business’ to ‘deregistration process’ and of course being non-compliant with the Companies Act, all of which may cause serious damage to a company’s reputation, brand and ability to do business.

How can we assist

So, companies take note – the clock has officially started ticking, with the six month grace period having commenced on 01 April 2023. If you are unsure of how to address these new requirements or correctly record your beneficial ownership structure, our dedicated Trust Office team assists our company clients with all of the new reporting and disclosure requirements and can also help your company do the necessary. Feel free to contact our Trust Team for assistance. You can find more information on our dedicated webpage on the new anti-money laundering legislation.

Also take note of our free upcoming webinar regarding Companies and the new Anti-money Laundering reporting requirements coming up on 17 May 2023 that you can register for.


RELATED ARTICLES:

• Introduction: New anti-money laundering amendment legislation to affect companies and trusts
• Trustees beware! You can now be fined and jailed!
• Alert: South Africa’s grey listingmeans extensive new compliance requirements!
• Companies take note of new beneficial ownership reporting requirements
• New disclosure requirements for companies. Comply or risk being deregistered!
• Trustees MUST now report their status! Find out why
• New Beneficial Ownership rules for companies and trusts
• Trustees take note! How to record your beneficial ownership structure
• Why trustees must now also record the accountable institutions they engage with

Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).