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South Africa has taken significant steps to encourage transparency in business ownership through the introduction of the Beneficial Ownership (BO) register. Launched by the Companies and Intellectual Property Commission (CIPC) on April 1, 2023, this register aims to identify and record individuals who ultimately own or control companies and close corporations.

Beneficial ownership declaration must be done within 10 business days after company registration else the company will be de-registered. Beneficial ownership information must also be updated or resubmitted with director changes and when the company’s annual returns are submitted.

What is the purpose?

The primary purpose of the BO register is to combat financial crime. By establishing a central repository of information on company ownership, law enforcement agencies can more effectively investigate activities such as money laundering and terrorist financing. Legal entities have historically been identified as potential vehicles for these illicit activities, and the BO register is designed to mitigate these risks.

Who needs to comply?

Any individual who holds more than 5% beneficial ownership in a company or close corporation is required to submit their information to the CIPC. This includes individuals who directly or indirectly own the company or exercise control over it through various means, such as holding shares, exercising voting rights, or having the power to appoint directors.

Who is exempt from submitting information on the BO register?

Certain entities are exempt from submitting beneficial ownership information to the CIPC. These include:

  • Trusts: While trusts can own shares in a company, the beneficial ownership information of the trust beneficiaries must be declared with the Master of the High Court, not the CIPC.
  • Public Companies: Companies listed on a local stock exchange, such as the Johannesburg Stock Exchange, are exempt from beneficial ownership reporting.
  • State-Owned Companies: State-owned enterprises may be exempted from these requirements if they have received specific approval from the relevant government minister.
  • Primary Cooperatives: These entities are excluded from the beneficial ownership reporting obligations.
  • Personal Liability Companies: Companies with this specific legal structure are not subject to these requirements.

Key points to remember:

  • Only natural persons can be beneficial owners, not companies or trusts.
  • The threshold for reporting a beneficial owner is typically 5% ownership or control.
  • The information submitted to the CIPC is not publicly accessible.
  • Non-compliance can result in penalties.

By understanding the purpose and requirements of the beneficial ownership register, businesses can ensure they are meeting their obligations and contributing to a more transparent business environment. If you need assistance with this process, consider seeking professional guidance.

For more information on beneficial ownership or assistance with other tax and trade-related matters, contact one of our consultants on 087 550 1038. We would be happy to assist you.