New CIPC Beneficial Ownership Reporting Requirements
As you may already be aware, it has been announced that all private and nonprofit companies must now declare their beneficial ownership with CIPC.
While the information surrounding these requirements can be quite confusing, we have outlined the main requirements below on why and how this affects your business.
Why is this now required?
On 24 February 2023, South Africa was put on a FATF “Grey List”, and as part of the Greylisting various deficiencies were identified and need to be addressed in order for South Africa to ultimately come off the list. One of these measures is the Beneficial Ownership Register, a register of natural persons who own or exercise control over legal entities either directly or indirectly. The register will be used to assist law enforcement and regulators (both nationally and internationally) with relevant information when it comes to the investigation of the ultimate owners of entities.
CIPC has been tasked via legislation to keep the Beneficial Ownership Register and as such, all companies are now required to file details of their beneficial owners with CIPC. According to CIPC, the register will not be available publicly, but will be shared with law enforcement and regulatory bodies in line with POPIA requirements.
What is a Beneficial Owner?
According to the definition provided by the CIPC, a beneficial owner is “any individual who, directly or indirectly, ultimately owns that company or exercises effective control”. This can be via shareholding, voting rights or a chain of ownership (such as through a trust, holding company or juristic person).
For example, Company A is 100% owned by Company B, which is owned 100% by Company C, and Company C has 2 people as their shareholders. It is the individual shareholders of Company C that are the beneficial owners of Company A, and it is their information that CIPC requires.
The threshold for reporting an individual’s information to CIPC is any beneficial owner who has more the 5% ownership/control.
How often will I need to update this information after this initial submission?
Going forward, all new companies will need to file this information within 10 days of being incorporated.
If there is a change to any beneficial owners, the updated information needs to be filed with CIPC within 10 days of the change.
And on an annual basis, as part of your CIPC annual return, you will be required to confirm that the beneficial ownership on file with CIPC is correct.
What do I need to do now and can DNKA do this for me?
CIPC requires information on each beneficial owner, as well as the securities/share register, ID copies, mandates and ultimate beneficial owners’ disclosure form. The exact requirements depend on the complexity of your structure and should be looked at on a case by case basis.
You can attend to this yourself via the CIPC eservices platform or engage a trusted partner such as DNKA to assist you.
Our fee to attend to this initial submission for noncomplex structures starts from R1950 ex. VAT. We are also able to assist with any required changes or other Company Secretarial services prior to submission.
If you would like DNKA to provide you with assistance or have any questions, please email our COO Caroline Sculley via firstname.lastname@example.org.
DNKA Inc is a registered audit and accounting practice in Kloof, KZN and specializes in assurance, consulting and compliance for SMMEs.