Reference: Published by Staff Writer, 10 July 2023

According to Micaela Paschini, an attorney with Tax Consulting SA, the Companies and Intellectual Property Commission (CIPC) has launched its new ‘Beneficial Ownership Register’ platform that businesses must comply with.

Businesses now have to disclose their beneficial ownership to the CIPC by October 2023, according to Paschini, as a result of concerns expressed by the Financial Action Task Force (FATF) on the nation’s shortcomings in terms of financial crime and anti-money laundering.

This implies that the “warm body” behind a firm may no longer speak anonymously.

For anyone who owns an item that is valuable or has a more complicated ownership structure, she said this has broad consequences.

The CIPC will consider the company to be non-compliant if this information is not updated and maintained, but more importantly, it hurts the company in practically every element of conducting business, including putting the banking connections at danger, according to Paschini.

The FATF recommended that corporations that violate their requirements to maintain beneficial ownership should face sanctions, and the government has followed this advice.

The CIPC’s e-services landing page now includes capabilities for the declaration of Beneficial Ownership, as displayed below:

Although there have been a few new forms that businesses must fill out in order to comply with the CIPC, the registration of beneficial ownership is perhaps the most crucial, according to the expert.

Companies and close companies must now create and keep a Beneficial Ownership Register that includes the following information:

• Profitable businesses
• Non-profit organizations
• External businesses
• State-owned enterprises that are not excluded
• Closed businesses

The concept of Beneficial Ownership does not change for listed firms that meet the criteria to be considered affected corporations, according to Paschini.

In regards to a firm, “beneficial ownership” refers to a person who, directly or indirectly, “ultimately owns that company or exercises effective control of that company,” according to Paschini.

Beneficial Ownership can occur, for instance, when someone:

1. Possesses a beneficial interest in a company’s shares;
2. A person who utilizes or oversees the use of voting rights attached to stock in a firm;
3. Possesses the authority to appoint or remove a company’s directors or has control over that activity;
4. Possesses the ability to exert influence over, including through a chain of ownership or control, a partnership, a legal entity, a group of people, or a person acting in accordance with the terms of a trust arrangement (such as a trustee or beneficiary);
5. Can fundamentally affect a company’s management in any other way.

Individuals holding more than 5% Beneficial Ownership in a corporation are required by law to provide the CIPC with their information. Additionally, updates must be made to Beneficial Ownership within five days of any changes.

A confirmation certificate will be issued after the data has been processed and entered into the CIPC’s platform.

“Companies and their directors may suffer if a Beneficial Ownership Register is not created and kept up to date. In addition to investigations, compliance notices, hefty penalties, and disqualification from serving as a director of a company, said Tax Consulting SA.

According to Paschini, it is ultimately the responsibility of shareholders, directors, and company owners to adhere to the new CIPC regulations.