Recent changes in South African law have introduced new beneficial ownership requirements for companies. This guide simplifies these legal changes, helping you understand what they mean for your business and how to comply effectively.

Background of the New Regulations

In 2021, a report by the Financial Action Task Force evaluated South Africa's measures against money laundering and terrorism financing. It called for better transparency in identifying the real owners of companies. As a response, South Africa enacted the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act No. 22 of 2022, leading to new regulations in 2023.

What Are the New Requirements?

The 2023 Regulations brought significant changes. Key among them is the need for certain companies to maintain a Beneficial Interest Register (BI Register). This register should include details of natural persons holding significant control or ownership (5% or more) in the company.

Who Needs to Comply?

Affected companies, including regulated entities like public companies, state-owned enterprises and others specified in the Companies Act, must adhere to these regulations. Interestingly, listed companies, though not exempt, have specific guidelines to follow, particularly if they already report similar information to stock exchanges.

Understanding 'Beneficial Ownership'

A beneficial owner is defined as someone who directly or indirectly exercises control or significant influence over a company. This includes various forms of control or influence, such as voting rights or the ability to appoint board members.

Compliance Steps for Companies

• Setting Up a BI Register: Companies must establish and maintain a register listing beneficial owners.

• Annual Filings: Affected companies must file their BI Register with the Companies and Intellectual Property Commission (“CIPC”) along with their annual returns.

Information Required in the BI Register

The register should contain comprehensive details of each beneficial owner, including their full name, date of birth, identity or passport number and extent of ownership or control.

Special Considerations for Listed Companies

Listed companies have specific exemptions if they already provide this information under stock exchange rules. They need to confirm their compliance through annual filings with the CIPC.

Supporting Documents and Submission

Filing the BI Register requires certain supporting documents and adherence to timelines. Companies should ensure all necessary documents are accurate and submitted timely to avoid penalties.

Penalties for Non-Compliance

Failure to comply with these regulations can lead to legal repercussions, including administrative penalties under the Companies Act.

Conclusion

The new beneficial ownership regulations in South Africa are a significant step towards greater transparency in business. Understanding and complying with these changes is crucial for affected companies to avoid legal pitfalls. For further guidance or assistance with your company's compliance, contact Barter McKellar. Our experienced team of company law attorneys are here to help you navigate these and other legal requirements smoothly and effectively.