SOUTH AFRICA'S NEW BENEFICIAL OWNERSHIP REGULATIONS: ENHANCING TRANSPARENCY AND COMPLIANCE

South Africa recently implemented new regulations requiring companies to disclose their beneficial owners. These regulations aim to increase transparency in business ownership structures to combat financial crimes like money laundering and terrorist financing. This blog post will explore these requirements, including their purpose and key details.

What are Beneficial Ownership Requirements?

Beneficial ownership refers to the individuals (natural persons) who ultimately control or benefit from a company, even if they don't hold the shares directly. These requirements mandate companies to identify and maintain a register of their beneficial owners.

Why were these Requirements Implemented?

The primary reason behind this change is to combat financial crimes like money laundering and terrorist financing. By increasing transparency around who truly owns and controls companies, authorities can better track suspicious activity and prevent the misuse of legal entities for illegal purposes. South Africa was placed on the greylist by the Financial Action Task Force and has implemented these measures to have itself ultimately removed from this list.

Key Details of the Requirements:

1.???? Threshold: Companies are required to disclose information on any individual holding 5% or more of the company's shares or voting rights, as well as individuals exercising control through other means (e.g., through nominee arrangements).

2.???? Deadlines: Companies registered on or after May 24, 2023, must file their beneficial ownership information within 10 days of incorporation. Pre-existing companies have until the filing of their annual returns to comply.

3.???? Reporting: Companies must update their beneficial ownership register within 10 business days of any changes. Additionally, annual confirmation or beneficial ownership information (or update) is required.

Compliance is Crucial:

Failing to comply with these requirements can lead to significant penalties, including fines and potential deregistration of the company. The Companies and Intellectual Properties Commission is in the process of implementing a “hard-stop” on the filing of annual returns for companies that have not filed their beneficial ownership information. This will mean that companies will incur penalties for the late filing of their annual returns.

The implementation of beneficial ownership requirements marks a significant step towards enhancing transparency and combating financial crime in South Africa. Companies should familiarize themselves with these regulations and ensure they take the necessary steps to comply. Remember, it is crucial to meet the deadlines and maintain accurate records to avoid penalties and ensure regulatory compliance.

Please note that this blog post is for general informational purposes only and does not constitute legal advice. For specific guidance on compliance with the new requirements, it is recommended to consult with a qualified professional. Should you need assistance, please feel free to give us a call at 021?424 4599.

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Sources: Companies Act 71 of 2008 as amended