Mandatory filing requirement at the companies and intellectual property commission

With effect from the 24 May 2023, every company has a legal obligation in terms of the Companies Act 71 of 2008, as amended (“Companies Act”), to maintain and submit its beneficial ownership at the CIPC.

The record keeping of beneficial owners by the CIPC as the company registrar, is one of the recommendations by the Financial Action Task Force, to assist South Africa in combating money laundering and terrorist financing. The aim of establishing the beneficial ownership register is to have a register of natural persons who own or exercise effective control over companies and prevent individuals from hiding behind a company or a complex organisation structure.

Any individual/natural person who, directly or indirectly, ultimately owns five percent or more of a company or exercises effective control of a company must be declared as part of the beneficial ownership filing at the CIPC.  

The Financial Intelligence Centre has published draft Public Compliance Communication which makes reference to the alignment of the Financial Intelligence Centre Act with the Companies Act and would then require all accountable intuitions to identify the person/s who hold five percent instead of the historic 25 percent, or more of ownership interest in a legal entity as those persons should be regarded as beneficial owners for purposes of the Financial Intelligence Centre Act.  

In the event that the beneficial owner is not a South African resident, the beneficial owner’s information must first be verified by the CIPC before the beneficial owner can be declared. The verification and validation of the information is an electronic process on the CIPC platform, namely the “Foreign Assurance” process. The Foreign Assurance process requires the non-resident to submit a certified/notarised copy (not older than three months) of their valid passport/foreign identity document to the CIPC. 

The filing of the beneficial ownership register at the CIPC is an ongoing filing requirement which should have been submitted on the 24 May 2023 and thereafter:

Failure to submit the beneficial ownership information will result in the CIPC utilising its compliance and enforcement powers in terms of the Companies Act to address cases of non-compliance. The CIPC may adopt administrative processes and where necessary litigate such infractions. 

With effect from 15 April 2024, the CIPC will introduce a hard-stop filing functionality which will prevent companies that have not complied with the beneficial ownership filing requirement, from submitting the annual return filing (annual renewal).

Should a company’s annual return filling remain outstanding for two years or more, the CIPC will automatically change the company status to “in deregistration process” and should the annual return filing remain outstanding, the CIPC may proceed with the deregistration of the Company. 

It is every South African’s duty and responsibility to combat corruption, money laundering and terrorist financing. The filing of beneficial ownership should be approached as a collective effort to eliminate financial crime and assist South Africa with being removed from the grey-listing. ​​​​