All South African companies and entities were required to submit beneficial ownership information to the CIPC (Companies and Intellectual Property Commission) before 1 October 2023. If they didn’t meet the deadline, they have a grace period until their next CIPC annual return is due, but then they will need to complete the process within 30 days to avoid falling foul of the new rules and risk penalties.
This is according to Joshua Alexandre, InfoDocs founder and CEO, who says: “Over 6 000 beneficial ownership declarations have already been submitted via InfoDocs by the 1 October deadline. The majority of these were by professionals who help privately held businesses to manage CIPC compliance.”
The beneficial owners are those individuals who ultimately own or control a company, either directly or indirectly. Although the Companies Act requires a register of those who own or control 5% or more of legal entities, the new laws provide greater transparency about ownership and control structures, which the CIPC will maintain in a central database. The intention is to avoid money laundering and combat terrorism financing.
Alexandre says: “The consequences of not knowing who owns and controls companies in South Africa have been dire. Linking beneficial ownership for all companies and close corporations is an important step in preventing abuse, and avoiding further state capture in South Africa.”
Private companies (Pty), close corporations (CC), non-profits (NPC), and state-owned companies (SOC) all need to file beneficial ownership. Any individual or entity holding more than 5% beneficial ownership of a company or close corporation must submit a register of beneficial owners to CIPC. The beneficial interest in relation to a company’s securities is entitlement through ownership, agreement, relationship or otherwise.
Companies can access the online system directly on CIPC’s website, but they are put off by the complexity of the inefficient process and prefer to outsource the job to professionals. This can be a costly exercise and consequently over 72% of businesses are not compliant.
InfoDocs provides a system that is used by professionals and SMEs to add their company directly from CIPC, produce professional templates and store company records securely online.