Companies to report Beneficial ownership information from 1 April 2023

22 February 2023

Introduction

Companies will have to provide their beneficial ownership information to CIPC from 1 April 2023.

The new requirements are due to the General Laws Amendment Act was promulgated in early 2023 bringing in requirements for companies and trust to provide information on beneficial ownership. It amends five different Acts, namely:

• Trust Property Control Act, 1988,
• Nonprofit Organisations Act, 1997,
• Financial Intelligence Centre Act, 2001,
• Companies Act, 2008 and
• Financial Sector Regulation Act, 2017.

The aim of reporting on beneficial ownership is to develop a comprehensive mechanism to bring transparency to corporate vehicles such as trusts and companies. This will mean additional reporting and recordkeeping requirements for these entities relating to beneficial ownership.  

The requirement to report on beneficial ownership information is 1 April 2023. With regulations currently in a draft waiting to be issued, there is a lot of uncertainty relating to the format and mechanism that will be put in place to collect such information. We are waiting to see the draft regulations and further information and guidance from CIPC.  

What should companies do now?

1. Understand the requirements

Companies and trusts are urged to start understanding their responsibilities under the GLA. You can read the GLA  Here.

For example, a company may fall under the definition of an ‘affected company’, or it may be a company that is ‘not affected’? An affected company is a regulated company as set out in section 117(1)(i) and a private company that is controlled by or a subsidiary of a regulated company as a result of any circumstances contemplated in section 2(2)(a) or 3(1)(a).

• Affected companies are required to maintain a register of beneficial owners.
• Companies that are not affected companies should provide the information to the Commissioner in a specified format.

2. Understand the concept of beneficial ownership

What is beneficial ownership?

‘‘beneficial owner’, in respect of a company, means an individual who, directly or indirectly, ultimately owns that company or exercises effective control of that company, including through—

(a) the holding of beneficial interests in the securities of that company

(b) the exercise of, or control of the exercise of the voting rights associated with securities of that company

(c) the exercise of, or control of the exercise of the right to appoint or remove members of the board of directors of that company”.

Reference to “ultimately owns or controls” and “ultimate effective control” is made in situations in which ownership/control is exercised through a chain of ownership or control other than direct control. This definition should also apply to the beneficial owner or a beneficiary under a life or other investment-linked insurance policy.

NOTE: Legal owners of an entity may not be the same as beneficial owners.

3. Raise awareness with stakeholders

Awareness should be raised relating to beneficial ownership with all related stakeholders within and outside the company/trust. This may include meetings and discussions.

Identified stakeholders should clearly understand their duties and responsibilities in disclosing the correct beneficial ownership information.

4. Collect your beneficial ownership information

This is the task of all companies in the coming 5 weeks.

How can CIBA accountants assist?

The new requirements and short timeframes will place companies under pressure. This provides an opportunity for our members to offer assistance to clients regarding steps 1 – 4.

Use CIBA resources to keep up to date as new regulations and guidance become available.

To learn more on how to identify beneficial ownership information register for our free webinar here.

For details on the new Regulations for Trust On Beneficial Interest Reporting read our post here.