Enhancing Corporate Transparency with the Beneficial Ownership Register

In a bid to bolster corporate transparency and combat financial crimes such as money laundering and terror financing, the Companies and Intellectual Property Commission (CIPC) in South Africa is set to implement a Beneficial Ownership (BO) register. This initiative aims to create a centralized repository of natural persons who own or control legal entities. The BO register will play a crucial role in assisting law enforcement by providing relevant information during investigations into the ultimate owners of entities and mitigating risks associated with money laundering and terrorism financing activities.

Definition of Beneficial Owner:

The definition of a beneficial owner, as per Regulation 32, includes individuals who directly or indirectly own or control a company. This encompasses aspects such as holding beneficial interests in securities, trustees and beneficiaries of trusts who hold securities or members’ interest, the exercising voting rights, appointing or removing board members, and influencing the management of the company.

CIPC’s Role and Regulatory Framework:

As the registrar and regulator of companies administering approximately 2.1 million active entities, the CIPC currently holds records of legal owners and management but lacks information on shareholders and beneficial owners. Recognizing its pivotal role in safeguarding the regulatory environment, the CIPC is committed to managing risks associated with financial crimes.

To facilitate the BO register’s implementation, the General Laws (Anti-Money Laundering and Combating of Terrorism Financing) Amendment Act (Act No. 22 of 2022) amends the Companies Act, Act 71 of 2008. This amendment introduces legal provisions supporting the collection of beneficial ownership information, granting the CIPC the mandate to request companies and other legal persons to file and update such information as applicable.

Filing Requirements for Companies:

Affected companies, as defined by Regulation 30A, including regulated companies and their subsidiaries, must file their securities register with prescribed information on beneficial owners. State-owned companies are also considered affected and are required to file unless exempted by the Minister in accordance with the Companies Act.

The implementation of the Beneficial Ownership Register by the CIPC marks a significant step toward enhancing corporate transparency, deterring financial crimes, and aligning South Africa with international standards. Don’t let the challenges of compliance overwhelm you. Reach out to Taxability today and let us be your trusted partner in ensuring accuracy, transparency, and efficiency in your filing processes.