Financial Crime World

South Africa Enacts New Beneficial Ownership Requirements for Companies

Enhancing Transparency in Business Dealings

In a bid to combat money laundering and terrorism financing, South Africa has introduced new beneficial ownership regulations for companies. The move is aimed at enhancing transparency in business dealings, following a 2021 report by the Financial Action Task Force.

What are the New Regulations?

The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act No. 22 of 2022 requires certain companies to maintain a Beneficial Interest Register (BI Register). This register must include details of natural persons holding significant control or ownership (5% or more) in the company.

Affected Companies

The new regulations affect:

  • Public companies
  • State-owned enterprises
  • Other entities specified in the Companies Act
  • Listed companies, which have specific guidelines to follow

Definition of a Beneficial Owner

A beneficial owner is defined as someone who directly or indirectly exercises control or significant influence over a company. This includes various forms of control or influence, such as:

  • Voting rights
  • Ability to appoint board members

Requirements for Maintaining the BI Register

To comply with the new regulations, affected companies must:

  • Establish and maintain a BI Register
  • Include comprehensive details of each beneficial owner, including:
    • Full name
    • Date of birth
    • Identity or passport number
    • Extent of ownership or control

Exemptions for Listed Companies

Listed companies have specific exemptions if they already provide this information under stock exchange rules. They need to confirm their compliance through annual filings with the Companies and Intellectual Property Commission (CIPC).

Filing Requirements

Filing the BI Register requires:

  • Supporting documents
  • Adherence to timelines
  • Ensuring all necessary documents are accurate and submitted timely to avoid penalties.

Consequences of Non-Compliance

Failure to comply with these regulations can lead to legal repercussions, including administrative penalties under the Companies Act.

Conclusion

The new beneficial ownership regulations in South Africa are a significant step towards greater transparency in business. Understanding and complying with these changes is crucial for affected companies to avoid legal pitfalls.