South Africa Tightens Rules on Beneficial Owners with New Regulations

Increased Transparency in Corporate Ownership

The Companies and Intellectual Property Commission (CIPC) has introduced significant changes to the way companies in South Africa report their beneficial owners. This move is aimed at enhancing transparency in corporate ownership, combating money laundering, and preventing terrorism financing.

Key Changes to Note

• New Filing Requirements: Entities incorporated before May 24 will need to file their Securities Register or Beneficial Interest Register with the CIPC from that date.
• Definition of Beneficial Owners: The new rules apply to individuals who own more than 5% of a company’s shares or exercise effective control over its affairs. This includes direct owners and those who hold beneficial interests through subsidiaries, trusts, or other entities.
• Exemptions for Listed Entities: Companies listed on the local stock exchange will be exempt from filing if they already disclose this information to the exchange or another institution authorized to collect and maintain such records.

Consequences of Non-Compliance

Companies must update their registers within 10 days of any changes in beneficial ownership. Failure to comply with these requirements can result in:

• Compliance Notice: Issuance of a notice requiring companies to take corrective action.
• Administrative Penalty: Imposition of a penalty for non-compliance.

Further Amendments Expected

The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022 will give effect to the provisions outlined above. This reflects South Africa’s continued effort to strengthen its anti-money laundering and combating terrorism financing framework.