Beneficial Ownership Registers - Now Mandatory with CIPC Annual Returns
“It is imperative that ALL companies and close corporations ensure compliance with the beneficial ownership filing requirements, to ensure good corporate governance and business continuity..”
It’s been a year since 24 May 2023 when company directors and members of close corporations became obliged to lodge a Beneficial Ownership Register plus supporting documents with the Companies and Intellectual Property Commission (CIPC) – which also needs to be maintained, updated timeously and confirmed annually. Since all entities should have lodged this register by 24 May 2024 – a year later – it has now become mandatory to file beneficial ownership information before the annual returns can be submitted. Non-compliance with the beneficial ownership requirements has consequences, as does failing to submit the annual return timeously.
Following changes to the Companies Act on 24 May 2023, company directors and members of close corporations are obliged to lodge and maintain a detailed Beneficial Ownership (BO) Register, along with a list of supporting documents with the CIPC (Companies and Intellectual Property Commission). This register and documents must also be kept up to date within tight timelines and verified annually.
Pre-existing companies with their anniversary date after the promulgation of the amended Companies Regulations were required to file their beneficial ownership information with their annual returns. Registers for new companies and amendments must be lodged within 10 days. This means that all entities in CIPC’s register must have filed their beneficial ownership information by 24 May 2024 – one year since it became mandatory. The Commission, citing a huge number of non-compliant entities that are yet to file their beneficial ownership and/or securities register information, is enforcing compliance by implementing more serious consequences.
CONSEQUENCES OF NON-COMPLIANCE
- A new “hard-stop functionality” has been implemented by the Commission. That will prevent any non-compliant entities from filing their annual returns, which brings its own consequences.
- The late filing of annual returns will incur penalties.
- Banks, service providers or customers often require businesses to have up-to-date annual returns before engaging in business.
- The Commission will take further and necessary enforcement actions with regards to entities which continue to be non-compliant, such as:
- investigation into the administration and governance processes of non-compliant business,
- issuing of compliance notices; and/or
- referral for deregistration and even final deregistration due to non-compliance.
- It is also a criminal offence to submit false or incorrect information to the CIPC.
WHAT IS REQUIRED FOR COMPLIANCE
- Identify the beneficial owners of a company – these are individuals/natural persons who, directly or indirectly, ultimately own 5% or more of the company, or exercise effective control of that particular company.
- For each beneficial owner identified, collect the following:
- full names, date of birth, correctly certified copy of ID or passport;
- business or residential and postal address;
- email address;
- confirmation as to the participation and extent of the beneficial interest;
- supporting documents.
- Collate the information in a register, which must be filed with CIPC, and upload the supporting documents to CIPC’s website.
- Keep the register up to date, with changes filed with CIPC as soon as practically possible, but no later than 10 business days after notification.
- An updated register must also be submitted with the annual returns each year.
- The information must be treated as confidential and adequate precautions must be taken to prevent theft, loss, damage, destruction and falsification.
TOP TIP FOR HASSLE-FREE COMPLIANCE
Our assistance will prove invaluable in ensuring your business remains compliant with both CIPC’s beneficial ownership requirements and annual return requirements, particularly following the hacking of the CIPC website and the problems and delays that followed. We can also guide you through the complexities of CIPC compliance, manage the tedious processes and take care of the ongoing maintenance requirements, thereby eliminating your risk of non-compliance, which constitutes an offence and can incur administrative penalties.
