CIPC Mandates Beneficial Ownership Filing and Securities Register Upkeep from 1st Oct ’23
The Companies and Intellectual Property Commission (CIPC) of South Africa has mandated significant changes in how businesses manage their beneficial ownership information and securities registrations beginning on October 1, 2023.
Refer: CIPC Customer Notice 53
Companies registered after the announcement of the amended Company regulations need to file beneficial ownership information within 10 business days after incorporation. Entities that existed before the announcement must also file their beneficial ownership information.
The modifications reflect an essential advancement towards improving accountability and compliance in the commercial sphere. We’ll go into detail about these changes in this blog post and explain why they’re crucial for businesses and the overall economy.
What is Beneficial Ownership?
Beneficial ownership describes the people who, ultimately, control or own a business, partnership, trust, or other legal entity. Identifying beneficial owners is essential for transparency and stopping unlawful acts, including fraud, tax evasion, and money laundering. Regulators and authorities may ensure businesses run legally by understanding who is behind them.
Who is a Beneficial Interest Holder?
Any natural person or an individual who directly or indirectly has over 5% ownership of a company or close corporation must file requisite Beneficial Ownership information with CIPC.
Who is exempted from filing Beneficial Ownership details?
Affected companies listed locally needn’t file a beneficial owner’s register if the stock exchange or an authorized institution already has it. This extends to related entities like subsidiaries.
Advantages of Beneficial Ownership Filing in South Africa
Beneficial ownership provides many benefits for encouraging openness, responsibility, and compliance, both for enterprises and for regulatory bodies. The following are some major benefits of beneficial ownership:
Tax compliance: Transparent information on beneficial ownership helps tax authorities ensure that companies pay their fair share of taxes. This eliminates tax evasion and supports a more equitable tax system.
Investors’ confidence: These changes should increase investor confidence in the South African business climate. When investors have a more vital understanding of the people driving the business, they may make better choices.
Counter-Terrorism Financing (CTF) and Anti-Money Laundering (AML): The effort to fight against money laundering and terrorism financing is one of the main reasons for requiring beneficial ownership reporting. Authorities can better detect and stop illegal financial activities when they know who owns or controls an organisation.
Security: The CIPC is focusing more on securities registrations and enforcing beneficial ownership reporting. Companies must keep up-to-date records of all ownership changes and share certificates for their securities.
Securities records are essential for confirming ownership as they offer a formal record of share ownership, which can help avoid disagreements and ambiguity. It ensures dividend payments to the shareholders thanks to accurate securities registrations. It comprises regulatory compliance that ensures securities rules are followed. Regulators have the right to request access to securities registers.
Learn more about Beneficial Ownership Filing Requirements.
Why Choose DataTracks?
A big step towards openness and compliance in the South African business environment will be made with the implementation of beneficial ownership filing and securities registrations by the CIPC beginning on October 1, 2023. In addition to being essential for preventing financial crime and tax evasion, these adjustments must be made to encourage investor trust and provide a fair and well-regulated economic environment.
Hiring a qualified firm like DataTracks for iXBRL instance preparation for CIPC filing has several advantages, including knowledge, accuracy, time savings, risk reduction, and peace of mind. Get in touch with us at + 27 10 446 9061 or mail us at enquiry@datatracks.co.za and avoid the risk of penalties.
