C&A Friedlander Attorneys

In response to the Financial Action Task Force announcing that South Africa had been added to its grey list of countries with insufficient anti-money laundering and terrorist financing controls, the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 22 of 2022 (“the GLAA”) was enacted in April 2023.

The GLAA amended the Companies Act, 71 of 2008 (the “Companies Act”) to require companies to keep a record of all natural persons who ultimately own or control the company, and to file this information with the Companies and Intellectual Property Commission (“the CIPC”) on an annual basis.

The information to be disclosed includes the identity or passport number, contact information and physical addresses of the individuals directly or indirectly holding more than 5% of the company’s issued securities. The CIPC reporting form also requires companies to indicate any complex ownership structures, including juristic persons and trusts.

As of 11 December 2023, the CIPC has implemented a system whereby annual return filings can only be submitted once beneficial ownership filings are complete. Should a company fail to adhere to this requirement by not completing its beneficial ownership information and filing its annual returns with CIPC, the company will run the risk of being deregistered and may result in possible business restrictions as well as non-compliance with the Companies Act. As a result, serious reputational damage may be caused to the company affecting its business activities. This requirement originally followed a phased roll-out, however, as of 1 April 2024 has become mandatory.

There is therefore a clear trajectory to ensure accountability and transparency as well as minimise white-collar crime within the corporate space in South Africa and it is therefore crucial for companies to be cognisant of the requirements of beneficial ownership to avoid legislative penalties and reputational harm.

Written by Daniel Marcus

You may contact me at daniel@caf.co.za or on 021 487 7900 for assistance.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).