Recently there have been significant amendments made to the Companies Act and the Trust Property Control Act. The new requirements relate to “Beneficial Ownership information” and compulsory submission of this information to Regulatory Bodies. Submission of this information is specifically required to be performed to the Intellectual Property Commission (“CIPC”), for all CIPC-regulated entities, and also to the Master’s Office, for all Trusts. A large emphasis is placed on the accuracy, completeness and truthfulness of the information submitted to these Bodies.
Impact of the change on the requirements by CIPC
In terms of existing legislation, all Companies should maintain certain records such as a share register, director’s register and an updated registered address. The new amendments based on the already existing law, now expand the requirements with some of the additional requirements to include the authority of the CIPC to at any time, request information such as the general company details, registered address and the MOI.
In terms of “Beneficial Ownership Information”, an additional requirement to file the information with CIPC has been imposed. It is ultimately the responsibility of the directors of the entity to submit the required information, or the submission may be performed by another party on their behalf, by granting the required mandate.
Impact of the change on the requirements by the Master’s Office
There have been significant changes for Trusts, we caution Trustees to research these vital changes to ensure their Trust remains compliant. What we will focus on in this notice is the record-keeping and submission requirements.
Up to now there have been limited information-related regulations implemented by the Master’s Office. The new regulations place a large emphasis on submitting and keeping information up to date with the Master’s Office. Therefore, submission of “Beneficial Ownership Information” will be required. It is ultimately the responsibility of the Trustees of the Trust to submit the required information, or the submission may be performed by another party on their behalf, by granting the required mandate.
What is a “Beneficial Owner”
A beneficial owner is defined by the Companies Act as:
“In respect of a company, means any individual who, directly or indirectly, ultimately owns that company or exercises effective control of that company, including through…”
Simply put, the ultimate individual/natural person (“warm body”) that holds any direct or indirect interest by means of control or benefits to be obtained, is considered to be a Beneficial Owner.
In terms of a company context, this will be the ultimate natural person shareholder, holding at least a 5% interest.
In terms of a close corporation, the beneficial owners will be the members.
In terms of a Trust the beneficial owners will be deemed to be the founder, Trustees, named beneficiaries of the Trust or if not a named beneficiary, a beneficiary who has accepted a distribution from the Trust.
What should be filed?
- Share register
- Beneficial owner register (containing all personal information including items such as personal tax number, email address, gender etc.)
- Mandate to authorise the filer to file the above with CIPC
- Certified IDs of the beneficial owners / certified passport if applicable
- Disclosure form reflecting the hierarchy of entities and other legal forms
With the Master’s Office
Each Trust is required to complete an Excel schedule as provided by the Master containing all “Beneficial Ownership information” (all personal information including relevant dates, email addresses, gender etc.). This has to be submitted to the Master’s Office.
When should it be filed?
CIPC: The deadline for initial submission as per legislation is currently unclear, however, the general understanding is that it should be submitted as soon as an entity has the information ready. Thereafter confirmation of the information as per CIPC’s records will form part of the yearly Annual Return submission requirements. Furthermore, should there be any changes in the Beneficial Owners of an entity, the updated information should be submitted to CIPC as soon as possible, but no later than 10 business days after the aforesaid change – this also applies for any newly registered entities.
The Master’s Office: As soon as possible. We would like to note that there is still some guidance that the Master’s Office is aiming to issue, however, we would suggest no delay in submission. Any changes also have to be updated as soon as it occurs.
Who should file the beneficial owner information?
CIPC: The following entities are required to file the Beneficial Owner information with CIPC:
- Profit companies
- Non-profit companies
- External companies; and
- Close Corporations.
Note that an entity that is still in the de-registration process, whether it be voluntary or compulsory, is still required to file the Beneficial Owner information.
Master’s Office: All Trusts are required to file the Beneficial Owner Information with the Master’s Office (even so-called dormant Trusts).
Who will have access to the above information?
The information will only be made available to certain persons and professional and regulatory bodies including but not limited to, the National Prosecuting Authority, Public Protector, South African Revenue Service, and Financial Intelligence Centre. These entities and authorities must request access to the information of the beneficial ownership register in writing, whereas the CIPC or the Master’s Office will grant access based on the qualifying terms of the request.
Implications of non-compliance
CIPC: Non-compliance with the requirements of the beneficial ownership register submission to CIPC is an offence in terms of the Companies Act and may attract a non-compliance notice and an administrative fine based on turnover, while also noting that it is an offence to knowingly provide false or misleading information in any circumstances in which the Companies Act requires the provision of information.
Master’s Office: All Trustees may be liable for any non-compliance in terms of the Trust requirements and Trust Property Control Act.
Regulatory changes as per the above have been imposed very recently. There are still a number of factors where clarity on interpretations is uncertain, however, this should not prohibit anyone from proceeding with submissions and adhering to the requirements as per the current understanding.
We encourage you to reach out to our secretarial division at firstname.lastname@example.org should you have any questions or require assistance with submissions and collating the above information in preparation for submission.
Please note that RTA will soon launch a compliance project specifically keeping the above amendments and additional submission requirements in mind. This will involve communications with clients obtaining the latest records as applicable as a “good housekeeping exercise” as well as identifying necessary updates or missing information including correction thereof in preparation for submission.
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 adviser for specific and detailed advice. Errors and omissions excepted (E&OE).