Update on the deadline for beneficial ownership submission
Beneficial ownership filings are now an important administrative requirement. The CIPC introduced these procedures on 24 May 2023. This was following the Companies Amended Regulations, 2023.
Ian Hayes and Sasha Schermers from Cliffe Dekker Hofmeyr provided advice. The advice was based on the latest updates from CIPC. This information can be found in Customer Notice 5 of 2024.
They explain who must register beneficial ownership. They also discuss the new deadlines for filing with the CIPC. Additionally, they outline the consequences of not registering beneficial ownership.
Who is obligated to register beneficial ownership
Companies not impacted must reveal who owns them, following Regulation 32B of the Companies Regulations.
As per the Companies Act, companies that are impacted are required to record the details of individuals who possess a beneficial interest of 5% or more in the company's securities, in compliance with Regulation 32A of the Companies Regulations.
An affected company is a:
- public company;
- state-owned company; or
- private company that is a “regulated company” for takeover law purposes – namely where more than 10% of the shares in the company have been transferred among non-related persons within the preceding 24 months. Subsidiaries of regulated companies are also affected companies.
The proposed Companies Amendment Bill wants to alter the requirements for a private company to be considered a "regulated company." This would also make it an "affected company" for disclosing beneficial interests.
The new test will inquire about the number of shareholders, which must be at least 10. It will also ask about the annual turnover and asset value, as mandated by the regulations.
It's important to know if a company is affected or not affected by new regulations for beneficial ownership filings. The filing requirements will be different depending on this distinction, although the exact details are still unknown.
When is the due date for beneficial ownership submissions
The Companies Act and Regulations do not clearly say when non-affected companies must make beneficial ownership filings. The CIPC's guidance notes and customer notices handle this issue instead.
The CIPC announced that new companies must provide details about their beneficial owners within 10 days of being formed. They also need to update this information within 10 days of any changes. Companies formed before May 24, 2023 had to include this information in their annual reports. Now, they must submit their beneficial ownership details separately by May 24, 2024. Companies must also update this information within 10 days of any changes.
The CIPC announced that new companies must provide details about their beneficial owners within 10 days of being formed. They also need to update this information within 10 days of any changes. Companies formed before May 24, 2023 had to include this information in their annual reports. Now, they must submit their beneficial ownership details separately by May 24, 2024.
Starting on 1 April 2024, the CIPC will implement a new rule called "hard-stop functionality." This rule will have important effects on companies that do not follow the deadline of 24 May 2024. Starting on 1 April 2024, the CIPC will enforce a new rule called "hard-stop functionality." This rule will impact companies that miss the deadline of 24 May 2024. The reason for this is that all companies should have finished their first year under the Companies Regulations by then.
What are the consequences if beneficial ownership registrations are not filed
If you miss the deadline, you may have to pay fines. You may also be unable to submit annual returns. This could result in deregistration by the CIPC.
Section 171(7) of the Companies Act states that the CIPC must issue a compliance notice after investigating a breach. If the company does not comply, the CIPC can apply to the court for an administrative fine. If the company does not comply, the CIPC can apply to the court for an administrative fine.
The CIPC may face questions about its authority to stop more yearly reports from being filed. These questions could result in legal battles in administrative law. This could lead to legal battles in administrative law.
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