We would like to inform you about the implementation of the Beneficial Ownership Requirement and the implications of South Africa being placed on the grey list by the global financial crime watchdog, the Financial Action Task Force (FATF). It is crucial to understand the steps that need to be taken to ensure compliance and avoid any potential penalties. Please take a moment to review the following important details:
1. Grey Listing Background
Earlier this year, South Africa was placed on the FATF’s grey list due to its failure to meet the required standards in combating money laundering and financing of terrorism. The FATF audit assessed the effectiveness of South Africa’s controls in these areas.
2. Remedial Action
Register of Beneficial Owners One of the measures South Africa must implement is the establishment of a register of Beneficial Owners for all companies and trusts. Given that shareholding in private companies and beneficiaries of trusts are not currently recorded in a centralized database, a new system has been developed to address this requirement. Consequently, legislation has been enacted to make reporting on beneficial ownership mandatory.
3. Definition of Beneficial Owner
A Beneficial Owner refers to an individual who ultimately stands to benefit from a company or trust, or who has control over a company or trust.
4. Access to the Register
The register of Beneficial Owners will not be accessible to the public but will be available exclusively to law enforcement agencies and to SARS as well.
5. Companies: Reporting Requirements
The Companies and Intellectual Property Commission (CIPC) has implemented a reporting system for all companies to disclose their Beneficial Ownership structure. The deadline for submission is September 30, 2023. As part of this process, the majority of directors (50%+1) of a company must confirm the accuracy of the submitted information. This will be done electronically via the CIPC website.
6. Trusts: Reporting Requirements
The Master’s Office has introduced a reporting system for all trusts to disclose their Beneficial Ownership structure. Although no official deadline has been announced, it is expected to align with the September 30, 2023 deadline. The reporting process for trusts is relatively simpler, but the information required is more comprehensive. Over and above beneficiary details the trustee details, as well as the Trust’s incorporator’s details, must also be reported.
7. Non-Compliance Consequences
Registered accountants and auditors are legally obligated to encourage compliance with relevant laws and regulations (NOCLAR). Failure of a client or employer to comply with these laws must be reported to the appropriate authorities. Non-compliance may result in fines and/or imprisonment for the responsible individuals, including the accountant/auditor. CIPC has various enforcement measures at its disposal as well, including declaring a director as delinquent, imposing penalties on the company, and obtaining a court order to ensure compliance. Trustees of trusts that fail to comply may face fines of up to R10 million and/or prison terms of up to 5 years.
8. Process: Companies
We are prepared to handle the submission of Beneficial Ownership information to CIPC on your behalf. To initiate this process, we require the details of the Ultimate Beneficial Owner. It is crucial that the director details registered with CIPC are accurate, as directors will need to respond to two one-time passwords (OTP) via SMS and email. If director details need to be updated with CIPC, a COR39 submission will be necessary.
9. Process: Trusts
We can assist with the submission of Beneficial Ownership information to The Master’s Office. We will provide you with a schedule to complete the required information. We will then cross-check it against our records and engage with you if any discrepancies arise before submitting it to The Master’s Office.
10. Ongoing Obligations
Moving forward, any changes in Beneficial Ownership must be promptly updated. At present, it is unclear whether yearly confirmations will be required.
11. Cost Breakdown
Trusts: The cost for submitting Beneficial Ownership information for each trust is R2,000 (excluding VAT).
Companies: The cost for submitting Beneficial Ownership information for each company is R3,500 (excluding VAT), assuming all beneficial owners and directors are natural persons. For more complex ownership structures, a separate quote will be provided.
12. Minimum information required (not a comprehensive list).
- Mandate for us to lodge. (Preparation included in the submission fee)
- Applicable director’s or trustee approvals and declarations. (Preparation included in the submission fee)
- Share register or copies of share certificates. (If no certificates are available, we can assist in the creation)
- Director contact details at CIPC must be up to date. (If director details need to be updated with CIPC, a COR39 submission must be made)
- Certified ID’s of directors, shareholders, trustees and trust beneficiaries.
- Trust information register. (To be completed by trustees and template to be provided by us)
Please note that submissions will be processed on a first-come, first-served basis, and it is essential to adhere to the deadlines. Should you wish for us to proceed, please confirm this via email as soon as possible.
Thank you for your attention to this matter. Should you have any questions or require further assistance, please do not hesitate to contact us. We are here to support you in ensuring compliance with these regulations.
Remember: We’ve got this!