Are you compliant? Deadline approaching for beneficial owners

Categories

Are you compliant? Deadline approaching for beneficial owners

by | Aug 24, 2023

AMENDMENT TO THE GENERAL LAWS AMENDMENT ACT, NO 22 OF 2022
(ANTI-MONEY LAUNDERING AND COMBATTING TERRORISM FINANCING)

In terms of the latest amendments made to the Companies Act, 71 of 2008, the Trust Property Control Act, 57 of 1988 and the Financial Sector Regulation Act, 9 of 2017, all Companies, Close Corporations and Trusts must ensure that their “beneficial owners” are declared with CIPC or the Master and SARS before or on 30 September 2023.  Failure to comply with this amendment renders all “beneficial owners” exposed to substantial fines and/or even imprisonment.

Fines imposed for non-compliance:
  1. Companies/Close Corporations (Section 50 of the Companies Act):
    A court-ordered administrative fine not exceeding the greater of 10% of the Respondent’s turnover during the non-compliance period up to R1 million.
  2. Trusts (Section 11A(1) of the Trust Property Control Act):
    Failure to comply constitutes an offence punishable by a fine not exceeding R10 million, imprisonment, not exceeding 5 years, or both.
Who is affected by these amendments?
  1. Companies;
  2. Close Corporations;
  3. Trusts.
What is a “beneficial owner”
  1. Any person who:

    i) has a beneficial interest in the shares of a company;

    ii) Exercises, or controls the exercise of, voting rights associated with shares of a company/Close Corporation/Trust;

    iii) Exercises, or controls the exercise of, the right to appoint or remove directors/members/Trustees of a company/Close Corporation/Trust;

    iv) Is able to exercise control, including through a chain of ownership or control, of a legal entity, body of persons, partnerships, or a person acting under the provisions of a trust agreement (i.e. a Trustee or Beneficiary).

Reason for the implementation

Due to South Africa’s shortfall in fulfilling the 11 recommendations made by the Financial Action Task Force (FATF) in 2019, which recommendations were implemented to combat terrorism and financing and money laundering and is effective from 1 April 2023.

Deadlines for updating beneficial owners:
  1. Companies must submit their updates with their Annual Returns, but not later than the deadline 30 September 2023.
  2. Trusts must update the register on the Master’s website and with SARS on its Income Tax/VAT profile by no later than 30 September 2023.
Required documentation/information which must be provided and available:

Companies:

  1. Company registration documents;
  2. Share Certificates;
  3. ID documents of each shareholder – latest physical addresses of each to be confirmed;

Close Corporations:

  1. Registration documents;
  2. ID documents of members – latest physical addresses of each to be confirmed.

Trusts:

  1. Letter of Appointment of Trustees;
  2. Copy of Trust Deed;
  3. ID documents of beneficiaries, including guardians, should beneficiary/ies be minors;
  4. ID document of Founder;
  5. ID documents of Trustees;
  6. Addresses of Founder, Trustees and Beneficiaries.

Our Most Recent Articles

Would you like to save time? Consider subscribing to our monthly newsletter here.