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CIPC updates deadline for SA business to comply with beneficial ownership

Home Business Management CIPC updates deadline for SA business to comply with beneficial ownership

ALL South African companies and entities were required to submit beneficial ownership information to the CIPC (Companies and Intellectual Property Commission) before October 1, 2023. Companies that did not meet the deadline have been given a grace period until their next CIPC annual return is due. At this time, the company will need to complete the process within thirty days to avoid falling foul of the new rules and risk penalties.

This is according to local startup InfoDocs, which has developed a simple way to file beneficial ownership. InfoDocs founder and CEO, Joshua Alexandre, says, “Over 6,000 beneficial ownership declarations have already been submitted via InfoDocs by the October 1 deadline. The majority of these were by professionals who help privately held businesses to manage CIPC compliance.”

New transparency rules could prevent another state capture

The beneficial owners are those individuals who ultimately own or control a company, either directly or indirectly. Although the Companies Act requires a register of those who own or control 5% or more of legal entities,  the new laws provide greater transparency about ownership and control structures, which the CIPC will maintain in a central database. The intention is to avoid money laundering and combat terrorism financing.

Says Alexandre, “The consequences of not knowing who owns and controls companies in South Africa have been dire. Linking beneficial ownership for all companies and close corporations is an important step in preventing abuse, and avoiding further state capture in South Africa.”

Private companies (PTY), close corporations (CC), non-profits (NPC), and state-owned companies (SOC) all need to file beneficial ownership. Any individual or entity holding more than 5% beneficial ownership of a company or close corporation must submit a register of beneficial owners to CIPC. The beneficial interest in relation to a company’s securities is entitlement through ownership, agreement, relationship or otherwise.

InfoDocs says that companies can access the online system directly on CIPC’s website, but they are put off by the complexity of the inefficient process and prefer to outsource the job to professionals. This can be a costly exercise and consequently over 72% of businesses are not compliant.

The InfoDocs system is used by professionals and SMEs to add their company directly from CIPC, produce professional templates and store company records securely online.

“Cost is always important, but non-compliant companies run the risk of attracting penalties, legal fees and director liability. InfoDocs simplifies company secretarial services for directors and shareholders.”

The company says that it works closely with the CIPC, as the software aids the CIPC in meeting its mandate. Companies use InfoDocs to submit annual returns, maintain statutory registers and submit documents using templates. The software sends alerts and notifications of submission deadlines. From the dashboard, companies can file returns and make secure payments directly to the CIPC.

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