Unlocking Secrets of Beneficial Ownership as required by CIPC

Beneficial Ownership Calculator: https://www.swiftreg.co.za/swiftreg/p... Beneficial Ownership has become a compulsory registration for ALL companies regardless of their size. It is mandated to identify and record the actual individuals or "warm bodies" who ultimately own or control the company. Whilst the intention may be noble; as it is intended to curb and expose those involved in money laundering and terrorism financing by identifying actual individuals behind each corporate structure, it does place an additional administrative burden on every business owner. This legislation which came into effect in June 2023 requires all newly registered companies to complete a BO register within 10 days of its registration. Furthermore, this register is required to be updated each and every year on the anniversary date of the company’s registration - even if no changes in beneficial ownership have taken place. In addition, every time there is a Beneficial Ownership change the register is required to be updated with CIPC. Beneficial Ownership is not only about ownership or shareholding but also power and influence in a company. So, what is the definition of a Beneficial Owner? It is only those individuals who hold more than 5% of a company's shares in their personal capacity or who exercise significant control over the company. For example, a person with the authority to appoint or remove the company directors, or a person with voting rights in the company which effectively give them control in the company. This definition therefor also includes those members of Non-Profit Companies who have voting rights as they are influencing the decisions of the company. Beneficial Owners can only be individuals and not entities like Trusts or Holding companies as the purpose is to record the actual people and not the structures. Therefore, if a Trust holds the shares in a company, then the Trustees and Beneficiaries of the Trust are considered the Beneficial Owners of the company as they are the warm bodies who exercise control. So many individuals can be defined as beneficial owners of a company even if they do not directly own shares. To take the guess work out of this complex process we have designed a very simple Beneficial Ownership Calculator using a number of eliminating questions to determine the number of Beneficial Owners your company actually has and whose details are required to be submitted to CIPC. The link is in the description. There are number of compulsory supporting documents required by CIPC to complete the application. The first document you will need is a copy of your latest ID issued by Home Affairs. It must be the most recent issued ID or it will be rejected as CIPC verifies your ID against the Home Affairs database will only accept the latest issued date of the ID. Foreigners are required to use valid passports. You will then need to compile a Securities Register which needs to be complaint with Regulation 32 which sets out the information required in the register. It needs to list ALL of the shareholders of ALL of the company’s issued shares i.e. 100% and may include other companies or Trusts. It needs to include details of each shareholder - Name, ID number - in the case of a company the registration number, physical address, contact details as well as the number and class of shares. Additionally, you will need to compile the Beneficial Ownership register which is a list of all the individuals who own more than 5% of the company shares in their personal names or individuals who exercise control over the company. This information is similar to that of the Securities Register but includes the three control questions, namely: Does the individual have the ability to appoint or remove directors? 2. Do they have voting rights and 3. Do they have the ability to influence the management of the company? Unfortunately CIPC does not provide templates for the Beneficial owner nor the Securities Registers. Once both these registers are finalised and saved as in a Pdf format, you are ready to file with CIPC. One of the first questions CIPC poses during the online submission process is whether your company is an affected company, a non-affected company with beneficial ownership or a non-affected company without beneficial ownership. Most people are confused by this as they have never heard of these classifications. So, let me explain. Affected companies are defined as State Owned Companies, Public companies or private companies that are subsidiaries of a holding company. This means that all other companies are classified as Non affected companies and constitutes the bulk of all filings. It also the only category that receives an instant certificate once the submission is complete.