Disclosure of Beneficial Ownership Information

Disclosure of Beneficial Ownership Information

Prior to the amendments, South Africa was not fully compliant with the G20 Principles regarding access to beneficial ownership information of legal entities and trusts. The General Laws Amendment Act amended five different Acts to ensure the establishment of beneficial ownership of legal entities.

The two Acts that were amended and affect us are:

The Trust Property Control Act (TPCA)

The Companies Act - Sections 55

In this article, we will address a few questions to help us understand what this entails and how it affects us as business owners or as trust founders, trustees, or beneficiaries.

Who is a Beneficial Owner?

In the case of a company, a beneficial owner is defined as a natural person who holds a shareholding of 5% or more in a legal entity, or a natural person who exercises effective control over the entity. When we refer to a 'natural person,' we mean a physical individual who benefits from the existence of the legal entity.

Regarding a trust, a beneficial owner includes the founders, trustees, any named beneficiaries, and any individual who exercises effective control over the trust. Similarly, we are referring to the natural person who stands to benefit from the trust.

What needs to be done?

According to the Trust Property Control Act, trustees must:

· Establish and document the beneficial ownership of the trust.

· Maintain a record of the prescribed information related to the beneficial owners of the trust.

· Submit a register to the Master's Office containing the prescribed information about beneficial

owners of the trust.

· Ensure that the information in the register is kept up to date.

On the other hand, companies are required to maintain a register of individuals with a beneficial interest of 5% or more in an entity. The register should be filed with the CIPC (Companies and Intellectual Property Commission), and this information should be updated annually when submitting the annual returns.

When did the Amendments come into effect? Is there a deadline to update information?

The amendments came into effect on April 1, 2023, entities have until September 30, 2023.

Who will have access to the Beneficial Ownership information?

Beneficial ownership information is not accessible to the public. Only law enforcement and competent authorities will have access to this information.

Are there any penalties for non-compliance?

Yes, for Companies - Section 214(1)(b) of the Companies Act, it is an offense to provide false or misleading information. Failure to comply with the new regulations and provide the beneficial ownership register will result in a court-ordered administrative fine of 10% of turnover or R1 million, whichever is greater.

For Trusts, if a trustee fails to comply with the request by the Master or fails to comply with an obligation will be liable for a fine of up to R10 million, or imprisonment for five years, or both.

Contact Allegra Accounting and Tax Services (Pty) Ltd to assist your company or trust to become compliant with the new regulations issued before 30 September 2023.

Contact details:

hello@allegra-accounting.co.za

+27 72 595 0988