Who counts as a beneficial owner of your company
Who CIPC treats as a beneficial owner of a South African company, which entities must declare them, and why a wrong declaration is an offence.
By Achekam · · 5 min read · For Running a business businesses in South Africa
For a company owned by two founders who each hold half the shares, "who owns it?" has an obvious answer. Add a family trust as a shareholder, a holding company in between, a silent investor with the right to appoint a director, or a shareholders' agreement that gives one person a veto, and the answer becomes much less obvious.
That question now has legal weight. South African companies must tell CIPC who their beneficial owners are, and the definition reaches past the share register to whoever really owns or controls the company. This article explains who counts, which entities must declare, what happens if the information is wrong, and how to prepare the information for whoever files it.
Ultimate ownership or effective control
CIPC defines a beneficial owner as an individual who directly or indirectly ultimately owns, or exercises effective control of, a company. It names the routes that count: voting rights, the right to appoint or remove directors, and a chain of ownership.
Three ideas sit inside that definition.
An individual. A beneficial owner is always a natural person. A holding company or a trust can be a shareholder, but it is never the end of the search. You keep going until you reach the people behind it.
Ownership or control. Either is enough. Someone who owns no shares at all can be a beneficial owner because of the control they exercise, and someone who holds shares through several layers can be one because of what they ultimately own.
Directly or indirectly. Holding shares in your own name is direct. Holding them through another company, or through a trust, is indirect. Both count.
Voting rights, directors and chains of ownership
The three routes CIPC names are the practical tests to work through for your company.
| Route | Question to ask |
|---|---|
| Voting rights | Who, in the end, decides how the votes attached to the shares are cast? |
| Appointing or removing directors | Who can put a director on the board or take one off? |
| Chain of ownership | If a shareholder is a company or trust, who stands behind it, and behind that? |
A worked example in words: a company's shares are held half by its founder and half by a holding company. The holding company is owned by a family trust. The founder is plainly in view. But the search does not stop at the holding company, or at the trust: the individuals who ultimately own or control through that chain also have to be identified. And if an investor, who holds nothing, has a contractual right to appoint a director, that right is one of the routes CIPC names, so the investor needs to be considered too.
When the structure is anything other than simple, ask your company secretary or accountant to map it with you, layer by layer, and keep the map.
Which entities must declare, and the exception
CIPC says all corporate entities registered with it, except co-operatives, must submit beneficial ownership information, effective from 24 May 2023. The requirement comes from amendments to the Companies Act made by the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act 22 of 2022.
It also connects the declaration to the annual return. CIPC says that from 1 July 2024 all companies and close corporations must submit beneficial ownership declarations with their annual returns, and that a non-compliant entity cannot finalise its annual return. Late filing can lead to penalty fees and, ultimately, deregistration.
The timing rules, including what happens when ownership changes during the year, are covered in beneficial ownership filing and update deadlines.
CIPC's beneficial ownership page explains who counts as a beneficial owner, why the register was introduced and what companies must file.
SARS asks a similar question
CIPC is not the only body that asks. SARS's guide to the ITR14 company income tax return says SARS requires disclosure of the beneficial ownership of a company, meaning the individuals who ultimately own or effectively control it, on every ITR14 for the 2022 tax year or later. SARS notes that its approach may differ from CIPC's requirements.
So the same company may give the same answer to both bodies, but should check each one's own rules rather than copying one filing into the other. The differences are set out in beneficial ownership on the ITR14 versus CIPC.
False or misleading information is an offence
CIPC says that providing false or misleading beneficial ownership information is an offence under the amended Companies Act, and can lead to referral to the National Prosecuting Authority for criminal prosecution.
That changes how the declaration should be approached. It is not an administrative form to be filled in from memory. Before anything is filed, someone should check the share register, any shareholders' agreements, trust deeds for any trust in the chain, and any document that gives someone a right to appoint directors.
Giving the firm you appoint what it needs
Many companies have their accountant or company secretary file the declaration. In Achekam, a business appoints its accounting firm by the firm's Achekam address or firm code, as accountant, auditor, tax practitioner, payroll provider or adviser, with an access level, and the firm accepts or declines. Appoint the firm in the role that matches the work you are asking it to do.
Then give it the documents. Achekam's Document Centre is a folder-based store where a business uploads files or whole folders, previews, downloads, renames, moves, tags, archives and searches them, and a new version keeps the earlier ones. A folder for beneficial ownership, holding the share register, the ownership map, shareholders' agreements, trust deeds and ID copies of each beneficial owner, gives the firm what it needs. When something changes, upload the new version; the earlier one stays, showing what was true when the last declaration was made.
Start with the map
Draw your company's ownership on one page, from the company up to every individual at the top of every chain, and mark anyone with control through votes or the right to appoint directors. Check it against the documents, file it where your adviser can see it, and update it whenever a shareholder, trust or agreement changes.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
