Business owners across the nation are being cautioned that their companies may be unable to trade if they fail to meet the requirements in compliance set by the Companies and Intellectual Property Commission (CIPC), specifically the registration of their beneficial ownership information by the 30th of November this year. The approach of this deadline has raised concerns across the country’s business community, with InfoDocs, a service provider to over 90,000 South African companies emphasising the critical nature of compliance. InfoDocs, as a conglomerate supports thousands of directors, members and shareholders. It has highlighted the serious consequences awaiting those who fail to comply with CIPC regulations.
Non-compliant companies risk deregistration, an outcome that has already affected over 650,000 businesses, largely due to missed annual returns, as reported in the CIPC’s recent annual report. Deregistered companies face several repercussions, including being unable to legally trade, invoice clients, or access their assets. In extreme cases, the state has the authority to absorb the assets of non-compliant companies. InfoDocs founder and CEO Joshua Alexandre warns that such deregistration could even lead to the suspension of business bank accounts, potentially paralysing daily operations and asset ownership. He describes this situation as a “nightmare” for businesses, yet one that is entirely preventable through timely compliance. The requirement to register beneficial ownership information stems from South Africa’s recent commitment to improving transparency and addressing the country’s placement on the Financial Action Task Force (FATF) greylist.
The warning by the government has come rather late. Pretoria should decentralize its authority to the provinces to keep track and regulate business registrations and activities. It is impossible for the national government to keep track of all the various private business outlets across South Africa and closing down those companies that were not able to comply with the regulations of the CIPC in time creates unemployment. Keeping track of over 650,000 business is not a minor task and should be delegated in authority and power to the provincial administrations and municipalities. They could relay the registration information back to the central authority of the national government. President Cyril Ramaphosa and the coalition partners of the Government of National Unity (GNU) need to consider this. The current rigid status quo of Pretoria making all major decisions needs to change. Delegating powers to the provinces should allow businesses to have breathing space.
It should allow them also to keep their assets and bank accounts.
By enhancing governance around beneficial ownership, South Africa aims to meet international standards and improve its financial reputation. To assist businesses, Alexandre offers a few practical steps to streamline compliance and ensure timely registration with the CIPC. For instance, Alexandre notes that companies cannot file their annual CIPC returns if they have not registered their beneficial ownership within the same calendar year. Beneficial ownership registration involves capturing essential information on a company’s share register, which records the equity distribution among shareholders. Businesses will need to gather supporting documents, including names, identification numbers, addresses, and copies of IDs for all shareholders holding over 5% equity. While companies may choose to submit beneficial ownership information directly with the CIPC, which could save roughly R100, Alexandre cautions that the process can be daunting for those unfamiliar with the regulatory landscape.
Moving to re-register on the CIPC is like skating on thin ice. One false move and you could go crashing through the cold layer to the watery depths below. Re-registration of the company must be done before the beginning of the holiday season and the end of the work year. The compliance within this time frame of the month of November must be done or assets and bank accounts will be frozen. Filing your annual CIPC returns when you have registered your beneficial ownership of said company within the work year of the calendar. To avoid confiscation of assets and the freezing of your bank accounts it will be important to follow Alexandre’s recommendations. Non the less it should be the role of provincial governments to register the businesses in their home jurisdiction given they have more direct communication would the stated businesses.
However, it is also best to have to consult with a lawyer experienced in regulatory practices to ensure you are registered.
Article written by:
Yacoob Cassim
Journalist at Radio Al Ansaar
