DIRECTORS, MEMBERS & TRUSTEES | IMPORTANT CHANGES TO YOUR RESPONSIBILITIES

Recent changes in legislation have resulted in new obligations for directors of companies, members of close corporations and trustees of trusts. With effect from 1 April 2023, directors, members and trustees are required to record, maintain and lodge with CIPC and the Master of the High Court, information relating to the Beneficial Ownership of companies, close corporations and trusts.
 
Not only are directors, members and trustees responsible for lodging these Beneficial Ownership Registers, but they are also responsible for maintaining these registers and notifying CIPC and the Master of the High Court of any changes to beneficial ownership.
 
Who is defined as a beneficial owner?
In respect of a company or close corporation, an individual who, directly or indirectly, ultimately owns 5% or more of that company or close corporation by way of:

1. holding shares/membership in the company/close corporation, or
2. having a voting right in the company/close corporation, or
3. having a right to appoint or remove a director of the company or a member of the close corporation, or
4. having the ability to exercise control of the company or close corporation.

In respect of a trust:

1. the founder, or
2. the trustees, or
3. named beneficiaries, or
4. any individual who exercises effective control of the trust.

The beneficial owner is always a natural person. Where the shareholder of a company is another company or a trust, or the member of a close corporation is a trust, the beneficial owner is the shareholder, in the form of a natural person, of this other company or subsequent companies, or the founder, the trustees, the named beneficiaries or any individual who exercises effective control of this other trust.
 
What do you need to do?
Directors, members and trustees are required to record and maintain beneficial ownership information in a Beneficial Ownership Register. This information must be lodged with CIPC, and where changes in beneficial ownership occur, these changes must be communicated to CIPC within 5 working days of the change, or as soon as possible thereafter to the Master of the High Court. The information must be lodged using the relevant online portals.
 
The documentation required to be submitted is extensive and the process of collating this can take some time. The information required for each beneficial owner includes:

For trusts:

• full names;
• date of birth;
• nationality;
• official identity document number, country of issue and type of document as it appears on the identity document;
• a certified copy of the identity document;
• residential address and alternate address to serve notices to, if different from residential address;
• alternate means of contact (e-mail address and mobile number);
• the basis on which the person is the beneficial owner of the trust.

For companies:

• full names;
• official identity document number;
• a certified copy of the identity document;
• personal income tax number;
• postal and physical address;
• e-mail address;
• mobile number;
• interest type;
• demographic.

The beneficial ownership information can only be lodged by the directors, members and trustees. However, they can give the authority to lodge the information on their behalf to an administrative agent under Power of Attorney.
 
Trustees have the added responsibility to provide details of and keep on record all Accountable Institutions which they use as agents to perform trustee functions, and who provide any services to them. Trustees are also required to disclose their position as trustees to any Accountable Institution with which they engage in the capacity of trustee.
 
Consequences of non-compliance
Should a director, member or trustee fail to comply with these new obligations, the director, member or trustee will be committing an offence, punishable with a fine not exceeding R10 million or imprisonment for a period not exceeding 5 years, or both.
 
Although the effective date for the above was 1 April 2023, directors and members have 6 months to lodge the beneficial ownership information with CIPC. As there is no grace period given to trustees to lodge the beneficial ownership information with the Master of the High Court, this should be done as soon as possible.
 
How can MGI Bass Gordon assist you?
We can assist with:

• compiling the Beneficial Ownership Register.
• lodging the beneficial ownership information with CIPC or the Master of the High Court.
• maintaining the Beneficial Ownership Register annually.

Should you require our assistance, or should you require further information, please contact your MGI partner or our Statutory Compliance division on 021 405 8500, or you can reach us by e-mail at info@bassgordon.co.za