Important amendments to the Companies Act and Regulations
Important amendments to the Companies Act, No. 71 of 2008 (“Companies Act“), which came into effect on 1 April 2023 and the Companies Regulations, 2011 (“Regulations“), which came into effect on 24 May 2023, have implications for companies registered and incorporated in accordance with the laws of South Africa.
* Thando Thabethe, Associate, and Nadia Lategan, Candidate Attorney, Corporate/M&A Practice Johannesburg, also contributed to this insight.
On 1 April 2023, certain sections of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act No. 22 of 2022 (GLAA) came into effect. As a result, amendments have been made to the Companies Act and Regulations, which impose enhanced reporting obligations on all South African companies. These amendments align the Companies Act with the purpose of the GLAA, which is to enhance the regulations around anti-money laundering and the combating of terrorist financing in South Africa. The amendments to the Companies Act and the Regulations (“Amendments“) require companies to file certain information in respect of those persons (juristic and natural) who hold a beneficial interest in, or have effective control over, the company. The Companies and Intellectual Property Commission (CIPC) is mandated through the Amendments to require this information be provided to them, and a failure to provide the required information to the CIPC will constitute non-compliance with the Companies Act and the Regulations.
Impact on businesses
Depending on the form of the company, a business must: (a) file its securities register with the CIPC together with its annual returns; and (b) may also have to file, with its annual return, a separate register containing the details of those persons (both natural and juristic) who hold a beneficial interest in the company equal to or in excess of 5% of the total number of issued securities of any class of securities issued by the company, together with the extent of those beneficial interests (“BI Register“).
In terms of the Amendments (specifically the amendments to sections 33(1) and 50 of the Companies Act), all companies are required, when filing their annual return with the CIPC, to file, in addition to their annual financial statements (where applicable), their securities register.
Further, all affected companies (as defined in the Companies Act) are required to file a BI Register with the CIPC. This is a register of all persons (both natural and juristic) who own a “beneficial interest” in the company. Further, in terms of the new section 56(7)(a) of the Companies Act, shareholders of listed companies must disclose to such listed company the identity of all persons with a beneficial interest in the securities registered, in the name of such registered shareholder. The Companies Act defines a “beneficial interest” as: “the right or entitlement of a person, through ownership, agreement, relationship or otherwise, alone or together with another person to (a) receive or participate in any distribution in respect of the company’s securities; (b) exercise or cause to be exercised, in the ordinary course, any or all of the rights attaching to the company’s securities; or (c) dispose or direct the disposition of the company’s securities, or any part of a distribution in respect of the securities”.
Read the full Insight here.