Understanding Beneficial Ownership Regulations under the CIPC and Companies Act in South Africa

In South Africa, as in many other countries, transparency and accountability are central to good corporate governance. One key area where this is applied is beneficial ownership – knowing who ultimately owns or controls a company. The Companies and Intellectual Property Commission (CIPC) and the Companies Act set out clear rules on how this information should be disclosed.

This article outlines the essentials of beneficial ownership in South Africa, why it matters, what the compliance requirements are, and the impact on businesses.

What is Beneficial Ownership?

Beneficial ownership is about identifying the real people who ultimately own or control a company. It’s not just the names on the paperwork. Sometimes shares are held through nominees, trustees, or layered entities, but the law requires us to look behind the scenes and see who truly benefits.

In 2023, South Africa was officially placed on the Financial Action Task Force (FATF) Grey List. This meant that the country was under intense scrutiny for weaknesses in its systems regarding money laundering, terrorist financing, tax evasion and corruption. What followed was an intense period of reforms, requiring the disclosure of beneficial ownership information. These reforms aimed to strengthen transparency, prevent financial crime and align with global compliance standards.

Here are a few key reasons for the implementation:

Preventing Financial Crime: Criminals often use complex corporate structures, shell companies, and trusts to hide the true source or destination of illegal funds, which can make it difficult for authorities to track. When you’re able to identify the natural person who owns or controls the company/entity, it can stop these activities in its tracks. 

International Standards and Compliance: The Financial Action Task Force (FATF) has created a global framework, and the implementation of these new laws aim to align itself with this. A range of countries, including South Africa, have implemented measures to address inadequacies in their anti-money laundering, and counter-terrorism financing frameworks. Providing accurate ownership information aims to tackle these problems.

Aiding Law Enforcement and Regulators: Law enforcement, such as the police, the Financial Intelligence Centre (FIC), and the South African Revenue Service (SARS),  requires a central register of beneficial owners which provides them with accurate information around owners.  This ensures When you have a central register of beneficial owners, it provides law enforcement, with access to accurate owner information. This ensures investigations and other enforcement actions are easier to navigate and precise. 

Enhancing Corporate Accountability and Governance: When ownership structures are transparent, it makes it easier for those in power to be held accountable for their decisions. This helps to nurture trust among investors, customers, and the public. 

Mitigating Risk: Legal entities have historically been identified in national risk assessments as vehicles prone to abuse for illegal activities. The beneficial ownership register is designed to mitigate these identified risks.

The main objective of the beneficial ownership rules is to eliminate the anonymity that allows criminals to conduct illegal activities behind a veil of corporate secrecy. These reforms have ultimately paid off, with South Africa’s removal from the FATF grey list in October 2025.

The Rules: Companies Act & CIPC

1. Companies Act Requirements:

The Companies Act of South Africa, specifically Sections 26 and 27, mandates that companies must maintain accurate and up-to-date records of their shareholders and directors. This includes identifying beneficial owners and recording their details. The Act defines beneficial owners as individuals who, directly or indirectly, hold more than 25% of the shares or voting rights in the company.

2. CIPC Requirements:

The Companies and Intellectual Property Commission (CIPC) is a regulatory body that is responsible for administering the Companies Act, ensuring businesses remain compliant. When registering or updating company records, firms must disclose details of all individuals who hold 5% or more beneficial ownership. This differs from the 25% threshold required under the Companies Act. These details should include each owner’s name, ID or passport number, address, and the nature of their ownership.

Why It Matters

Preventing Financial Crime
Transparency helps authorities prevent money laundering, terrorist financing, and other financial crimes. It makes it harder for corporate structures to be misused.

Better Governance
Knowing who really benefits builds stronger accountability. Stakeholders can see who has influence and control, which improves trust in the company’s decision-making.

Compliance in Practice

• When registering: The CIPC requires companies to declare all qualifying beneficial owners. This includes each natural person who directly or indirectly holds 5% or more ownership or control.

• Ongoing updates: Any changes (share transfers, restructuring, new owners) must be reported to the CIPC quickly.

• Non-compliance: Failure to disclose or update can result in fines, penalties, or legal consequences.

Common Challenges

• Complex ownership chains: Trusts, offshore holdings, or multi-layered structures can make it tricky to identify beneficial owners. Professional guidance is often needed.

• Privacy concerns: Businesses must balance transparency with the need to protect sensitive personal and commercial information.

• Stricter Update Controls by the CIPC: The CIPC is making it more difficult for company record updates, requiring the consent of relevant parties before certain changes can be made. While this process hasn’t been applied to Ultimate Beneficial Owners (UBOs), it already affects director changes. This implementation is done to ensure the company records are accurate and up-to-date. Individuals need to ensure these updates are completed as soon as possible, as delaying them for too long can lead to a tedious process that requires director consent.

The Bottom Line

South Africa’s beneficial ownership rules aim to create a more transparent and trustworthy business environment. For companies, it’s not just about following the law — it’s about building credibility with regulators, investors, and the public.

By keeping accurate records and disclosing beneficial ownership information, businesses can avoid penalties, strengthen governance, and show they’re committed to integrity.

In short: compliance isn’t just ticking boxes,  it’s helping build a business culture of trust and accountability.