As a business owner, you want to grow your company without worrying about complicated regulations. But new compliance requirements, like beneficial ownership registers, can feel overwhelming. Kind of like trying to assemble flat-pack furniture without the instructions—frustrating and confusing. Ignoring them could mean serious risks for your business, including:
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Financial penalties
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Reputational damage
Let’s make compliance simple, so you can focus on what matters most—growing your business. After all, no one starts a company because they love paperwork.
The Problem: Beneficial Ownership Registers
A beneficial ownership register is a record of who truly owns or controls a company or trust. It shows who’s in charge behind the scenes, even if their names aren’t on the official paperwork. Keeping an up-to-date beneficial ownership register is essential for compliance with South African regulations.
Example:
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Sarah owns 30% of a company’s shares, but her name isn’t on the paperwork. She is still a beneficial owner. This means that although Sarah's involvement is not immediately visible in official company filings, she holds significant control over the company’s decisions and profits. If the company needs to report beneficial ownership to regulators, Sarah must be included to ensure compliance.
This information helps regulators keep businesses honest and prevents illegal activities like money laundering.
What Happens If You Don’t Comply?
Missing deadlines or not keeping up with beneficial ownership requirements can lead to:
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Fines: Regulatory authorities could penalise you.
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Denied Opportunities: Imagine applying for a business loan and getting denied because you lack the required beneficial ownership records.
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Reputational Damage: Banks, clients, and partners may hesitate to work with you if your beneficial ownership register is not up to date.
Example:
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Suppose you are applying for a loan to expand your retail business. The bank asks for your beneficial ownership register. Without it, the bank sees your business as non-compliant and therefore too risky to lend to. This could delay your expansion plans, costing you both time and potential profit. Additionally, your inability to provide required compliance documents might lead other partners to question the reliability of your operations.
The Plan: How to Stay Compliant
Practical Steps to Establish Beneficial Ownership
Establishing beneficial ownership can be straightforward if you follow these steps:
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Review Company Structure: Start by analyzing your company’s shareholding and management structure to identify all individuals with significant control.
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Gather Documentation: Collect necessary documents, such as identity documents, share certificates, or trust deeds, to confirm the identities of beneficial owners.
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Determine Control Threshold: Define who qualifies as a beneficial owner. Typically, this includes anyone owning 25% or more of shares or voting rights, or anyone who has significant influence over the business.
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Record Beneficial Owners: Create a detailed record that includes the names, identification details, and the nature of the ownership or control of all beneficial owners.
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Keep Records Updated: Establish a system for keeping beneficial ownership records updated whenever there are changes in ownership or control.
Example:
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John owns 70% of a construction company, and his brother Peter owns 30%. John creates a beneficial ownership register listing both of them, including their shares. John includes details such as each person’s name, percentage of ownership, and any significant control they have. This ensures that, if authorities or financial institutions request the beneficial ownership register, John can easily provide all required details. If Peter decides to transfer his shares to their cousin Mary, John will need to update the beneficial ownership register to reflect the change.
For trusts, trustees need to record the names and details of trustees, the founder, and beneficiaries who control the trust or benefit from its assets.
Example:
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Imagine a family trust where Lisa is the trustee, and her children are the beneficiaries. Lisa needs to document the details of all trustees, beneficiaries, and the founder. These details have to be submitted to the Department of Justice.
What Success Looks Like
Imagine running your business with peace of mind, knowing that your beneficial ownership compliance is sorted. Picture a scenario where you never have to scramble for missing paperwork or worry about unexpected penalties. Instead of dealing with bureaucratic headaches, you can put your energy into growing your business and building strong relationships with partners and clients. Compliance is no longer a burden, it's just part of the smooth running of your successful business.
Let Nuvia Help
Compliance doesn’t have to be a hassle. It might not be fun, but at least with Nuvia, it won't be a comedy of errors either. Nuvia’s can take care of the details for you, making sure your beneficial ownership register is always up to date.
Get in touch today for professional support and let us handle your beneficial ownership compliance so you can focus on growing your business.
Contact us now to ensure your beneficial ownership compliance is up to speed. Let Nuvia take the burden off your shoulders, so you can do what you do best!
JM Bennett is a Chartered Accountant (SA), a Registered Auditor and a Registered Tax practitioner. He obtained an MBA from Wits Business School in 2020 and a Higher Diploma in Tax from the International Institute of Tax and Finance in 2016. He has almost 20 years of experience in accounting, auditing and tax of SMEs.