Unlocking the Beneficial Interest and Beneficial Ownership Quagmire

• Jurisdiction: South Africa
• Date: 01 June 2023
• Pages: 13-18
• Author: Julie Oppenheim
• Published date: 01 June 2023
• DOI: 10.10520/ejc-btclq_v14_n2_a4

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© Juta and Company (Pty) Ltd

Unlocking the Benef‌i cial Interest

and Benef‌i cial Ownership

Quagmire

JULIE OPPENHEIM*

ABSTRACT

The General Laws (Anti-Money Laundering and Combating Terrorism

Financing) Amendment Act 22 of 2022 (GLAA) was introduced in 2022 and

amends the Companies Act 71 of 2008 (Companies Act) by (i) providing for

a comprehensive mechanism through which the Companies and Intellectual

Property Commission can keep accurate and up-to-date benef‌i cial ownership

information; (ii) requiring a company, which is not an ‘affected company’

for purposes of the Companies Act, to keep, and f‌i le with CIPC, a record of

the ’benef‌i cial owners’ of a company, and by providing for specif‌i ed time-

lines within which a company must record any changes in this information;

(iii) requiring a company, which is an ‘affected company’ for purposes of the

Companies Act, to establish and maintain a register of the persons who hold

benef‌i cial interests equal to or in excess of 5% of the total number of securities

of that class issued by the company, together with the extent of those benef‌i -

cial interests; and (iv) specifying that persons who are convicted of offences

relating to money laundering, terrorist f‌i nancing, or proliferation f‌i nancing

activities or are subject to a resolution of the UN Security Council are prohib-

ited from registering as company directors.

Key to the amendments is the distinction between a company which falls

within the def‌i nition of an ’affected company‘ for purposes of the Companies

Act, on the one hand, and a company which does not fall within the def‌i ni-

tion of an ;affected company; for purposes of the Companies Act, on the

other hand. Also key is the def‌i nition of ‘benef‌i cial owner’ and the manner

in which it will be interpreted — which remains to be seen. Time will tell as

to how benef‌i cial these provisions are and whether they can assist in having

South Africa removed as a grey list country. Enforcement may be more effec-

tive if the sanction for non-compliance is a criminal sanction (in addition to a

f‌i nancial sanction) — as is the case in Mauritius, which managed to convince

the Financial Action Task Force to remove it from the grey list.

Introduction

The Financial Action Task Force (FATF) is the global money laundering and

terrorist f‌i nancing watchdog. It sets international standards that aim to

prevent illegal activities and the harm they cause to society.

Insofar as South Africa is concerned, in 2021, following a comprehen-

sive review of the effectiveness of South Africa’s measures to combat money

laundering and terrorist f‌i nancing, FATF released the Mutual Evaluation

* Partner, M&A, Bowmans.