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How to Avoid Penalties with Beneficial Ownership

Nicole on 29 May 2024
How to Avoid Penalties with Beneficial Ownership

South Africa's new Beneficial Ownership regulations are raising concerns for small businesses. While the goal of a cleaner business environment is inspiring, navigating the compliance process can be overwhelming.

The High Cost of Non-Compliance

The CIPC takes regulations seriously, and failing to comply can have intense financial and legal consequences for your business, such as:

Large Fines

Fines will vary depending on the severity of the offence but will be big enough to strain your business' finances. Fines can even go up to 10% of your company’s annual turnover.

Director Disqualification

Non-compliant owners can be disqualified from being directors in ANY South African company.

De-registration (Worst Case Scenario)

In extreme cases of non-compliance, the CIPC can deregister your company - this means your business will be shut down.

Be Proactive to Avoid Consequences

The potential consequences of non-compliance are not worth the risk. Here are some simple ways to protect your business from penalties:

Gather Information Early

Start collecting details of your beneficial owners early instead of waiting until the last minute, including:

  • Names
  • Addresses
  • Shareholding percentages

Organise Your Documents

Maintain a file with all your Beneficial Ownership-related documents for easy access and to save you time and frustration, including:

  • Mandate to lodge signed by all directors
  • Share register
  • Certified copies of all shareholder ID documents

Consider Streamlined Solutions

There are online services that can help you manage Beneficial Ownership requirements to simplify the process, minimise errors, and ensure you meet all filing deadlines and avoid penalties.

Overall, Beneficial Ownership requirements have great potential for South Africa. It is a matter of staying compliant (especially as a small business) that gets complicated. Still, by being proactive and staying informed, you can ensure a smooth and compliant Beneficial Ownership experience for your small business.