A simpler way for small businesses to file beneficial ownership

There is a simpler way for small businesses to file beneficial ownership information with the Companies and Intellectual Property Commission and avoid being fined for filing late.

Companies must file beneficial ownership information within 30 days of their Companies and Intellectual Property Commission (CIPC) annual return being due or within 10 days of incorporation since May this year.

Companies that fail to meet this deadline will fall foul of the new rules and risk penalties, Joshua Alexandre, InfoDocs founder and CEO, says. Infodocs is a local startup that developed a simpler way to file beneficial ownership.

“Over 10 000 beneficial ownership declarations have already been submitted via InfoDocs this year. Most of these were submitted by professionals who help privately held businesses manage their CIPC compliance.

“However, InfoDocs has simplified the process to make it possible for anyone to submit their registers of beneficial owners, shareholders and disclosure forms, which are also known as beneficial ownership diagrams or organograms. All of these documents are automatically generated.”

Although the Companies Act requires a share register of individuals who own or control 5% or more of legal entities, the new laws provide greater transparency about ownership and control structures, which the CIPC maintains in a central database to avoid money laundering and combat terrorism financing.

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Why we must know who owns and controls companies

“The consequences of not knowing who owns and controls companies in South Africa have been dire. Linking beneficial ownership for all companies and close corporations is an important step in preventing abuse and avoiding further state capture in South Africa.”

Private companies (PTYs), close corporations (CCs), non-profits (NPCs) and state-owned enterprises (SOEs) must all file beneficial ownership. Any individual or entity holding more than 5% beneficial ownership of a company or close corporation must submit a register of beneficial owners to CIPC. The beneficial interest in relation to a company’s securities is entitlement through ownership, agreement, relationship or otherwise.

Companies can access the online system directly on the CIPC’s website, but they are put off by the complexity of the inefficient process and prefer to outsource the job to professionals, Alexandre says. This can be a costly exercise and consequently over 72% of businesses are not compliant.

Professionals and SMEs use the InfoDocs system to add their company directly from CIPC, produce professional templates and store company records securely online.

“Cost is always important, but non-compliant companies run the risk of attracting penalties, legal fees and director liability. InfoDocs simplifies company secretarial services for directors and shareholders for less than R395 per company per year, including a beneficial compliance submission. At this price, it is a no-brainer to ensure compliance.”

Alexandre says InfoDocs works closely with the CIPC, as the software helps the CIPC in meeting its mandate. To date, over 50 000 companies use InfoDocs to submit annual returns, maintain statutory registers and submit documents using high-quality document templates. The software sends alerts and notifications of submission deadlines and small businesses can file returns and make secure payments directly to the CIPC from the dashboard.