Warning to businesses in South Africa – major deadline hitting this month

Posted by Malcolm Libera at businesstech.co.za on 4 Nov 2024, view original post here

South African business owners are being cautioned that their companies may be unable to trade if they fail to meet the compliance requirements set by the Companies and Intellectual Property Commission (CIPC), specifically the registration of their beneficial ownership information by 30 November 2024.

This deadline has raised concerns across the business community, with InfoDocs, a service provider to over 90,000 South African companies, emphasising the critical nature of compliance.

InfoDocs, which supports thousands of directors, members, and shareholders, has highlighted the serious consequences awaiting those who fail to comply with CIPC regulations.

Non-compliant companies risk deregistration, an outcome that has already affected over 650,000 businesses, largely due to missed annual returns, as reported in the CIPC’s recent annual report.

Deregistered companies face several repercussions, including being unable to legally trade, invoice clients, or access their assets.

In extreme cases, the state has the authority to absorb the assets of non-compliant companies.

InfoDocs founder and CEO Joshua Alexandre warns that such deregistration could even lead to the suspension of business bank accounts, potentially paralysing daily operations and asset ownership.

He describes this situation as a “nightmare” for businesses, yet one that is entirely preventable through timely compliance.

The requirement to register beneficial ownership information stems from South Africa’s recent commitment to improving transparency and addressing the country’s placement on the Financial Action Task Force (FATF) greylist.

By enhancing governance around beneficial ownership, South Africa aims to meet international standards and improve its financial reputation.

To assist businesses, Alexandre offers a few practical steps to streamline compliance and ensure timely registration with the CIPC.

For instance, Alexandre notes that companies cannot file their annual CIPC returns if they have not registered their beneficial ownership within the same calendar year.

Beneficial ownership registration involves capturing essential information on a company’s share register, which records the equity distribution among shareholders.

Businesses will need to gather supporting documents, including names, identification numbers, addresses, and copies of IDs for all shareholders holding over 5% equity.

While companies may choose to submit beneficial ownership information directly with the CIPC, which could save roughly R100, Alexandre cautions that the process can be daunting for those unfamiliar with the regulatory landscape.

He advises business owners who work with accountants or professional service providers to confirm all relevant due dates, which may differ from one company to another, to avoid missed filings.

He further recommends verifying that all contact details are up-to-date with the CIPC, as some InfoDocs clients have discovered overdue returns only after mistakenly assuming their accountants or bookkeepers were managing compliance obligations.

With the approaching deadline and the potentially severe consequences of non-compliance, business owners are urged to prioritise their beneficial ownership registration to avoid the risk of deregistration.

By adhering to CIPC requirements, companies can safeguard their trading capabilities, financial assets, and overall operational stability, ensuring their continued contribution to South Africa’s economy.

Luke Victor

BA(SA), ICB Financial Accountant
The Tax Shop Alberton

More about Luke Victor

Luke obtained a Diploma as a Financial Accountant with ICB and is a registered member of SAIBA with experience in bookkeeping, debtors, creditors, VAT, payroll, PAYE, UIF, financials, taxation, Workman’s Comp and company secretarial.

Luke has been managing and running The Tax Shop Alberton for 3 years. With his help, we have reached our yearly targets from our head office for the last 2 years. He also has experience working in IT and Software Testing and Training.

Xero & QuickBooks Certified