Running a business in South Africa is a challenge. Quite apart from the political and economic conditions, every business must also comply with a web of governance, regulatory, tax, and labour law requirements. It’s a massive cost burden, but failing to comply can mean penalties, lost business opportunities, and even deregistration. Here's how we can turn your compliance into a strategic strength, while also saving your business a substantial amount of time, cost, and hassle.

“A director must… act in good faith and for a proper purpose; in the best interests of the company; and with the degree of care, skill and diligence that may reasonably be expected…” (Companies Act of 2008) The first Guideline for 2025 issued by the CIPC (Companies and Intellectual Property Commission) aimed to “sensitise directors on the consequences for non-compliance with their duties to a company.” Here’s a quick overview of these duties and what could happen if directors don’t comply.  What are the duties of directors? A director must exercise the powers and perform the functions of a director:  In good faith and for proper purpose In the best interest of the company Without using the position to knowingly cause harm to the company With the degree of care, skill and diligence that may reasonably be expected of him/her This means that directors should carefully understand the provisions of the Companies Act that relate to the governance of companies, including, but not limited to: Section 75: Directors’ personal financial interests Section 76: Standards of directors’ conduct Section 77: Liability of directors and prescribed officers Section 78: Indemnification and directors' insurance Section 213: Breach of confidence Section 214: False statements, reckless conduct and non-compliance Section 215: Hindering administration of the Act Recent amendments In the last few months, amendments to the Companies Act have introduced significant new changes that have further increased the responsibility and risk that directors shoulder. Focusing on accountability, transparency, and alignment with international governance standards, the changes include stricter fiduciary duties to prioritise company and stakeholder interests, mandatory transparency in director appointments, and new director criteria disqualifying individuals with a record of insolvency, criminal convictions, or prior misconduct from serving as directors. Consequences of non-compliance: Civil liability The Companies Act emphasises that a director of a company in his/her personal capacity may incur civil liability for loss or damage incurred by the company due to the director: Acting on behalf of the company without the necessary authority Trading recklessly or under insolvent circumstances Being a party to an act or omission by a company calculated to defraud Being a party to false and misleading financial statements Being a party to a prospectus or written statement that contains an untrue statement Failing to vote against an unauthorised or inconsistent provision of the Companies Act during a meeting or decision-making process In a recent High Court case, the court found that directors of a property fund had grossly abused their positions and engaged in reckless conduct that severely harmed the company. The judge declared these directors delinquent and ordered them to compensate the fund for losses incurred due to their actions, including the costs of forensic investigation and reputational harm. A delinquency declaration can also result in a ban from holding directorships for a specified period or even permanently, as it did for SAA’s Chairperson Duduzile Myeni.  Consequences of non-compliance: Criminal liability A director may be also held criminally liable in his/her personal capacity in terms of various…

“It is imperative that ALL companies and close corporations ensure compliance with the beneficial ownership filing requirements, to ensure good corporate governance and business continuity.” (CIPC) Following changes to the Companies Act on 24 May 2023, company directors and members of close corporations are obliged to lodge and maintain a detailed Beneficial Ownership (BO) Register, along with a list of supporting documents with the CIPC (Companies and Intellectual Property Commission). This register and documents must also be kept up to date within tight timelines and verified annually. Pre-existing companies with their anniversary date after the promulgation of the amended Companies Regulations were required to file their beneficial ownership information with their annual returns. Registers for new companies and amendments must be lodged within 10 days. This means that all entities in CIPC’s register must have filed their beneficial ownership information by 24 May 2024 – one year since it became mandatory. The Commission, citing a huge number of non-compliant entities that are yet to file their beneficial ownership and/or securities register information, is enforcing compliance by implementing more serious consequences. Consequences of non-compliance   A new “hard-stop functionality” has been implemented by the Commission. That will prevent any non-compliant entities from filing their annual returns, which brings its own consequences. The late filing of annual returns will incur penalties. Banks, service providers or customers often require businesses to have up-to-date annual returns before engaging in business. The Commission will take further and necessary enforcement actions with regards to entities which continue to be non-compliant, such as: investigation into the administration and governance processes of non-compliant business, issuing of compliance notices; and/or referral for deregistration and even final deregistration due to non-compliance. It is also a criminal offence to submit false or incorrect information to the CIPC. What is required for compliance?  Identify the beneficial owners of a company – these are individuals/natural persons who, directly or indirectly, ultimately own 5% or more of the company, or exercise effective control of that particular company. For each beneficial owner identified, collect the following: full names, date of birth, correctly certified copy of ID or passport; business or residential and postal address; email address; confirmation as to the participation and extent of the beneficial interest; supporting documents. Collate the information in a register, which must be filed with CIPC, and upload the supporting documents to CIPC’s website. Keep the register up to date, with changes filed with CIPC as soon as practically possible, but no later than 10 business days after notification. An updated register must also be submitted with the annual returns each year. The information must be treated as confidential and adequate precautions must be taken to prevent theft, loss, damage, destruction and falsification. Top tip for hassle-free compliance Our assistance will prove invaluable in ensuring your business remains compliant with both CIPC’s beneficial ownership requirements and annual return requirements, particularly following the hacking of the CIPC website and the problems and delays that followed. We can also guide you through the complexities of CIPC…

“The lack of adequate, accurate and up-to-date beneficial ownership information facilitates money laundering and terrorist financing by allowing criminals to hide their true identities, and the true purpose and/or source or use of funds.” (Financial Intelligence Centre - FIC) South Africa’s grey listing by the Financial Action Task Force (FATF) earlier this year and the subsequent passing of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, resulted in amendments to the Companies Act, among others. The changes to the Companies Act mean that company directors are now obliged to implement a detailed beneficial ownership register for their companies and submit the register to the Companies and Intellectual Property Commission (CIPC), along with a list of supporting documents. Such a register must also be kept up-to-date and verified annually. Who must file a beneficial ownership register? The vast majority of private companies must file a beneficial ownership register, but there are some complicated issues at play here and you would be well-advised to check with your accountant as to exactly what your company’s obligations are in terms of these new rules. What are the penalties? Failure to comply with the provisions relating to the beneficial ownership register requirements is an offence in terms of the Companies Act. A compliance notice may be issued in cases of non-compliance and an administrative penalty may be imposed. What are the deadlines? Entities incorporated before 24 May 2023 will be required to file the records of their Beneficial Interest Register as part of their Annual Returns filing process from 24 May 2023, the date of publication of the final Amended Companies Regulations. Entities incorporated after 24 May will be required to file the records of their beneficial ownership within 10 days after incorporation. What is required? The beneficial owners of a company must be identified, their information collated and a register containing this information must be filed with CIPC. A “beneficial owner” in respect of a company, means an individual/natural person who directly or indirectly, ultimately owns 5% or more of that company, or exercises effective control of that particular company, including through: The holding of beneficial interests in securities of that company. The exercise of, or control of the exercise of the voting rights associated with the securities of the company The exercise of, or control of the exercise of the right to appoint or remove members of the board of directors of that company. The holding of beneficial interest in the securities, or the ability to exercise control, including through a chain of ownership or control of a holding company of that company. The ability to exercise control, including through a chain of ownership or control of a juristic person other than a holding company of the company, a body of persons corporate or unincorporated, a person acting on behalf of a partnership, a person acting in pursuance of the provisions of a trust agreement; or The ability to otherwise materially influence the management of that company. For…