Our comments in Red
Dear CIPC Customer,
Good day Sir/Madam
Your enquiry above refers.
Beneficial Owner is an individual/ natural person who, directly or indirectly, ultimately owns 5% and more of a company or exercises effective control of a company. How do you get to the natural person if there are no percentages when you drill down in the case of trusts, as we only have to declare 5% or more.
Beneficial ownership disclosure form (Organogram) must be submitted for complex ownership structures, inclusive of juristic persons, trusts, etc. must be indicated in this form. In order to do this one needs percentages, otherwise how can an organogram be produced.
The CIPC wants all corporate entities to declare ALL beneficial ownership information as far as possible, BUT we are cognisant of the practicalities where there may be complex ownership structures, and do not want to overburden entities in terms of compliance. Where there is a complex structure the identity method should be used and a drill down on the beneficial owners must take place. Without percentages one will not be able to drill down through different levels of trusts. Where the trust is a discretionary trust and its not possible to determine percentages make the beneficiaries percentages equal.
Should a declaring company thus have a trust as part of its ownership chain, the company is required to declare the information in terms of trustees, beneficiaries, etc. as far as possible. Should the structures be complex, such as minor children being trustees, etc. we require the information (possible to declare via the Register) to be indicated via the system, and additional information explaining the ownership structures to be indicated in an organogram via the "Disclosure Form" to be uploaded. The CIPC to advise how they are going to extract the detail on the disclosure form.
When trustees and beneficiaries are beneficial owners of a company, the company should indicate the Trust info only (on the system) and submit a disclosure form that indicates the BO structure.
This does not make sense. The disclosure form is an organogram. In order to get to the natural persons one needs to use the identity method and apply a percentage to the beneficial owners in a trust so that a drill down can take place, otherwise how can one drill down through the trust to get to the human BO’s.
In reading this the CIPC are in fact getting closer to what we said in the first place, but they are not quite there. I have been told that where it comes to trusts that a percentage cannot be entered. The CIPC must change this as it’s the only way it is going to work in South Africa. It is also the only way to get data in a database that is meaningful for the regulators.
