Local startup InfoDocs has warned that those companies that missed the October 1 deadline to submit beneficial ownership information to the Companies and Intellectual Property Commission (CIPC) now need to complete the process within a 30-day grace period until the next CIPC yearly return is due, to avoid falling foul of the new rules and risk penalties.

InfoDocs founder and CEO Joshua Alexandre says it has developed a simple and affordable way to file beneficial ownership documents, with more than 6 000 beneficial ownership declarations having been submitted through InfoDocs by the October 1 deadline.

Overall, the company provides CIPC-related services to African companies and directors. InfoDocs, through proprietary software, manages company records, yearly returns, share registers and certificates.

Most of the latest submissions were made by professionals who help privately-held businesses to manage CIPC compliance.

InfoDocs says the new CIPC rules around transparency could prevent another State capture in that it provides greater transparency about ownership and control structures, which the CIPC maintain in a central database.

The intention of the new rules is to avoid money laundering and terrorism financing.

The beneficial owners are the individuals who ultimately own or control a company directly or indirectly.

“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,” says Alexandre.

Private companies, close corporations, nonprofits and State-owned companies all need to file beneficial ownership documents.

Any individual or entity holding more than 5% beneficial ownership of a company or close corporation must submit a register of beneficial owners to the 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, says InfoDocs.

This can be a costly exercise and consequently more than 72% of businesses are not compliant.

The InfoDocs system is used by professionals and small businesses to add their company directly from the 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,” Alexandre adds.