A few years ago, starting a business often meant buying a shelf-company. Thankfully, today’s process is much simpler. Thanks to the Companies and Intellectual Property Commission (CIPC), registering a company has become quick, easy, and affordable—you can do it in minutes for as little as R125.00. Almost anyone can register a company without professional help.
But here’s the catch: what does that R125.00 get you? While it provides a registered company and the essential documents, it doesn’t get you close to being compliant. You won’t have share certificates, an understanding of how to issue shares, or knowledge of what a securities register is—let alone a compliant one. Although company registration has become simple, staying compliant has become more complex.
The Importance of Annual Returns
Once your company is registered and your business is operational, there’s more to think about. Every registered company must file an Annual Return with CIPC to confirm that the business is still active and to update important company information. For a small operational company, this submission costs R450. You’ll need to provide financial details, including turnover. If your financials are audited, you’ll have to submit the audited statements.
You’ll also need to update basic company details like contact information, financial year-end, registered office, directors, and auditors. While it sounds like a lot, it’s manageable if your financials are in order.
The Consequences of Failing to File
Previously, companies could get away with failing to file their annual returns without serious consequences—those days are over. CIPC now takes non-compliance seriously. If two or more successive annual returns are outstanding, CIPC will automatically deregister your company, effectively halting its ability to trade or recover debts. In fact, on 31 March 2023, CIPC deregistered over 647,000 companies!
How does the annual return relate to the other compliance issues, like securities registers and beneficial ownership filing?
In February 2023 South Africa was grey-listed by the global financial crime watchdog, Financial Action Task Force (“FATF”) for failing to comply with international standards around the prevention of money laundering, terrorist financing and proliferation financing. Since then Parliament has done what it can to enact legislation to get South Africa off the grey list.
The Companies Act now requires companies to file beneficial ownership declarations, identifying the human owners and controllers behind the business. This information must be filed each year and is essential for completing your annual return.
Filing Beneficial Ownership information is not rocket science for most small companies, however, the requirements for filing differ based on whether a company is classified as an affected or non-affected entity. This distinction is essentially the difference between either having to file a separate beneficial interest register (affected entity) or merely having to include the beneficial interest register in your company's securities register (non-affected entity). In a nutshell: an affected entity can be a private company where more than 10% of its shares have been transferred within the past 24 months.
Without this beneficial ownership information, you can’t file your annual return. And without an annual return, your company faces deregistration. So, there’s a clear chain of compliance that needs attention.
We Can Help You Stay Compliant
While registering a company has never been easier, company compliance is where things can get confusing. At Van Zyl Scheepers Attorneys, we understand these requirements and can help ensure that your company is not only registered but also compliant from the start. From issuing shares and creating share certificates to filing beneficial ownership and annual returns, we use trusted electronic platforms that you can access anytime.
With the right compliance side-kicks, you can focus on growing your business while we handle the compliance. Let Van Zyl Scheepers Attorneys take care of the legalities so you can build the next big thing.
Comments