Picture: for illustration purposes
The South African Department of Trade, Industry and Competition (DTIC) has released a new iteration of the Companies Amendment Bill for public deliberation. This move becomes a potential turning point for corporate transparency in South Africa as the nation juggles with high-profile cases of political and fiscal corruption. The legislation could unmask the beneficial interests hidden behind a maze of intermediaries, making it easy to track who significantly controls or benefits from a company.
Currently, the 2008 Companies Act requires only public companies to reveal information about beneficial interest holders; however, this amounts to a mere 315 of the companies registered on the Johannesburg Stock Exchange. The proposed amendments, therefore, intend to broaden the requirement for businesses to collect and verify information about those possessing beneficial interests.
The bill, which seeks to enhance corporate transparency rules, includes beneficial ownership disclosures and wage gap disclosures. It also acknowledges 'beneficial owners' or 'true owners' as those individuals who ultimately enjoy the benefits from the securities of a company. Further, companies will be mandated to file latest financial statements, security register, and beneficial ownership register with the Companies and Intellectual Property Commission (CIPC), available publicly on request.
While concerns about consequent burdens on businesses have been expressed, advocates of the bill stress its crucial commitment to beneficial ownership transparency, citing how 110 countries, including South Africa, have pledged towards this transparency.
The move comes even as the Financial Action Task Force (FATF) released a Mutual Evaluation Report on South Africa's anti-money laundering and counter-terrorism measures, highlighting the need for more transparency in the country's business dealings.