Annual Returns in South Africa: What You Need to Know

All companies (including external companies) and close corporations in South Africa are legally required to file their annual returns every year. The Companies and Intellectual Property Commission (CIPC) will send reminders to file, provided they have accurate contact details for the directors or members.

What Are Annual Returns?

An annual return is a legal requirement under the Companies Act and Close Corporations Act. It helps CIPC confirm if a business is still active or planning to operate in the future.

Key Requirements:

When filing annual returns, companies and close corporations must include:

1. Audited Financial Statements (AFS) or Financial Accountability Supplement (FAS)
2. Beneficial Ownership Declaration

Filing Deadlines

• For Companies: Must file within 30 business days from the anniversary of their registration date.
• For Close Corporations: Filing opens on the first day of the anniversary month and closes at the end of the following month.

Late Filing Penalty: Missing these deadlines results in penalty fees.

Consequences of Not Filing

Failure to file annual returns can lead to deregistration, which has serious consequences:

• The business is removed from CIPC’s active records and ceases to exist as a legal entity.
• Banks, suppliers, and other organizations may refuse to work with the business.
• Directors or members could be held personally liable for any debts or obligations incurred while the business was operational.

Why File Annual Returns?

Filing annual returns ensures your business:

1. Stays legally active.
2. Demonstrates compliance with the law, especially financial reporting requirements.

If returns are not filed, CIPC will assume the business is dormant and start the deregistration process.

Key Takeaway

Filing annual returns is not optional—it’s a critical compliance step to maintain your company or close corporation’s legal status. Ensure timely filing to avoid penalties and deregistration.

Understanding Beneficial Ownership in South Africa

Beneficial Ownership (BO) refers to the individual (a natural person) who ultimately owns or controls a company, whether directly or indirectly. It ensures transparency in corporate ownership and accountability.

Who is a Beneficial Owner?

A Beneficial Owner is someone who:

• Directly or indirectly owns 5% or more of a company (through shares, voting rights, or other interests).
• Exercises effective control over the company.

Minimum Threshold: 5% ownership or control.

Filing Beneficial Ownership Information

Effective from 1 April 2023, all entities must file BO information as follows:

• Entities registered before 24 May 2023: Must file BO information within 30 days of their financial year-end (FYE).
• Entities registered after 24 May 2023: Must file BO information within 10 days of incorporation.

Completion Confirmation:
Once the BO filing is done and a confirmation certificate is issued, the entity is considered BO-compliant. However, the CIPC may conduct further checks and request additional documentation.

Ongoing Compliance Requirements

1. Annual Updates: Even if no changes occur during the financial year, entities must confirm the validity of their BO information annually.
2. Updating Changes:
   • If BO details change, entities must update their BO register within 10 days of the change.
   • This applies to both affected and non-affected companies, under the relevant regulations.

What is an Affected Company?

An affected company includes entities under specific regulations in the Companies Act:

• Public companies.
• State-owned companies.
• Private companies where:
  • More than 10% of securities are transferred within a 24-month period (as prescribed).
  • The private company is controlled by, or is a subsidiary of, a regulated entity.

Why Beneficial Ownership Matters

Filing BO information promotes transparency, prevents misuse of corporate structures, and ensures compliance with the Companies Act. Entities must remain diligent about updating and confirming BO details to avoid non-compliance.

Registering a New Company in South Africa

Starting a business in South Africa requires registering your company with the Companies and Intellectual Property Commission (CIPC). Small Business Consulting assists you with this.

Benefits of Registering a Company

• Legal Recognition: Protects your business name and brand.
• Limited Liability: Personal assets are protected in a private company structure.
• Access to Funding: Banks and investors often require a registered entity.
• Contract Eligibility: Many clients, especially corporates, only work with registered companies.

The Companies and Intellectual Property Commission (CIPC) emphasizes the need for accurate details of foreign nationals on the Foreigner Assurance platform.

Correctly capturing this information is vital for maintaining the integrity of the company registry and ensuring compliance with security measures and public regulations. This is particularly important for verifying the eligibility of directors and members to prevent involvement in illegal activities.

Ensuring the correct identification of foreign nationals is crucial in applying security measures and adhering to public regulations, particularly in relation to the appointment of directors and members who may be disqualified due to suspected involvement in activities such as terror financing, money laundering, and other offences. The assurance of such information is therefore of national importance.

A custom domain or a custom URL is a unique branded link to your website or to a platform where you host your content. The custom domain also allows you to create branded email off your custom domain name like info@sb-consulting.co.za. This helps your company, brand or side hustle to look trustworthy and professional.