Beneficial Ownership Declaration
- All Apps
- Sep 6, 2023
- 9 min read
Updated: 1 day ago
This post will explain the Beneficial Ownership Declaration module.
It is broken down as follows:
Overview
DataGrows assists with scheduling tasks to remind you to submit your clients' Beneficial Ownership Declaration documents as well as their Annual Return on an annual basis, on the anniversary of the CIPC Registration Date.
CIPC prevents you from submitting the Annual Return for a company if they have not submitted the latest Beneficial Ownership Declaration. So, these reminders are crucial.
DataGrows assists you in generating all of the supporting documents required for that submission from information you maintain within DataGrows for the Client. These documents can then be downloaded to submit to CIPC. DataGrows does not currently handle the submission directly.
Once your company structures are set up in DataGrows, you simply review the reports each year and make changes where the ownership structure might have changed.
Scheduling Task Reminders
To get the Annual Return and Beneficial Ownership Declaration Task reminders to schedule, please:
Click on the CIPC Entity Client in the Client table
Scroll down to Services
Check the CIPC Annual Return checkbox.
Please ensure that the client has a Registration Date, Registration Number, and Year-end added on the Details section of their record for this task to schedule correctly.
To view or access the task reminders, please go to the CIPC Beneficial Ownership table in the CIPC Department within the left navigation.
This table contains the links to all the supporting documents needed for the submission and will show a record for each year for each client.
The sections below will show you how to set up each document to generate correctly.
Directors
Next, you need to add directors in the directors table.
There are two ways to do this:
By importing information from CIPC via our extension. Click here to find out more.
By adding Directors manually. The steps below will explain this process.
To add directors manually, click on the client in the Client table, select their record, then go to the Directors tab at the top.
Click ADD RECORD to add a new director.
If the client is an existing client of yours that is also contained in the client table, you can click on their record and select them from the DataGrows client dropdown. This will link them for future reference, reports, and to add additional information for them from the client table. If their details in the client table are outdated or incomplete, please copy the information over from the Directors table to the clients table before selecting them from the dropdown.
You can download this table as a CSV if you want to update information in bulk. Reach out to support@mydatagrows.com so that we can assist.
From this table, you can add the directors as Shareholders or add them to the Beneficial ownership structure for the company.
To do this:
Select the records by checking the checkboxes to the left.
Go to Actions
Then select either Copy to Share Register to add them as shareholders or
Select Copy to Beneficial Ownership to add them to the Beneficial Ownership structure.
If all the directors are shareholders, you will need to copy them to the Beneficial Ownership Declaration and Share Register Tables. This is the start of building the Organogram instance. Only copy directors who are beneficial owners, because not all directors are shareholders.
The next section will explain how to add more details to both the Share Register and Beneficial Ownership, but first we want to show you how to download the mandate so your clients can sign.
Setting up the mandate
The mandate will need to be signed by your client, authorising you to do the submission on their behalf. DataGrows has a mandate that has been approved by CIPC. It contains the details of the CIPC Customer who will be doing the submission to CIPC. This information pulls through from your Firm Settings table, which can be found under Setup in the left navigation.
Click on your Firm, then complete the 1st Tax Practitioner Details with the person who's going to declare it. This will pull through to all future mandates.
To access the Mandate:
Go to the CIPC Beneficial Ownership table in the CIPC department in the left navigation.
Look for the specific client record
Click on the CIPC mandate icon to access the report
The company details for your client will pull through to the mandate. If any details seem to be missing, please ensure that the Client record has been updated in the Client table.
The mandate will list the directors who need to sign.
Downloading the report:
Once you are happy with the information displayed on the Mandate. You can download it by clicking on the Floppy disk icon.
Saving the signed mandate
Once the client has signed, you can attach the document to the record by clicking on the record in the CIPC Beneficial Ownership table, then going to the Document tab and attaching it there.
Shareholders, Share Register & Securities Register
Another supporting document in the CIPC Beneficial Ownership table is the Securities Register. This shows the shareholding of the entities involved.
This is not the register of the beneficial owners; that is an additional document that we will cover later. The securities register should only list the shareholders. So, don't mix the two layers.
Also avoid confusion when you know that a trust is involved in the structure of your client. The securities register lists the shareholders, so if a trust is a shareholder, they need to be listed, not all the trustees. They're not direct shareholders of your client. They are beneficiaries of a trust that is a shareholder of your client. So your share register needs to remain pure to the certificates that are generated for the shareholding that exists. Do not muddy them and do not mix them up when doing this declaration.
The Securities Register is populated from the Share Register tab. To access this:
Click on the client in the Client table
Go to CIPC at the top, then Share Register
If you copied clients over from the Directors table, they would display here, and you can click on their records to add more information. Alternatively, you can click on ADD RECORD to add more shareholders. This post will explain more.
Once you are happy with this table, the Securities Register can be downloaded from the CIPC Beneficial Ownership table:
Go to the CIPC Beneficial Ownership table in the CIPC department in the left navigation.
Look for the specific client record
Click on the Securities Register icon to access the report
Downloading the report:
Once you are happy with the information displayed on the Mandate, you can download it by clicking on the Floppy disk icon.
Building company structures
The last two supporting documents involve the structure of the company. They are called the Beneficial Interest Register and Beneficial Ownership Disclosure Form.
The Beneficial Ownership Disclosure Form is the organogram showing the hierarchical tree map for your client.
The Beneficial Interest Register will contain the exact interest of each party involved throughout the entire structure of your client. It is important to note that based on the information you provide, DataGrows automatically calculates the ownership percentage for each entity in the tree or organogram as it relates to your main client. This is the number that CIPC is interested in.
You need to start building the structure in the Beneficial Ownership Declaration table to populate these documents.
To do this:
Go to the Beneficial Ownership Declaration table in the CIPC Department in the left navigation.
If you copied anyone over from the Director's table, they would display here.
You can click on their records and complete the missing information.
We need to show CIPC the company structure and how we got to each beneficial owner, whether it's through direct ownership as a shareholder or via another entity’s shareholding, or by being a beneficiary of a trust. We will need to declare all the way down to the last natural person involved in the last connected company. This is to ensure that CIPC has full transparency over the structure of your client's company, so that any money laundering, trafficking or other illegal activity can be identified more easily.
Beneficial Interest Register
Think of your shareholders as the starting points of your Organogram, your hierarchy and the Organogram is upside down. As most of you know, after studying the Companies Act, we looked at group structures where we refer to companies as parents and subsidiaries.
To help us understand the concept, let's say we want to do the Beneficial Ownership Declaration for our client, Best Lease. They are owned by the Company BDC, the individual, Mariska Naude, and a Trust. Best Lease then has a few subsidiaries, which we are not concerned with right now, because we are submitting the Beneficial Ownership Declaration for Best Lease. So, the aim is to declare all involved parties to CIPC until you get to the last remaining warm bodies, in our case, the green bubbles.
We will start with the first level. As shown below and indicated in orange.
We have a parent company, Mariska Naude, as a natural person and then the trust.
Add them by going to the Beneficial Ownership Declaration table, then clicking on Add Record in the top right corner. Complete the form three times, once for Mariska, once for BDC as a company and once for the Trust for your main client, Best Lease. The difference between humans and companies in the Beneficial Ownership Declaration table is the nature of the entity. Once you select the nature of the entity, fields will hide or display to request the relevant information. Essentially, you want to recreate the share register here in a way.
Natural Person Shareholders:
Click add record, choose Client as Best Lease, and select nature of entity as Natural Person. Complete every field for Mariska. CIPC would like all of it, only tax number is not mandatory, but SARS requires it on the income tax return, so rather request it from the person.
Legal Entity Shareholders:
Click add record, choose your client as Best Lease, and select nature of entity = Legal Entity.
If BDC and the trust are not already clients of yours, you will need to add them to the Clients table by clicking on Add Record. Please select the status as Part of Ownership structure. This will prevent tasks from showing for them. If they are one of your clients and you do offer services to them, you can leave the status as active. Once you have added these legal entities to your Clients table, you can add them to the Beneficial Ownership Declaration. Use the Inherit Ownership Structure from dropdown to choose BDC or the Trust, respectively, and save.
Next, build the ownership structure for the trust by going to the Beneficial Ownership Declaration table and clicking on Add Record. Now you want to select the trust from the client dropdown, and complete a separate form for each of the trustees and beneficiaries. DataGrows already knows that the trust is linked to Best Lease and will automatically link the beneficiaries and trustees of the trust to Best Lease with the accurate percentage. Now you have declared up to the last warm bodies of the trust.
Next, you need to do the same for BDC. Here, I will add two records to the Beneficial Ownership Declaration table. One for Jeff as a natural person and one for Cape Tours as a company.
The last level will be to create the structure for Cape Tours by adding a record to the Beneficial Ownership Declaration table and selecting Cape Tours as the client and Melanie as a natural person. In this way we have gone as far as we can into our client, Best Lease’s structure, up to the last natural person in each branch.
DataGrows has automatically linked all the entities to my client, Best Lease, with the correct Beneficial Ownership percentage. If BDC is also your client, the organogram for them will also reflect correctly, and you do not need to rebuild it when you submit their declaration.
To get the Organogram and Beneficial Interest Register reports, go to the CIPC Beneficial Ownership table. and find Best Lease in the client column.
Next:
Scroll to the right and click on the link for the Beneficial Ownership Disclosure form. This is the organogram. You can download it by clicking on the old floppy disk icon and then on PDF. This can be uploaded directly to CIPC.
The Beneficial Interest Register will show you all the information that you need to copy over onto CIPC, including the ownership percentage of each natural person as they relate to Best Lease.
7. Troubleshooting
How do you know if you did it correctly?
The goal is that you end up with all the warm bodies on the organogram (Disclosure Form) with their linked entities, and all the warm bodies displaying on the Beneficial Interest Register with all their details completed.
What happens if something changes?
If somebody else comes into the picture, you simply add a new record and DataGrows will adjust the percentages for the rest.
What if there is no percentage?
Not every ownership level can be quantified into a percentage. You'll see that when you select, for example, the beneficiary of the trust on CIPC, the percentage is taken away. We have also done this in DataGrows, so if the percentage gets taken away, then you know that you do not need it for CIPC.
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