Governance Readout February 2025

South Africa has continued efforts to combat money laundering and terrorist financing, aiming to remove itself from the grey list. Further proposed amendments to the Companies Act were published in the General Laws (anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2024 which introduces hefty penalties for non-compliance with beneficial ownership filing requirements (up to R10 million and 10% of turnover during the non-compliant period and deregistration) to the Companies and Intellectual Property Commission (CIPC).

The CIPC published a list of non-compliant entities in January and allowed a period of seven days for submission of beneficial ownership/interest returns failing which non-compliant entities were deregistered.

 

Separately, the South African Central Securities Depository (CSD) Strate plans to implement Rule amendments from March, mandating brokers and CSD Participants to provide personal shareholder information in its Beneficial Interest Register (formerly referred to as the beneficial owner download). While these changes aim to improve transparency and combat financial crime, brokers have raised concerns. They believe there was a lack of market consultation and limited stakeholder engagement in shaping these requirements, and also want clarity on legislative precedence as the Protection of Personal Information Act (POPIA) conflicts with new regulations.

 

Brokers (as with CSD Participants) are accountable institutions and must comply with FICA, POPIA, as well as with CSD and Exchange Rules, the Financial Markets Act, the Companies Amendments Act, the General Laws Amendment Act and others applicable to them. 

 

Requiring brokers or CSD Participants to provide their respective underlying shareholder and private client information to Strate may introduce additional risks and raise questions about the liability in the event of a POPIA breach, given multiple accountable institutions are involved.

 

The amendments to the Strate Rules were approved by the Financial Sector Conduct Authority (FSCA) in October 2024. The South African Institute of Stockbrokers (SAIS), representing the broker community, along with Computershare, has engaged with the FSCA to find the best approach, following which the SAIS is now seeking a legal opinion and clarity from the Information Regulator on data privacy and legislative precedence.

 

In the interim, brokers and CSD Participants will update their nominee company details for compliance with the Strate Rule and Directive changes, but they have advised that they need guidance from the Information Regulator before sharing their underlying private client information with Strate. If there is a financial investigation and access is required to beneficial interest holder information, brokers and CSD Participants can provide the necessary information directly to the investigating authorities.

Collaborative efforts are ongoing to address these concerns and ensure a smooth transition to the updated register.

Computershare will also be hosting further workshops with clients to provide more clarity on the above.  Please look out for these dates.

Further to our recent communication regarding proposed Directive changes, which would result in all voting for meetings being sent to Strate via its e-voting platform, Computershare raised extensive concerns regarding the additional risks that would arise for issuers and other unintended consequences.

Following comments received from the market, Strate has withdrawn the proposed directive changes and advised that it will be developing a White Paper to provide a detailed framework, updated timelines and inform any revisions to the proposed Directives. There will be further consultation with all stakeholders.

Computershare will continue to engage with Strate's consultation process and provide feedback on the proposed digital voting framework. Computershare may collate issuers comments as part of our formal response to this paper.

The Companies Second Amendment Act 17 of 2024 and some of the sections proposed in the Companies Amendment Act 16 of 2024  are now effective. Here is a summary of the various sections and commencement date, for your information: 

 Companies Amendment Act 2024 Commencement as at February 2025

Computershare hosted a webinar on 30 October 2024 regarding key amendments contained in the Companies Amendment Acts, 2024, particularly relevant for listed (affected) companies, but which may also apply to unlisted companies. If you were not able to attend this webinar, you can Click here to register and watch the session on demand.

 

We also wish to refer you to the notices published by the Companies and Intellectual Property Commission (CIPC) relating to the requirement to conduct foreign director assurance prior to updating director information and submitting beneficial ownership returns, as well as the requirements contained in Practice Note 2 of 2022. Please note the requirements relating to certification of documentation, as CIPC will reject any documents that do not comply with these criteria.

 

1. Foreigner Assurance Notice
2. Practice Note

 

With regard to dual-listed companies, the application of the Companies Amendment Act, 2024 to a foreign company will depend on a number of factors, such as if there are any unlisted subsidiaries based in South Africa that are required to submit annual returns to CIPC and if there are any tax returns to SARS (our local tax authorities).

 

The JSE Listings Requirements state that the Listing Requirements that apply to the primary listing will take precedence over the JSE Listing Requirements with the exception of a few requirements/continuing obligations set out in section 18.21.

 

If there are no local subsidiary companies, then the annual returns/tax returns and local reporting requirements will not apply.

 

We will keep you updated if there are any further amendments to these requirements.

Computershare welcomes an industrywide solution to asset reunification in South Africa and supports the collective efforts that encourage shareholders to claim their entitlements. Computershare continues to successfully run asset reunification programmes for our clients with an average of R25 million paid out monthly across all issuers.

As part of the verification process, it is essential to ensure that data protection laws and regulatory frameworks are upheld. The verification process should remain the responsibility of the intermediary who is managing the shareholder relationship, as updating of banking details is not only for unclaimed dividends but also applies to all future corporate action entitlements and share sale proceeds. Therefore, it is imperative that any shareholder contacting the JSE via their “Claimit” programme should be directed to the appropriate transfer agent responsible for maintaining their records rather than having one single call centre.

During December, Computershare acquired ingage IR Limited and CMi2i Limited.

ingage provides investor relations and engagement software to help listed companies around the world build and manage their investor relations function.

CMi2i provides independent and trusted advice to boards, executives and advisors of some of the largest public companies around the world. The company’s investor intelligence services, including its bondholder offering, help companies to identify and engage with investors on complex, contested and high stakes issues.

For more information, visit: News & Insights