SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
result of the acquisition, the person holds a benefi - cial interest in securities amounting to 5%, 10%, 15% or any further whole multiple of 5% of the issued securities of that class; or • disposes of a beneficial interest in sufficient securi - ties of a class issued by a company such that, as a result of the disposition, the person no longer holds a beneficial interest in securities amounting to a particular multiple of 5% of the issued securities of that class. Upon having received such notice, an affected com - pany must file a record of that notice with the CIPC and a regulated company must: • file a copy with the Takeover Regulatory Panel (TRP); and • report the information to the holders of the relevant class of securities, unless the notice concerned a disposition of less than 1% of the class of securi - ties. The Takeover Regulations require a mandatory offer to be made to the remaining shareholders when a party (operating alone or in concert) acquires securities in a regulated company that increase the acquiring party’s beneficial interest in the voting rights of such company to 35% or more. Amendments to the Companies Act Brought About by the GLAA The GLAA introduced the definition of “beneficial owner”, meaning a natural person who, directly or indirectly, ultimately owns or exercises effective con - trol of a company, including through holding beneficial interests, exercising voting rights, exercising control over director appointments, or the ability to otherwise materially influence management. It is important to note here that the concept of “beneficial interest” pre-dates the GLAA and was therefore already in the Companies Act and is distinct from beneficial owner - ship. When used in relation to a company’s securities, “beneficial interest” means the right or entitlement of a person, through ownership, agreement, relationship or otherwise, alone or together with another person, to: • receive or participate in any distribution in respect of the company’s securities;
• exercise or cause to be exercised, in the ordinary course, any or all of the rights attaching to the company’s securities; or • dispose or direct the disposition of the company’s securities or any part of distribution in respect of the securities. It does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, No 45 of 2002. The distinction between beneficial ownership and beneficial interest is important as the reporting obli - gations in relation to beneficial interests are applica - ble to “affected companies”, whereas the reporting obligations flowing from beneficial ownership apply to companies that are “non-affected”. In this regard, an affected company must establish and maintain a register of the persons who hold ben - eficial interests equal to or in excess of 5% of the total number of securities of that class issued by the company, together with the extent of those beneficial interests, and must file a copy of its register of the dis - closure of beneficial interest with the CIPC, together with its annual return. On the other hand, a non-affected company must record in its securities register prescribed information regarding the natural persons who are the beneficial owners of the company, and must also file a record of the beneficial owners with the CIPC. In certain respects, the guidelines published by the CIPC titled “User Guidelines Beneficial Ownership” seem to sometimes conflate beneficial ownership with beneficial interest, even though, as discussed above, these concepts are not one and the same according to the definitions in the Companies Act. In any event, it should be noted that both affected and non-affected companies have reporting obligations. The General Laws Amendment Bill 2026 proposes enhanced CIPC enforcement powers, including the ability to impose administrative fines directly (with increased thresholds), deregister companies for repeated failures to file securities or beneficial own -
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