SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison and Madison Liebmann, ENS
in relation to a company’s securities, “beneficial interest” means the right or entitlement of a per - son, through ownership, agreement, relationship or otherwise, alone or together with another per - son, to: • receive or participate in any distribution in respect of the company’s securities; • exercise or cause to be exercised, in the ordi - nary course, any or all of the rights attaching to the company’s securities; or • dispose or direct the disposition of the com - pany’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, 2002 (Act 45 of 2002). The distinction between beneficial ownership and beneficial interest is important as the report - ing obligations in relation to beneficial interests are applicable 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 estab - lish and maintain a register of the persons who hold beneficial 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 disclosure of ben - eficial 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 Own - ership” 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 and it is advisable to follow the steps to submit beneficial ownership/ beneficial interest information as per CIPC’s guidelines. Listings Requirements The Listings Requirements mandate issuers to disclose shareholdings of 5% or more in their annual report and circulars. 6. Corporate Reporting and Other Disclosures 6.1 Financial Reporting On an annual basis, a company must prepare AFS within six months after the end of its finan - cial year, or within such shorter period as may be appropriate in accordance with the Companies Act. The Companies Act provides that the AFS of a public company must be audited and, in the case of profit and non-profit companies, the AFS may: • be audited if it is in the public interest to do so under the Regulations; • be audited voluntarily if the company’s MOI so provides; or
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