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Picture: 123RF/80869348
Picture: 123RF/80869348

Linda Ensor’s article states that not all entities governed by the Financial Intelligence Act, which is implemented by the Financial Intelligence Centre (FIC), are complying (“Firms’ foot-dragging a threat to SA’s bid to escape greylist”, February 14).

A crucial component of this legislation is the obligation to “know your client”, which includes the disclosure of ultimate beneficial owners (UBO). While the Companies Amendment Bill gazetted last year obliges private companies to provide a UBO register with their annual returns to the Companies & Intellectual Property Commission (CIPC), the law states that this information can only be accessed by the FIC and the state security cluster, and not by the media or the public.

Companies are therefore obliged by law to provide information on their clients that is denied to them by a further piece of legislation, which is an obvious clash of legislation. One of the 22 reasons provided by the Financial Action Task Force for greylisting SA is the lack of legislation to disclose UBO, which was addressed in the amendment bill, but it inexplicably denies access to this data by the media and the public.

The CIPC is an efficient state agency with an effective IT infrastructure that could provide this access, but it is not the custodian of the Companies Act and can only implement the law as gazetted. Public access to UBO registers has long been in place with most of our European trading partners and our African neighbours Ghana and Nigeria, and commitment to this effect has been given by Kenya, Senegal and Zambia.

The principle that the affairs of companies cannot be entirely private is well established in our law. The Constitutional Court ruling in 1996 by Justice Ackermann in Bernstein v Bester NO stated as follows:

“The establishment of a company as a vehicle for conducting business on the basis of limited liability is not a private matter. It draws on a legal framework endorsed by the community and operates through the mobilisation of funds belonging to members of that community. Any person engaging in these activities should expect that the benefits inherent in this creature of statute, will have concomitant responsibilities ….”

A further simple argument is that the reasons for shareholders keeping beneficial ownership secret from the public are probably precisely the same reasons the public requires transparency of ownership. Given the corporate malfeasance of our recent past, it is patently clear that transparency should prevail over secrecy, and the relevant authorities need to explain to the media and public why they are denied access to private company UBO registers.

Andrew McGregor
MD, Who Owns Whom

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