By Zurayda Mayet | Mayet & Associates

Introduction

On 27 May 2026, the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2026 (the Bill) was introduced in the National Assembly. The Bill is the second instalment of a legislative project that began with the General Laws Amendment Act 22 of 2022. The statute passed at speed in response to South Africa’s February 2023 greylisting by the Financial Action Task Force (the FATF). Where the 2022 Act put beneficial ownership obligations on the statute book, the 2026 Bill is concerned with making them work in practice.

The context matters. South Africa exited the FATF greylist in October 2025, after twenty months of remediation. The next FATF Mutual Evaluation will commence in mid-2026 and conclude in October 2027. The Bill is, in candid terms, the legislative response to a single FATF observation that has tracked South Africa for over a decade, namely that domestic law had progressively put the requirements for beneficial ownership transparency in place, but that enforcement was sporadic, slow, and disproportionate to the scale of non-compliance.

This article examines the changes the Bill proposes to the Companies Act 71 of 2008 (the Companies Act), with a particular focus on three structural shifts: (i) the move from passive register-keeping to active reconciliation against external sources; (ii) the rebalancing of enforcement powers between the Companies and Intellectual Property Commission (the CIPC), the National Prosecuting Authority (the NPA) and the courts; and (iii) the increase in the financial ceiling for administrative fines from R1 million to R10 million. Taken together, these shifts amount to a meaningful change in the compliance posture South African companies and their directors should adopt.

Background: How We Got Here

A short recap is useful, because the Bill builds on a structure that is not fully understood in many corporate boardrooms.

The beneficial ownership reforms introduced by the 2022 Act took effect on 1 April 2023 and were operationalised through the Companies Amendment Regulations of May 2023. Those regulations introduced two parallel disclosure regimes:

• Regulation 32A applies to “affected companies” broadly, public companies, state-owned companies and certain private companies regarded as regulated for takeover purposes and requires the filing of a securities register reflecting persons holding a beneficial interest of 5% or more in any class of issued securities.
• Regulation 32B applies to all other companies (the larger universe of private companies and close corporations) and requires the filing of a register of natural persons who, directly or indirectly, ultimately own the company or exercise effective control over it.

Both regimes were intended to populate a central register maintained by the CIPC. In practice, compliance has been uneven. In January 2025 the CIPC published lists of thousands of non-compliant entities and threatened to bar them from transacting with the Commission. By mid-2025 the CIPC was actively issuing compliance notices, but the procedural architecture for converting a compliance notice into an enforceable sanction remained cumbersome.

The Bill addresses that gap directly.

Shift One: From Passive Register-Keeping to Active Reconciliation

The first significant change introduced by the Bill is conceptual rather than procedural. Until now, beneficial ownership compliance has rested almost entirely on what a company itself files with the CIPC. The Bill introduces a parallel reconciliation duty owed by obliged entities, a new category of person to be prescribed by the Minister, drawing principally from the population of accountable institutions already subject to the Financial Intelligence Centre Act 38 of 2001 (FICA).

The discrepancy report mechanism

The mechanism works as follows. An obliged entity will, in the course of its FICA-related client due diligence, frequently obtain beneficial ownership information from corporate clients. Where the information so obtained differs materially from the information recorded on the CIPC’s register, the obliged entity will be required to lodge a discrepancy report with the CIPC.

The expanded definition of “material” in the Bill is doing real work here. It encompasses any difference that could lead the obliged entity to conclude that it cannot establish and verify the identity of a beneficial owner of the company. That formulation is materially wider than a simple test of arithmetical accuracy. A difference between the registered share register and the FICA file is “material” not only where the percentages do not match, but also where the chain of ownership recorded by the company is incomplete, where the natural person at the top of the chain cannot be reconciled, or where there is doubt about the bona fides of nominee arrangements.

Why this matters

The shift is structural. South Africa is moving from a beneficial ownership regime that relies on self-disclosure by the company to one that builds in independent verification by gatekeepers, banks, attorneys, accountants, trust and company service providers, and the wider FICA accountable institution universe. The CIPC’s register ceases to be a passive repository of filings and becomes the data anchor against which a far larger group of compliance professionals must reconcile their own records.

This carries three immediate practical implications.

First, the register itself becomes more accurate over time. Discrepancy reports lodged by obliged entities will, in aggregate, expose under-reported, mis-reported and stale beneficial ownership data and force its correction.

Second, the company’s own compliance position becomes more visible to its service providers. A bank, attorney or auditor that identifies a material discrepancy is required to report it. Companies that have historically treated beneficial ownership filing as a low-priority annual formality will find that material errors are routinely surfaced, not by the regulator, but by the company’s own counterparties.

Third, the new duty creates an additional layer of reporting risk for obliged entities themselves. Failure to lodge a discrepancy report when one was required will become an enforcement target, in much the same way that failure to file a suspicious-transaction report under FICA section 29 has become a routine enforcement priority for the Financial Intelligence Centre.

Shift Two: From Prosecutorial to Administrative Enforcement

The second shift is procedural. Under the current text of the Companies Act, enforcement of a compliance notice issued under section 171 follows a binary route: the CIPC must either apply to court under section 175 for an administrative fine, or refer the matter to the NPA for criminal prosecution. The two routes are mutually exclusive, both are slow, and neither has been used at scale.

The Bill restructures this in three ways.

Three concurrent enforcement options

First, the binary becomes a triad. In respect of the same compliance notice, the CIPC will be entitled to (i) apply to court for an administrative fine, (ii) refer the matter to the NPA for criminal prosecution, and (iii) in defined circumstances, impose an administrative fine directly. The three routes will operate concurrently rather than alternatively, although their practical sequencing and constraints will need to be developed through prosecutorial policy and the CIPC’s own enforcement guidelines.

Direct administrative fines without court involvement

Second, and this is the genuinely novel mechanic, the CIPC will be empowered to impose an administrative fine directly, without the intervention of a court, in respect of a compliance notice that relates to the submission of a securities register or a register of beneficial interests. The mechanism is narrow in its target (it is confined to register-related notices) but transformative in its operation. The CIPC will no longer need to brief counsel, prepare court papers, fund the litigation, or wait for an unopposed motion to be allocated a hearing date. It will simply impose the fine.

A constitutional question worth flagging

This is the point at which constitutional considerations come into focus. An administrative fine imposed without prior court authorisation is, in legal terms, an exercise of public power that triggers the protections of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and the procedural fairness requirements of section 33 of the Constitution. The Bill addresses this concern by providing for a review mechanism: a company aggrieved by a direct administrative fine may, within 15 business days (or longer with leave), apply to the Companies Tribunal for review. The Tribunal may confirm, modify or set aside the fine; further review or appeal to a competent court remains available.

The architecture is workable, but two questions should be flagged for the companies that will operate within it. The first concerns the standard of review the Companies Tribunal will apply: whether the Tribunal will conduct a rehearing on the merits, or a review confined to the standard administrative-law grounds. The Bill is presently silent on this point, and the answer will materially affect the practical utility of the review. The second concerns the suspensive effect of a Tribunal review on the underlying fine. Without clear language conferring suspensive effect, a company that has paid a fine pending Tribunal review may face genuine recovery difficulties if the fine is later set aside. Both points are amenable to legislative clarification, and would benefit from it during parliamentary scrutiny.

Shift Three: From R1 Million to R10 Million

The third change is the most arithmetically straightforward and, in some ways, the most consequential. Section 175 of the Companies Act currently provides that an administrative fine may not exceed the greater of (i) 10% of the company’s turnover during the period of non-compliance, and (ii) a prescribed minimum maximum of R1 million. The Bill increases that prescribed minimum maximum to R10 million, a tenfold increase.

The arithmetic effect

For larger companies, the 10%-of-turnover ceiling already governs; the change in the prescribed minimum maximum has limited practical effect. For smaller companies, however, the change is significant. A small private company with annual turnover of (say) R20 million that commits a beneficial ownership offence can presently be fined a maximum of R2 million (being 10% of turnover, that figure exceeding the prescribed R1 million). Under the Bill, the same company may face a fine of up to R10 million, being the prescribed minimum maximum, which now exceeds the company’s 10% turnover figure.

Why the increase is meaningful

The deterrent effect of the existing R1 million ceiling has been widely regarded as insufficient. For a company contemplating the disclosure of complex nominee or trust-overlay ownership structures, an administrative fine capped at R1 million may sit well below the perceived commercial value of opacity. A R10 million ceiling re-balances that calculus materially. It does so, importantly, by raising the floor of the prescribed cap rather than altering the 10%-of-turnover formula, meaning that the change targets smaller companies (where opacity is empirically more frequent) without further punishing larger ones (which were already capped at turnover).

The increase also has signalling value within the FATF assessment framework. The 2021 FATF Mutual Evaluation Report identified the disproportion between South African beneficial ownership sanctions and the scale of corporate non-compliance as a specific deficiency. The Bill responds directly to that observation.

A New Ground for Deregistration

In addition to the three structural shifts, the Bill introduces a discrete but important amendment to section 82 of the Companies Act. The CIPC currently has the power to remove a company from the register where it has failed to file annual returns for two or more consecutive years. The Bill adds, as a separate ground, the failure to submit a securities register or beneficial interest register for two or more consecutive years.

The consequences of deregistration under section 82 are not new but bear restating: the company loses its legal personality, its contracts are at risk of being treated as void, its bank accounts are frozen, and its directors may face the personal liability consequences set out in the Companies Act and (where applicable) the National Credit Act 34 of 2005 in respect of certain post-deregistration conduct. Reinstatement is possible under section 82(4), but it is procedurally slow and may be conditional on the rectification of the underlying non-compliance.

The implications for compliance practice are direct. Until now, an attentive company secretary could keep a company “alive” and out of section 82(3) deregistration simply by filing annual returns. After the Bill is enacted, the same company secretary will need to ensure that the securities register, the beneficial interest register (where applicable), and the corresponding CIPC filings are current. The deregistration risk is now a multi-stream risk; it is not enough to keep the annual return filed.

Personal Liability Implications for Directors

The Bill does not, on its face, introduce new categories of director liability. It does, however, materially raise the practical risk of liability under the existing categories.

Three points deserve attention.

First, a company that has been finally deregistered under section 82(3) ceases to exist as a juristic person. Directors who continue to act on behalf of the deregistered company, by, for example, entering into contracts, signing documents or operating bank accounts, may incur personal liability for those acts, including under section 22 of the Companies Act in respect of reckless trading and under common-law agency principles.

Second, where the CIPC imposes a direct administrative fine under the new section 175 mechanism, the fine attaches to the company but the underlying conduct will frequently engage the fiduciary duty owed by directors under section 76. A persistent failure to maintain or file the securities register or the beneficial interest register is the kind of conduct that may attract derivative liability under section 218(2) for losses suffered by the company as a result of director non-compliance with the Companies Act.

Third, the discrepancy report mechanism described above will, over time, create a contemporaneous documentary trail of inaccurate or incomplete beneficial ownership disclosure. That trail will be available to plaintiffs in derivative actions, to shareholders considering relief under sections 162 and 163, and to the Companies Tribunal in proceedings under the new direct-fine review mechanism. A director who has signed off on inaccurate beneficial ownership filings, or who has failed to address known discrepancies between the company’s records and the CIPC register, will be exposed.

Practical Steps for Companies and Their Advisors

Pending passage of the Bill — and acknowledging that further amendment during parliamentary scrutiny is possible — companies and their advisors should consider the following:

1. Audit the existing position now, not on enactment. The 2022 reforms have been in force for three years. Most non-compliance traces back to that period rather than to anything the Bill introduces. The Bill simply makes the existing non-compliance easier to identify, easier to penalise and harder to remedy quietly. Companies should treat the period before enactment as a remediation window.

2. Reconcile the company’s records against the CIPC register. The discrepancy report mechanism will, when it comes into force, be triggered by exactly this kind of reconciliation by external parties. Companies that perform the reconciliation themselves, and correct any errors through ordinary CIPC re-filings, will substantially reduce their downstream exposure.

3. Map the company’s beneficial ownership chain to the natural-person level. Where the chain involves nominees, trusts, foreign holding entities or complex layered structures, the reconciliation should be supported by documentary evidence sufficient to satisfy an obliged entity’s FICA verification process. Companies that cannot produce that evidence on demand should treat the position as a priority issue, not a documentary tidy-up.

4. Brief the board on the new direct-fine and deregistration risks. Directors who have not previously focused on beneficial ownership compliance should be brought up to speed before the Bill is enacted, particularly in light of the personal liability points noted above.

5. Consider the interaction with FICA obligations of group accountable institutions. Where the group includes accountable institutions (a banking subsidiary, an authorised financial services provider, a legal practitioner), the obliged-entity discrepancy report duty will likely apply to those institutions as well, including, in some circumstances, in respect of their own corporate counterparties. Group-wide compliance protocols may need revisiting.

6. Engage with the legislative process. The Bill remains susceptible to amendment. Industry bodies and the legal profession have, in past iterations of the AML-CFT legislative programme, made effective use of the Standing Committee on Finance and the Select Committee on Finance to refine technical provisions. The questions raised above regarding the suspensive effect of Companies Tribunal review, and the standard of review the Tribunal will apply, would benefit from clarification before the Bill is enacted.

Concluding Observations

The 2022 Act put beneficial ownership obligations on the statute book. The 2026 Bill is the architecture for making those obligations enforceable in practice. Read together with the FATF assessment timetable, the message to South African companies is plain: the regulatory infrastructure for beneficial ownership transparency is approaching maturity, and the enforcement runway is now in place.

For the majority of compliant companies, the Bill is not cause for alarm. The accurate and complete maintenance of the securities register, the timely filing of beneficial ownership information, and a willingness to reconcile internal records against external sources will keep most companies out of the new enforcement architecture. For companies that have hitherto regarded beneficial ownership compliance as a low-priority administrative task, however, the Bill marks the end of that approach. The combination of a tenfold increase in the prescribed administrative fine ceiling, direct fining powers exercisable without court involvement, and a new ground for section 82 deregistration is not a marginal adjustment to the existing framework. It is a different framework.

How We Can Assist

Mayet & Associates advises companies and directors on Companies Act compliance, beneficial ownership disclosure obligations, the interface with FICA and the broader anti-money laundering and counter-terrorism financing framework, responses to CIPC compliance notices, and proceedings before the Companies Tribunal. Should your business wish to discuss the matters set out in this article, or undertake a beneficial ownership compliance review in advance of the Bill being enacted, please contact the firm.

Mayet & Associates · www.mayet.law

This article is provided for general information only and does not constitute legal advice. The Bill remains subject to parliamentary process and to further amendment. Readers should obtain specific advice in respect of their particular circumstances before acting on any of the matters discussed.