n Stellenbosch Law Review = Stellenbosch Regstydskrif - Disclosure of ownership in South African company law
|Article Title||Disclosure of ownership in South African company law|
|© Publisher:||Juta Law Publishing|
|Journal||Stellenbosch Law Review = Stellenbosch Regstydskrif|
|Affiliations||1 Ludwig-Maximilians-Universitat, Germany|
|Publication Date||Jan 2013|
|Pages||406 - 429|
Knowing who owns a company is essential for a multitude of reasons. It enables investors to carry out transactions in an informed way and to look into corporate governance matters involving large-scale shareholders. It enables banks, other businesses and individuals who contract with a company to establish who actually controls that company. And it enables the competent authorities, as well as the general public, to investigate the use of companies for illicit purposes, such as money laundering, tax evasion, corruption or bribery. On the other hand, mandatory company ownership disclosure raises questions about privacy, wealth distribution and, in some instances, even personal security. Accordingly, mandatory disclosure of company ownership is, and has always been, a politically sensitive issue.
This article seeks to address two central questions: How does the law determine who actually owns a company, and how and to what extent does it impose duties of disclosure on these persons and provide for their enforcement? Regarding the first question, it is argued that South African company law distinguishes between three different forms of company owners - those who are entitled to dispose of any shares ("owners" in the narrow sense of the word), those who are entitled to exercise any shareholder rights vis-à-vis the company ("shareholders"), and those who can exercise ultimate effective control over a company, either personally themselves as "owners" or "shareholders", or through someone else ("holders of a beneficial interest"). Regarding the second question, the mechanisms of disclosure of these positions are analysed and evaluated. It is argued that the exact scope of disclosure is far from certain. Moreover, due to a lack of enforcement measures, compliance with substantial parts of the law of company ownership disclosure seems to be de facto at the discretion of the owners involved.
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