What is the 25% Beneficial Ownership Rule?

There is no 25% beneficial ownership rule in South African law, and there never has been one in a statute. The figure originated in paragraph 103 of the Financial Intelligence Centre’s (FIC) Guidance Note 7 of 2 October 2017, which treated a holding of 25% or more of a company’s voting shares as usually sufficient to indicate control. The FIC deleted that 25% indicator entirely when it published the revised Guidance Note 7A on 1 September 2025 and now points accountable institutions to Public Compliance Communication 59 (PCC 59), which at paragraph 2.18 strongly recommends identifying every natural person holding 5% or more of an ownership interest as a beneficial owner under section 21B(2) of the FIC Act. A separate 5% figure sits in the Companies Act 71 of 2008, where a company must keep a register of persons holding a beneficial interest equal to or exceeding 5% of a class of its issued securities — a different duty, owed to the Companies and Intellectual Property Commission (CIPC) rather than to the FIC. Trustees carry a third, parallel obligation under section 11A of the Trust Property Control Act 57 of 1988 to keep a beneficial ownership register and lodge it with the Master of the High Court.

The Short Answer: 25% Was Guidance, Not Law — and It Has Been Withdrawn

No South African statute or regulation has ever prescribed a 25% beneficial ownership threshold. The FIC Act’s section 21B does not contain a percentage, and PCC 59 (paragraph 2.16) expressly confirms that the Act and its Regulations contain no percentage and that “controlling ownership interest” is left undefined. The 25% figure entered South African practice as an indicator rather than a test — never a safe harbour, never a binding rule.

The same wording carried forward into Guidance Note 7A at paragraph 103, until 1 September 2025 when the FIC published a revised Guidance Note 7A that removed the 25% indicator entirely and redirected readers to PCC 59. That is the moment the “25% rule” ceased to exist even as guidance.

Why people still ask about it: the United States genuinely does operate a 25% statutory test under its Corporate Transparency Act reporting rules. International group templates, offshore onboarding packs and imported compliance checklists still carry 25% into South African files. A US-derived 25% template is not compliant here and will systematically under-identify beneficial owners.

Where the 5% Figure Comes From — and Why There Are Two of Them

The FIC’s 5% is a recommendation for accountable institutions. PCC 59, issued on 8 August 2024, states at paragraph 2.18 that the FIC strongly recommends identifying persons holding 5% or more of an ownership interest in a legal person as beneficial owners for purposes of section 21B(2). Its legal weight is nuanced: the FIC’s own Consultation Feedback Note on PCC 59 records that the 5% threshold “sets the best practice standard” and is “not an expansion of the law”. But Guidance Note 7A’s preface (paragraph (iii)) describes FIC guidance as authoritative, meaning an institution that departs from it must demonstrate equivalent compliance.

The Companies Act’s 5% is a hard filing duty for companies. Section 56(7)(aA) of the Companies Act 71 of 2008 requires an affected company to establish and maintain a register of persons holding a beneficial interest equal to or exceeding 5% of the total issued securities of that class, with disclosure tracked in 5% increments.

When the FIC moved to 5%, it brought FICA customer due diligence into line with a 5% figure that the CIPC beneficial ownership register already used. Same number, two entirely different obligations, two different regulators. A company can be fully compliant with its CIPC filing and still fail a bank’s FICA onboarding, and vice versa. The alignment is real, but the obligations are not interchangeable.

Comparison Table: The Three Beneficial Ownership Regimes in South Africa

Three separate beneficial ownership duties under South African law

	FICA / FIC Act section 21B	Companies Act 71 of 2008	Trust Property Control Act 57 of 1988
Who owes the duty	Accountable institutions listed in Schedule 1 — banks, legal practitioners, estate agents, trust and company service providers, credit providers, crypto asset service providers, life insurers, gambling businesses, forex dealers, high-value goods dealers	Companies (affected and non-affected, filing different content)	Trustees
Owed to	The institution’s own records and its RMCP; enforced by the FIC and supervisory bodies	CIPC, via national electronic filing	The Master of the High Court
Threshold	No statutory percentage; FIC recommends 5% or more (PCC 59 paragraph 2.18)	5% or more of a class of issued securities (section 56(7)(aA))	No percentage — qualitative test based on roles and control
25% status	Deleted from guidance on 1 September 2025	Never applied	Never applied
Trigger	Client onboarding and ongoing due diligence	Incorporation, annual return cycle, and any change in beneficial ownership	Registration and ongoing changes

How to Identify a Beneficial Owner: The FIC’s Process of Elimination

This is the operative method for legal persons, and it is where most compliance files go wrong. A beneficial owner is always a natural person — the FIC states directly that identifying only legal owners who are themselves juristic persons does not discharge the obligation. A file that names a holding company as the beneficial owner is a non-compliant file.

1. Identify natural persons with a controlling ownership interest. Apply the FIC’s recommended 5% test. Ownership is traced through chains, not stopped at the first company. PCC 59’s Annexure A works an example in which a 60% holding in a 60% holder yields a 36% effective interest that qualifies, while an effective interest that falls below 5% does not.
2. If step 1 identifies no one, identify natural persons who exercise control by other means. This step has no percentage at all and captures nominee shareholders, directors, attorneys acting under mandate, voting pacts, veto rights and dominant influence however it is exercised.
3. If steps 1 and 2 identify no one, identify natural persons who exercise control over management — an executive officer, director or senior manager.
4. Record the elimination process itself. Retain evidence of how you moved down the cascade. Institutions may identify beneficial owners at all three levels under a risk-based approach.
5. Keep it accurate, adequate and up to date, and make sure the institution’s RMCP addresses beneficial ownership compliance including record keeping.

Legal practitioners are themselves Schedule 1 accountable institutions, which is why an attorney will run this analysis on a client’s structure before opening a matter. This is the compliance work Burger Huyser Attorneys’ commercial law practice handles routinely through company registrations, restructurings and trust formations.

Trusts, Partnerships and Nonprofits: Where Percentages Do Not Help

For trusts, the enquiry is about roles rather than percentages. Trustees must identify every trustee, founder or donor, settlor, protector, named beneficiary and any other person exercising effective control over the trust. Separately, section 11A of the Trust Property Control Act 57 of 1988, in force since 1 April 2023, obliges trustees to establish and maintain a record of the trust’s beneficial owners and lodge that register with the Master of the High Court. Non-compliance penalties under the Act are reported at up to R10 million and/or five years’ imprisonment under section 19(2), and should be confirmed against the current consolidated Act before any reliance is placed on the figure.

For partnerships, identify every partner, expressly including silent partners. Where a partner is itself a legal person, run the process of elimination on that partner.

For nonprofit organisations, the same approach as trusts applies — the FIC directs accountable institutions to identify all persons exercising effective control.

The CIPC Filing Layer: Deadlines and Consequences

The Companies Act filing regime came out of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, with the Companies Amendment Regulations giving effect to CIPC beneficial ownership filing published and effective on 24 May 2023. The “1 April 2023” date often quoted in industry material belongs to the Trust Property Control Act and FICA layer, not to the CIPC filing regime — the two should not be merged.

CIPC beneficial ownership filing windows

Filing event	Deadline
Newly incorporated company — first beneficial ownership filing	Within 10 business days of incorporation
Any change in beneficial ownership	Within 10 business days of the change
Existing entity — annual filing	Within 30 business days of anniversary date, alongside the annual return

As a hard stop, CIPC will not accept an annual return until the beneficial ownership filing is in place. Consequences of not filing include CIPC compliance notices (typically allowing seven working days to remedy), blocked annual returns leading to deregistration after two years of non-filing, exclusion from public-sector tenders, and administrative fines. Directors who wait for the next annual return to disclose a shareholding change are out of time on the day the change occurs.

Why the Threshold Changed: The FATF Context

South Africa was placed on the Financial Action Task Force (FATF) grey list on 24 February 2023, following the FATF’s 2019 mutual evaluation of the country. The beneficial ownership reforms across the FIC Act, Companies Act and Trust Property Control Act were a direct response, aimed at FATF Recommendations 24 and 25 on transparency of legal persons and legal arrangements.

South Africa was removed from the grey list on 24 October 2025 at the FATF plenary in Paris, alongside Nigeria, Mozambique and Burkina Faso. The European Union followed by removing South Africa from its high-risk third-country list in January 2026.

Delisting did not relax the obligations. The revised Guidance Note 7A that deleted the 25% indicator was published on 1 September 2025, before delisting, and the 5% expectation has stood since. Readers should not treat the grey-list exit as a signal to loosen their files.

What This Means in Practice: A Compliance Checklist

• If you run a company: confirm your CIPC beneficial ownership filing is current, and diarise the 10-business-day window for filing any change in ownership.
• If you are a trustee: confirm the trust’s beneficial ownership register is lodged with the Master and reflects current trustees, founders, protectors and named beneficiaries.
• If you are an accountable institution: review your RMCP against PCC 59. An RMCP still built on a 25% threshold now carries a justification burden — the guidance that supported 25% was withdrawn on 1 September 2025, and 5% is the safe-harbour position. Institutions may still set their own threshold, but must be able to show equivalent compliance.
• If you are being onboarded by a bank or an attorney: expect to disclose down to 5%, expect to be asked to trace ownership through holding structures to natural persons, and expect the institution to refuse a file that names a company rather than a person as the beneficial owner.

Frequently Asked Questions

Is the 25% beneficial ownership rule still valid in South Africa?

No. The 25% figure was never in a statute — it came from paragraph 103 of the Financial Intelligence Centre’s Guidance Note 7 of 2 October 2017, which described a holding of 25% or more of voting shares as usually sufficient to indicate control. The FIC deleted that indicator entirely from the revised Guidance Note 7A published on 1 September 2025 and now refers institutions to Public Compliance Communication 59 instead.

What is the current beneficial ownership threshold in South Africa?

For accountable institutions doing FICA due diligence, the FIC strongly recommends 5% or more of an ownership interest, at paragraph 2.18 of PCC 59. Separately, the Companies Act 71 of 2008 requires a company to keep a register of persons holding a beneficial interest of 5% or more of a class of its issued securities under section 56(7)(aA). The two 5% figures are different obligations owed to different regulators, even though the number is the same.

Why does my international group’s compliance pack still say 25%?

Most likely because it was drafted for a jurisdiction that genuinely uses a 25% statutory test — the United States applies one under its Corporate Transparency Act reporting rules, and 25% has historically featured as an illustrative example in international standard-setting material. A 25% template applied to a South African file will under-identify beneficial owners against the FIC’s current recommended approach and should be reviewed.

Is the FIC’s 5% recommendation legally binding?

It sits between binding and optional. The FIC’s own Consultation Feedback Note on PCC 59 says the 5% threshold sets the best practice standard and is not an expansion of the law, so it is a recommendation rather than a statutory rule. However, Guidance Note 7A describes FIC guidance as authoritative, so an institution that adopts a different threshold in its Risk Management and Compliance Programme must be able to demonstrate that it achieves equivalent compliance — a materially harder position to defend since the 25% support was withdrawn.

Can a company be listed as a beneficial owner?

No. A beneficial owner must be a natural person. The FIC states directly that identifying only legal owners that are themselves juristic persons does not fulfil the obligation, so ownership must be traced through holding companies and other structures until natural persons are reached. Where a chain exists, effective interests are calculated through it — a 60% holding in a company that holds 60% produces a 36% effective interest, which qualifies.

Do trusts have a percentage threshold for beneficial ownership?

No percentage test applies to trusts. The enquiry is about roles and control, so trustees must identify every trustee, founder or donor, settlor, protector, named beneficiary and anyone else exercising effective control over the trust. Section 11A of the Trust Property Control Act 57 of 1988, in force since 1 April 2023, separately requires trustees to keep a beneficial ownership register and lodge it with the Master of the High Court.

Did South Africa’s exit from the FATF grey list relax these obligations?

No. South Africa was removed from the grey list on 24 October 2025 and the European Union removed it from its high-risk third-country list in January 2026, but the beneficial ownership duties remain in force unchanged. The revised Guidance Note 7A that withdrew the 25% indicator was published on 1 September 2025, before delisting, and the 5% expectation has applied throughout.

If you are unsure whether your company’s CIPC filing or your trust’s register with the Master reflects the right people, Burger Huyser Attorneys can review the structure and bring the filings up to date through its commercial law and trusts practices. The firm works with companies and trustees across Gauteng from its head office at 49 First Avenue, Linden, Randburg — call 011 888 0246 to talk it through, and bring your share register, trust deed or existing beneficial ownership declaration to the first consultation. Burger Huyser Attorneys carries a 4.8/5 average across 250+ Google reviews (Trustindex verified), and clients consistently note the firm’s honesty about costs and prospects rather than false reassurance.