Disclosure Requirements – South Africa
Disclosure Category: 1
In the case of holdings in securities listed in South Africa (including foreign securities) and in financial instruments that are convertible into listed securities, Clearstream Banking S.A. (Clearstream Banking) is under obligation, under section 56 of the Companies Act 2008 ("the Companies Act"), as amended, to disclose the identity and holdings of its clients holding applicable positions.
Consent
In order to comply with the legislation as mentioned above, clients entering into transactions in the South African market are hereby deemed to consent to disclosure and to the appointment of the requestor (for example, the issuer or its agent) as their attorney-in-fact, under power of attorney, to collect from Clearstream Banking such information as is required to be disclosed.
Disclosure requirements
Clients are advised that local laws and regulations (including the Companies Act) may require Clearstream Banking to disclose securities holding information and the identity of its clients.
Background and legal basis
Section 56 of the Companies Act gives an issuer the power to investigate ownership of its securities.
A written notice is sent by the issuer to any person that holds the securities or that held the securities during the three years preceding the date of the notice. The notice is addressed to the person whose name appears in the shares register or the person the issuer knows or has reasonable cause to believe to have a beneficial interest in the securities issued by that issuer. The issuer can request that the final beneficial owner be revealed.
The South African market recognises the nominee concept and South African securities held by clients of Clearstream Banking S.A. are registered in the name of Clearstream Banking or Standard Chartered Nominees SA (Pty) Ltd if it is a physical security. The Companies Act gives the issuer the right to require disclosure down to the level of the final beneficial owner.
Sanctions
Non-compliance with section 56 of the Companies Act is considered as an offence. Persons failing to comply shall be subject to a fine or imprisonment for up two years or both.
Obligation to report threshold crossings
In terms of section 56 of the Companies Act, if a security of a public company is registered in the name of a person who is not the holder of the beneficial interest in all the securities in the same company held by that person, that registered holder of security must disclose:
- the identity of the person on whose behalf that security is held; and
- the identity of each person with a beneficial interest in the securities so held, the number and class of securities held for each such person with a beneficial interest, and the extent of each such beneficial interest.
The information required in terms of 1. and 2. above must:
- be disclosed in writing to the company within five business days after the end of every month during which a change has occurred in such information, or more promptly or frequently to the extent so provided by the requirements of a central securities depository; and
- otherwise be provided on payment of a prescribed fee charged by the registered holder of securities.
The Companies Act further provides that a company that knows or has reasonable cause to believe that any of its securities are held by one person for the beneficial interest of another, by notice in writing, may require either of those persons to:
- confirm or deny that fact;
- provide particulars of the extent of the beneficial interest held during the three years preceding the date of the notice; and
- disclose the identity of each person with a beneficial interest in the securities held by that person.
The above information must be provided not later than 10 business days after receipt of the notice.
A company that falls within the meaning of “regulated company” as set out in section 117(1)(i) of the Companies Act is obligated in terms of the Companies Act to
- establish and maintain a register of the disclosures made in terms of section 56 of the Companies Act; and
- publish in its annual financial statements, if it is required to have such statements audited in terms of section 30(2) of the Companies Act, a list 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.
In terms of section 122 of the Companies Act a person must notify a regulated company in the prescribed manner and form within three business days after that person:
- acquires a beneficial interest in sufficient securities of a class issued by that company such that, as a result of the acquisition, the person holds a beneficial interest in securities amounting to 5%, 10%, 15%, or any further whole multiple of 5%, of the issued securities of that class; or
- disposes of a beneficial interest in sufficient securities of a class issued by a company such that, as a result of the disposition, the person no longer holds a beneficial interest in securities amounting to a particular multiple of 5% of the issued securities of that class.
The requirements set out directly above apply to a person irrespective of whether:
- the person acquires or disposes of any securities
- directly or indirectly; or
- individually, or in concert with any other person or persons, or
- the stipulated percentage of issued securities is held by that person alone, or in aggregate by that person together with any
- related or inter-related person; and
- person who has acted in concert with any other person.
In terms of the Financial Markets Act, the depository rules will provide for participants to disclose to the CSD their clients' details as per their CSDP records. However, the Companies Act provides the Issuer (not the SA regulator) certain powers to request disclosure from clients and that includes foreign nominees.
Stamp duty and capital gains tax
The South African Tax Authorities organise the Securities Transfer Tax (STT) and Capital Gains Tax (CGT), which is charged to the beneficial owner via the custodian (Standard Chartered Bank Johannesburg Branch) and Clearstream Banking, if applicable.
The South African Tax Authorities may question or make inquiries in relation to any details of a transaction, including the eligibility for exemption.
By holding equities issued in South Africa in an account with Clearstream Banking, clients are deemed to have authorised disclosure to the South African Tax Authorities, upon request, of all details of transactions relating to such equities.