1. Introduction
The promulgation of the Companies (Beneficial Ownership) Regulations, 2024 under Legal Notice No. 81 of 2024 marks a pivotal development in Lesotho’s corporate law and regulatory landscape. These Regulations, issued pursuant to s185 of the Companies Act 18 of 2011, establish a binding legal framework for the identification, disclosure and maintenance of records pertaining to beneficial ownership in all companies registered in Lesotho. They further align Lesotho’s corporate governance practices with international anti-money laundering (AML) and counter-terrorist financing (CTF) standards, particularly those espoused by the Financial Action Task Force (FATF).
2. Conceptual Framework
The Regulations adopt an expansive and functionally grounded definition of “beneficial owner”, encompassing any natural person who directly or indirectly owns or exercises control over a company or on whose behalf a transaction is conducted. This includes persons with beneficial interests in securities, individuals who hold more than 10% of a company’s shares or voting rights, and those who possess the power to appoint or remove a majority of directors. “Ultimate effective control” is also included, thereby capturing arrangements effected through chains of ownership, nominee arrangements or trusts.
3. Core Obligations
The regulatory framework imposes dual disclosure duties. First, any person who acquires beneficial ownership, whether by acquisition of shares, voting rights or through control, is required to notify the company within seven days of such acquisition. Secondly, every company must maintain a comprehensive and up-to-date register of beneficial owners at its registered office in Lesotho. This register must include, inter alia, the beneficial owner’s full name, nationality, country of residence, residential and service addresses, date of birth, date of acquisition of beneficial ownership, and the nature and extent of control.
Where beneficial ownership is held through a legal entity, the register must further disclose the particulars of that legal entity and identify the ultimate natural persons who exert control through it. The Regulations make clear that nominee shareholders and nominee directors are subject to identical reporting obligations, thereby closing potential loopholes for anonymity.
4. Filing and Record-Keeping Requirements
Companies are obliged to file the particulars of beneficial ownership with the Registrar of Companies within seven days of internal registration. Any changes affecting beneficial ownership, including cessation of interest or changes in particulars, must similarly be recorded and filed within seven days of occurrence. The company is required to take proactive steps to verify the accuracy of the information received, and must notify the beneficial owner and the Registrar if it reasonably believes that any particulars are inaccurate or incomplete.
Additionally, companies must retain beneficial ownership records for a period of ten years after the relevant interest ceases or, in the case of a dissolved entity, from the date of deregistration. This obligation extends to liquidators and designated officers acting during or after the winding-up of a company.
5. Oversight and Enforcement
The Registrar of Companies, alongside competent authorities such as financial intelligence units and regulatory bodies, is empowered to inspect the beneficial ownership register and related documents during business hours. Where records are maintained electronically, companies must ensure accessibility and convertibility to legible format upon request. Companies with foreign directors or managers must designate a natural person resident in Lesotho to serve as the point of contact for regulatory compliance.
The Regulations further provide for reciprocal international cooperation, allowing the Registrar to share beneficial ownership information with foreign counterparts, subject to confidentiality and data protection safeguards.
6. Sanctions and Penalties
The Regulations impose strict administrative and criminal sanctions for non-compliance. Companies that fail to maintain or submit accurate beneficial ownership information are liable to fines under the Companies Act. Directors and officers who fail in their duties under these Regulations may be declared delinquent and disqualified from future appointments. Persistent default may result in the removal of a company from the register of companies.
7. Conclusion
The Companies (Beneficial Ownership) Regulations, 2024 signify a decisive shift towards corporate transparency and accountability in Lesotho. By mandating the disclosure and ongoing reporting of beneficial ownership, the Regulations seek to curb the misuse of corporate vehicles for illicit purposes and ensure the enforceability of AML and CTF measures. While compliance may impose additional administrative burdens on companies, the long-term benefit lies in fostering a business environment grounded in trust, transparency and legal certainty. The Regulations bring Lesotho into closer alignment with international best practice and will likely serve as a catalyst for broader governance reforms across the corporate sector.