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New Mandatory Compliance Checklist For Companies by Johanei Borstlap

The Companies and Intellectual Property Commission (“CIPC”) on 13 August 2019 introduced a new compliance checklist (“the checklist”), which must be completed by all companies (including state-owned; non-profit; private; personal liability and public companies) before submitting annual returns. The submission of the checklist is mandatory with effect from 1 January 2020 (in terms of Notice 52 of 2019).

One of CIPC’s functions is the monitoring of compliance with the Companies Act 71 of 2008 (“the Act”). The checklist will be used by CIPC to monitor companies’ compliance with the mandatory requirements of the Act.

The checklist comprises of 24 questions with “yes”; “no” or “not applicable” answer options. The checklist tests compliance by the company in the previous calendar year with certain specified sections of the Act.

The checklist contains a reminder to companies that in terms of section 215(2)(e) of the Act it is an offence knowingly to provide false information to CIPC and a person convicted of this offence could be liable for a fine, imprisonment not exceeding 12 months or both a fine and imprisonment, in terms of section 216(b) of the Act. CIPC recently won three High Court cases dealing with penalties for non-compliance with the Act (CIPC v Citiconnect 9503/18; CIPC v Blue Sky Air 9502/18 and CIPC v SISAO Project 9504/18).

Concerns have been raised about how CIPC will deal with differences in interpretation of the Act. CIPC indicated that should information submitted through the checklist be in conflict with the company’s annual financial statements as submitted, CIPC will raise the conflict with the company.

SAICA has advised directors and accountants to document their interpretations and subsequent answers to the checklist questions. The vague manner in which the questions have been drafted can easily lead to confusion or misinterpretation.

CIPC indicated that any questions or specific points of clarification regarding the checklist should be raised by e-mail to COR135.1complaints@cipc.co.za.

It is advisable that companies should consult with their accountants and/or legal advisors when completing the checklist.

CIPC Compliance Checklist questions

  1. Did the company comply with section 4 (solvency and liquidity test) during the previous calendar year?
  2. Did the company comply with section 15 (Memorandum of Incorporation, shareholders’ agreement and rules of the company) during the previous calendar year?
  3. Did the company comply with section 26 (Access to company records) during the previous calendar year?
  4. Did the company comply with section 27 (Financial year of company) during the previous calendar year?
  5. Did the company comply with section 28 (Accounting records) during the previous calendar year?
  6. Did the company comply with section 29 (Financial statements) during the previous calendar year?
  7. Did the company comply with section 30 (Annual financial statements) during the previous calendar year?
  8. Did the company comply with section 32 (Use of company name and registration number) during the previous calendar year?
  9. Did the company comply with section 33 (Annual return) during the previous calendar year?
  10. Did the company comply with section 44 (Financial assistance for subscriptions of securities) during the previous calendar year?
  11. Did the company comply with section 45 (Loans of other financial assistance to directors) during the previous calendar year?
  12. Did the company comply with section 50 (Securities register and numbering) during the previous calendar year?
  13. Did the company comply with section 61 (Shareholders meeting) during the previous calendar year?
  14. Did the company comply with section 66 (Board, directors and prescribed officers) during the previous calendar year?
  15. Did the company comply with section 69 (Ineligibility and disqualification of persons to be director or prescribed officer) during the previous calendar year?
  16. Did the company comply with section 70 (Vacancies on board) during the previous calendar year?
  17. Did the company comply with section 72 (Board committees) during the previous calendar year?
  18. Did the company comply with section 86 (Mandatory appointment of company secretary) during the previous calendar year?
  19. Did the company comply with section 90 (Appointment of auditor) during the previous calendar year?
  20. Did the company comply with section 92 (Rotation of auditor) during the previous calendar year?
  21. Did the company comply with section 94 (Audit committee) during the previous calendar year?
  22. Did the company comply with regulation 21 (Registered office of the company) during the previous calendar year?
  23. Did the company comply with regulation 43 (Social and Ethics Committee) during the previous calendar year?
  24. Did the company comply with schedule 1 (Provisions concerning Non-Profit Companies) during the previous calendar year?