NEW CIPC ENFORCEMENT COMPLIANCE CHECKLIST MANDATORY FOR COMPANIES FROM 1 JANUARY 2020

The CIPC issued a Notice (Notice 52 of 201fhbc_jan_nuusbrief_01_179) in August of 2019 where it stated that the roll out of the Companies Checklist will be on a voluntary basis for a period of 4 months from 1 September 2019 where after compliance with this checklist would become mandatory on 1 January 2020 and companies would be required to complete the Compliance Checklist before submitting Annual Returns.

CIPC now requires companies to complete this Compliance Checklist to ensure compliance of the mandatory requirements of the Companies Act (Act No. 71 of 2008).  It also serves as an educational tool for directors and company secretaries in guiding them with regards to their responsibilities in terms of the Companies Act.

CIPC will utilise the Checklist to monitor and regulate proper compliance with the Companies Act and if certain trends of non-compliance appear, CIPC will take action accordingly.

The completion of the CIPC Enforcement Compliance Checklist will be mandatory for the following categories of companies:

  • Incorporated Companies (Inc)
  • Proprietary Limited – (Pty) Ltd
  • Limited (Ltd)
  • State owned Companies (SOC)
  • Non-Profit Companies (NPC)

Directors, company secretaries and other mandated officials within a company are now compelled to have a working knowledge and understanding of the Companies Act and track the actions and workings within the company in order to report accurately to CIPC about the company’s compliance with the Companies Act.

The Enforcement Compliance Checklist, lists the following questions and in answering, an option of (i) Yes, (ii) No or (iii) Not Applicable, can be ticked off on the list (in respect of every section/regulation individually):

  • Did the company comply with the following sections of the Companies Act during the previous calendar year? 
    • 4, 15, 26, 27, 28, 29, 30, 32, 33, 44, 45, 50, 61, 66, 69, 70, 71, 86, 90, 92 and 94
  • Did the company comply with the following regulations of the Companies Act during the previous calendar year? 
    • 21 and 43
  • Did the company comply with schedule 1 of the Companies Act during the previous calendar year? 

The required compliance confirmation in respect of the abovementioned sections, regulations and schedule 1 specifically refer to the following:

Section 4  Solvency and Liquidity Test (read together with Section 22, Reckless Trading)
Section 15    Memorandum of Incorporation (MOI), Shareholder Agreements and Company Rules
Section 26    Access to company records
Section 27  Financial year end and amendments to it
Section 28  Statutory requirements for Accounting Records
Section 29 Statutory requirements for Annual Financial Statements
Section 30 Annual Financial Statements: Statutory and voluntary audits, independent reviews, etc
Section 32 Use of Company name and company registration number
Section 33 Filing of annual return
Section 44 Financial assistance for subscription of securities
Section 45 Loans and other financial assistance to directors
Section 50 Securities register and numbering
Section 61 Shareholders meetings
Section 66 Election and appointment of directors and prescribed officers
Section 69 Ineligibility and disqualification of directors and prescribed officers
Section 70 Vacancies on board
Section 71 Removal of directors
Section 86  Mandatory appointment of company secretary
Section 90 Appointment of auditor
Section 92 Rotation of auditors
Section 94 Audit committees
Reg 21 Registered office of a company
Reg 43 Social and Ethics Committee
Schedule 1  Provisions concerning non-profit companies (NPC`s)
   

It is evident that the information required is vast and cover an extensive portion of the Companies Act.  If you do not have a working knowledge or reasonable understanding of the Companies Act, you will experience difficulty in completing the checklist.

FHBC assists its clients in lodging Annual Returns with CIPC and will also now offer to assist clients in completing the required Compliance Checklist before submitting Annual Returns.

Clients should, however, take note that most of the business of the company is internal, within the company itself.  Companies required to self-regulate and comply with the Companies Act at all times.

It remains the responsibility of the company, its directors and company secretaries to ensure that correct information is provided in the submission of the Compliance Checklist.  Incorrect information supplied to CIPC may imply non-compliance, which in turn may lead to queries or action from CIPC.

FHBC will make available to its clients a similar (initial) checklist with relevant background information on the specific sections, regulations and Schedule 1 of the Act, in terms whereof CIPC requests compliance confirmation.  FHBC staff will also be available to provide information and guidance as and when may be required by its clients.  If FHBC are requested to submit the Compliance Checklist on behalf of a client, FHBC will make use of the information supplied on the initial checklist.

If any incorrect information is submitted on the Compliance Checklist, CIPC provides for a procedure whereby an application can be submitted in request to have the information rectified.  Sufficient information as to the reason for the amendment has to accompany the application, where after CIPC will make a determination.

FHBC urges its clients to take note of the mandatory compliance with the Enforcement Compliance Checklist to the CIPC as from 1 January 2020.

Please read: Notice 52 of 2019 http://www.cipc.co.za/files/1415/6569/2299/notice_52.pdf

If you have any queries, please contact Elsabe le Roux at elsabe@fhbc.co.za

Source Reference:

The Companies Act, Act No, 71 of 2008
CIPC “Notice of downtime, Companies Compliance Checklist on E-Services”: Notice 52 of 2019