On 13 August 2019, the Companies and Intellectual Property Commission (“CIPC”) issued Notice 52 of 2019, advising that new requirements would apply for companies to declare their compliance status to specific sections of the Companies Act 71 of 2008 (as amended) (the “Companies Act”), which would be required to be submitted with the Annual Return of a company.

Therefore, as from 1 January 2020, the CIPC Compliance Checklist became mandatory to complete before submitting a company’s Annual Return with the CIPC. Section 33(1) of the Companies Act states that every company must file an Annual Return in the prescribed form, with the prescribed fee, and within the prescribed period after the anniversary of the date of its incorporation.

The CIPC has stated that the Compliance Checklist was introduced by the CIPC to ensure compliance by companies of the mandatory requirements of the Companies Act and to educate the directors of companies on the specific requirements of the Companies Act. The CIPC further commented that the Compliance Checklist would be used to monitor and regulate proper compliance with the Companies Act and that, if the CIPC were to notice any trends of non-compliance they would act accordingly. Potential penalties for non-compliance could include an administrative fine. In the event that a company knowingly provides false information to the CIPC, the directors could be fined, or could face imprisonment of not more than 12 months, or be subjected to both a fine and imprisonment.

Notice 9 of 2020, which was issued by the CIPC on 3 March 2020, however, limits the application of the Compliance Checklist. The aforementioned notice states that only companies that are audited or independently reviewed, are now required to declare their compliance status and submit the Compliance checklist to the CIPC with the company’s Annual Return. The information required in terms of the Compliance Checklist must be submitted to the CIPC within 30 business days after the anniversary date of a company’s incorporation (the “compliance year”).

The Compliance Checklist also now contains a comment box for each question in the event that companies wish to explain their interpretation of the compliance requirements in respect of specific answers given to the CIPC.

Compliance with the Companies Act is mandatory and directors have a duty to ensure that the company complies with the relevant sections of the Companies Act at all times. Therefore, in the event that a company is audited or independently reviewed, there is no escaping the requirement of mandatory compliance in respect of the submission of the Compliance Checklist with such company’s Annual Return.

Vernon Findlay

Corporate Statutory Department, Johannesburg

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