From 1 January 2020, the Companies and Intellectual Property Commission (“CIPC”) will make it mandatory for companies, before submitting their annual returns, to complete a compliance questionnaire. This will intensify the CIPC’s compliance enforcement as the questionnaire will be used to assess areas of non-compliance with the Companies Act (“the Act”). The CIPC will then take action where it sees the need to address any weaknesses.
The questionnaire will also serve to ensure that directors and officers of companies know and understand the mandatory compliance aspects of the Act as it asks if the organisation complies with a list of important areas of the Act (although for smaller companies, some of these areas are non-applicable). We attach, hereto, the list of sections of the Act for which annual confirmation of compliance is required for your reference.
The main questions ask:
- Have you satisfied yourself that the company meets liquidity and solvency requirements?
- Does your Memorandum of Incorporation, or changes made to it, comply with the Act?
- Have you compiled Annual Financial Statements in line with the Act’s requirements?
- Do you handle any financial assistance to directors correctly?
- Do directors run the company along the stipulations set out in the Act?
Please remember that:
- it is an offence to make a false declaration to the CIPC, so ensure that you both understand the question (in the context of the Act) and give a careful and accurate answer, seeking professional help if required (especially on the first occasion that the questionnaire is completed).
- your annual return must be submitted in the thirty business days after the anniversary of the organisation’s date of incorporation (e.g. if the company was incorporated on, say 4th December, then you have thirty business days from 5th December to complete the return). If the organisation fails to submit an annual return, the CIPC will take this to mean that the organisation is no longer active and will begin company deregistration proceedings, which must be avoided.
We know that only a small percentage of non-profit organisations in South Africa have been established as non-profit companies but, for those that have been, we hope this “heads up” will be helpful. If you need any guidance on this matter, or on broader issues of organisational compliance, please remember that we are here to help.