The Companies and Intellectual Property Commission’s (“CIPC”) Annual Return is a statutory requirement in Section 33(1) of the Companies Act 71 of 2008 (as amended) (“Companies Act”), that 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. All companies and close corporations are required by law to lodge their Annual Returns with the CIPC.
The CIPC has issued Notice 52 of 2019 announcing that new requirements will apply for companies to declare their compliance status to specific sections of the Companies Act in the form of a CIPC Compliance Checklist. The CIPC Compliance Checklist will be required to be submitted with the Annual Return of the company. For details about the Compliance Checklist, click here.
The Compliance Checklist will be used by the CIPC to ensure compliance of the mandatory requirements of the Companies Act. It will further serve 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 trends of non-compliance appear, to act accordingly.
As from 1 January 2020 the CIPC Compliance Checklist is mandatory to complete before submitting a company’s Annual Return with the CIPC. The Compliance Checklist is applicable to all companies, including state-owned companies, non-profit companies, private companies, personal liability companies and public companies. At this stage the checklist does not apply to close corporations.
The Compliance Checklist comprises of 24 questions with “yes”, “no” or “not applicable” answer options. Companies are prompted to indicate whether they complied with a particular section during the previous calendar year.
The following sections have been included in the CIPC Compliance Checklist:
- Section 4 – Solvency and Liquidation test
- Section 15 – Memorandum of Incorporation, shareholder agreements and rules of company
- Section 26 – Access to company records
- Section 27 – Financial year of company
- Section 28 – Accounting records
- Section 29 – Financial statements
- Section 30 – Annual financial statements
- Section 32 – Use of company name and registration number
- Section 33 – Annual return
- Section 44 – Financial assistance for subscription of securities
- Section 45 – Loans or other financial assistance to directors
- Section 50 – Securities register and numbering
- Section 61 – Shareholder meetings
- Section 66 – Board, directors and prescribed officers
- Section 69 – Ineligibility and disqualification of persons to be director or prescribed officer
- 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
- Regulation 21 – Registered office of company
- Regulation 43 – Social and Ethics committee
- Schedule 1 – Provisions concerning non-profit companies
The checklist will ask if a company has complied with a section of the Act but will not explain what the section is about. The questionnaire does not allow respondents an opportunity to explain their responses. We, therefore, recommend that you document your interpretation of every section, so that you can account for your responses should you be questioned by the CIPC, especially given that there are serious consequences of giving incorrect information.