COMPANIES : ARE YOU WILLING TO GIVE 10% OF YOUR TURNOVER AWAY?
The Companies and Intellectual Property Commission (CIPC) sent out a media release on the 31 May 2018 on cases in the High Court that they have won. These wins are related to Section 30 of the Companies Act which states that “every company is required to prepare its annual financial statements within 6 months after of end of its financial year”.
The Companies and Intellectual Property Commission (CIPC) objectives.
Among others, CIPC, has the responsibility to promote compliance in terms of the Companies Act efficiently and effectively in order to ensure the widest possible enforcement. This includes promoting the reliability of financial statements prepared and submitted by companies as well as monitoring compliance in terms of those financial statements.
What is the Independent Regulatory Board for Auditors (IRBA)?
Auditors of a company need to be independent and reliable in order to combat fraudulent activities. Therefore the IRBA is an organisation made up of many independent and reliable auditors that report to CIPC after their completion of an audit of a respective company and its financial records.
What do we know from the recent court decisions?
IRBA have reported a major failure by companies to comply with section 30 of the Act in that they were not submitting their financial statements within the prescribed period either in full or at all.
IRBA then reported their findings to CIPC in order for CIPC to follow out their objectives and enforce compliance. CIPC sent these various companies Compliance Notices which were in turn ignored.
CIPC then sent the companies Administrative fines for the period of non-compliance and again such was done to no avail.
Which are the major companies involved in the failure to comply?
The companies which gave the CIPC the most problems were Citiconnect, Blue Sky Air and Sisao Projects.
These were the major role players referred to in the Notice of Motion brought by CIPC. They brought a court application seeking an order by the court to enforce those Administrative fines.
What was the outcome?
The conclusion of these cases was in favour of CIPC. The Administrative fines were ordered to be paid by each company equal to 10% of their turnover during the entire period that these companies showed non-compliance!
CIPC’s concluding remarks are that they “strive to rectify conduct that goes against the spirit of the Companies Act through high standards of corporate governance and high levels of transparency”. Our Question to you is, have you submitted you annual Financial Statements?
How can we help?
Schwenn Inc., Attorneys and Conveyancers can assist with your company secretarial duties and ensure that you are aware of these kinds of obligations.