CIPC Compliance Checklist - SAIPA

1 CIPC Compliance ChecklistLeana van der MerweWhat IsTheComplianceChecklist? 13 August 2019 CIPC issued notice 52 of 2019 Implementinganewmethod tomonitor Compliance with the Companies Act It is calledComplianceChecklist This Checklist relate to various sections of the Companies Act Usedtodetermine Compliance withthese sections Will apply to previous calendaryear and you submit with your annual return Example:Ifyousubmityour2019 Annualreturnthenyourcompliancechecklista ndanswerswill be basedonpreviouscalendaryearwhich willbe20182 CIPC Compliance ChecklistWho Are Required to Submit This Checklist ? Personal Liability Companies (INC) Proprietary Limited Companies (PTY) LTD Limited Companies (LTD) State owned Companies (SOC) Non-Profit Companies (NPC) Close Corporation (CC) NO, not applicable currently!3 CIPC Compliance ChecklistWho Is Responsible?

2 Business and affairs of a company must beoManaged byORoUnder The Control ofoTheDirectors Directors need to be aware of their Compliance obligations Personcompetingthe questionnaire commitsandoffenseiftheyknowingly provide false information4 CIPC Compliance ChecklistObjective Of The Compliance Checklist To ensure Compliance of the mandatory requirements of the Companies Act described in Section 15 Educational tool for odirectors, ocompany secretaries, oauditors and oaudit firms, oin guiding them with regards to what their responsibilities are in terms of the Companies Act; CIPC will utilize the Checklist to monitor and regulate proper Compliance with the Companies Act and if trends of noncompliance appear, they will act accordingly; and To implement a self-assessment model5 CIPC Compliance ChecklistAnd If You Are Not Compliant?

3 Answers need to be true and accurate Personcompletingthechecklistmustknowandu nderstandtheActandtherequirements If a person knowingly provides false information this person will be liable foroFineoImprisonment up to 12 monthsoFineandImprisonment Accountant/Independent revieweroNOCLAR reportingoNon- Compliance withL & RoIR reportCIPCoCompilation Report Management Rememberyoushouldhavebeendoingthisallalo ngaspartofyourprofessional obligation undersubmittingARCIPC Compliance Checklist6 When does this come into effect? Notice was issued 3 August 2019, CIPC Notice 52 of 2019 4 Month VOLUNTARY submission 01 September 2019 31 December 2019 01 January 2020 MANDATORY Submitted as part of the Annual return process SubmitBeforetheAnnual return!CIPC Compliance Checklist7 Calendar Year Checklist requires a response in respect of the past calendaryear.

4 Calendar year is not defined in the Companies Act Theannual return must be filed within 30 business days after the anniversary date of the company s date of incorporation. (12 months after incorporation date within 30 business days) Unclear to which period the Checklist refers AFS submitted with the annual return usually represents the financial position of the previous financial year. Example:oYear end 28 February 2019oAnniversary Date01 June 2019oAR to be submitted 01 July 2020oWithAFSforyearended 28 February 2019oCompliance Checklist 01 January 2019 31 December 2019 CIPC Compliance Checklist8 Uncertainty And Answers To Uncertainty What will CIPC use this for Monitor Compliance Costinvolved PartofyourReview/CompilationProcess InterpretationsoftheAct DocumentandDocumentandDocument Companies Act Sections and Subsections Awaiting CIPC feedback, for now, Document and Document!

5 Calendar Year and confusionCIPC Compliance Checklist9 What is a Mandatory Audit? StateOwnedCompany Limited Company PrivateCompany withfiduciaryAssetsgreater thanR5million MOIrequiresandaudit(Doesn t matterwhatPIScoreis)LOOKOUTFOROLDARTICLE SOFASSOCIATIONANDINCORPORATION Proprietary Limited with PI Score greater than 350 Proprietary Limited with PI Score between100and349 ANDtheentityis Non-Owner Managed ANDAFS Internally Compiled Proprietary Limited with PI Score between 100 and 349 AND the entity is Owner Managed ANDAFS Internally CompiledCIPC Compliance Checklist10 Compliance Sections Sections of the Companies Act which CIPC wants to confirm Compliance with Thefollowingquestionsshouldbeaskedbyyour self onEACH section:oIs it applicableoDidyouapplyitcorrectlyoDo you know the requirements?oDoyouhavethe correctpaperwork?

6 24 QuestionsoYesoNooNot ApplicableoNo opportunity to explain your answers Further Compliance Checklist11 List of all the Compliance Questions Did the company comply with section 4(solvency and liquidity test)during the previous calendar year? Did the company comply with section 15(Memorandum of Incorporation, shareholders agreement and rules of the company)during the previous calendar year? Did the company comply with section 26(Access to company records)during the previous calendar year? Did the company comply with section 27(Financial year of company)during the previous calendar year? Did the company comply with section 28(Accounting records)during the previous calendar year?CIPC Compliance Checklist12 List of all the Compliance Questions Did the company comply with section 29(Financial statements)during the previous calendar year?

7 Did the company comply with section 30(Annual financial statements)during the previous calendar year? Did the company comply with section 32(Use of company name and registration number)during the previous calendar year? Did the company comply with section 33(Annual return)during the previous calendar year? Did the company comply with section 44(Financial assistance for subscriptions of securities)during the previous calendar year?CIPC Compliance Checklist13 List of all the Compliance Questions Did the company comply with section 45(Loans of other financial assistance to directors)during the previous calendar year? Did the company comply with section 50(Securities register and numbering)during the previous calendar year? Did the company comply with section 61(Shareholders meeting)during the previous calendar year?

8 Did the company comply with section 66(Board, directors and prescribed officers)during the previous calendar year? Did the company comply with section 69(Ineligibility and disqualification of persons to be director or prescribed officer)during the previous calendar year?CIPC Compliance Checklist14 List of all the Compliance Questions Did the company comply with section 70(Vacancies on board)during the previous calendar year? Did the company comply with section 71(Removal of Directors)during the previous calendar year? Did the company comply with section 86(Mandatory appointment of company secretary)during the previous calendar year? Did the company comply with section 90(Appointment of auditor)during the previous calendar year? Did the company comply with section 92(Rotation of auditor)during the previous calendar year?

9 CIPC Compliance Checklist15 List of all the Compliance Questions Did the company comply with section 94(Audit committee)during the previous calendar year? Did the company comply with regulation 21(Registered office of the company)during the previous calendar year? Did the company comply with regulation 43(Social and Ethics Committee)during the previous calendar year? Did the company comply with schedule 1(Provisions concerning Non-Profit Companies)during the previous calendar year?CIPC Compliance Checklist16 Answering The Checklist All questions must be answered Noisifyourcompanyshouldhavecompliedbutdi d not comply N/Aisifyourcompany hadnoneedtoordoesnotneedto comply Yesisifyour company had to comply and they did complyCIPC Compliance Checklist17Q1 -Did the company comply with section 4(solvency and liquidity test)during the previous calendar year?

10 Solvency and liquidity test. Assets fairly valuedmust exceed liabilities and the company will be able to pay debts within 12 months. This is used when, for example, paying a dividend or making a loan . If any of the following occurred:oDistributions of any nature including dividends (Section 46)oFinancial assistance for shares (Section 44)oFinancial assistance to directors and group companies (section 45)oCapitalization of shares with a cash alternative (Section 47)oBuyback of shares (Section 48)oAmalgamations and mergers (Section 113) Has a solvency and Liquidity test been done?CIPC Compliance Checklist18Q2 -Did the company comply with section 15(Memorandum of Incorporation, shareholders agreement and rules of the company)during the previous calendar year? Memorandum of Incorporation, shareholder agreement and rules of the company must comply with the Companies Act.