Mandatory completion by companies of the CIPC compliance checklist

• South Africa

• Other

21-02-2020

The Companies Intellectual Property Commission (“CIPC”) has implemented a compliance checklist that all companies must complete. As of 1 January 2020, CIPC requires that, prior to submitting annual returns, all companies must complete the compliance checklist. Companies affected include private, non-profit, personal liability, public and state-owned companies. The compliance checklist does not, however, apply to close corporations.

The rationale behind the compliance checklist is for CIPC to ensure compliance of the mandatory requirements of the Companies Act 2008 (“Act”), as well as serving as an educational tool for directors and company secretaries by guiding them with regards to the responsibilities in terms of the Act. CIPC will utilise the compliance checklist to monitor and regulate proper compliance with the Act and to act accordingly in instances of non-compliance.

The compliance checklist comprises 24 questions relating to compliance with the Act. Each response to the questions is answered with either yes, no or not applicable, therefore companies cannot provide commentary or an explanation of their answer. The compliance checklist encompasses questions relating to a company’s compliance with various sections in the Act relating to inter alia:

• solvency and liquidity tests;
• financial statements;
• financial assistance;
• shareholders meetings; and
• election and appointment of directors.

It is important to note that it is an offence to knowingly provide false information to CIPC, punishable by a fine or to imprisonment for a period not exceeding 12 months or to both a fine and imprisonment.

The compliance checklist is unfortunately unclear and will require clarification. Until this occurs, companies must apply their mind carefully when completing the checklist to avoid sanctions for non-compliance. Eversheds Sutherland is preparing a simple manual to assist companies in ensuring compliance with these new requirements.

Should you require any further clarification or assistance with completing your company’s compliance checklist or annual return, please contact our offices.