The CIPC Companies Compliance Checklist

What does it mean to be compliant? Is your organisation Compliant when it comes to the Companies Act 71 of 2008? These are questions all directors need to ask themselves.
 
Since 2018, CIPC implemented various methods and systems to ensure compliance with the Companies Act.
 
Changes CIPC Introduced to Monitor Compliance
 
On 13 August 2019, CIPC issued Notice 52 of 2019 confirming that it is now implementing a new method to monitoring compliance with the Companies Act 71 of 2018 with the so-called Compliance Checklist.
 
What Is This Compliance Checklist?
 
This checklist or questionnaire relates to various sections of the Companies Act 71 of 2008, requiring confirmation of compliance of these sections issued by CIPC.
 
This checklist will only be applied to your previous calendar year and will be submitted to CIPC when you submit your annual return.
 
For example:
 
If you submit your 2019 CIPC annual return, then your questionnaire and answers will be based on your previous calendar year i.e. 2018.
 
Compliance Sections In Question?
 
In this Compliance checklist that CIPC issued, there are certain sections to which CIPC would like to know you have complied.
 
For instance, when you look at Section 4 of the Act, Solvency and Liquidity, have you applied this correctly when it comes to your company? Do you know when this requirement needs to be complied with? Do you have the correct paperwork in place to confirm that you are compliant? If not, what will it take for you to be compliant with this section?
 
Another section CIPC would like to check for compliance is Section 30, Annual Financial Statements. Have you prepared your financials within six months after your financial year-end?
 
These are a few sections in which CIPC would like to know your compliance status. Now ask yourself in what way you have been compliant when it comes to the Companies Act 71 of 2008.
 
When Does This Come into Effect?
 
CIPC has rolled out a four-month voluntary submission period 01 September 2019 till 31 December 2019, where companies will have the option to submit the Checklist and get familiar with the process.
As of 01 January 2020, the submission of the compliance checklist will be compulsory and needs to be submitted to CIPC as part of the annual return submission process.
 
Why Did CIPC Introduce This?
 
  • To ensure compliance of the mandatory requirements of the Companies Act described in Section 15 (requiring that every company must have a MOI);
  • It serves as an education tool for directors, company secretaries, auditors and audit firms, in guiding them with regards to what their responsibilities are 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 noncompliance appear, they will act accordingly; and
  • To implement a self-assessment model similar to SARS.
 
Who 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
 
What Happens When You Are Not Compliant?
 
You simply cannot answer yes, no or not applicable as you deem fit, as this will have an impact on the company as well as its directors. These answers need to be true and accurate. It is critical that the person completing the questionnaire understands the Act and the requirements of the relevant section of the Act.
 
If a person who knowingly (or ought to have known) provides false information to CIPC or commits an offence as per Section 215(2) and Section 216(b) of the Companies Act, this person will be liable to either pay a fine or imprisonment for a period not exceeding 12 months, or to both a fine and imprisonment.
 
Keep in mind that CIPC recently won the following High Court Cases to impose penalties for Non-Compliance, providing them more power to enforce penalties on non-compliance of the Act.

CIPC V CITICONNECT 9503/18 – ORDER GRANTED
CIPC V BLUE SKY AIR 9502/18 – ORDER GRANTED
CIPC V SISAO PROJECT 9504/18 – ORDER GRANTED
 
What’s Next?
 
Speak to your local Moore firm and we will guide you through the Compliance Checklist introduced by CIPC for your business.
 
Find out more about how we can help you with your CoSec needs with our Business Outsourcing services.