ATTENTION COMPANIES – NEW CIPC COMPLIANCE CHECKLIST

Companies and Intellectual Property Commission (CIPC) requires that all companies submit an Annual Return every year after the anniversary of the date of incorporation. Failure to do so will result in a company being deregistered because CIPC assumes that you are no longer in business. During 2019 the CIPC announced that as from 1 January 2020 a new “Compliance Checklist” becomes mandatory for all companies to complete before submitting their Annual Return.
 

So what’s the purpose of this checklist?

CIPC says that the Compliance Checklist will serve:
• To ensure compliance of the mandatory requirements of the Companies Act,
• To be an educational tool for directors and company secretaries, in guiding them with regards to their responsibilities in terms of the Companies Act, and
• It is to be utilised by CIPC as a tool to monitor and regulate proper compliance with the Companies Act and if trends of non-compliance appear, to act accordingly.

Who is affected by the checklist?

 
Companies affected include private, non-profit, personal liability, public, and state-owned companies. The checklist does not apply to closed corporations.

How does this affect me as a company owner?

 
If you are a company, you are required to be compliant with the Companies Act and company directors must ensure that the company complies with the relevant sections of the Companies Act at all times. So the responsibility of the Compliance Checklist rests with the directors of the company.
Also bear in mind that in terms of section 215(2)(e) a person commits an offence if they knowingly provide false information to CIPC and that if a person is convicted on an offence they could be liable to a fine, imprisonment not exceeding 12 months or both a fine and imprisonment in terms of section 216(b).
 

Concerns about the Compliance Checklist:

 
Well, there seem to be a concern with the checklist. One of the main concerns is that it asks if a company has complied with a section of the Companies Act but does not explain what the section is about nor does it allow directors an opportunity to explain their responses. So directors need to be careful here.
SAICA has also raised concerns about the checklist and the questions raised are concerns such as what the CIPC will do with the information provided and how differences in interpretation of the Companies Act will be dealt with.

Our Recommendation

 
Firstly if you are a director of a company, it’s time you made acquaintance with the Companies Act and understand your duties as a director and understand all 24 sections that have been included in the Compliance Checklist.
It is quite obvious that there are consequences for failing to complete this mandatory checklist, or knowingly completing it incorrectly which includes a fine, imprisonment or both. It has to be completed and completed correctly. So if you are unsure what to do then you should contact a professional accountant for assistance.
You should also document your interpretation of every section so that you can account for responses should you be questioned by the CIPC, especially given that there are serious consequences of giving incorrect information. It’s really not so bad, given that this is just an annual exercise.
Finally, a dedicated email address ([email protected]) has been created to raise concerns around the mandatory checklist by CIPC. They will monitor this email address and are open to discussing specificities or issues of confusion with companies. We also recommend that registered company owners make use of this to communicate with CIPC on their concerns.