It’s the financial year-end season for most businesses and that means it’s time to look at your financial statements, filing accounts, accounting for your records and books.

During this process, it is best to also check if your business is compliant with the relevant laws before submitting your annual returns. The first thing that should be on your list is the Companies and Intellectual Property Commission (CIPC) compliance checklist.

The CIPC compliance checklist started being in effect from the 1st of January 2020. I attended a conference a few weeks ago at the beginning of the year and it was brought to my attention how important it is for businesses to be compliant with this law, not only because of the heavy consequences that come with failure to comply; but what it could mean for businesses’ privacy.

Here’s what I think you should be aware of regarding the CIPC compliance checklist:

Firstly, it is important to understand that the Compliance Checklist applies to all companies, including state-owned companies, non-profit companies, private companies, personal liability companies and public companies. The checklist currently does not apply to close corporations.

The Companies Act and the annual return must be filed within 30 business days after the anniversary date of the company’s date of incorporation

What are the objectives of the Compliance Checklist? 

• To ensure compliance with the mandatory requirements of the Companies Act;
• To serve as an educational tool for directors and company secretaries, in guiding them with regards to their responsibilities in terms of the Companies Act;
• To utilise the Checklist to monitor and regulate proper compliance with the Companies Act and, if trends of non-compliance appear, to act accordingly.

What to expect on the Checklist: 

The Compliance Checklist comprises of 24 questions with “yes”, “no” or “not applicable” answer options. Companies are requested to indicate if they comply with a particular section during the previous calendar year.

The questionnaire does not allow respondents an opportunity to explain their responses. Companies will be required to complete the Compliance Checklist, before submitting their annual returns.

The Repercussions: 

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.

Cons

• Most raised concerns were about what the CIPC will do with the information provided and how differences in interpretation of the Companies Act will be dealt with.
• There is less room that provides a reasonable opportunity for explanations for areas of non-compliance or interpretation. At the very least, more guidance is required.
• This new checklist has seemed to be vague and businesses may need external assistance from qualified accountants and representatives, to make sure that they understand how it works and whether businesses are compliant with what is required from the Checklist, before filling it out.

Get in touch with me directly and let us give your financial year a governable start. info@cvwab.co.za.