The Companies and Intellectual Property Commission (CIPC) has announced new requirements for companies and close corporations when completing their Annual Returns.
From 1 January 2020 it will be mandatory to complete a compliance questionnaire when submitting the Annual Return.
The rationale for the questionnaire
The CIPC will use this questionnaire to assess areas of non-compliance with the Companies Act (“the Act”) and will take action where it sees the need to address any weaknesses.
It also serves to ensure that directors and officers of companies know and understand the mandatory compliance aspects of the Act.
If you don’t complete the questionnaire, then you won’t be able to file the Annual Return.
What is in the questionnaire?
You are asked to state whether you comply with a list of important areas of the Companies Act (for smaller companies, you can mark quite a few of these as non-applicable).
The main areas covered are:
- Have you satisfied yourself that the company meets liquidity and solvency requirements?
- Does your Memorandum of Incorporation, a new shareholders’ agreement or changes to one, or changes to company rules comply with the Act?
- Have you compiled Annual Financial Statements in line with the Act’s requirements?
- Do you handle financial assistance to directors correctly?
- Is your shareholder register compliant?
- Do directors run the company along the stipulations set out in the Act?
- Do you have a company secretary?
It is an offence to make a false declaration to the CIPC, so when doing this for the first time, make use of your accountant’s services.
When to submit the Annual Return
Companies are required to submit their Annual Return in the thirty business days after the anniversary of their date of incorporation – i.e. if the company was incorporated on 10 June then you have thirty business days from 11 June to complete the return.
Close Corporations have the two months from the first day of their month of incorporation to submit their returns i.e. if your date of incorporation is 10 June, then the Annual Return needs to be in on or by 31 July.
Don’t forget Annual Financial Statements (AFS) must be submitted, in XBRL format, with the Annual Return. If the date for your Annual Return falls before you have finalised your current AFS, then submit last year’s AFS.
If you fail to submit an Annual Return, the CIPC will take this to mean your company is no longer active and will begin company deregistration proceedings – the last thing you need is to find your company effectively doesn’t exist so make sure you acquaint yourself with these new requirements and ask your accountant for advice in any doubt.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)