The CIPC has granted an extension for the filing of annual returns (due to the lockdown), but the process now includes the completion of a compliance checklist, to prove compliance with the Companies Act.
All companies (including external companies) and close corporations are required to file their annual returns with the Companies and Intellectual Property Commission (CIPC) annually within 30 days from the anniversary of their original date of incorporation failing which the CIPC will start the deregistration process to remove the company or close corporation from its active records.
If the filing deadline of annual returns fell within the national lockdown period, there will be a two week extension from the date the lockdown ceases. The CIPC notice does not distinguish between the different lockdown levels so it is unclear, at this stage, what effect the downgrade to level 4 will have on this extension. If the filing deadline of annual returns falls outside of this period, the normal prescribed filing period will be applicable. This extension of the filing period has the effect of deferring penalties, requiring the completion of a compliance checklist for some companies, and preparation of annual financial statements.
Annual returns can be filed electronically via the CIPC Annual Return Website: annualreturns.cipc.co.za or CIPC Self Service terminal.
With effect from 1 January 2020 all incorporated, private, public, state owned and non-profit companies whose annual financial statements are audited or independently reviewed are also required to complete and submit a compliance checklist before submitting their annual returns. CIPC has advised that without the submission of the compliance checklist, annual returns cannot be submitted. This is despite the fact that neither the Companies Act nor its regulations impose this obligation.
The compliance checklist contains 24 questions which requires ‘yes’, ‘no’ or ‘not applicable’ answers and is aimed at ensuring compliance with mandatory requirements of the Companies Act.
In essence, the company is required to consider whether it has complied with the requirements during the previous calendar year and make this submission to CIPC.
It is stated that the compliance checklist was introduced to ensure that directors, company secretaries and other mandated officials of a company have a working knowledge and understanding of the Companies Act, in order to report accurately to CIPC about the company’s compliance with the Companies Act, and for the CIPC to track the actions and workings within the company.
It is yet to be seen how the CIPC will assess the answers provided, particularly as there is no ability to provide detailed reasons supporting the answers on the compliance checklist. Accurate and correct information must be provided because knowingly providing false information to the CIPC is an offence which could result in a fine or imprisonment or both.
Companies are advised to seek legal advice when completing the compliance checklist, particularly if they are uncertain on whether they have complied with the Companies Act. Compliance training for directors and individuals involved in the management of the business is also recommended.