Substantial penalties for the late filing of annual financial statements

The Companies and Intellectual Property Commission (CIPC) is tasked with ensuring that companies comply with the provisions of the Companies Act.

In terms of Section 30 of the Companies Act, a company is required to prepare its annual financial statements within six months of the end of its financial year and file it with CIPC, where applicable.

The auditors of a company’s annual financial statements are required to submit reports of any irregularities, such as failure of a company to comply with the Section 30 requirements, to CIPC through the Independent Regulatory Board for Auditors (IRBA).

In three recent instances, Reportable Irregularity reports were received by CIPC who, in turn, issued Compliance Notices to the respective companies. In all instances, these notices were ignored.

The Companies Act further gives CIPC the power to levy administrative fines against companies for specific, continuous non-compliance with provisions of the Companies Act. Accordingly, CIPC’s Corporate Disclosure Regulation and Compliance Unit applied to Court for an order against each of the non-compliant companies for the payment of an administrative fine equal to 10% of the company’s turnover during the period which the company was non-compliant. These orders were subsequently granted.

This again shows that there are serious consequences for companies who do not comply with the provisions of the Companies Act, and fail to correct their behaviour.

Should you have any questions relating to the Companies Act or related legislation, please contact:

Henning Pieterse | Partner

E: h.pieterse@bissets.com

Areas of Expertise: Corporate & Commercial Law