On 13 August 2019 the Companies and Intellectual Property Commission (CIPC) announced that from 1 January 2020 it will be mandatory for all companies to complete a Compliance Checklist before submitting their annual returns.
This Compliance Checklist requires entities to declare their compliance status with the mandatory requirements of the Companies Act, 71 of 2008 and is applicable to all companies, including non-profit companies, which is often the legal structure used to create home owners’ associations.
The Compliance Checklist comprises 24 “yes”, “no” or “not applicable” questions that are all aimed at confirming compliance with a particular section of the Companies Act during the previous calendar year. The CIPC will use the Checklist to monitor and regulate proper compliance with the requirements of the Companies Act and, if trends of non compliance appear, CIPC will take the necessary steps against the company.
The Companies Act requires the board of directors to manage the business and affairs of a company and although these directors may delegate this function to a suitably qualified professional, they remain ultimately responsible for compliance with the Companies Act.
Knowingly providing false information to the CIPC is an offence in terms of the Companies Act which, if convicted, could hold a director liable to a fine or imprisonment for a period not exceeding 12 months, or to both a fine and imprisonment.
It is therefore important for directors of home owners’ associations, established as non-profit companies, to ensure strict compliance with the CIPC Compliance Checklist and to ensure that the information provided is accurate prior to submitting the companies annual return.
This is easier said than done because the questions in the Compliance Checklist are vague and a number of these questions are not applicable to home owners’ associations which will undoubtedly cause confusion. We therefore strongly recommend that directors seek professional assistance when dealing with this compliance process.
Click here for more details about the Compliance Checklist.
Should you require assistance in completing this Compliance Checklist, please don’t hesitate to contact Paddock’s consulting department at firstname.lastname@example.org for a no-obligation quote, to provide the necessary legal assistance.
Article reference: Paddocks Press: Volume 15, Issue 3.
Specialist Community Scheme Attorney (LLB, LLM), Auren Freitas dos Santos, has previously been a Portfolio Manager and a Legal & Compliance Officer of a large managing agency.
This article is published under the Creative Commons Attribution license.