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CIPC: Clamping down on reckless conduct and non-compliance
- 06 September 2023
- Accounting
- South African Accounting Academy
The CIPC, as Regulator of the Companies Act, will not allow the submission of fraudulent documentation, to go unnoticed without consequence. Any person convicted of an offense in terms of section 214(1) of the Companies Act, and the common law offenses of fraud and forgery, will be liable to a fine, imprisonment, or both.
Companies are urged to take governance and legislative compliance seriously – ignorance is not an excuse in law, and parties found guilty of any offense in terms of the Act, will be prosecuted and punished to the fullest extent of the law.
One of the many purposes of the Companies Act, 71 of 2008 is to provide for a predictable and effective environment for the efficient regulation of companies and other juristic persons, as described in section 7 of the Act. In recent times, it has unfortunately become more and more prevalent for companies and the persons responsible for the management thereof, to rather resort to criminal activities to reach certain goals, than to comply with legislative and common law requirements.
Part of the governance process of any company is to understand the consequences attached to decisions made, not in line with the Companies Act requirements and the impact of such decisions and consequences. It is clear from the perspective of the Regulator of the Act, that many entities, are not aware of the dire impact of their decisions, or simply do not regard such consequences as relevant.
The legislator provided in Chapter 9 of the Act, for certain offenses and penalties, where a person (natural and juristic) is a party to reckless conduct, providing false statements, and is generally non-compliant with the Act.
Click here to download the Legal Article:
https://www.cipc.co.za/wp-content/uploads/2023/09/Article-on-Offences-and-Penalties.pdf
Relevance to Auditors, Independent Reviewers & Accountants:
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The Companies Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (Non-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
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As an auditor, independent reviewer and accountant, you also need to monitor your client’s compliance with the Companies Act and all relevant notices/enforcements/practice notes/customer letters issued by CIPC as the regulator.
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It is therefore vital that you remain aware of new media statements and legal articles issued by CIPC’s Legal department – as it relates to the issuing of fines and penalties in response to non-compliance.
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Where you perform these compliance tasks on behalf of your client, you need to ensure that you comply with all relevant notices/enforcements/practice notes/customer letters issued by CIPC as the regulator.
Relevance to Your Clients:
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An entity (company or close corporation) has a duty to comply with the Companies Act, and all relevant notices/enforcements/practice notes/customer letters issued by CIPC as the regulator.
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It is therefore vital that your clients remain aware of new media statements and legal articles issued by CIPC’s Legal department – as it relates to the issuing of fines and penalties in response to non-compliance.