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CIPC: Companies and their stakeholders in dispute
- 30 July 2025
- CIPC
- South African Accounting Academy
Summary:
The Companies and Intellectual Property Commission (CIPC) has published a practice note providing some clarity and guidance regarding companies and their stakeholders in dispute, as well as the resulting frequent director amendments.
Article:
The Commission has observed through the filing of documentation, especially pertaining to director amendments, that the disputes within companies, between directors themselves and directors and shareholders, manifests itself in removal and appointment of directors. Although an application for removal and/or appointment of a director may comply with legislative and CIPC internal requirements, such submissions lead to a cycle of director amendments and the companies’ submitting objections to such filings as provided for in Regulation 168(6) of the Act.
The back and forth of amendments, and objections thereto, results in CIPC’s objective of maintaining an accurate and up to date registry, being compromised.
In order to ensure that internal company disputes are adjudicated via the correct and relevant platforms, a position has been taken by the Commission that when there are reasonable grounds to believe that the filing of director amendments is not as a result of normal governance processes, the CIPC will stay (freeze) all filings related to director amendments, until the appropriate forum has pronounced on the dispute and a resolution has been reached.
Reasonable grounds, in this instance will, inter alia, include situations where two or more director amendments related to the same persons have been filed and the company objected thereto through the abovementioned process.
Section 187(2)(a) of the Companies Act, provides as follows: -
“(2) Other than with respect to matters within the jurisdiction of the Takeover Regulation Panel, the Commission must enforce this Act, by, among other things:
- promoting voluntary resolution of disputes arising in terms of this Act between a company on the one hand and a shareholder or director on the other, as contemplated in Part C of Chapter 7, without intervening in, or adjudicating any such dispute;”
The appropriate forums for adjudicating disputes as mentioned above is detailed in section 156 of the Act, which includes the Companies Tribunal and relevant High Courts.
This practice was effective from 24 July 2025.
Click here to download Practice Note 3 of 2025:
Relevance to Auditors, Independent Reviewers & Accountants:
- 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.
- 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.
- 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.
- Company Secretarial staff play a critical role in bridging the gap between entities and CIPC. As legislation, regulations and tax law are continuously changing and evolving, it is of utmost importance for companies and company secretarial practitioners to keep abreast of such changes in so that companies continue to meet their compliance obligations.
Relevance to Your clients:
- 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.
- Failure to comply with CIPC requirements, may lead to an investigation and/or the issuance of compliance notices.