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CIPC: Guideline for corporate compliance programme (SEC)
- 29 November 2024
- CIPC
- South African Accounting Academy
Summary:
The Companies and Intellectual Property Commission (CIPC) has republished a previous guideline to emphasise the importance of corporate compliance – specifically relating to functions of Social and Ethics Committees (SECs).
Article:
This Guideline is issued in terms of Regulation 4 of the Companies Regulations 2011 and is addressed to the Social and Ethics Committees (SEC) of:
- every state-owned company;
- every listed public company; and
- any other company that has in any 2 of the previous 5 years, scored a Public Interest Score (PIS) above 500 points in terms of Regulation 26(2)
The functions of a SEC per Regulation 43(5)(a)(i)(bb) are set out in the Guideline as follows:
- to monitor the company's activities, have regard to any relevant legislation, other legal requirements or prevailing codes of best practices, with regard to matters relating to social and economic development – including the company's standing in terms of goals and purposes for the Organisation for Economic Cooperation and Development (OECD) recommendations regarding corruption.
The SEC of a company should identify and evaluate the corruption risks that its employees or other acting on its behalf are likely to encounter and use this knowledge as a basis for developing appropriate measures to reduce these risks. The risk evaluation should take into account the nature of the company's business, including the sectors and markets in which it operates, and should be revisited as the company's business changes, expands or develops.
Best practice indicates that an effective method to achieve compliance with its SEC functions, would be for a company to implement a Corporate Compliance Programme.
The following minimum principals, that should be specifically incorporated into a Corporate Compliance Programme, are:
- Top management commitment
- Clear, practical policies and procedures (a list of some policies that should be included is provided)
- Communication and Training
- Periodic reviews
- Due diligence
- Auditing and Accounting Controls
Click here to download the 3-page Guideline 1 of 2018:
https://www.cipc.co.za/wp-content/uploads/2024/11/Guideline-1-of-2018.pdf
Relevance to Auditors, Independent Reviewers & Accountants:
- The Companies Act and Regulations 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.
- 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.
- 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/guidance issued by CIPC as the regulator – especially with regards to the functions of Social & Ethics Committees.
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.
- Your clients should also be aware of relevant guidance that is issued by the CIPC – especially with regards to functions of Social & Ethics Committees.