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CIPC: Practice Note re Status report requirements
- 25 October 2024
- CIPC
- South African Accounting Academy
Summary:
The Companies and Intellectual Property Commission (CIPC) has issued a Practice Note providing guidance on the general structure and requirements that should be adhered to when compiling Status Reports (with regard to Business Rescue) to be filed.
Article:
This practice note is issued in terms of Regulation 4(1)(b) of the Companies Regulations, 2011 which stipulates that a regulatory body may issue a practice note in respect to a matter within its authority which sets out a procedure that will be followed by that regulatory agency; a procedure to be followed when dealing with that regulatory agency or the regulatory agency’s interpretation of or intended manner of applying a provision of the Act or the Regulations.
CIPC introduced the automation of status reports in September 2024, with the objective to ensure the facilitation of efficient and effective services to its stakeholders and to ensure the widest enforcement of the Act.
Substantial volumes of status reports have been received and reviewed by the commission however the commission has observed that a significant number of reports do not conform to the general prescribed structure required in terms of Section 132(3)(a)-(b) of the Act, which prescribes that report should be on the development of the proceedings and should be updated at the end of each subsequent month.
Majority of the reports that have been reviewed only have dates of the required meetings as per the mandate of the Act and dates as to the adoption of the plan and would not have any content in respect to the developments of the proceedings.
The Commission has come up with a general structure and requirements that should be adhered to when compiling status reports to be filed.
First update Report
When the proceedings have not ended within 3 months after the commencement of the proceedings, the report should include the creditors, meetings that have been convened, outcome of the investigations of the practitioner, date of publication of the plan, adopted actions as per the plan and any outstanding matters.
Subsequent Reports
Herein practitioners are expected to provide reports on outstanding actions as per the adopted plan, the implementation of the plan, the implementation rate of the plan which must be provided in percentages.
It is not a requirement to include the date of the first meeting of creditors and the date of appointment of the practitioners as well as other dates that are provided in the first report.
CIPC has furthermore observed that there are entities that have been in business rescue for more than 5 years and no plan has been adopted in such entities post commencement of the business rescue proceedings, the Commission would like to put it in record that the practitioners will be attended to.
Click here to download Practice Note 2 of 2024:
https://www.cipc.co.za/wp-content/uploads/2024/10/Practice-Notice-status-reports.pdf
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 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 and that you are aware of the latest media statements 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.
- Business Rescue Practitioners (BRPs), and all relevant stakeholders should be aware of the requirements to file status reports and the issues around the automation relating to some BR documents.
Relevance to Your Clients:
- Business Rescue Practitioners (BRPs), and all relevant stakeholders should be aware of the requirements to file status reports and the issues around the automation relating to some BR documents.
- An entity (company or close corporation) has a duty to comply with the Companies Act, and all relevant notices/enforcements/practice notes and to be aware of the latest media statements issued by CIPC as the regulator.