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CIPC re directors’ remuneration when AFS are voluntarily audited
- 28 July 2020
- Accounting
- South African Accounting Academy
CIPC released a notice to inform companies that are required to have their annual financial statements (AFS) audited and those that have had their AFS voluntarily audited in terms of Section 30 (2) of the Companies Act 71 of 2008, as amended (the Act); that it is mandatory to disclose directors’ or prescribed officers’ remuneration and other benefits paid, payable or receivable as per Section 30(4)(5)(6) of the Act.
The CIPC, through its compliance monitoring activities has observed a trend where some companies are not disclosing directors’ or prescribed officers’ remuneration as required and prescribed by the Act. It is incorrect to disclose remuneration as a single aggregated amount or as a single amount under each director without the name(s) of the director(s)/prescribed officer(s) and description of the payment/compensation. Where no remuneration was paid, a note is still required in the notes to the financial statements indicating that there were no payments made to directors.
CIPC also provided illustrative examples of the correct and incorrect disclosure of the required remuneration.
The disclosure of remuneration and other benefits paid to, payable or receivable by directors or prescribed officers is one of the key disclosures which ensure that companies comply with the principles aimed at transparency, accountability and integrity and maintain high standards of corporate governance. Failure to adhere to the above-legislated requirements is a contravention of the Act and may lead to a possible investigation as prescribed in Section 168 of the Companies Act, 71 of 2008 as amended.
Click here to download Notice 38 of 2020: