Archive for the 'CIPC' Category

Companies Act 2008: What happens after 30 April?

As the transitional period for all pre-existing companies has come to a close, the question for many business owners remains: What happens if my Memorandum of Incorporation (MOI) wasn’t registered by 30 April?

It is important to remember what the intention of the transitional period was. In terms of this arrangement the legislator granted companies a two-year period during which they had to ensure that their initial founding documents were in agreement with the provisions of the Companies Act of 2008. Business owners could, inter alia, register their MOI with the Companies and Intellectual Properties Commission (CIPC) free of charge.

Although it was highly anticipated that the grace period would be extended we were surprised to see, as 30 April 2013 approached, that no extension was granted.

In this article we would like to address questions you might still have concerning your company’s MOI.

What happens after 30 April if I haven’t yet registered an MOI?

Firstly, it is important to bear in mind that it is not compulsory for a pre-existing company to convert its initial founding documents to an MOI. Pre-existing companies that have not registered an MOI with the CIPC will continue to be governed by their old memorandum and articles of association until such time as these initial founding documents are converted to an MOI. The government will not arbitrarily assign an MOI to your company if you haven’t done so by 30 April.

It is, however, important to note that the company will only be governed by the initial founding documents to the extent that the provisions of these documents are consistent with the 2008 Act. All provisions that are inconsistent with the 2008 Act, will be deemed void and the provisions of the Act will prevail.

In essence your founding documents might:

  • contain void provisions; and/or
  • contain unnecessary information and requirements.

While an MOI could have been registered with the CIPC at no cost during the transitional period, a charge of R250 applies for all registrations that are done after 30 April.

What are the implications of not having an MOI, for the audit requirements of my company?

In terms of the provisions of the 2008 Act, with certain exceptions companies might, based on their Public Interest Score, qualify for alternatives to an audit, i.e. either an independent review or, in very limited circumstances, a compilation.

However, if a company’s Articles of Association specify that an auditor shall be appointed, that company, governed by its Memorandum and Articles of Association, shall appoint an auditor and an audit shall be performed for the company in terms of the requirements of Chapter 3 of the 2008 Act. In essence, this is a statutory audit with much more stringent requirements. The most significant of these requirements is Section 90(2)(b)(iv) which stipulates that, in the case of a statutory audit, no accounting or secretarial services shall be performed by the appointed auditor.

Accordingly, in order to avoid the application of certain requirements of Chapter 3, either of the following has to be performed:

  1. Registration of the new MOI with the CIPC in terms of the 2008 ActThis will ensure that the company is allowed to use alternatives to an audit, based on its Public Interest Score.Should the company elect to have an audit performed even if it is not required in terms of the Act, based on its Public Interest Score, such audit will be deemed a voluntary audit.In the case of a voluntary audit the requirements of the 2008 Act are far less onerous and the most significant provisions of Chapter 3 will not be applicable.


  2. Amendment of the Articles of Association (the deemed MOI) by means of a special resolution registered with the CIPC.It is advised that in both the following circumstances a special resolution be passed by the shareholders in order to remove the requirement regarding the appointment of an auditor, from its Articles of Association:
  • All companies that are still in the process of formalising their MOI before the expiration of the transition period; and
  • Companies of which the old Memorandum and Articles of Association will be deemed the MOI after the transition period.It is also important to note that either option (i) or (ii) above should be performed before your company can exercise any of the following options:
  • Voluntary audit (i.e. not statutory in terms of Chapter 3);
  • Independent review; or
  • Compilation (in the case of owner-managed businesses).

What are the risks for me as a director for not putting in place an MOI?

As mentioned earlier, you are allowed to use your old Memorandum and Articles of Association, so there are no implicit risks for you as a director of a company following this route. Note, however, that in this case you are using a MOI (in terms of the old Act) and that you may not be certain which of its provisions apply and which are deemed void.

Theoretically, there is also no risk for third party claims against a company for not having an MOI. However, because the directors might not always know what their responsibilities are, due to the fact that certain provisions are stipulated in the act and not in the deemed MOI (old memorandum and articles), they might incur liability in instances of non-compliance.

We therefore do not recommend that companies use their old memorandum and articles but urge them the get their MOI in place in terms of the 2008 Act as soon as possible. Ultimately, saving the cost is not just worth the risk for both you and your company.

During the last few months we have assisted numerous clients to successfully register their MOI with the CIPC.


Should you require assistance in this regard you are most welcome to contact Christa Swart, our corporate governance department ( or your relationship director.



Indiening van jaarlikse opgawes en finansiële state

Direkteure van maatskappye en lede van beslote korporasies is verplig om hul entiteit se jaarlikse opgawe by die CIPC in te dien. Ons verrig hierdie taak namens baie van ons kliënte.

Die CIPC het betreklik onlangs ‘n nuwe stelsel geïmplementeer waarvolgens hulle entiteite per e-pos herinner aan die indiening van die jaarlikse opgawes. Hierdie e-posse word direk aan die direkteur/lid van die entiteit gestuur. Sou u as ons kliënt dus so ‘n e-pos ontvang en enige onsekerheid oor die hantering daarvan hê, is u welkom om dit aan ons te stuur vir aandag.

Luidens ‘n kennisgewing van die CIPC van 6 Julie 2011 getiteld “Submittance of Annual Returns” is die indiening van finansiële state (met uitsondering van die state van openbare maatskappye en maatskappye in staatsbesit) uitgestel tot 31 Maart 2013. Dit beteken dus dat, met ingang 1 April 2013, alle entiteite se finansiële state saam met hul jaarlikse opgawes ingedien moet word. Die gewysigde werkswyse mag moontlik ‘n invloed uitoefen op die kostes wat ons vir hierdie diens moet verhaal en ons sal spoedig in hierdie verband met u kommunikeer.

Indien u enige navrae het in verband met indiening van jaarlikse opgawes of as ons u hiermee behulpsaam kan wees, is u welkom om met Marisa Viljoen ( van ons kantoor te skakel.

Submission of annual returns and financial statements

Directors of companies and members of close corporations are required to submit their entity’s annual return to the CIPC. We undertake this task on behalf of many of our clients.

Fairly recently the CIPC implemented a new system according to which they remind entities by email to submit their annual returns. These emails are sent directly to the director/member of the entity. Therefore, should you as our client receive such an email and have any uncertainty about how to handle it you are welcome to send it to us for attention.

In terms of a notice of the CIPC issued on 6 July 2011, titled “Submittance of Annual Returns” the submission of annual returns (except for those of public and state-owned companies) was waived until 31 March 2013. This means that as from 1 April 2013 all entities must submit their financial statements together with their annual returns. The amended procedure may affect the costs that we have to recover for this service and we will shortly communicate with you in this regard.

If you have any queries about the submission of annual returns, or if we can be of assistance with this, you are welcome to contact Marisa Viljoen ( at our office.

Back(log) into the future

Hope in the South African business world that the debilitating backlog in company registrations was about to be eradicated, was dealt a serious blow in January this year when it become known that the logjam continues unabated.

At the time the backlog has reached a staggering 13 000, despite promises to the contrary by the Companies and Intellectual Property Commission (CIPC), which replaced the blundering and malfunctioning Companies and Intellectual Property Registration Office in 2011.

According to a report by Business Day on 25 January 2012 Parliament learnt the day before that the Commission was incapable of maintaining its initial progress with new registrations due to the exceedingly high number of new applications received between September and December 2011, and a slowdown in the commission’s work processes. Altogether 53 000 applications were received during this time.

This, together with the continuing absence of a mechanism for online applications, as well as the dismally ineffective services of the Commission’s call centre, prompted calls for its transformation as a matter of priority. Between June and December last year, only 39% of the 286 535 calls received by the call centre were answered, with 174 996 being abandoned.

Commission head Astrid Ludin conceded the call centre’s performance “leaves a lot to be desired”. Yet, she remained optimistic that the commission could be turned around within 18 months.

Raymond Parsons, deputy CEO of Business Unity SA, described the persistence of the serious backlogs as “highly unsatisfactory”.

  • In view of the above situation, we call for understanding among clients with regard to service delays bound to occur in our dealings with the CIPC. We sincerely hope that the backlog will be resolved shortly and the turnaround realised forthwith

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