Company Maintenance

1. Knowing the Laws & Obligations

The Companies Act provides for the incorporation, registration, organisation and management of companies. This includes the efficient rescue of financially distressed companies, the appropriate legal redress for investors and third parties with respect to companies, as well as providing a framework for financial record keeping and reporting.

2. Company records

According to the CIPC website registered companies are required to maintain company records. This means the company must at all times have a copy of its Memorandum of Incorporation (MOI) and any changes to it as well as any rules that apply to the company in terms of the MOI. The full list of records that have to be kept is published on the CIPC website.

3. Accounting Records

The Companies Act, 2008, requires all companies to keep accurate and complete accounting records, which must be kept and be accessible at the company’s registered office

4. Appointment and rotation of Auditors

It is not mandatory for private companies or personal liability companies to appoint an auditor unless the company is required to produce audited financial statements. The conditions for appointing an auditor is stipulated on the CIPC website.

5. Financial Statements

Private or personal liability companies that are required to be audited by the Companies Act, 2008 or regulation 28, must file a copy of the latest approved Audited Financial Statements on the date that they file their annual return with the CIPC.

6. Appointment of Social and Ethics Committee

Private or personal liability companies with a Public Interest Score (PIS) above 500 in any two of the preceding five (5) years are required to have a Social and Ethics Committee. Companies may apply for exemption from having a Social and Ethics Committee to the Companies Tribunal. Subsidiaries of companies that have a Social and Ethics Committee are not required to have a committee.

7. Solvency and reckless trading

The Companies Act, 2008, states that a company must not carry on its business recklessly, with gross negligence, with intent to defraud or trade under insolvent circumstances. (Sect 22) If a company trades in such circumstances, the Commission may require the company to cease carrying on business.

Although “trading under insolvent circumstances” is not defined in the Act, it is accepted to mean that a company does not meet the “solvency and liquidity test” criteria. There are many trading companies which are liquid, meaning they can pay their debts as they become due, but not necessarily solvent as defined in the solvency and liquidity test.

In terms of the “solvency and liquidity test”, solvency relates to the assets of the company, fairly valued, being equal or exceeding the liabilities of the company. Liquidity relates to the company being able to pay its debt as they become due in the ordinary course of business for a period of 12 months.

8. Obligations to notify the CIPC of certain changes

A company must notify the CIPC of certain information:

A change in the registered address;
A change in the location of the company records;
A change in the financial year end of the company;
Appointment, resignation and removal of a director
Commencement of Business Rescue;
Resolution to wind up a company

9. Annual Returns

All companies (including external companies) and close corporations are required by law to lodge their Annual Returns with CIPC within a certain period of time every year.

An Annual Return is a statutory return in terms of the Companies and Close Corporations Acts and therefore MUST be complied with. Failure to do so will result in the Commission assuming that the company and/or close corporation is not doing business or is not intending on doing business in the near future. Non-compliance with annual returns may lead to deregistration, which has the effect that the juristic personality is withdrawn and the company or close corporation ceases to exist.

Companies have 30 business days from the date that the entity become due to file annual returns before it is in non-compliance with the Companies Act. Annual Returns can only be filed electronically. The process for doing so is outline on the CIPC Website.

Source: CIPC

10. Change of Directors

Businesses changes involves changes of Directors too. As a business evolves, a new Director can be appointed, an existing Director can resign or die, or can be removed or incapacitated or disqualified.

When the need arises, this can be effected online on the e-Services site of CIPC. https://eservices.cipc.co.za/
Before you can make the changes, you will be required to register as a customer (if you have not already registered), and thereafter click on ‘Amend Company Director Details’.
Thereafter, choose whether you would like to add, change or delete a Director.
The following documents will be required to be sent to CIPC on eServicesCOR39@cipc.co.za
- Certified Identity Document of the Applicant
- Resolution pertaining to the changes
- Notice of Minutes of a meeting etc where this was stipulated
- Certified copies of Identity Documents of the affected Directors
- If the above is being done by a third party, then the a mandate must be supplied by the company for the third party to be able to submit on its behalf.

How long will it take?
It takes about 5 days for the change to take place by CIPC.

11. Changing the Memorandum of Incorporation

The MOI can be changed but once again a process needs to be followed.

The company would need a special resolution to amend the its MOI. For example, the Board of Directors may propose the change at a Board Meeting.
Once the resolution has been taken then the Company must make the amendment within 10 business days by completing the Form COR 15.2
Login to the CIPC e-Services website

NB: Ensure that you have sufficient funds to conduct this transaction (you would need R250)

Email the completed COR 15.2 form to moiamendments@cipc.co.za

How long will it take?
It takes about 25 days for the change to take place by CIPC.

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