So what does the Co’s Act have to say about this?
- AFS are required to be prepared within 6 months of a company’s financial year end.
- AFS must be complete in all respects ie. Directors report, audit/review report, signed etc.
….and if this is not done?
- A reportable Irregularity exists
- Directors are guilty of a breach of fiduciary duty
So what happens next?
- When the audit/review commences the auditor/reviewer must report a Reportable Irregularity to CIPC/IRBA after discovery of the fact.
- The Directors will be informed and must take steps to rectify the situation before the auditors/reviewer makes a second report of CIPC/IRBA, within 30 days of the first report.
- If the AFS are not issued before the second report in ii.) above, the company can expect a compliance notice from CIPC in the near future.
What is a Compliance Notice?
A formal notice from CIPC demanding compliance by a specified date. Usually within 3 – 9 months.
How to respond?
Comply or suffer the consequences. Those could be up to 10% of Turnover during the period of non-compliance.
This isn’t new, but it would appear that CIPC are serious about stamping out continuous non- compliance so Directors, Auditors and Reviewers need to be serious about their timeliness too!
Read the Company’s Act for yourself. You will find this information in Section 30.
Hope this was helpful.