A company’s conduct must at all times be aligned with the ‘spirit’ of the Companies Act, 71 of 2008 (the “Act”), being “high standards of corporate governance and high levels of transparency”.
The Companies and Intellectual Property Commission (the “CIPC”) received a number of irregularity reports from the Independent Regulatory Board for Auditors.
A number of companies were reported by their auditors for failure to prepare (and lodge with the Regulator, where applicable) its annual financial statements, within 6 (six) months of the end of its financial year. The CIPC consequently issued ‘Compliance Notices’ to such non-compliant companies (and their directors), to no avail.
As a result, legal action was taken by the CIPC against the errant companies. In each instance the Court found against such companies and imposed a fine equal to 10% (ten percent) of the company’s turnover during the period for which it was non-compliant.
Findings such as these should encourage companies to comply with the provisions of the Act and to align their conduct with the spirit of the Act.