Companies Act FAQ

Must a company keep proper accounts?

"A company must keep accurate and complete accounting records in one of the official languages of the Republic..." Companies Act, 71 of 2008.

Where must the company store its accounting recors?

"A company's accounting records must be kept at, or be accessible from, the registered office of the company." Companies Act, 71 of 2008.

Must the financial statements be true?

Every lie, whether big or small, is a material contravention of the Law of the Ten Commandments. You must always be honest and thus reflect the truth in the financial statements. The Companies Act allows unintentional misrepresentation of the truth as long as it is not material: "Any financial statements prepared by a company, including any annual financial statements of a company as contemplated in section 30, must not be... false or misleading in any material respect..." Companies Act, 71 of 2008.

when must annual financial statements be prepared?

"Each year, a company must prepare annual financial statements within six months after the end of its financial year, or such shorter period as may be appropriate to provide the required notice of an annual general meeting in terms of section 61(7)." Companies Act, 71 of 2008.

must the annual financial statements be audited?

The annual financial statements must-

(a) be audited, in the case of a public company; or

(b) in the case of any other profit or non-profit company-

(i) be audited, if so required by the regulations made in terms of subsection (7) taking into account whether it is desirable in the public interest, having regard to the economic or social significance of the company, as indicated by any relevant factors, including -

(aa) its annual turnover;
(bb) the size of its workforce; or
(cc) the nature and extent of its activities; or

(ii) be either-

(aa) audited voluntarily if the company's Memorandum of Incorporation, or a shareholders resolution, so requires or if the Company's board has so determined; or
(bb) independently reviewed in a manner that satisfies the regulations made in terms of subsection (7), subject to subsection (2A)

WHICH COMPANIES are exempt from audit and independent review?

If, with respect to a particular company, every person who is a holder of, or has a beneficial interest in, any securities issued by that company is also a director of the company, that company is exempt from the requirements in this section to have its annual financial statements audited or independently reviewed, but this exemption—

(a) does not apply to the company if it falls into a class of company that is required to have its annual financial statement audited in terms of the regulations contemplated in subsection (7)(a); and

(b) does not relieve the company of any requirement to have its financial statements audited or reviewed in terms of another law, or in terms of any agreement to which the company is a party.

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