The Companies and Intellectual Property Commission (CIPC) has issued a mandate for the software service providers of the industry. It has made it mandatory for the providers to include their names as a watermark or text as a footnote in the report that the companies will submit. In addition to this, from 1st October 2019, a tag was introduced for the software service providers to watermark the software version, which was used to generate the iXBRL report.
The companies are also liable to complete a compliance questionnaire before submitting the Annual Return. This has come into effect from 1st January 2020 and applies to companies including state-owned companies, non-profit companies, private companies, personal liability companies and public companies.
DataTracks takes a look at the rationale behind these mandates and what companies should do about them.
Purpose of the mandates
CIPC has introduced these changes to ensure uniformity of data and credibility of the Software Service Provider. All providers must adhere to minimum technical requirements and certain quality standards must be maintained.
The checklist is yet another measure by CIPC to ensure compliance with the Companies Act. It requires directors, company secretaries and auditors to understand their responsibility in adhering to the companies act and the CIPC can take actions during non-compliance of the same.
Annual returns cannot be filed without completing this checklist. If annual returns are not filed, CIPC assumes that the business is dormant and starts the process to remove the business from the register of active businesses.
Immediate next steps
- Begin with finding out when your Annual return is due. Companies have 30 business days after the anniversary of their date of incorporation, whereas close corporations have two months from the first day of their month of incorporation to submit their returns.
- Then login to the CIPC website and find the ‘Compliance Checklist’ button on the e-Services page.
- Complete the checklist by selecting the right answers (Yes / No / Not Applicable) to the questions.
Preparing for the checklist
Some of the questions covered in the checklist that the CIPC would like to know the answers to are regarding Section 4 (Solvency and Liquidity), Section 30 (Annual Financial Statements), Memorandum of Incorporation (MOI), Shareholder Agreements and Rules, statutory requirements of financial statements and procedure for a director’s appointment and disqualification, etc.
Companies are required to state, through their answers, whether they complied with a particular section in the previous year. The questions are extensive and only those with a proper understanding of the companies act should answer it. The directors, company secretaries and auditors are responsible for providing the correct answers to all the questions in the checklist. The answers must be true and accurate as providing incorrect information can lead to some serious action taken by the CIPC.
Also, the questions do not explain what the individual section is about and neither can the answers be supported with any explanation. So it is best to make notes while answering the questions so that in case of any queries by the CIPC, they can be referred.
How to handle errors or non-compliance
If you have submitted incorrect information, send an email to COR135.email@example.com explaining why it is incorrect along with the correct answer.
In case of non-compliance or submitting false information, CIPC can hold the person liable for a hefty fine or imprisonment for up to 12 months or both.
You can seek professional help from DataTracks, who has been catering to the needs of numerous companies seeking regulatory compliance reporting services for over 14 years. DataTracks can assist not just in completing the checklist but also helps you in filing the report in iXBRL format, without any hassle. Get in touch with DataTracks at firstname.lastname@example.org