SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison and Madison Liebmann, ENS
• be independently reviewed in a manner required by the Companies Act. The AFS must be approved by the board and be presented to the first shareholders’ meeting after the AFS have been approved by the board and generally include the following information: • a director’s report detailing the state of the company; and • an auditor’s report. The AFS must satisfy financial reporting stand - ards as to form and content if such standards are prescribed. 6.2 Disclosure of Corporate Governance Arrangements Position Under the Listings Requirements In addition to the requirements discussed in 6.1 Financial Reporting , the Listings Requirements impose a number of ongoing obligations on pub - lic companies. As a result, issuers must comply with financial reporting and disclosure require - ments in critical areas such as periodic financial information, price-sensitive information, profit forecasts and major company activities. As per King IV, good governance can be attained through its “apply and explain” disclosure frame - work, which requires a company to: • apply the recommended practices thought - fully, with common sense, and proportionally (ie, in line with its size and resources, and the scope and complexity of its operations); and • provide a descriptive account of that imple - mentation with reference to the recommend - ed standards. This account, together with the company’s AFS (and other external reports), code of conduct and
ethical codes, and integrated reports, should be published on the company’s website (or other widely accessible media or platforms). 6.3 Companies Registry Filings In terms of the Companies Act, all companies (including external companies and close corpo - rations) are required to file annual returns with the CIPC within a specified time period. Compa - nies must file their annual returns within 30 busi - ness days after the anniversary date of their reg - istration date, regardless of whether they were active or not. Notably, the amendments to the Companies Act introduced by the GLAA require companies to include a copy of their AFS and a copy of their securities registers in their annual returns and, in the case of affected companies, a copy of the register of disclosure of beneficial interest. If annual returns are not filed within the specified timeframe, the company may be deregistered as the CIPC will assume that the company is inac - tive. The deregistration procedure has the legal consequence of terminating the juristic person - ality of the company or close corporation, with the effect that the company or close corporation ceases to exist. Furthermore, all entities are required by law to file their taxable returns with the South African Revenue Services to determine their taxable income. 7. Audit, Risk and Internal Controls 7.1 Appointment of External Auditors Position Under the Companies Act The Companies Act prescribes that only certain types of companies require an external auditor to be appointed to audit their financial state -
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