The mandatory compliance checklist introduced by the Companies and Intellectual Property Commission (CIPC) is another burden added on the country’s small businesses and part of overregulation that will make the investors flee, according to an expert.
Hennie Ferreira, chief executive of digital accounting firm Osidon, said the list would first undermine the rest of the country’s drive to attract investment to South Africa.
“Overregulation flies in the face of government’s plan to turn the economy around. Investors will look at the overregulated environment and decide to invest elsewhere,” Ferreira said.
The checklist was not educational as it only allows for “yes”, “no” or “not applicable” responses – leaving no space for explanations and descriptions. It created more work for accountants, leading to increased service fees.
“It also places the business’ responsibility on the accountant, which could have legal implications. This list does damage to an industry that already struggles to keep its head above water,” Ferreira said.
He said accounting fees would be hiked as the average business owner did not have adequate knowledge of the Companies Act, leaving accountants to complete the list for their clients.
Business and accounting industry leaders had the compliance checklist, which became effective this year.
The checklist required all companies except close corporations to answer a 24-question compliance list, when they submit their annual returns.
When it introduced the checklist, CIPC said it was meant to ensure companies were compliant with the Companies Act, to serve as an educational tool for directors and company secretaries in guiding them concerning their responsibilities in terms of the Companies Act.
It was also to monitor and regulate proper compliance with the Act and allow action to be taken where necessary.
Ferreira, who is a champion for small businesses and entrepreneurs, has a different view as he lambasted the checklist, saying it added to the already overregulations that exists in the country.
“This is in no way educational and undermines the country’s drive for investment and the deregulation of business…. this list is used by the CIPC to bully small businesses and entrepreneurs and needs to be re-evaluated.”
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