Sat, Jul 20, 2024

The official Financial Regulation Journal of SAIFM

Interested parties can approach the CIPC to request a Compliance Notice against directors’ breach of Companies Act

PJ Veldhuizen, CEO of Gillan and Veldhuizen

Many people don’t realise that we have the right and ability as interested parties to approach the Companies and Intellectual Properties Commission (CIPC) if we suspect that a company is being conducted recklessly, with gross negligence, with intent to defraud any person or for any fraudulent purpose. This right was demonstrated recently in the case of, Dudu Myeni (South African Airways). An interested party, who elected to remain anonymous, approached the CIPC requesting that they investigate and issue a Compliance Notice against Myeni for trading in circumstances that did not align with her fiduciary duties as a director.

PJ Veldhuizen of Gillan and Veldhuizen Incorporated says that it is surprising how many people are unaware of the option made available by the CIPC to request a compliance notice. “Most people avoid any encounter when they feel that a company has been compromised by actions of directors or directorship. What we are not aware of is that we don’t have to approach a court, at a ridiculous cost; the CIPC will investigate and issue a compliance notice as a service.”

According to section 169/170/171 of The Companies Act:

‘Interested parties’ include, but are not necessarily limited to  shareholders, creditors, employees and fellow-directors. Veldhuizen adds that the process is a simple one which can be done anonymously with the appropriate forms downloaded from the CIPC website. For example, “If you are a creditor of a company that you suspect is unable to honour its payments to you, instead of proceeding with lengthy and costly court applications, you have the ability to cause an investigation via the CIPC.”

A compliance notice may require the person to whom it is addressed to:

  • cease, correct or reverse any action in contravention of the Companies Act;
  • take any action required by the Companies Act;
  • restore assets or their value to a company or any other person;
  • provide a community service, in the case of a notice issued by the Commission; or
  • take any other steps reasonably related to the contravention and designed to rectify its effect.

On the other hand, companies or directors who are issued with a compliance notice against them can request that it be reviewed by the Companies Tribunal who will determine whether the CIPC was correct or whether the notice should be amended or scrapped. Once the notice has been issued, the affected party may request a review by The Companies Tribunal, sitting either as a panel of 1 or 3, who will determine whether the CIPC was right or alternatively they can review, amend or scrap the decision.

 

 

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