KING III: THE AUDIT COMMITTEE INTRODUCTION 5. Expertise, resources and experience of
King III will be effective from 1 March 2010 and imposes
an obligation on Companies to appoint an audit committee (“committee”) to enable it to perform its functions. The purpose of this article is to set out the King
annually consider the appropriateness of the
expertise, resources and experience of the
A holding company’s committee must have at least 3
In Public companies the committee must also
members who are independent non-executive directors.
evaluate the suitability of the finance director
The chairman of the committee and the chairman of the
and recommend changes to the Board where
board of directors cannot be the same person.
Certain Minimum qualifications and experience are required in respect of corporate law, financial risk and
6. Combined Assurance Model:
sustainability reporting as well as international and other reporting standards.
The committee is responsible for ensuring that
assurance by management and internal and
Public companies must ensure that committee
external auditors sufficiently satisfies the
appointments comply with qualification criteria to be
committee that significant risk areas are
established by the Minister as contemplated in section 95
adequately addressed and that suitable risk
(4) of the Companies Act No. 71 of 2008, and any
premature termination of the services of any committee member must be approved by the relevant executive authority of the (public) company.
The committee is responsible for monitoring the
The committee should meet at least twice per annum and
should oversee stakeholder reporting, including:
INTERNAL ASSURANCE 1.Financial reporting:
The committee is responsible for overseeing the
scrutinise all relevant narrative information so as
should be an integral component of the risk
to ensure it presents a balanced view of the
2. Interim results:
Consider whether there are reasons for internal
and external auditors to perform assurance procedures (quarterly or 6 monthly); and
The committee should report to the Board and stakeholders as to how its duties have been carried out.
3.Summarised Financial Information: engage external 4.Integrated sustainability reporting:
assist the Board in reviewing sustainability reporting; and
consider and recommend the necessity of engaging external auditors to provide assurance.
DIRECTORS APPOINTMENT: (CM 29) DOES ONE REQUIRE A CM29 CONFIRMATION FROM CIPRO AS PROOF OF DIRECTOR CHANGES?
On 25 February 2009 Cipro posted a notice on its website
- Section 215 then obliges a company to keep a
informing its clients that the service whereby a CM29 can
register of directors and it sets out the requirements for
be electronically lodged are temporarily suspended until
such a register, but again it assumes that the name of
further notice since it came to the Registrar’s attention
the person entered into the register is already a director
that certain areas on their website are not well protected
of the company. It imposes a criminal sanction for non-
against fraud and consequently require system changes.
compliance, but clearly does not prescribe a precondition
This resulted in the Registrar being inundated with
manual applications. Unfortunately for companies, Cipro
- Section 216(1)(a) also requires that persons whose
does not have the manpower to deal with the processing
details need to be entered into the register of
of these lodgments in an effective and time efficient
directors, must provide the information necessary for
manner. Currently one can expect to wait between 10 to
keeping the register to the company within 21 days of
12 weeks before receiving a CM29 confirmation.
appointment. The observations made with regard to s
211 will also apply here. Although the form CM27 does
Praise must go to the officials tasked with processing the
not explicitly mention, it the lodging of a properly filled out
overwhelming manual lodgments of CM29's as they will
form CM27 with the company will also constitute
go out of their way to assist those clients who urgently
need a CM29 confirmation if shown good cause.
However, many companies are experiencing the
- Sections 216(2) and 216(3) then dictate that the
frustration of this unfortunate time consuming process
company must within fourteen days of receiving the
since other entities such as SARS, auditors and financial
particulars that it will have to enter into the register,
institutions request a CM29 confirmation as proof that a
established in terms of s 215, lodge a return with the
director is newly appointed or has resigned. This can
Registrar on form CM 29. Again it is clear from ss 216(2)
have unfortunate financial and other implications for
and 216(3) that this provision does not affect the validity
But is this abovementioned requirement fair and legally
correct? When is a director regarded as appointed/
resigned legally? Is it when one receives the CM29
The scheme clearly only requires that information about
confirmation from the Registrar or when appointed/ resigned by the company by way of an ordinary
a particular fact, ie is the appointment of a director, must be communicated to the Registrar. It assumes that the
details provided will be of a person who is already a director. Non-compliance does not lead to invalidity
In the absence of any provision in the articles of a
of appointment, but to criminal sanction. Notice of
company or the Companies Act, No 73 of 1963 (hereinafter referred to as the “Act”), in dealing with the
appointment and changes in the particulars treated are in
appointment of directors, the common law will apply.
According to the common law the members of a company
in general meeting have the power to appoint directors by
This clearly indicates that proper appointment is not
affected by furnishing of details to the Registrar (or
Cipro). It is clear that this is how these provisions are
Directors will become validly appointed through the
generally viewed. A cursory glance at the information
act of appointment. No other formalities are prescribed.
kept by Cipro clearly indicates that very many directors
So, if a resolution of the members provides simply that Mr
are not accurately reflected in the records kept by Cipro,
X is appointed as director and he consents to his
yet these persons remain effective directors of the
appointment, he will, according to the common law,
companies to which they have been appointed.
henceforth be a validly appointed director. Of course the
members can provide for appointment to take effect at
Nevertheless, other entities still demand a CM29
another point in time, but it is submitted that this will occur
confirmation from the Registrar before acknowledging
only where express provision is made for it or where it
that a Director is appointed/ resigned by the company.
can be inferred clearly from the circumstances.
Hopeful y the Registar’s proposed “proof of concept of
To what extent is this rule affected by a company’s
the customer verification” system will final y be tested
articles and memorandum of association or the Act? The
and effectively implemented soon and provide relief for
articles of a company normally determine the procedures
for the appointment of directors in some special circumstances (see Schedule 1 Table B art 67-71), but
this ordinary power of members, namely to appoint
directors, is seldom affected by the articles.
The Companies Act itself also does not prevent the
immediate appointment of a director by the members.
- Section 211 provides for the formal consent to appointment by a director. It provides that a director must give written consent to appointment (on form CM27), but it is clear that this is not a prerequisite for valid appointment. The Act states merely that written consent must be given within 21 days of appointment or a longer period provided by the Registrar. Failure to comply with the provision is visited with criminal sanction, but it does not affect the validity of an appointment.
by Dr. Robert Bastian CS joins Dr. Anthony Jahn in welcoming otolaryngologist Dr. Robert Bastian as a guest contributor to this issue and presenter at the Classical Singer Convention “It is my pleasure to problem . I remember one patient with between his stomach and esophagus. welcome Dr. Robert perimenopausal voice change, another Again, the lesion was unchanged. Bastian, a n
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