7.1 INTRODUCTION
The old articles i.e. table B indicates that an auditor must be appointed. The articles do not say anything about doing an audit because it was compulsory in terms of the old companies act anyway.
The New Companies Act creates a whole new situation in regard to the audit requirement. It uses a system of public interest points which is specified in the Act and the Regulations and if the company has more than 100 points it has to do a Review and if it has to do more than 350 points it has to do an Audit. The majority of companies however fall below 100 and therefore they are not required to do a review or an audit. In all likelihood banks have granted company loans and at the very minimum will probably want a review. In certain instances, they may also specify an audit which means that the audit or review becomes voluntary.
The problem with this situation is that the transitional arrangements in Schedule 5 of the new act allows the old Act or the old MOI (i.e. the old Memo of Incorporation and the old Articles of Association) to apply for the first two years. After the two years have passed everything reverts to the new Act. If a company has not changed the old MOI then it has to do an audit within the first 2 years because the old Table B specifies that the company will have to have auditors and by reference to the old act will therefore require an audit. After the 2 years is up if there is still no change to the MOI then all conflicts with the new act are void and the company can then carry out the terms of the new act. See Schedule 5 clause 4.4.
Most Company Secretarial practitioners were not aware of this complication until SAICA sent out a notification explaining the law. The problem is that the notification was sent out about 10 days before the end of February 2012 which caused a huge volume of special resolutions submitted to the CIPC as many companies wanted to change the audit requirements to a review or no audit.