Some years ago, there was a huge rush to create Section 51 PAIA Manuals in order to comply with the deadline laid down by government.

We, at FINSERV, acting on behalf of clients, spent huge amounts of time assisting clients with this, only to have the whole process “moth-balled” by a moratorium.  It would seem that this has raised its head again, and this time, won’t go away.

The South African Human Rights Commission has a specific mandate in terms of the Promotion of Access to Information Act 2 of 2000 (PAIA), to monitor compliance with the legislation, report compliance levels to National Parliament, and to enhance implementation of the Act within both the Public and Private sector.

It has seen very poor levels of compliance despite the inception of this legislation more than a decade ago, when the Minister declared a moratorium exempting small business from complying with Section 51 of this Act.

This moratorium is set to expire on 31 December 2011.

What this means is that ALL businesses/organisations – for profit or not-for-profit – will now be required to have these manuals.

This section carries a mandatory compliance obligation for the Private Sector.  Regulations permit the imposition of a fine or a sentence of imprisonment for wilful or grossly negligent non-compliance with the obligations of this section.

The PAIA is also a component of a framework advocated by the Companies Act, the King reports, etc. vital to securing good corporate governance.   The purpose of this legislation is to promote a culture of transparency, accountability and good governance both in the private and public sectors.

In terms of Section 51 of the PAIA, the head of a private body must:

1. compile a section 51 manual which is a roadmap of the company
2. submit the manual to the South African Human Rights Commission once, electronically and in hard copy format
3. effect material changes when these occur and resubmit to the SAHRC
4. Submit manuals to SAHRC head office.
5. make the manual available as prescribed by the Act at the company offices and on their website;
6. must  annex a request form to the manual and  also make request forms available on the website and at the company premises’ access points;

There are penalties for non compliance, even though the Commission has not imposed fines for non compliance to date.  It does, however, reserve the right to do so.

The manual must, amongst others, contain the following information:

1. details of the company’s postal, email and street address, fax and phone numbers of the company;
2. the description of available records generated by the company, stating those which are automatically available and those that are only available on request;
3. outline the request procedure in terms of PAIA;
4. state who the head of the company is (CEO is usually the  Information Officer in terms of PAIA);
5. stipulate the fees applicable, as legislated by the Act, which are payable by  requesters of information;
6. remedies available to requesters, if their request for information has been refused;
7. Details facilitating any request for access to a record etc.

The Human Rights Commission is mandated to provide training and support to all sectors of society, and so can be contacted for assistance.

We encourage all our clients, in the interests of compliance and good governance, to ensure that these manuals are done in the manner prescribed.

If you would like assistance with this, please would you contact Louise Madgwick at Finserv at 033-3552550 or email her at louise@finserv.co,.za.  It is not expensive. The cost for producing this manual for our clients will be R200 plus VAT, and will include the production of a hard copy manual.

There are couple of fairly significant developments taking place here in South Africa, which will affect business; and all of which seem to be happening within the next few months. 

The first and most important one is the advent of the new Companies Act, which, it appears, will finally happen next month. (though seeing is believing!).    The previous Act was written 38 years ago, so it was due for a re-write.   In previous posts on this subject, I’ve raised a few important aspects of this new Act which need to be reviewed.  Please would you consult your accountant if your business is a registered company, to ensure that any changes that may have to be made, are made.  If your business is a registered Close Corporation, consult your accountant as well, to establish what your options are/will be.

Tied in with this new Act are significant changes to the administration of it through CIPRO - the central registry for business.    A recent newsletter to members from the South African Institute of Chartered Accountants set this out as follows:

Please take note of the following changes which are to be implemented on 1 April 2011, and the consequences of these changes.

Effective date 1 April 2011
The DTI is determined to have the Commission and the Act in effect on 1 April 2011. However, the following still needs to happen before 1 April 2011 for the above to take effect:

• Companies Amendment Bill still to be completed
• Companies Amendment Bill to go through Parliament
• Companies Amendment Bill to be signed by President
• Companies Amendment Bill effective date to be gazetted
• Regulations and Forms to be completed and signed off
• The National Assembly has scheduled to meet on 1, 2 and 9 March 2011 to deliberate and formally consider the Bill

The Commission
On 25 March 2011 the new Commission will be launched, and will become active from 1 April 2011. The names of the appointed commissioner and deputy commissioner are expected to be made public at this launch.

All documentation, applications and lodgements received by Cipro up to and including 31 March 2011, will be processed in accordance with the current (‘old’) Companies Act, with submissions taking place on the current CM / CK forms. From 1 April all applications have to be submitted on the new forms and comply with the new Companies Act requirements.

A new website will be launched as of 1 April 2011, which must be used from then onwards. Cipro has developers working around the clock in order for this website to be ready for implementation on 1 April 2011.

Cipro is employing every effort to make the transition a smooth one; however they acknowledge that the timeline is extremely tight. They are using all resources available in an attempt to reduce the backlog, and to ensure that come 1 April 2011, they are ready to convert to the Commission.

Please bear these changes in mind if you are thinking about making any statutory changes to existing companies and close corporations – its not going to happen quickly!

Lastly, we are faced with the advent of the Consumer Protection Act – also on 1st April 2011.  This is fairly serious legislation, as once in effect, will make South African consumers the most protected in the world!  It aims to protect the poor and vulnerable by serving as a formal Bill of Rights of the consumer.  Without going into all the intimate details in this newsletter, suffice it to say that every busines which acts as a supplier of goods and/or services should take the time – and the money – to consult an attorney to ensure that their quoting/supplying policies, procedures and practices are reviewed.  You may need to change a lot of your existing documentation

I heard today that SARS are issuing warrants of arrest for errant taxpayers, who – presumably – are ignoring demands and summonses to submit tax returns.  One story involves someone who was arrested in the dead of night and then incarecerated along with every other kind of felon!  This is not something one wants to experience, especially here in South Africa.

May I suggest that if you’ve been delinquent in handling your income tax affairs – you start taking them seriously, - and if necessary, get them to us so we can sort them out with SARS on your behalf.

Many of you small business owners might be blissfully unaware that the deadline for the submission of employment equity reports is the 1st October.

Generally speaking, this only applies to businesses that employ more than 50 people, and even then, if your employment numbers are less than 150, you will only be required to submit these reports every two years – but also on the 1st October.

However – in some cases, the employment number criteria to qualify your business as a ‘designated employer’ for this purpose, can be irrelevant if your annual turnover is greater than certain minimum limits, dependent on the industry which you’re in. For example, if your business is in the agriculture industry, and your annual turnover is greater than R2m per annum, and you only employ 10 people, then you will have to submit one of these reports.

If you’ve started a business within the past year, and you qualify as a designated employer, then you are also required to submit your first report between 6 and 12 months after commencement of the business.

Why the alert? Well, the government has imposed very stiff fines if the reports are not received when due – starting at R500,000 for the first offence!

If you want to know whether your business qualifies –and you could be in hot water – then contact our offices as soon as possible.

The latest is that the South African Revenue Service (SARS), in their wisdom, have decided to turn the thumbscrews a bit on provisional tax payers.

They now want accurate estimates (though that seems to me to be a bit of an oxymoron), failing which penalties (and quite heavy ones at that) will be levied on any differences between this estimate and the final assessed amount.

This can be very difficult, especially if you have income from a variety of sources and you’re waiting for audits and final accounts to be completed.

The key aspects of this new rule are:

• Make sure your estimate is as accurate as possible!
• You must pay provisional tax on at least 80% of your eventual taxable income.
• If you don’t, SARS can penalise you by charging additional tax equal to 20% of the difference in tax, and this is calculated at the rate which applies to the 80% estimate.

What to do about it:

1. Make sure you (or your accountant) keeps all the documentation (as evidence) used to do the estimate, so if you have to, you can prove the calculation was genuine. If SARS asks you to justify the estimate and it isn’t satisfied with the response, it could even increase the estimate! What’s worse, in this event, is that the estimate becomes final and you can’t even challenge it.
2. If SARS levies a penalty, you can object to it, but in the absence of sound evidence, the objection could be rejected. Make sure the objection is prepared by a tax specialist – it could save you a lot of time and money!