Public interest score

The Regulations states that every close corporation shall calculate its ‘public interest score’ at the end of each financial year.

The ‘public interest score’ is calculated as the sum of the following:

(a)	a number of points equal to the average number of employees of the CC during the financial year;
(b)	one point for every R 1 million (or portion thereof) in third-party liabilities of the CC at the financial year end;
(c)	one point for every R 1 million (or portion thereof) in turnover of the CC during the financial year; and
(d)	one point for every individual who, at the end of the financial year, is known by the CC to directly or indirectly have a beneficial interest in the CC.

The close corporation’s public interest score will be used to determine whether or not it will require audited financial
statements and which financial reporting standards will apply.

Accounting officer

The Close Corporations Act still requires all close corporations to appoint an accounting officer.

Audit exemption

The Amendment Act provides for an exemption with regards to audit. The exemption states the following:
“30 (2A) If, with respect to a particular company, every person who is a holder of, or has a beneficial interest in, any securities
issued by that company is also a director of the company, that company is exempt from the requirements in this section to
have its annual financial statements audited or independently reviewed, but this exemption—
(a) does not apply to the company if it falls into a class of company that is required to have its annual financial statement
audited in terms of the regulations contemplated in subsection (7)(a); and
(b) does not relieve the company of any requirement to have its financial statements audited or reviewed in terms of another
law, or in terms of any agreement to which the company is a party.”
As “company” also includes a close corporation, this implies that all close corporations that meet the requirement to be
audited in terms of Regulations, in terms of the Public Interest Score or activities engaged in, would require an audit. Should
the close corporation not need an audit in terms of the Regulations, then the requirement for an independent review is also not
applicable.

Audit requirement

The Regulations provide for both activity and size criteria to determine whether or not close corporations require audited
financial statements.
The requirements for close corporations to have their financial statements audited are as follows:

• any close corporation if, in the ordinary course of its primary activities, it holds assets in a fiduciary capacity for

persons who are not related to the close corporation, and the aggregate value of such assets held at any time during

the financial year exceeds R 5 million (activity test);

• any close corporation whose public interest score in that financial year is

(i) 350 or more; or

(ii) at least 100, but less than 350, if its annual financial statements for that year were internally compiled.

Independent review

The exemption on audit in section 30(2A) would lead to close corporations not requiring an independent review.

Trusts as members of close corporations

Close corporations would need to assess the specific circumstances where a trust is a member of a close corporation. The
trust deed of the trust would need to be evaluated to confirm whether the trust meets the requirements of either trustees
and/or beneficiaries having a beneficial interest in the close corporation and being members of the close corporation.
Where beneficiaries of the trust can be deemed to have a direct or indirect interest in the close corporation, the beneficiaries
would need to be included in the computation of the public interest score.

Financial reporting Standards

The Regulations make provision for IFRS, IFRS for SMEs and SA GAAP, and also state that the Financial Reporting
Standards apply to every company with a financial year end starting on or after the effective date of the Act. Therefore close
corporations with a year- end starting after 1 May 2011 (year end of 30 April 2012) will have to prepare financial statements in
line with the following table:

PUBLIC INTEREST SCORE	FINANCIAL REPRTING STANDARD	AUDIT	INDEPENDENT REVIEW	ACCOUNTING OFFICER’S REPORT
PIS > 350	IFRS / IFRS for SMEs	YES	NO	YES
PIS > 100 and < 350 and AFS were internally compiled	IFRS / IFRS for SMEs / SA GAAP	YES	NO	YES
PIS > 100 and < 350 and AFS independently compiled	IFRS / IFRS for SMEs / SA GAAP	NO	NO*	YES
PIS < 100 and AFS independently compiled	IFRS / IFRS for SMEs / SA GAAP	NO	NO*	YES
PIS < 100 and AFS internally compiled	The Financial Reporting Standard as determined by the company for as long as no Financial Reporting Standard is prescribed	NO	NO*	YES

*The exemption on audit in section 30(2A) would lead to close corporations not requiring an independent review. Should they not meet the exemption they would require an independent review.