All Companies and Close Corporations must comply with the provisions of the Companies Act, Act 71 of 2008. In terms of this Act a Company must have a financial year. This means that there must be a start and an end date.
Most companies have their financial year end in South Africa on the 28th February each year, so their financial year in South Africa starts on the 1st March of each year.
The financial year end date must be set out in the Company’s Notice of Incorporation.
FIRST FINANCIAL YEAR
The first financial year of a Company begins on the date that the incorporation of the Company is registered, as stated in its registration certificate. (The Company is registered with CIPC (the Corporate and Intellectual Property Commission) and after registration, CIPC issues a registration certificate called the Notice of Incorporation which contains the important information of the Company.
The financial year end of a Company in its first year of trade will be set out in the Notice of Incorporation, but it may not be more than 15 months after the date that the Company started it’s first financial year. Remember the first date of trading will be the date of incorporation of the Company – so the financial year end may not be longer than 15 months after that date.
SECOND FINANCIAL YEAR
The second and each subsequent financial year of a Company begins when the preceding financial year ends; and ends on the first anniversary of the date that the Company was incorporated, provided that the financial year end has been changed as set out below.
CHANGE OF FINANCIAL YEAR
The board of a Company may change its financial year end at any time, by filing a notice of change with CIPC. The Company may only do so once during any financial year. The newly established financial year end must be later than the date on which the notice is filed; and the date as changed may not result in a financial year ending more than 15 months after the end of the preceding financial year.
FINANCIAL YEAR END ON A WEEKEND OR PUBLIC HOLIDAY
If, in a particular year, the financial year of a Company ends on a Saturday, Sunday or Public Holiday, that financial year will be regarded to have ended on the next following business day.
The financial year of the company is its annual accounting period.
FILING OF ANNUAL RETURNS
Every Company must file an annual return in the prescribed form with the prescribed fee, and within the prescribed period after the end of the anniversary of the date of its incorporation a copy of its annual financial statements, if it is required to have such statements audited in terms of the Companies Act. (Not all Companies have to be audited).
Each year, in its annual return filed, every Company must designate a director, employee or other person who is responsible for the Company’s compliance with the requirements of this.