Initial complications are to be expected as companies and close corporations CCs try to work out how to calculate public interest scores PIS in the New Companies Act and interpret the regulations.That’s the view of Ian Scott, joint managing partner of the Grant Thornton Cape office.“The new Companies Act, which came into effect on 1 May 2011, includes a PIS calculation which determines what report these entities need going forward, unless they hold assets in a fiduciary capacity with an aggregate value of over R5 million, in which case an audit is needed.”“The new Act also brings increased regulation to close corporations as their PIS calculations are subject to the same criteria as companies, although the outcomes are different,” says Scott.The Regulations provide for both activity and size criteria to determine whether or not companies or close corporations require audited financial statements. The Regulations state that every entity is required to calculate its PIS at the end of each financial year and the score is calculated as the sum of the following:A number of points equal to the average number of employees as determined by the Labour Relations Act of the company during the financial year;One point for every R1 million or portion thereof in third-party liabilities at year end these exclude shareholder loans and intercompany loans with common shareholdings;One point for every R1 million or portion thereof in turnover during the financial year; andOne point for every individual who, at the end of the financial year, is known by the company to directly or indirectly have a beneficial interest in the business.If a close corporation has a PIS score below 100 it requires an accounting officer’s report just the same as it did previously.
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