Appointment of an Auditor and a Company Secretary and Rotation of Auditors

It is mandatory for a public and a state-owned company to appoint an auditor and a company secretary.  A public company must appoint its auditors and its company secretary upon incorporation or within 40 business days of incorporation.

The company secretary may be appointed by the incorporators upon incorporation or subsequently by the directors of the company or through an ordinary resolution of the shareholders. The appointed company secretary must be a permanent resident in South Africa. The company secretary does not have to be a natural person, but could also be a juristic person or a partnership, provided that the entities meet the requirements of the Companies Act, 2008.

 Only registered auditors may be appointed. In addition, the appointed auditor may not be a

  • director, prescribed officer, employee or consultant of the company;
  • director, officer or employee of the person appointed as company secretary;
  • person who habitually or regularly performs the duties of accountant or bookkeeper of the company;
  • person appointed in the immediately preceding 5 years as the auditor of the company.

Auditors must be appointed upon incorporated by the incorporators or subsequently by the  directors of the company within stipulated timeframes. The first auditors of a company hold office until the first Annual General Meeting (AGM), and are re-appointed on an annual basis at every AGM. 

In terms of section 92 of the Companies Act, 2008, the same individual may not serve as the auditor or designated auditor of a company for more than 5 consecutive financial years. If an individual has served as the auditor or designated auditor of a company for 2 or more consecutive financial years, and then ceases to be the auditor or designated auditor, the individual may not be appointed again as the auditor or designated auditor of that company until after the expiry of at least two further financial years.

If a company has appointed 2 or more persons as joint auditors, the company must manage the rotation in such a manner that all of the joint auditors do not relinquish office in the same year.

Rotation of auditors

In terms of section 92 of the Companies Act, 2008, the same individual may not serve as the auditor or designated auditor of a company for more than 5 consecutive financial years.

If an individual has served as the auditor or designated auditor of a company for 2 or more consecutive financial years, and then ceases to be the auditor or designated auditor, the individual may not be appointed again as the auditor or designated auditor of that company until after the expiry of at least two further financial years.

If a company has appointed 2 or more persons as joint auditors, the company must manage the rotation required by this section in such a manner that all of the joint auditors do not relinquish office in the same year.

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