Key Takeaways from CIPC’s Reissued Guideline for Corporate Compliance Programs

The Companies and Intellectual Property Commission (CIPC) has reissued Guideline 1 of 2018, providing critical advice on corporate compliance programs. The guideline is aimed at assisting companies in mitigating corruption risks, promoting ethical business practices, and ensuring compliance with regulatory standards. Here’s what you need to know to assist clients effectively.

Applicability of the Guideline

The Guideline 1 of 2018 applies to:

• State-owned companies.

• Listed public companies.

• Other companies scoring over 500 public interest score in two of the last five years (Regulation 26(2)).

It particularly targets Social and Ethics Committees, which are required to oversee corporate activities relating to social and economic development, corruption prevention, and ethical conduct in alignment with the Companies Act, 71 of 2008.

Core Compliance Principles in the Guideline

1. Top Management Commitment

   • Active support from senior leadership is essential. Establish a zero-tolerance stance on corruption with independent compliance officers and clear disciplinary measures.

2. Clear, Practical Policies and Procedures

   • Develop accessible policies covering areas such as:

     • Gifts, hospitality, and expenses.

     • Political contributions, charitable donations, and facilitation payments.

   • Ensure these policies are communicated to employees and relevant external parties (e.g., agents, contractors).

3. Communication and Training

   • Conduct regular compliance training and require annual certifications from stakeholders.

4. Periodic Reviews and Audits

   • Regularly evaluate and improve compliance programs through internal audits and reporting mechanisms like hotlines.

5. Due Diligence

   • Assess and mitigate risks in business relationships, particularly with agents, intermediaries, and suppliers.

6. Auditing and Accounting Controls

   • Maintain accurate financial records and monitor for deceptive entries that could mask illegal activities.

Practical Steps for Accountants:

1. Support the clients’ compliance infrastructure, helping clients develop and document policies that align with CIPC standards.

2. Risk assessments - assist clients in evaluating and mitigating risks associated with unethical practices.

3. Monitor and report - encourage the use of internal reporting systems to enhance transparency.

Why This Matters

Effective compliance programs protect companies from legal risks, financial penalties, and reputational harm. Accountants play a vital role in guiding clients toward ethical practices and regulatory compliance.

For detailed guidance, refer to the full Guideline 1 of 2018 on the CIPC website.