New CIPRO requirements
13 Dec 2010
According to articles published in newspapers such as Business Day, Rand Daily Mail and the Sunday Times in September 2010, a company was hijacked by exploiting a weakness in the CIPRO system that deals with the appointment and resignation of directors in a company.
The unlisted mining company, Kalahari Resources Ltd, opened a case of fraud after the managing director of the company found that all the directors of the company had been replaced by eight new directors without her knowledge or that of the other directors or shareholders.
An investigation revealed that Sandi Majali, allegedly the central figure in the Oilgate scandal involving the diversion of funds to the African National Congress, was one of the new directors of the company. The registered address of the company had been changed and a CM15 seemingly lodged with CIPRO. This resulted in the allotment of all unissued shares to the new directors, giving them the majority shareholding in the company.
This and other fraud cases forced CIPRO to implement advanced control measures in its electronic system, especially where the appointment and resignation of directors are concerned. These measures include:
- Certified copies of the identity documents of all directors whose names appear on form CM29, must be lodged with form CM29.
- A certified copy of the notice and minutes of the meeting where the resolution was made to appoint or remove directors, is required.
- A mandate from the CEO of the company on a company letterhead authorising the person/persons who will submit the form to CIPRO, is required.
- CIPRO needs to be informed of all changes in directors’ e-mail addresses, telephone and fax numbers. Once form CM29 has been lodged, an e-mail containing a zip code is forwarded to the directors. Only after this code is e-mailed to CIPRO, will CIPRO proceed with the registration of the CM29.
Since CIPRO has difficulty coping with the increased workload of implementing the new control measures and sending e-mails to directors, delays are being experienced in registering changes in directors.
Article contributed by SEKRETARI Company Secretaries, tel. (012) 664 3173 or e-mail firstname.lastname@example.org.