Did you know that as a company director you can be held responsible if you don't comply with the Companies Act?
Yes! If you're not compliant, you'll be personally and financially liable for any losses anyone incurs (Section 75 of the Companies Act). And you know what that means...
That money's coming out of your own pocket!
But you can avoid all this! Read on to find out the one thing you need to do to comply with section 75 of the Companies Act...
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Did you know that being a company director nowadays isn't what it used to be?
Today's director faces:
Hefty responsibilities; and
Potentially serious liabilities.
Section 75: Why it should matter to you!
Before I tell you what you need to do, let's take a look at section 75.
Some companies seem to think this section doesn't apply to them. They often comply with the Companies Act on a broad level, but seem to skip some of the more complex sections like section 75!
The turth is, if you're a director, alternate director, prescribed officer, member of a committee of the board, or related to any of these, you're actually included in section 75!
And this section says as a director, you need to tell the board whenever you personally stand to gain financially (i.e. other than your normal salary) on any of your company's business deals.
Let's say your company's about to give out a tender. And your father's company is bidding for it. You have a personal financial interest and you're at risk if you don't do this one thing…
ATTENTION: Financial Directors
There are 11 Companies Act Law changes that affect you!
To learn what these are and avoid penalties of up to R1 million or ten years in jail. Follow this link…
Disclose your interest
As soon as you have a personal financial interest, you need to inform your board of directors about it, in advance and in the correct format.
And whatever happens next, you're covered!
If your board approves the interest, the business deal can legally go ahead with transparency! If it doesn't approve the interest, you've done your part and complied with your duties as a director.
But if you don't declare your interest, there are serious consequences...
Comply now or fork out your own money later
If you don't comply, you'll be in breach of section 75 of the Act. And you'll be liable for any loss anyone suffers.
Let's say something goes horribly wrong with the project. And R5 million needs to be paid out in damages. You may have to pay it from your pocket!
And your board can move to fire you!
So make sure you disclose your personal financial interest to avoid being personally liable!
For more information on section 75, turn to chapter C06: Companies Act: directors personal financial interests in your Practical Accountancy Loose Leaf. Don't have one yet? Click here to get one now. And pay a pittance compared to what you'll have to pay when you're found non-compliant of the Companies Act!
P.S. Got a Tax or Accounting question you need to ask? Your questions get a guaranteed answer from one of our experts on the Accounting and Tax Club. Click here to ask your question for free today...