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Auditing Profession Act, 2005 (Act No. 26 of 2005)

Chapter III : Accreditation and Registration

Part 2 : Registration of individual auditors and firms

38. Registration of firms as registered auditors

 

(1) The only firms that may become registered auditors are—
(a) partnerships of which all the partners are individuals who are themselves registered auditors;
(b) sole proprietors where the proprietor is a registered auditor; and
(c) companies which comply with subsection (3).

 

(2) On application by a firm which is a partnership fulfilling the conditions in subsection (1)(a) or a sole proprietor, on the prescribed application form, the Regulatory Board must register the firm as a registered auditor on payment of the prescribed fee.

 

(3) The Regulatory Board must register a company as a registered auditor on the payment of the prescribed fee if—
(a) the company has a share capital and its memorandum of incorporation provides that its directors and past directors shall be liable jointly and severally, together with the company, for its debts and liabilities contracted during their periods of office;

[Subsection (3)(a) substituted by section 6(a) of Act No. 2 of 2015]

(b) only individuals who are registered auditors are shareholders of the company;
(c) every shareholder of the company is a director thereof, and every director is a shareholder, except that—
(i) where a shareholder of the company dies, the estate of the shareholder may continue to hold the relevant shares for a period of six months as from the date of the death or for such longer period as the Regulatory Board may approve; or
(ii) where a shareholder of the company ceases to conform to any requirement of paragraph (b), the shareholder may continue to hold the relevant shares for a period of six months as from the date on which the shareholder ceases so to conform or for such longer period as the Regulatory Board may approve,

and provided that—

(aa) no voting rights attach to any share contemplated in paragraph (c)(i) and (ii); and
(bb) a shareholder mentioned in that paragraph does not act as a director of the company or receive, directly or indirectly, any director’s fees or remuneration or participate in the income of or profits earned by the company in its business; and
(d) the memorandum of incorporation of the company provides that—
(i) the company may, without confirmation by a court, purchase on such terms as it may consider expedient any shares held in it and the shares purchased are available for allotment in accordance with the company’s memorandum  of incorporation; and
(ii) despite any provision to the contrary in any other law, a member of the company may not appoint a person who is not a member of the company to attend, speak or vote on behalf of the member at any meeting of the company.

[Subsection (3)(d) substituted by section 6(b) of Act No. 2 of 2015]

 

(4) In its application to a company which is a registered auditor, section 8(2)(c) of the Companies Act, 2008 (Act No. 71 of 2008), has effect.

[Subsection (4) substituted by section 6(c) of Act No. 2 of 2015]