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News: Technical Updates
IFRIC Interpretation on Income Taxes withdrawn
In December 2010, the International Accounting Standards Board (IASB) issued Deferred Tax: Recovery of Underlying Assets: Amendments to IAS 12(AC 102) - Income Taxes, effective 1 January 2012. These amendments to IAS 12(AC 102) introduced a presumption that an investment property measured at fair value is recovered through sale. This presumption is rebutted if the investment property is held to consume substantially all the economic benefits embodied in the investment property over time, rather than through sale. As the guidance in SIC 21(AC 421) - Income Taxes - Recovery of Revalued Non-Depreciable Assets, has been incorporated into the amendments to IAS 12(AC 102), SIC 21(421) was withdrawn from 1 January 2012.
Comprehensive review of IFRS for SMEs to commence in 2012
The IASB is expected to begin its comprehensive review of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) during the last six months of 2012. This review is expected to include a request for public comment on amendments that should be considered for the standard. As part of the review, the IASB will also consider incorporating the Q&As into the revised IFRS for SMEs. For this reason, the IASB's SME Implementation Group is not planning on issuing many, if any, additional draft Q&As before the start of the comprehensive review. The Q&As can be downloaded from the IASB website.
Three new Trustees appointed to the IFRS Foundation
The Trustees of the IFRS Foundation have announced the appointment of Chandrashekhar Bhaskar Bhave, James Quigley and Ronald Arculli as Trustees. Their terms will expire on 31 December 2014. Mr B have is a former Chairman of the Securities and Exchange Board of India, and the Indian Securities and Market Regulator. Mr Quigley is a Senior Partner of the US member firm Deloitte LLP and former Global Chief Executive Officer of Deloitte Touché Tohmatsu Limited. Mr Arculli is the Chairman of Hong Kong Exchanges and Clearing Limited and Chairman of the World Federation of Exchanges. The IFRS Foundation press release can be downloaded from the SAICA website.
Latest editorial corrections and changes to IFRS
The IASB has issued editorial corrections and changes to:
- Bound Volume 2010, 2011 and 2012
- IFRS 9 – Financial Instruments (2009 and 2010)
- IFRS 10 – Consolidated Financial Statements (issued May 2011)
- IFRS 12 – Disclosure of Interests in Other Entities (issued May 2011)
- IFRS 13 – Fair Value Measurement (issued May 2011)
- IAS 19 – Employee Benefits (issued June 2011)
- Disclosures – Transfers of Financial Assets (issued October 2010)
- Presentation of Items of Other Comprehensive Income (issued June 2011)
- Mandatory Effective Date of IFRS 9 and Transition Disclosures (issued December 2011)
The latest editorial corrections and changes to IFRS can be downloaded from the SAICA website.
Financial Services
Afrikaans Level 1 Regulatory Examinations
In a circular released in 2011, the FSB indicated that due to the limited interest in the Afrikaans examination, it would make this version of the examination available on a limited number of specific dates and at specific venues. FAIS circular 1 of 2012 serves to communicate the specific dates and venues for the Afrikaans examinations, in order for interested parties to plan, and make the necessary arrangements to attend one or more of the Afrikaans examination sessions.
Candidates are reminded that the fee for the Afrikaans examination remains at R900. The registration process for the Afrikaans is very similar to the English examination and can be done telephonically or electronically. The examination process is also the same as for the English examination, meaning that the same procedures and processes will be followed before, during and after the examinations.
The study materials for the examinations are provided by SETA accredited training providers. The FSB study guide will also be made available in Afrikaans and will be published on the FSB website once finalised. asa
The FSB will provide more information regarding the addresses and times of the examination sessions on the following link. ftp://ftp.fsb.co.za/public/Faisdep/Circulars/FAISCircular1_2012.pdf.
GOVERNANCE
Summary of court case – Sibakhulu Construction (Pty) Ltd v Wedgwood Village Golf and Country Estate (Pty) Ltd dealing with the registered office of a company
The Western Cape High Court recently considered the issue of the 'residence' of a company under the new Companies Act (the '2008 Act') in the matter of Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf and Country Estate (Pty) Ltd.
The case deals with the winding up request by an applicant and a subsequent application for business rescue by another respondent. The application for business rescue was made in the Port Elizabeth High Court, whilst the application for winding up was made in the Western Cape High Court. The case was then decided by determining the jurisdiction of where the company resides.
The issue then arose whether the winding up needs to be put on hold whilst the business rescue process is continuing. The jurisdiction of the court impacted the decision and the business rescue application.
Judge Binns-Ward found that if the company has more than one office, its 'principal office' must be its registered office in accordance with section 23(3) of the 2008 Act. The term 'principal office' is not defined in the 2008 Act. Looking at the 2008 Act's requirements as to what must be kept at its registered office (sections 24 and 28), the court concluded that the principal office should be the place where “the company's general administration is centred”. The judgement acknowledges the fact that under the Companies Act, 1973 there was a possibility of a distinction between a company's registered office and its “main place of business”. The judgment also refers to the fact that in practice a company's registered address under the Companies Act, 1973 was “often an address chosen for convenience rather than an office of the company in itself in the ordinary sense, frequently the registered office of a company was for example that of the company auditors”.
The Companies Act, 2008 requires the registered office and the principal place of business for jurisdictional purposed to be the same.
As the transitional provisions do not make reference to the issue of a pre-existing company's registered office the result must therefore be that a pre-existing company is obliged to change its registered office in terms of section 23(3)(b) of the 2008 Act if the registered office does not agree with the principal place of business.
The judge considers that a company can only reside at the place of its registered office and therefore in respect of every company there would only be a single court in South Africa dealing with winding –up and business rescue matters.
The judgment concluded that the business rescue proceedings instituted in the Port Elizabeth High court has not been competently instituted and is not accepted.
Based on the above, companies should revisit the decision of having their auditors / company secretaries listed as the registered office. Companies should ensure that the CIPC records reflect the address of the principal office if there is more than one office.
To change the registered office, companies must file notice of change of the registered office with the CIPC. There is no filing fee payable.
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Thanks for updates, i hope this will improve our designation in may ways.
