The importance of knowing your Public Interest Score (“PIS”)

From the local barber to the multinational, they all must know or be aware of their PIS. If you own a
company or are a director of a company, it is part of your duty as an owner and director to know
your company’s PIS. For the simple reason being that it allows to you to be compliant with Section
30 and the Regulations of the Company Act. Section 30 of the act obligates companies to compile
annual financial statements which must be presented at the annual general meeting that must be
held during a financial year. The type of company together with the PIS will determine when those
annual financial statements must be audited or independently reviewed. This is only applicable to
profit and non – profit companies. Public and listed companies must have their annual financial
statements audited, regardless of the PIS obtained. This is due to the type of company a public
company is. It does not matter whether the public company is listed or not.

What is a Public Interest Score (“PIS”)?

A PIS indicates the Public Interest in your company. In essence it determines whether your annual
financial statement must be audited or only must be independently reviewed. Regulation 28
differentiates between four different levels of PIS. First level 0 -100, Second Level 100 – 350 and
third level 350< and the fourth level being 500<. In terms of Regulation 28 a company other than a
public company with a PIS on the first level, usually owner -managed companies only must compile
annual financial statements that does not need to be audited or independently reviewed unless the
Memorandum of Incorporation determines otherwise. Companies on the second level PIS, must
have their annual financial statements independently reviewed if the statements were internally
compiled and not audited, unless the Memorandum of Incorporation determines otherwise.
Companies with a PIS on the third level must have their statements audited regardless of what the
Memorandum of Incorporation determines. Companies with a PIS of 500< is legally obligated to
appoint and establish a Social and ethics Committee (“SEC”).

Regulation 26(2) sets out the method for calculating your company’s PIS. In terms of Regulation
26(2) your PIS is calculated as follows:

  • A number of points equal to the average number of employees of the company during the financial year.
  • One point for every r million turnover or part thereof for the financial year.
  • One point for every R 1 million or portion thereof in third party liability of the company, at the financial year end and one point for every individual, who at the end of the financial year, is known by the company –
    • In the case of a profit company, to directly or indirectly have a beneficial interest in any of the company’s issued securities; or
    • In the case of non – profit company, to be a member of the company, or a member of an association that is a member of the company.

All of these must be added up and the grand total will then be your company’s PIS. This will then confirm whether your annual financial statements must independently reviewed or audited and whether the company must appoint and establish an SEC. 

For any further assistance with the calculating of your company’s PIS or any other queries regarding your company’s corporate governance and compliance, contact the team at Stratlaw (Pty) Ltd for assistance.

– Johann Hattingh 2022/07/11

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