What is a Public Interest Score and why do I need to know about it?
The Companies Act of 2008 introduced us to the concept of the public interest score (PI Score), so why is this important and what is this score? It is important to know your company’s PI Score as it plays a role in determining amongst other things, whether a company must be audited or independently reviewed; which persons are eligible to perform the independent review, and whether a company must appoint a Social and Ethics Committee.
So how do I calculate this PI Score?
In terms of Regulation 26(2) of the Act, the PI Score is calculated as the sum of the following:
A number of points equal to the average number of employees of the company during the financial year;
One point for every R1 million (or portion thereof) in third party liability of the company at the financial year end - This is the money owed in terms of loans, debentures, and other financing;
One point for every R1 million (or portion thereof) in turnover during the financial year - if the turnover is half a million rand, score ½ point;
One point for every individual who, at the end of the financial year, is known by the company to directly or indirectly have a beneficial interest in any of the company’s issued securities. - this will include shareholders, beneficiaries of a trust where a trust is a shareholder and other stakeholders. As more companies are choosing to establish Trusts with multiple beneficiaries, this could push the PI Score of these companies up substantially.
This calculation should be done for each company individually and not at a consolidated group level. Regulation 26 requires every company to calculate its PI Score at the end of each financial year.
So what does the score mean to my company?
Score 500 points of more
- Must have Audited financials and establish a Social and Ethics Committee
Score 350 point or more
- Must have Audited Financials
Score between 100 and 350 points
- Must have an independent review – by an Auditor or C.A
Score below 100 point
- Must have an independent review – by an Accounting Officer
Close Corporations are treated the same way as companies when it comes to the audit requirement.
For any queries regarding the above or assistance with compliance or any other commercial needs please contact Myers Attorneys on 011 346 2422 or reception@myersattorneys.co.za