COMPANIES ACT 71 OF 2008:

Extracts – particularly relevant to Steinhoff Directors and Servants

1. Definitions:

'knowing', 'knowingly' or 'knows', when used with respect to a person, and in relation to a particular
matter, means that the person either-

(a) had actual knowledge of the matter; or

(b) was in a position in which the person reasonably ought to have-

(i) had actual knowledge;

(ii) investigated the matter to an extent that would have provided the person with actual
knowledge; or

(iii) taken other measures which, if taken, would reasonably be expected to have provided the
person with actual knowledge of the matter;

22 Reckless trading prohibited

(1) A company must not carry on its business recklessly, with gross negligence, with intent to
defraud any person or for any fraudulent purpose.

(2) If the Commission has reasonable grounds to believe that a company is engaging in conduct
prohibited by subsection (1), or is unable to pay its debts as they become due and payable in the
normal course of business, the Commission may issue a notice to the company to show cause why
the company should be permitted to continue carrying on its business, or to trade, as the case may
be.

(3) If a company to whom a notice has been issued in terms of subsection (2) fails within 20 business
days to satisfy the Commission that it is not engaging in conduct prohibited by subsection (1), or that
it is able to pay its debts as they become due and payable in the normal course of business, the
Commission may issue a compliance notice to the company requiring it to cease carrying on its
business or trading, as the case may be.

28 Accounting records

(1) A company must keep accurate and complete accounting records in one of the official languages
of the Republic-

(a) as necessary to enable the company to satisfy its obligations in terms of this Act or any other
law with respect to the preparation of financial statements; and

(b) including any prescribed accounting records, which must be kept in the prescribed manner
and form.

(2) A company's accounting records must be kept at, or be accessible from, the registered office of
the company.
(3) It is an offence for-

(a) a company-

(i) with an intention to deceive or mislead any person-

(aa) to fail to keep accurate or complete accounting records;

(bb) to keep records other than in the prescribed manner and form, if any; or

(ii) to falsify any of its accounting records, or permit any person to do so; or

(b) any person to falsify a company's accounting records.

(4) For greater certainty, the Commission may issue a compliance notice, as contemplated in section
171, to a company in respect of any failure by the company to comply with the requirements of this
section, irrespective whether that failure constitutes an offence in terms of subsection (3).

29 Financial statements

(1) If a company provides any financial statements, including any annual financial statements, to any
person for any reason, those statements must-

(a) satisfy the financial reporting standards as to form and content, if any such standards are
prescribed;

(b) present fairly the state of affairs and business of the company, and explain the transactions
and financial position of the business of the company;

(c) show the company's assets, liabilities and equity, as well as its income and expenses, and any
other prescribed information;

(d) set out the date on which the statements were published, and the accounting period to which
the statements apply; and

(e) bear, on the first page of the statements, a prominent notice indicating-

(i) whether the statements-

(aa) have been audited in compliance with any applicable requirements of this Act;

(bb) if not audited, have been independently reviewed in compliance with any applicable
requirements of this Act; or

(cc) have not been audited or independently reviewed; and

(ii) the name, and professional designation, if any, of the individual who prepared, or supervised
the preparation of, those statements.

(2) Any financial statements prepared by a company, including any annual financial statements of a
company as contemplated in section 30, must not be-

(a) false or misleading in any material respect; or

(b) incomplete in any material particular, subject only to subsection (3).

(3) A company may provide any person with a summary of any particular financial statements, but-
 (a) any such summary must comply with any prescribed requirements; and

(b) the first page of the summary must bear a prominent notice-

(i) stating that it is a summary of particular financial statements prepared by the company, and
setting out the date of those statements;

(ii) stating whether the financial statements that it summarises have been audited, independently
reviewed, or are unaudited, as contemplated in subsection (1) (e);

(iii) stating the name, and professional designation, if any, of the individual who prepared, or
supervised the preparation of, the financial statements that it summarises; and

(iv) setting out the steps required to obtain a copy of the financial statements that it summarises.

(4) Subject to subsection (5), the Minister, after consulting the Council, may make regulations
prescribing-

(a) financial reporting standards contemplated in this Part; or

(b) form and content requirements for summaries contemplated in subsection (3).

(5) Any regulations contemplated in subsection (4)-

(a) must promote sound and consistent accounting practices;

(b) in the case of financial reporting standards for public companies, must be in accordance with
the International Financial Reporting Standards of the International Accounting Standards Board or
its successor body; and

(c) may establish different standards applicable to-

(i) profit and non-profit companies; and

(ii) different categories of profit companies.

(6) Subject to section 214 (2),1 a person is guilty of an offence if the person is a party to the
preparation, approval, dissemination or publication of-

(a) any financial statements, including any annual financial statements contemplated in section
30, knowing that those statements-

(i) fail in a material way to comply with the requirements of subsection (1); or

(ii) are materially false or misleading, as contemplated in subsection (2); or

(b) a summary of any financial statements, knowing that-

(i) the statements that it summarises do not comply with the requirements of subsection (1), or
are materially false or misleading, as contemplated in subsection (2); or

(ii) the summary does not comply with the requirements of subsection (3), or is materially false or
misleading.

1
Included below.
214 False statements, reckless conduct and non-compliance

(1) A person is guilty of an offence if the person-

(a) is a party to the falsification of any accounting records of a company;

(b) with a fraudulent purpose, knowingly provided false or misleading information in any
circumstances in which this Act requires the person to provide information or give notice to another
person;

(c) was knowingly a party to an act or omission by a company calculated to defraud a creditor or
employee of the company, or a holder of the company's securities, or with another fraudulent
purpose; or

(d) is a party to the preparation, approval, dissemination or publication of a prospectus or a

written statement contemplated in section 101, that contains an 'untrue statement' as defined and
described in section 95.

(2) For the purposes of subsection (1) (d) and section 29 (6), a person is a party to the preparation
of a document contemplated in that subsection if-

(a) the document includes or is otherwise based on a scheme, structure or form of words or
numbers devised, prepared or recommended by that person; and

(b) the scheme, structure or form of words is of such a nature that the person knew, or ought
reasonably to have known, that its inclusion or other use in connection with the preparation of the
document would cause it to be false or misleading.

(3) It is an offence to fail to satisfy a compliance notice issued in terms of this Act, but no person
may be prosecuted for such an offence in respect of a particular compliance notice if the
Commission or Panel, as the case may be, has applied to a court in terms of section 171 (7) (a) for
the imposition of an administrative fine in respect of that person's failure to comply with that notice.

(4) A person who contravenes section 99 (1), (2), (3), (4), (5), (8) or (9) and, if that person is a
company, every director or prescribed officer of the company who knowingly was a party to the
contravention, is-

(a) guilty of an offence; and

(b) liable to any other person for any losses sustained as a consequence of that contravention.

218 Civil actions

(1) Subject to any provision in this Act specifically declaring void an agreement, resolution or
provision of an agreement, Memorandum of Incorporation, or rules of a company, nothing in this
Act renders void any other agreement, resolution or provision of an agreement, Memorandum of
Incorporation or rules of a company that is prohibited, voidable or that may be declared unlawful in
terms of this Act, unless a court has made a declaration to that effect regarding that agreement,
resolution or provision.

(2) Any person who contravenes any provision of this Act is liable to any other person for any loss
or damage suffered by that person as a result of that contravention.
(3) The provisions of this section do not affect the right to any remedy that a person may otherwise
have.