Running a Legally Compliant Organisation A Presentation by: Mr Thembekile J Kanise , Director of Catholic Development Centre – Mthatha Diocese Catha National Conference: Johannesburg , 19 to 21 April 2018

My take on the Topic An Organisation (that is) Legal (and ) Complies

Understanding Organisations in S.A In South Africa there are three types of Organisation not for Profit 1. a Voluntary Association 2. a Non Profit Company 3. a Non- Profit Trust All of these can now be called Non Profit Organisation (NPO)

Voluntary Association A Voluntary Association: Is an organisation formed when 1. Two or More people come together in order to find a solution to a common social problem. The agree on rules to guide them . This is their Founding Document They agree on what they want to achieve- one goal They agree on how to achieve it They are not linked to any government body or department. Common Law applies

Non Profit Company (NPC) Seven or more persons meet to form an entity not for gain They link their entity to the Companies Act 71, of 2008 under Department of Trade and Industry They identify two persons amongst themselves as Directors and others (5 to 7 as members)

Non Profit Trust One or more persons donate an asset to a group of people so that they may keep for the good of others. The five to seven people decide to form an entity The entity is registered under the Trust Property Control Act 57 of 1988 under the Department of Justice and Constitutional Development All members are screened and approved to be fit to hold assets in Trust in the area where assets are.

Non Profit Organisation Act 71 of 1997 The act provides a platform for all Organisation not for profit in South Africa to be registered on voluntary basis. This helps to link all Non Profit Organisation with the Constitution of the Republic of South Africa. This includes: Voluntary Associations – which are not linked to a department and therefore not linked to the constitution NPC which are already linked through Department of Trade and Industry Non Profit Trusts which are already linked through department of Justice and Constitutional Development

NPO Continued The links all its registered NPO through the Department of Social Development The act provides for establishment of the Non Profit Directorate. An administrative wing and Support The Act provides for registration, compliance matters and a code of practice for NPO’s IT IS once again VOLUNTARY (You may register or not register)

NOTE WELL Funding partners need an entity that : Has an Identity Number (Registration number of your organisation) and Is linked and protected, as an Entity , to and by the Constitution of the Republic of South Africa That is why all organisations and entities not for profit are required to register with one of the three government departments.

Summary of NGO’s / Entities in SA Entity Department Linked to Body responsible for Registration Founding Document Governance Structure Non Profit Company Trade and Industry Companies and Intellectual Property Commission Memorandum and Articles of Association Board of Directors Non Profit Trust Justice and Constitutional Development Master of the High Court Trust Deed Board of Trustees

Summary Continued… Entity Department Linked to Body Responsible for registration Founding Document Governance Structure Voluntary Associations Social Development Non Profit Directorate Constitution Management Committee

Your Organisation must be Legal To register as an NPO you need according to the NPO Act Your Founding Document with some key clause in them as follows: Name of your entity Organisational objectives (main and ancillary Make provision for income and property are not distributed to its members or office bearers except for reasonable compensation Provision for entity to be body corporate and have an identity and exists distinct from its members or office bearers Provision for the entity to exists nothwiithsatanding changes in the composition of members or office bearers

NPO Checklist continued Provision that office bearer or members have no rights to property or assets of the organisation solely by virtue of being members or office bearers Powers of the entity Organisation structures and mechanism for its governance Rules for convening and conducting meetings, including quorum required for and the minutes kept for the meetings How decisions are made Financial transactions must be conducted by means of bank account The manner in which decisions are to be made

NPO Check list continued Date for the end of the entity’s financial year Procedure for changing the founding document Procedure on how the entity may be wound up or dissolved and it must read “when the organisation is being wound up or dissolved, any asset remaining after all its liabilities have been met, must be transferred to another NON Profit Organisation having similar objectives.” On a prescribed form Id copies of Management Committee with address, id numbers and positions on the Committee

Registering a NON Profit Company There must be up to three, South Africa Citizens appointed to become Directors There can be any number of members Id copies of Directors Minimum fee of R175 Prescribed for CoR15.1C with supporting document Reservation of a name Memorandum of Association and Articles of Association

Registering a Non Profit Trust An acceptance of Trusteeship form for each person A bond of security by the trustee if required, J344E Form JM21 A Trust Deed A fee of R100

Other Legal Requirements for Organisation The entity becomes an employer: You need to register with: South African Receiver of Revenue For Income Tax and Pay as You Earn You may apply for Exemption on paying tax and become a Public Benefit Organisation (PBO) status and also register for a Section 18 A Status

Other Legal Requirements You need to register with: Department of Labour for Unemployment Insurance Fund (UIF) Compensation of Injuries and Disease Act (COIDA) Adhere to the Labour Relation’s Act Follow the Public Finance Management Act (PFMA) All acts of government that relate to entity’s programmes

What is Unemployment Insurance Fund (UIF) It is a compulsory government Tax which every employer must collect and pay for each employee under their employment. This tax contributes to the unemployment insurance fund of the government. They must be people who work more than 24hours a month and not students The tax is currently 2% of the employee’s wage or salary until a certain ceiling . The employer pays 1% towards the employer’s contribution and the employer contributes another 1%. It is an offence not to contribute It is fraud to collect UIF monies and not pay to the Department of Labour on monthly basis or to the SARS.

How to contribute for UIF First you need to register as an employer with SARS You then apply for UIF with the Department of Labour (there is a prescribed form UI-8 and UI 19 You are then given an organisational reference number which you use as an employer. You then register each employer under your organisation stating their names, identity numbers and the date they started If you fail to deduct then you may not deduct for past months. Please not this may be to the account of the employer should there be a challenge,

What is COIDA This is a government tax paid by employers for government to provide for compensation for disablement caused by occupational injuries of diseases sustained or contracted by employees in the course of their employment or for death resulting from such injuries or diseases and to provide for matters connected with. This is according to the Department of labour. The act applies to all employers, casual and full time workers All employers have to apply with the department of labour which assesses your services and determines what each employer should pay.

Being a Compliant entity All Registered NPO’s must submit an annual report (Narrative and Financial) to the NPO Directorate within 9 months from the end of its financial year. Each NPO must inform the NPO Directorate on changes made in its founding document and submit the amended founding document. Each NPO must keep all its records for a minimum of seven to ten year Each NPO must have an external body to assess its financial books. This may be a registered accountant or an audit company. These will produce Annual Financial Statements (AFS) Each month an NPO must deduct taxes (UIF and PAYE) and submit such payments to SARS or Department of Labour

Compliance continued Each NPO must ensure that names of governance structure are amended according and such changes communicated to the NPO Directorate, SARS where Public Benefit Organisation applies and in Banks where accounts are held. This is very important. Reporting to funders and other relevant partners. Remember these partners support your Idea and Dreams (They help you Buy Time, Buy Space and achieve)

The End Thank you Ndiyabonga Enkosi Remember your organisation is one of the Thousands registered with the NPO Directorate or CIPC or Master of the High Court or it is a Voluntary Association Make sure it is Legally Registered and Complies with the requirements.