Corporate governance: Financial year-end of a company
Every company has a financial year. A company’s financial year is any 12-month period that the company uses for accounting purposes. The financial year-end of a company is usually the end of any quarter, such as the end of February, June, September or December.
Even though the financial year of a company is usually a 12-month period, the same may not be true in all circumstances. In the case of a newly incorporated company, the financial statements are prepared from the date of incorporation to the year-end date. In the last instance, the financial year-end period may result in a year-end period of less than 12 months.
A company must have a financial year, ending on a date set out in the Company’s Notice of Incorporation.
The first financial year of a company a) begins on the date that the incorporation of the company is registered, as stated in its registration certificate; and (b) ends on the date set out in the Notice of Incorporation, which may not be more than 15 months after the date stated in (a) above.
The directors of a company may amend the financial year-end of a company at any time by submitting a CoR 25 notice of amendment application to the Companies and Intellectual Property Commission (“CIPC”) together with a signed resolution by the board of directors where the change in the financial year-end date was approved.
The requirements for the amendment of a company’s financial year-end as stipulated in the Companies Act N. 71 of 2008 (“the Act”) is:
- The financial year-end may only be changed once in a particular financial year;
- The newly amended year-end date must be a date that is later than the date on which the amendment was submitted to CIPC; and
- The new financial year-end may not result in a new financial year that is longer than a 15-month period from the date on which the previous financial year-end period ended.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).