How companies are currently classified
Companies used to be classified as either widely held or limited interest companies. With the introduction of the New Companies Act, a new classification system was introduced.
Companies are now, since its introduction, either classified as either profit or non-profit organizations.
Profit organisations are, in turn, classified as any one of the following, viz Private Companies, Personal Liability Companies, State-Owned Companies, and Public companies. (Read More on Corporate Structures)
What is a Public Interest score?
Each of these companies is obliged to calculate its Public Interest score at each financial year-end and this provision applies to both Company’s and Close Corporations alike.
Who determines your Public Interest score?
An organisation’s Public Interest score is usually calculated by the auditor or compiler of the financial statements at the end of each year
What is Public Interest Scoring?
Public Interest Scoring refers to a method, prescribed by the Companies Act and Regulations, to determine an organisation’s impact or involvement with the public at large.
This article is not intended to serve as an in-depth analysis of the purpose, calculation, or Public Interest Scoring, in general, but serves as a mere introduction to the subject matter thereof.
How is a Public Interest score calculated?
Public Interest Scoring is calculated by adding the following:
- The average number of employees of the organization during the financial year; plus
- one point for every R 1 million (or portion thereof) in third party liability of the company, at the financial year-end; plus
- one point for every R1 million (or portion thereof) in turnover during the financial year; and
- one point for every individual who, at the end of the financial year, directly or indirectly has a beneficial interest in the company or one point for every member of a non-profit organization or association.
Why does your Public Interest score matter?
An organisation’s Public Interest score determines, amongst others, the organization’s obligations to have their financial statements audited, which financial reporting system standards should apply to it, as well as who may conduct a review of that financial statements (if any)
Save for these accounting requirements, which fall outside of the purview of this article, an organisation’s Public Interest score will also determine the governance obligations an organisation must meet or comply with.
