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Section 716 of The Companies Act No. 17 of 2015: Exemption from audit for non-profit making companies

    

(1) The requirements of this Part as to audit of financial statements do not apply to a company for a financial year if it is non-profit making and its financial statements are subject to audit by the Auditor General.
(2) In the case of a company that is a parent company or a subsidiary undertaking, subsection (1) applies only if every group undertaking is non-profitmaking.
(3) This section has effect subject to compliance with section 709(2).
(4) A company is non-profit-making for the purpose of this section if it does not provide a pecuniary gain to its members
(5) For the purpose of subsection (4), a company provides pecuniary gain toits members if—
(a) it carries on any activity for the purpose of securing pecuniary gain for its members;
(b) it has capital that is divided into shares held by the company's members;
(c) it holds property in which the company's members have a disposable interest (whether directly, or in the form of shares in the capital of the company or otherwise); or
(d) it is a company that is, or is included in a class of bodies that is, prescribed by the regulations for the purposes of this subsection.
(6) For the purposes of subsection (5)(a), a company does not provide pecuniary gain for its members only because of any of the following—
(a) the company itself makes a pecuniary gain, unless that gain or any part of it is divided among or received by the company's members or any of them;
(b) the company is established for the protection of a trade, business or industry in which the company's members are engaged or interested, but the company does not itself engage or participate in any such trade, business or industry;
(c) members of the company derive pecuniary gain through the enjoyment of facilities or services provided by the company for social, recreational, educational or other similar purposes;
(d) members of the company derive pecuniary gain from the company in the form of bona fide remuneration;
(e) members of the company derive pecuniary gain from the company of a kind that they could also derive if they were not members of the company;
(f) members of the company compete for trophies or prizes in contests directly related to the objects of the company;
(g) the company provides pecuniary gain of a class prescribed by the regulations for the purposes of this section.

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