Basil Michaelides was the ex-auditor of Knysna Tourism (KT) and a member of their Finance sub-committee. He was the owner of Michaelides & Co which was later subsumed by Grant Thornton SA. Strangely, shortly after i questioned Deepak Nagar, Grant Thornton’s Chairman, regards Basil’s actions at Knysna Tourism (KT), Basil quit.
Back in early 2013, Michaelides & Co sent this this letter to KT (note how many times the pertinent points were expressed):
As of the 1 May 2013, the two year “period of grace” in which to bring your statutory records (namely your Articles, Memorandum of Association and Shareholder’s Agreement) in line with the new Companies ACt will be over.
The new Companies Act has made provision for a Memorandum of Incorporation (MOI) which will replace the previous Articles and Memorandum of Association. Therefore, as of 1 May 2013, your Articles, Memorandum of Association and shareholders agreement (if applicable) [shareholders are KT’s members] may be null and void to the extent that they conflict with the Act.
Deadlines: The Act afforded businesses a period of 2 years in which to update or convert their statutory records without incurring any fees levied by CIPC for submitting such changes, which ends on the 1 May 2013. It is anticipated that CIPC is going to encounter backlogs leading up to the deadline as everyone scrambles to get their MOI’s lodged. Therefore it is advised to please attend to this matter as soon as possible to avoid missing the deadline.
The saving of fees levied by CIPC is a nicety, however it’s of more importance to ensure that your MOI complies with the New Companies Act and clearly provides for the efficient functioning of your business. The MOI is a key document that sets out the rights, duties and responsibilities of directors, shareholders and other office bearers. It is the Company’s exclusive governing document and should not be ignored. More importantly, the MOI serves as a director’s contract with the Company.
These documents have not been ratified by membership so even if they have been recently submitted, they would be illegal.
Another massive question is whether it was legal for Knysna Tourism to run without a CEO for 22 months?
At the heart of this mess were many politicians and board members who must answer why they have repeatedly hidden KT facts and answers from their members. The only answer that adds up is my repeated accusation of cover-up and deliberate, gross incompetence.