PROFIDEND NEWS

Your company might be in danger… a danger you are not even aware off. Business owners, please read this. Sometimes you have to do the boring stuff too!

My business service providers, Henzel and Profidend brought this scary issue under my attention and I think it is crucial for our subscribers with companies or close corporations to take urgent notice of this silent killer. Perhaps just another way of the government to make money, but a very disturbing way. That is for sure.

Companies and close corporations (”CCs”) are required by law to lodge annual returns with CIPRO and pay the relevant fees. The lodgement of the annual returns is a recent legal requirement which starts to bite companies and CCs. Failure to lodge the annual returns timeously can cause a company or CC to be deregistered by CIPRO. During November 2009 CIPRO placed hundred thousands of companies and CCs in process of deregistration due to their failure to lodge their annual returns. It is anticipated that the registration of those companies and CCs which have still not lodged their annual returns, will be cancelled in the very near future.

Directors of companies and members of CCs are well aware of the legal responsibility of the preparation of annual financial statements for their businesses as well as the filing of income tax returns. The annual returns, which must be lodged with CIPRO, is a further legal requirement with which companies and CCs must comply irrespective whether the annual financial statements have been prepared or the income tax return have been filed.

Annual returns of companies and CCs must be lodged annually in the anniversary month of their date of incorporation. The end of the financial year of companies and CCs is not used to determine when the annual return must be lodged. If a company or CC was registered in August 2007, the annual return must be lodged during August of every subsequent year. CIPRO does not send notifications to companies and CCs to remind them of their responsibility to lodge annual returns. The responsibility therefore rests with the owners of companies and CCs to ensure that they are aware when annual returns must be lodged and have procedures in place to ensure timeous lodgement of the annual returns.

A company or CC must supply all the current information of the entity when lodging the annual return. This information will assist CIPRO to determine whether the information required to be disclosed in terms of the Companies Act by the company or the Close Corporations Act by a CC, has been disclosed and is still valid. This means that a company or CC must ensure, as required by law, that whenever there is a change in its information, the required forms containing such new information are lodged with CIPRO. The information supplied in the annual return should therefore confirm the information on record with CIPRO. If the information contained in the annual return differs from that on record with CIPRO, CIPRO will request the company or CC to lodge the appropriate forms to update its records accordingly.

If an annual return has not been lodged within the month following the month in which the anniversary of the date of registration falls, (September in the example used above) CIPRO may place the company or CC in process of deregistration. CIPRO may cancel the registration of a company or CC if the annual return has not been lodged within 6 months from its due date. Such cancellation of the registration is referred as final deregistration. It is also important to note that at times CIPRO does not wait for the 6 month period to lapse. Applying another provision in the Acts, CIPRO may consider that a company or CC which has failed to lodge its annual return timeously, is dormant, and immediately proceed to finally deregister such company or CC. .........................

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