News Update from the Corporate & Commercial Department, Are Your Annual Returns and Director Changes Up-to-date?
Each year, within 30 business days after the anniversary of its date of incorporation, a company (including a non-profit company), is required to lodge an annual return and pay the prescribed fee to the Companies and Intellectual Property Commission ("CIPC"). An annual return is essentially a notice advising CIPC that the company is still in business, or is to conduct business in the near future. If this is not done, CIPC may assume that the company is no longer active and may place the company in the deregistration process.
Section 82(3) of the Companies Act, 2008 ("the Act"), provides that CIPC has a "duty" to deregister a company if it fails to file annual returns for two or more consecutive years. This may happen without you even knowing about it.
Amongst other things, deregistration puts an end to the existence of a company and the property of the company becomes bona vacantia or "ownerless" and, as such, vests in the State. All of the other consequences of non-existence follow. For example, the authority of a person who acted on the company's behalf is terminated and any purported resolutions passed by the deregistered company are void.
The fee payable to CIPC with the annual return is calculated according to the company's gross annual turnover for its preceding financial year. To avoid possible deregistration, an annual return must be lodged even if the company has been inactive and has had no turnover. A fee is still payable in such circumstances.
If the annual return is lodged after the prescribed time period has expired, a penalty ranging from R50 to R1000 is automatically levied by CIPC.
Annual returns can only be lodged electronically via CIPC's website. So you must either register to use CIPC's website and have sufficient funds available in your online account for payment, or appoint a third party to calculate, submit and pay the annual return on your behalf.
The Act provides that a person is entitled to act as a director when he or she has been elected or appointed as such and has provided the company with a written consent to act as its director.
Although it does not affect the validity of a director's appointment, a company is statutorily required to notify CIPC of any changes in its directors within 10 business days of the change occurring. CIPC's registers are used by banks and other organisations as conclusive proof of the identity of the directors of a company, for example, to verify the identity and status of signatories to the company's annual financial statements, so it is important to keep this information up to date to avoid unnecessary complications.
Director changes for private companies have to be lodged electronically via CIPC's website by a registered user. Non-profit companies still have to lodge their director changes by email until such time that CIPC's website is upgraded to include these changes.
Shepstone & Wylie provides a comprehensive company secretarial service which includes annual return submissions, lodging of director changes, company name changes, MOI changes, the incorporation of new companies, purchase of shelf companies and company conversions.
Claire Cowan, Partner
Contact: 031 575 7404 or firstname.lastname@example.org