We live in an age of increasing compliance, which carries with it both a cost and the consequences of non-compliance.
Why annual returns?
All companies and close corporations (CCs) are obliged to file an annual return with the Companies and Intellectual Property Commission (CIPC). The CIPC is the statutory body via which, among other functions, all companies are registered or deregistered plus all changes to a company’s status are recorded, such as changes to directors. CCs can no longer be registered but all changes to their status including deregistration are handled by the CIPC.
The cost of compliance
The CIPC is funded by annual duty which is payable with your annual return. The cost is relatively small – for companies it ranges from R100 for turnover below R1 million to R3,000 if turnover is R25 million or above; CCs pay R100 if turnover is below R50 million and R4,000 if turnover is R50 million or more.
The consequences of non-compliance
If you do not file an annual return and pay annual duty for 2 successive years, CIPC will send you a notice of an intention to deregister your business. If you do not respond, your business will be deregistered – this means it will cease being a legal entity and will be unable to trade. Directors or members can be held personally liable for debts of the business.
Should the business be deregistered, there is a process to have the business restored as a registered entity.
Annual duty and returns are not just another statutory requirement. They may seem minor but they can have major consequences. Make sure you have a register of all legal requirements and a system to check that they are all completed.
Note: If you are behind with your annual duty returns, now is a good time to do them as CIPC are waiving late filing fees and penalties until 31 March 2013.
For more information contact Carel at carel@newtons-sa.co.za .
© CA(SA)DotNews is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.
