11 Jan Statutory Compliance Part 2
Annual returns (to CIPC)
We hope our Two-part series on Statutory Compliance has helped you differentiate and have a better grasp all this admin, and we hope that you know, we are always happy to help with it all.
All companies (including external companies) and close corporations are required by law to lodge their Annual Returns with CIPC within a certain period of time every year. Its essentially the fee you pay the Registrar of Companies to keep your company “Active” on the National Database.
An Annual Return is a mandatory statutory return, in terms of the Companies and Close Corporations Acts, and therefore MUST be complied with. Failure to do so will result in the Commission assuming that the company or close corporation is not doing business or is not intending on doing business in the future. Non-compliance with annual returns WILL lead to deregistration, meaning, the company or close corporation ceases to exist.
Companies have 30 business days from the date that the entity becomes due to file annual returns before it is in non-compliance with the Companies Act.
What is the purpose for filing Annual Returns?
The purpose of the filing of an annual return is to confirm whether a company or close corporation is still in business. The annual return may be considered as a type of annual “renewal” of the company or close corporation registration.
When must a company or close corporation file its Annual Returns?
As it is an annual filing, it will be different for companies and close corporations. Companies need to file (irrespective as to whether it was active or not) within 30 business days starting from the day after its registration date on an annual basis. Close corporations need to file (irrespective as to whether it was active or not) beginning from the first day of the month it was registered up until the month thereafter. It may still file after such period, but an extra penalty fee will be applicable.
How will I know when to file?
CIPC does provide reminders via e-mail / sms to the directors and members (for close corporations) providing that accurate contact details have been submitted to the CIPC at time of registering the business. If CIPC does not have the correct information, reminders cannot be distributed.
The Articles of Association and Memorandum of Association form the constitution of limited companies. They set out the rules by which the companies’ are run and administered. In order to make certain decisions – or change the constitution itself – company directors or shareholders need to pass resolutions. These can be made at general meetings or board meetings (ordinary and special resolutions) or sometimes in writing (written resolutions).
What decisions require a resolution?
Most decisions beyond the normal day-to-day running of a business will require a resolution. These also need to be passed for any decision which affects the constitution or rules of a company. Examples include:
- Appointing company directors;
- Changing directors’ powers;
- Changing the name of a company; or
- Changing the share structure.
- Opening / Closing of Bank Accounts
- Purchasing or Selling Fixed Property
The company articles will normally state if a resolution is required for a certain decision and may also determine the type of Resolution needed (e.g. ordinary or special).
What records must be kept?
Resolutions which are passed in a meeting are recorded in the minutes of the meeting. Minutes serve as evidence of meeting proceedings and must be kept at the company’s registered office for at least ten years, and all shareholders must receive written notification of any resolutions.
If records are not kept, this a fineable offence. The company must make all records or decisions available for inspection and keep them at the company’s registered office or other specified location.
There are two ways to pass special resolutions and unanimous resolutions:
- At A Meeting
All board members must receive at least 30 days’ notice (by hand or via prepaid registered post) of the meeting and the proposed Resolution. If a board member is unable to physically attend the meeting, he/she can present his/her decision in a company resolution letter or nominate a representative to act on his/her behalf.
- On A Round Robin Basis
The proposed Resolution can be presented in writing and circulated to all members by hand or via prepaid registered post. Members vote in favour of the Resolution in writing with a company resolution letter.
If you have any queries or questions – get it touch, we would LOVE to hear from you!