Close corporations face processes that are so complicated they are unable to lodge annual returns in time, and are being deregistered and rendered unable to trade.
In terms of the new Companies Act, businesses must lodge annual returns with the recently-formed Companies and Intellectual Property Commission (CIPC). The CIPC was created through the merger of the Companies and Intellectual Property Registration Office (Cipro) and the Office of Companies and Intellectual Property Enforcement.
The Companies Act requires that all firms file an annual return providing up-to-date information with the agency. If companies do not file, the CIPC assumes they are no longer in business, and deregisters them.
Tax expert and chairman of software payroll company NuQ Ron Warren alleges close corporations face complicated processes when filing annual returns, which results in them being deregistered and unable to trade.
Warren has heard of a number of cases and had a similar experience when he recently submitted a close corporation annual return through the CIPC to avoid a company being deregistered.
After completing all the required information on the Web site, he battled to submit supporting documents and eventually had to start the process again, says Warren.
Penalties waived
The CIPC was not immediately available to comment this morning. However, in a statement issued last week, the office said it was tackling challenges and its efforts should start bearing fruit this week.
In March, the CIPC's predecessor, Cipro, reported a record number of companies filing annual returns before the 21 February cut-off.
Cipro said its systems held up during the rush, and the “extremely high volumes of transactions were comfortably accommodated”. In the middle of last year, Cipro's offices were unable to cope with the volume of returns, and its electronic site stalled.
Last week, the CIPC said it would waive late filing fees and penalties for both companies and close corporations. The leeway is applicable to returns due between April this year and March next year.
Acting commissioner advocate Rory Voller says returns must be filed before the end of next March to qualify for the waiver. However, companies that should have filed before April do not benefit from the office's grace, he adds.
Annual returns due from April can now be filed in 60 days instead of the usual 30 days, the office adds. Businesses that were deregistered after not lodging annual returns last July and this February can apply online to be restored, the CIPC says.
Companies and close corporations will be restored after 24 hours, it says. In the interim, the CIPC is processing the existing applications that were received manually. However, the platform cannot accept electronically submitted supporting documentation, so the office is waiving the need for firms to lodge financial statements until next March.
Voller says: “Customers should bear in mind that the CIPC is a new entity that has to implement a total new law as per the new Companies Act. This requires redesign of systems which will be ongoing due to the complexity of the Companies Act and functions to be fulfilled by the CIPC. However, new companies are being registered daily, allowing South African businesses to continue trading.”
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