CIPC and Annual Returns
Who is CIPC? What is an Annual Return? Who must submit such a return and what is the impact of not submitting your Annual Return to CIPC? These are questions often raised and new business owners are often not aware of this requirement.
Who is CIPC?
CIPC is short for the Company and Intellectual Property Commission and falls under the Department of Trade and Industry (DTI). They manage all company secretarial work and statutory records. This is where your company (or Close Corporation) was registered. Where you update your contact details. Where you maintain the details of the appointed directors, etc. With the use of technology most of the changes that needs to be made at CIPC can be made electronically if you have an account with CIPC. Due to the sheer volume of records that CIPC must maintain, they implemented an Annual Return requirement in 2006.
What is an Annual Return?
When Annual Returns were implemented in 2006 the aim was to verify that companies and close corporations were in fact a trading business. Originally an Annual Return only required a confirmation of your latest turnover and a minimal stamp fee was calculated based on this. As soon as CIPC received this confirmation and payment your Annual Return was deemed as submitted and your company/close corporation’s status was maintained. Over time the requirements for the Annual Return submission has grown, especially for entities where a statutory audit is compulsory. It is envisaged that these requirements will continue to be expanded in the near future to provide CIPC and the DTI with more information on companies. Such information may be made available to the public, e.g. BBBEE status of Exempt Micro Entities.
Who must submit an Annual Return?
All companies and close corporations must submit an Annual Return to CIPC within 3 months of their registration birthday month. This is an annual requirement. This requirement applies to all companies and close corporations, irrespective of their trading status.
What is the impact if I don’t submit an Annual Return?
If a company or close corporation don’t submit their Annual Return to CIPC, CIPC will commence the deregistration process of the legal entity. Such a deregistration process will also result in your bank account being frozen and suppliers can also revoke your credit facilities. The directors become liable for all debt of the company in their personal capacity and all assets are forfeit to the state. Although this is very drastic it is possible to turn this around. If your company is deregistered or if it is in the process of deregistration you can bring your Annual returns up to date and reinstate your company. Remember that it is a legal requirement for your company to prepare annual financial statements, even
if no audit or review is required.
What should I do now?
The first step is to verify the status of your company or close corporation at CIPC. If need be your annual returns must be brought up to date. This should not be a concern for a company director and should be taken care of so that you can focus on your business.
If you need any assistance with the issues mentioned above, please don’t hesitate to contact us: info@pphcglobal.com
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