Every year on a company’s/close corporation’s anniversary date the directors/members must submit an Annual Return to CIPC. This originally started off to confirm that companies and close corporations are still active but developed over the years to also collect information about these businesses. CIPC is also the place where the general public have access to information about companies/close corporations and the intention is to grow the information available to the public. One such an initiative is to allow the public access to a company/close corporations BBBEE score directly from CIPC.
What happens if I do not submit the return?
If you have not submitted your return for at least 2 years CIPC can begin the process of deregistering your business. When this happens all assets of the business defaults to the State. From a practical perspective the bigger immediate problem is the fact that the banks will put a freeze on your account until the situation is rectified. This will obviously have a substantial impact on your business.
Should CIPC do a final deregistration of your business, you can apply for this to be reversed. However, this is a time-consuming process.
How do I know if my submission is up to date?
You can obtain a free disclosure of limited information about your business from the CIPC website. As part of this will be your organisational status. Your company/close corporation’s status should reflect as “In Business”.
What are the other circumstances that CIPC can deregister my company/close corporation?
If your business has been inactive for 7 years (no sales) CIPC may provide you with a notice of intention to deregister your business. Should you wish to keep your business active they will require documents supporting your application. The directors/members may also apply to have the company/close corporation deregistered.
What must I submit?
Companies/Close corporations who require an audit, either as required by their MOI or as required by the Companies Act, or other legislation must submit their annual financial statements in XBRL! format to CIPC.
Other companies/close corporations can voluntary submit their Annual Financial statements in either XBRL or PDF format to CIPC.
If they don’t submit their financial statements, they need to complete the relevant questionnaire about their business. In future it is expected that this questionnaire will also cover compliance to various sections of the Companies Act.
What is XBRL and how do I get my financial statements in this format?
XBRL enables preparers to utilize software to tag all financial items in their business reports to the elements as required by CIPC. This is accomplished with an Instance Document which can be electronically exchanged and validated between computers or viewed in a human readable format (this is called rendering).
There is commercial software available to do this conversion, but it can usually also be done by the person who compiled your Annual Financial Statements.
Who is responsible for the submission and what is the consequence if I submit incorrect information?
A director or an employee designated by the board of directors must take responsibility for the submission. A false declaration is an offence. The person who does the declaration should therefore make sure that they have sufficient information to complete the submission accurately, especially with regards to questions about compliance to the legal aspects of the Companies Act.
Who can help me with the submission to CIPC?
The submission can be done by any person who has an account with CIPC since an annual fee must also be paid to CIPC (based on turnover). PPHC Global provides this service to our clients so that they have peace of mind that they stay legally compliant. “We’ve got this!”