Crackdown on companies

Avia Collinder, Business Reporter

A solid 41 per cent of the more than 60,000 active companies on the Gover-nment's register are in breach of the requirements for filing annual returns, and they are about to be hit where it is expected to hurt most: in their pockets.

The delinquents amount to 25,734 companies of the 63,374 registered at the Companies Office of Jamaica (COJ).

But their days of skating by are numbered, now that the COJ has a new legislative tool to wield.

COJ Compliance Manager Heather Sutherland said come September 1, new regulations would be implemented, imposing a penalty of $100 per day, up to a maximum of $10,000, for companies that file annual returns late.

A company's annual return is considered late when it is not filed within 28 days after the anniversary of incorporation or the anniversary date of the last return.

Among the delinquent companies are those that have actually filed but had their returns rejected as inadequate.

A new fee structure for the COJ, with increased costs, is also to be unveiled by October this year. The new structure was gazetted in June this year, but implementation has been stalled "to ensure that the public is fully aware of the pending increases to allow adequate time to file all outstanding returns on the old fee structure", said Sutherland.

The return, which by law is to be filed annually, provides a snapshot of what has happened in a company over the year.

"If the company fails to file this document yearly, potential investors and the public at large will have access to dated information which may or may not be correct," Sutherland said.

Financial statements

The return also identifies changes in the ownership or management of a company, as well as any alteration in the value of shares and any share transactions during the period for which the return is being made.

Companies limited by guarantee must file financial statements along with their annual returns. Public companies and other companies which meet certain criteria set out by the law are also required to file audited financial statements along with their annual returns.

The COJ has stressed that all companies whose names appear on the register of companies are required to comply with the statutory obligations under the Companies Act whether or not the company is actively doing business.

Where a company has stopped doing business and wishes to be removed from the register, the procedure for removal has to be followed for it to be deregistered.

The COJ official said ensuring that the COJ register reflects current information is critical to the mandate of the office to "foster trade and commerce through registration and regulation of businesses and the provision of accurate information".

The pending financial sanctions are among other strong-arm tactics open to the COJ to force compliance. For example, the COJ can institute legal proceedings in the Supreme Court against companies and their directors to nudge compliance.

reporting obligations

"The registrar also has the discretion to remove a company from the register under Section 337 of the act where there is reasonable cause to believe that a company is not carrying on business or in operation," Sutherland said.

Among the indications used by the COJ to determine that a company is not carrying on business is the failure to file annual returns over a period of time.

The COJ is giving a reminder of other company reporting obligations, too. Notice of a change of address of the registered office is among the key requirements.

"If the company having changed its address, is unaware of legal proceedings and therefore does not present itself in court, default judgment may be awarded against it," Sutherland said, explaining the importance of this requirement.

The COJ should also be notified whenever there is a change of company directors.

"All directors on the register may be held liable on behalf of the company," the spokesperson said.

The Companies Office of Jamaica, formerly the Office of the Registrar of Companies, originally formed part of the Registrar General's Department. It was established as a separate government department in 1975. The office reports to the investment and commerce ministry.

avia.collinder@ gleanerjm.com