Enforcement action for annual return and financial statements filing breaches

Companies and close corporations are required to file annual returns annually, within a prescribed period of time. Companies are required to file annual returns within 30 business days after the anniversary date of its incorporation. Close corporations are required to file annual returns within the anniversary month of its incorporation up until the month thereafter. Together with Annual Returns, companies are also required to submit their latest final approved audited or independently reviewed Annual Financial Statements. It may still file after such period, but an additional penalty fee will be applicable.

Non-compliance of entities that contravenes the laws in terms of Section 175 of the Act, will be subjected to the following actions being taken against them:

• Failure to submit the CIPC Annual Returns – The deregistration of the entity and penalties may apply; and

• Failure to submit AFS – An investigation will be conducted. After investigation a compliance notice will be issued mentioning a deadline date to comply with. Further failure to comply with the deadline date will result in a fine which may be issued or formal prosecution may be investigated.

There are cost implications for late filings. Continuous non-filing will result in the company or close corporation being placed into deregistration and eventually being finally deregistered. During the deregistration process or final deregistration, government departments, SARS, banks and other organisations or the service providers of the company or close corporation may refuse to do business with the company or close corporation until such time that outstanding annual returns have been submitted. 

Deregistration will be automatically triggered by the CIPC when two or more successive annual returns are outstanding.  During deregistration companies and close corporations will be notified by registered mail or alternative electronic methods of communication of the pending deregistration.  The contact details as per the CIPC records will be used to communicate the business status.  If your contact details are outdated or incorrect, you will not receive such notification.

If finally deregistered, the business will have to be re-instated first before it can continue doing business.