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Annual Returns

CIPC: ANNUAL RETURNS

Annual Returns (CIPC)

All companies (including external companies) and close corporations are required by law to lodge their Annual Returns with CIPC within a certain period of time every year.

An Annual Return is a statutory return in terms of the Companies and Close Corporations Acts and therefore MUST be complied with. Failure to do so will result in the Commission assuming that the company and/or close corporation is not doing business or is not intending on doing business in the near future. Non-compliance with annual returns may lead to deregistration, which has the effect that the juristic personality is withdrawn and the company or close corporation ceases to exist.

Companies have 30 business days from the date that the entity become due to file annual returns before it is in non-compliance with the Companies Act.

What is annual returns?

All companies (including external companies) and close corporations are required by law to file their annual returns with the CIPC on an annual basis, within a prescribed time period. The purpose for the filing of such annual returns is to confirm whether a company or close corporation is still in business/trading, or if it will be in business in the near future. The annual return may be regarded as a type of annual “renewal” of the company or close corporation registration.

Therefore, if annual returns are not filed within the prescribed time period, the assumption is that the company or close corporation is inactive, and as such CIPC will start the deregistration process to remove the company or close corporation from its active records. The legal effect of the deregistration process is that the juristic personality is withdrawn and the company or close corporation ceases to exist.

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Will my personal detail as a director or member be disclosed on the annual return?

Due to security concerns relating to the disclosure of personal information CIPC has affected the following changes relating to annual returns:

Only the first 6 digits of a director’s or member’s identity number will be displayed; and
The annual return filing certificate will not display the identity number, addresses, or contact details of a director or member.

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What will happen if the company or close corporation does not comply with annual returns?

The CIPC will assume that the company or close corporation is inactive, and as such CIPC will start the deregistration process to remove the company or close corporation from its active records. The legal effect of the deregistration process is that the juristic personality is withdrawn and the company or close corporation ceases to exist.

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When must a company or close corporation file its annual returns?

It is an annual filing and it differs for companies and close corporations. Companies must file (regardless as to whether it was active or not) within 30 business days starting from the day after its date of registration. Close corporations must file (again regardless as to whether it was active or not) starting from the first day of the month it was registered up until the month thereafter. It may still file after such period, but an additional penalty fee will be applicable.

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If a company or close corporation has filed its tax returns with SARS, is it still required to file annual returns with CIPC?

A clear distinction must be made between an annual return and a tax return. An annual return is a summary of the most relevant information regarding the company or close corporation and is filed with CIPC while a tax return focuses on taxable income of a company or close corporation in order to determine its tax liability to the State and is filed with SARS.

Compliance with the one does not mean that there is compliance with the other. It is two different processes, administered in terms of different legislation by two different government departments.

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What is meant by business description?

It is the industry that the company or close corporation mainly operated in for the annual return period, for example construction, catering, cleaning services, import/export, transport, financial services, investment, mining, agriculture, marketing. The indicated examples are not a complete list of all industries.

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What is the annual return used for?

Annual returns are used to determine whether the business is still doing business or will be doing business in the future. If annual returns are not filed, CIPC assumes that the business is dormant and starts the process to remove the business from the register of active businesses. Also, annual returns may be used to gauge the level of compliance with the Companies Act especially financial reporting.

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What fee should be paid when filing annual returns?

In determining the appropriate fee for the filing of an annual return, a distinction must be made between a company and close corporation filing, and the date on which the annual return became due, since different fee structures are used for companies and close corporations. Further, in order to determine the year from which the company or close corporation became liable to file annual returns, the roll out date for the specific category of entity must be used together with its registration date.

Examples (Companies)

The company was registered on 26 June 1995. If it is a public or external company, its first annual return became due in June 2003. Therefore, annual returns should have been filed on an annual basis as from June 2004 until June 2011, and should then continue to be filed annually every year thereafter.

If the company is a private company, its first annual return became due June 2005. Therefore, annual returns should have been filed on an annual basis as for June 2005 to June 2011, and every year thereafter.

If the company was registered 26 June 2009 and it is any other type of company, the first annual return became due in June 2010. Therefore, annual returns should have been filed on an annual basis for June 2010 and June 2011, and every year thereafter.

If the annual return became due 1 May 2011 or thereafter, the fee structure under the Companies Act, 2008 must be used. If it became due before 1 May 2011 the Companies Act, 1973 fee structure must be used.

Companies Act, 1973 fee table:

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Companies Act, 2008 fee table:

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If the company or close corporation was dormant/inactive for an annual return period, should it still file and pay annual returns?

Yes. The Companies Act, 2008 (and its predecessor Companies Act, 1973) and Close Corporations Act, 1984 does not make a distinction between an active and inactive company or close corporation. Therefore, even if the company or close corporation was inactive, it is still legally required to file and pay annual returns.

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What will happen if the company or close corporation do not file annual returns?

As indicated above, 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.

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When must a company file audited financial statements, reviewed financial statements or a financial supplement with its annual returns?

All companies must prepare annual financial statements (“AFS”). Public and State Owned companies (SOC) must have audited AFS while a Private, Personal liability and Non-Profit company and close corporation is not required to have its AFS audited unless –

in the ordinary course of its business, it holds assets in a fiduciary capacity for persons who are not related to the company, in excess of R5 million in value at any time during the year;
it is a non-profit company and was directly or indirectly incorporated by the state, a state owned company or foreign entity;
it is a non-profit company and was incorporated primarily to perform a statutory or regulatory function in terms of any legislation or to carry out a public function; or
its public interest score in that financial year, as calculated in accordance with Regulation 26 (2), is 350 or more or is at least 100 if its AFS have been internally compiled.

Any other company must have its AFS independently reviewed in accordance with ISRE 2400 unless –

it is exempt, in terms of section 30 (2A) to have its AFS audited for that year or reviewed (every person who is a holder or has a beneficial interest in any securities issued is also a director of the company);
it is required by its own Memorandum of Incorporation (“MoI”) to have its AFS audited; or
it has voluntarily had its AFS audited for that year.

A company or a close corporation that is required to have its AFS audited, as indicated above, must file a copy of its latest approved audited AFS with its annual return while a company or a close corporation that is not required to have its AFS audited as indicated above, may file a copy of its audited, reviewed AFS or a financial accountability supplement (CoR 30.2) after its annual return.

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Which set of financial statements should be used to determine the turnover of the company or close corporation for purposes of filing annual returns?

A company or close corporation must use its latest approved financial statements for purposes of determining the turnover for purposes of filing annual returns.

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What sections of the legislation governs annual returns?

Companies:

Filing Requirement:

Section 33 of Companies Act
Regulation 30 of Companies Regulations

Deregistration Requirement:

Section 82(3) of Companies Act
Regulation 40 of the Companies Regulations

Re-instatement Requirement:

Section 82(4) of Companies Act
Regulation 40 of the Companies Regulations

Filing of Financial Information:

Section 30 of Companies Act
Regulation 40 (2) – (4) of Companies Regulation
Regulations 28 and 29 of Companies Regulations

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