72% of South African companies don’t file annual returns

Despite the consequences of non-compliance – penalties, legal fees and director liability – the most recent annual report of the Companies and Intellectual Property Commission (CIPC) states that 72% of the 3.1 million companies in South Africa don’t submit annual returns and therefore don’t meet basic legal requirements.

Every registered company must meet certain requirements to remain active and trading in South Africa. These include filing an annual return, notifying the government of changes to company, director, member and officer information, maintaining a register of shareholders, and producing various company records. Failing to do so could result in penalties and deregistration.

The CIPC recently deregistered more than 640 000 companies for failing to file annual returns. It also announced that companies must submit information about their beneficial ownership by 1 October 2023, adding to an already complex situation.

Companies can meet their obligations by using the CIPC’s website, but they generally use company secretarial services provided by professionals. These services can be costly, which is a factor in the low level of compliance.

One start-up has now spotted a gap: helping companies get CIPC compliant, charging R199 for an annual return using proprietary software.

Joshua Alexandre, founder and CEO of InfoDocs, said many privately held companies are put off by the red tape and costs involved in remaining compliant. “We developed software to simplify company secretarial services for directors and shareholders. Our system imports data directly from the CIPC, produces professional templates and stores company records securely online.”

New laws

South Africa recently put in place new laws related to beneficial ownership. The Companies Act already requires a register of those who own or control 5% or more of the company, but the grey-listing of South Africa by the Financial Action Task Force has put this requirement in the spotlight.

To ensure transparent ownership and control structures of legal entities, companies have until 1 October to file this information with CIPC, which will maintain a central database.

So far, about 30 000 companies are using InfoDocs to submit annual returns, maintain statutory registers and submit documents using templates. The software sends alerts and notifications of submission deadlines.  Companies can file returns from the dashboard and make secure payments directly to the CIPC, the company said.  – © 2023 NewsCentral Media

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