The Business and Intellectual Property Authority is urging business owners, especially those with dormant close corporations and who do not intend to conduct business in the future, to rather deregister their entities.
This is because various business owners registered their businesses and failed to pay annual duties, ultimately accumulating high penalties.
“The submission of annual returns and the payment of the associated annual duty remain statutory obligations for each registered business. Failure to comply with such obligation may incur punitive measures as provided for in the various legislations,” said the executive for marketing, corporate communication and client management services at Bipa, Ockert Jansen.
He told New Era that a legally registered business becomes a juristic entity upon registration, and as such has registration obligations. However, in instances where they do not wish to comply with their obligations, they should deregister their entities, which is done through the High Court.
“In order to deregister, all fees must be paid up,” Jansen added.
In terms of section 13 (2) (a) of the Close Corporation Act, 1988 (Act. No 26 of 1988), every close corporation must within one month after its financial year submit to the registrar, on the prescribed form, its annual return and pay the associated annual duty.
Currently, the annual duty for a close corporation is merely N$120 per year.
In case the close corporation does not comply with the Act, a compounded penalty of N$600 is charged in addition to the initial capital amount of N$120, bringing the total liability of such a close corporation for a specific year to N$720.
Jansen further indicated that any company which fails to lodge an annual return and pay its annual duty commits an offence, and is liable to a fine of N$40 per day during the period of such a transgression.
He, therefore, advised all business entities, whether close corporations or companies, of their legal obligation to submit all statutory required submissions on time to avoid any penalty.
“Failure to pay annual duties may attract penalties for each month of non-payment. Bipa may also initiate a non-voluntary deregistration process, and all such entities that aren’t compliant with the regulation may be subject to deregistration,” he added.
Asked if there are options to waive penalties for dormant entities, Jansen said the Bipa board and management resolved that those annual duties will be collected from 2012 to 2022.
“The periods prior to 2012 for outstanding annual duties were waived. Therefore, compliance is enforced from 2012 to date for all CCs and companies. Currently, there is no decision to waive penalties for the above period, but if such is considered by the Bipa board, Bipa will communicate this to all its stakeholders at the time,” he clarified.
According to statistics provided by the institution, a total of 195 743 legal entities are registered with Bipa.
From this number, 166 693 entities are close corporations, making up 85.2% of total business entities registered. Furthermore, 26 685 companies are registered, making up 13.6% of the total entities registered with Bipa. From this number, 23 880 are PTY companies, 2 426 are Section 21 companies and 379 are foreign-owned companies.
Though the entity has been experiencing various challenges in respect of annual duty collections from established businesses since its establishment in 2016, Jansen noted that their current processes of issuing statements of accounts monthly to business entities makes it easier for such businesses to effect payment against the invoiced amounts.
“We have also started a compliance campaign in the media to ensure that business owners are aware of their registration obligations. As such, we have seen a spike in business owners coming forward and taking steps in being compliant,” Jansen stated.
Bipa is working on its second phase of the annual duty campaign that will kick off in April 2022.
The campaign is aimed at improving awareness about the statutory compliance of submitting annual returns and paying duties.
“Also, to share with businesses the benefits of a paid-up entity, such as the good standing certificates that are issued by Bipa, safekeeping of their entity documents, protection of the entity names and other benefits,” he continued.