No duplication
IN December 2021, in response to an indication by the Companies Office of Jamaica (COJ) that it would remove the registration of companies which had failed to do required filings, a reader had commented that the COJ was duplicating roles already being carried out by Tax Administration Jamaica (TAJ).
However, COJ CEO Judith Ramlogan has moved to set the record clear, stating that persons who have indicated that the COJ has no unique function are misguided.
The COJ in a published listing had threatened in December to remove from its register hundreds of companies.
“Whereas have reasonable cause of believe that the companies named herein are not carrying out business or in operation: Take notice that on the expiration of three months from this notice the names of the companies mentioned in the schedule hereto, will in accordance with the Provisions of section 337 of the Companies Act, be struck off the Register of Companies and be dissolved, unless cause is shown to the contrary,” it said in the notice.
From information on the COJ’s website, the assets of such companies can also be seized and taken over by the Crown or Government. In a separate notice, the COJ also warned companies that they need to file their annual returns in order to avoid legal action.
At the time Ramlogan told the Jamaica Observer, “we try to remove somewhere in the region of 3,000 inactive companies each year.” Most of these companies are removed because of being delinquent in filing their annual returns for years
The CEO told the Business Observer in the first week of February 2022, “The functions of the Companies Office are vastly different from that of the Tax Administration Jamaica (TAJ) despite the fact that both entities require that companies file annual returns. The TAJ is the Government’s tax collection agency.”
She explained, “The return required to be filed by the TAJ provides financial information on which basis tax payable by the company is assessed. The annual return required by the COJ provides an overview of the changes that the company may have undergone during a particular year regarding the number and classes of shares the company is authorised to issue, the shareholders and their respective shareholdings, the directors, the company secretary, the registered office and the company’s indebtedness.”
Why returns are required
Outlining why annual returns need to be filed with the COJ, Ramlogan noted that the duty falls under The Companies Act.
“The Companies Act allows for the creation of a legal person by incorporation. Several benefits are afforded as a result of incorporation, but there are also responsibilities including the filing of annual seturns. The Companies Office, being the ‘birthplace’ of the entity, must also have records of the changes that take place within the entity as well as the formal termination of the entity.”
She expounded, “The requirement to file annual returns is a legal one. The filing of annual returns at the Companies Office provides the public with information on which to undertake due diligence regarding any company on the Register of Companies.”
Name strike
If a company is found to be conducting business in its name after it has been struck off the register, every director of that company is liable to a fine of $500 for every day that the business is so conducted, the CEO pointed out.
Ramlogan stated that The Companies Act also makes it clear that despite being struck off the Register of Companies, the liability of the managers, officers and members of the company in relation to its activities continues.
In addition, a company being struck off the register does not equate to termination of liability on the part of its directors and shareholders/members. It follows therefore that where a company continues to trade even after being struck off, the directors and shareholders/members become personally liable for any liabilities the company incurs during this period.
A company which is struck off the register loses limited liability status and as such shareholders/members no longer have this as a form of protection from liabilities.
In conclusion, Ramlogan said, where the directors and shareholders/members of a company continue to trade, despite being struck off the register, they do so at the risk of personal liability. They will also be liable for the payment of the $500 a day fine when discovered by the authorities.