Carefree companies - One in three fails to file annual returns
One-third of the entities registered with the Companies Office of Jamaica (COJ) do not file their annual returns, and Judith Ramlogan, the registrar of companies, believes this is a major problem that needs to be addressed.
According to Ramlogan, the situation requires attention because most of the delinquent companies are small businesses.
"A lot of companies don't file annual returns. Many of them are not aware that they should file the returns. The cost might be prohibitive as well, plus the complexity of the form," said Ramlogan.
It costs $5,000 to file the annual returns for companies limited by shares. If the documents are not submitted by the deadline, there is a charge of $10,000. There could also be court action.
The returns, which are different from the ones required by Tax Administration Jamaica, are due on the anniversary of the date of the company's registration or the last filing.
"For every day that you're late, it is $100 up to 100 days, and it's capped at $10,000. People find that prohibitive. Five thousand dollars is one thing, but $15,000 is an expense," the registrar told The Gleaner.
The current rate of delinquency is at 36.8 per cent. That means of the 93,703 companies on the register, 34,465 have one or more annual returns outstanding, and many of the delinquents are small businesses. In addition, about 73 per cent of the delinquents are based in Kingston and St Andrew.
Aside from the financial penalties, the COJ has the power to initiate lawsuits against companies, though with the thousands of possible cases, the Supreme Court has had to limit the number filings at any one time.
... COJ hauls hundreds of companies before court
According to documents provided by the Companies Office of Jamaica (COJ), 397 suits were filed over the period April 2016 to March 2017, but the total number of cases heard during the period was 654, when others from previous years are counted.
Of the 654 cases, the COJ won 257, while 314 were discontinued. Of those discontinued, 169 companies paid the legal fees and filed their outstanding returns, effectively becoming compliant. Another 145 companies were removed from the register.
"A lot of companies might feel that if they don't file annual returns, nobody will know. 'Nobody is interested in my company, nobody reads these annual returns except me.' But that's not true," said Judith Ramlogan, the registrar of companies.
"For instance, if somebody wants to do business with a company in Jamaica from overseas, one of the first things they'll do is check their corporate governance statements."
Those foreign companies, Ramlogan said, tend to come from countries where compliance levels are higher, and if they find local companies they're interested in with outstanding documents, "they may think twice" about contacting the delinquent entity.