Closing down a business
Published: Sunday | April 12, 2009
Francine Hoqwell-Bryce, attorney at law with DunnCox. - Contributed
QUESTION: I owned and operated a small business which I eventually closed in 1995. My accountant advised the tax office of the closure. However, in error the Registrar of Companies was not notified.
I now would like to register a new small business and was advised that it cannot be done until I pay $12,000 in arrears. I have a letter from the tax office to show evidence of the closure, but they will not accept it. I think this is very unfair and seek your assistance and advice.
Our expert this week, Francine Howell-Bryce, attorney-at-law with DunnCox, notes that although your question specifically relates to what companies should do if they intend to close, it appears that your problem may concern the termination of registration of a business, rather than the removal of a company from the register of companies.
This distinction is relevant to the extent that the formalities for closing a business registered under the Registration of Business Names Act differs from a company registered under the Companies Act.
There are other legal requirements associated with terminating a company or business.
Where a company no longer carries on business, it must have itself removed from the register at the Companies Office, either by formal request to the registrar in writing, or a winding-up procedure in accordance with the Companies Act.
The written request is a quick and inexpensive procedure in cases where the company has no assets or liabilities.
The request must be signed by all the directors or a majority of them and should clearly state that the company has no assets or liabilities.
This statement must be supported by a letter from the company's auditor or chartered accountant.
The company must be up to date with all annual returns and notice. Upon payment of the processing fee of $4,500, the registrar will publish the removal of the company in the newspaper as well as the Gazette.
The company is dissolved once the final notice is published and a copy forwarded to the registered office of the company.
Where a company has assets or liabilities and wishes to cease operations, it must be removed from the register by the process of winding up (liquidation) in accordance with the Companies Act.
The procedure varies depending on whether the company is solvent or insolvent and can be costly and time consuming.
To terminate a registered business, the proprietor must file a notice with the registrar within six months of the cessation of business.
Failure to file the notice can land the business operator in court, where he/she if convicted of a breach can be fined up to $5,000 or be sent to prison for three months if unable to pay the fine.
Howell-Bryce says that while the Registration of Business Name Act does not stipulate a penalty for failure to renew registration of a business, any firm or individual who continues to operate without renewal of registration is deemed to be doing so illegally.
A fee for renewal is payable every three years, and an application must be made at least 14 days before the expiration of the current period of registration.
The Companies Office of Jamaica has adopted a policy that where an individual or firm wishes to register a new business, all outstanding fees in relation to renewal of registration of any business previously registered by that individual or firm must be paid before the new business can be registered.
In some instances, based on the circumstances of each case, an appeal may be made to the registrar particularly where there is substantial proof that the business has not been operating.
This of course is purely at the discretion of the registrar.
Email Francine: firstname.lastname@example.org.