Companies see rise in fines
The amount of fines levied by the Registrar of Companies on companies that have failed to deliver annual accounts on time or delivered defective ones has gone up by over 50 per cent over the past two years.The increase is the result of better...
The amount of fines levied by the Registrar of Companies on companies that have failed to deliver annual accounts on time or delivered defective ones has gone up by over 50 per cent over the past two years.
The increase is the result of better enforcement, sources said, adding that it was in companies' best interests to bring themselves up to date and to stay in compliance thereafter.
The Companies Act 1995 stipulates that the penalty for failure to deliver or delivering defective annual accounts to the registrar is a fixed fine of Lm1,000 and a daily fine of Lm20 until these documents are filed.
The current practice, however, is for the registrar to claim 1 per cent of the penalties stipulated by the law.
Directors must deliver a copy of their company's annual accounts within 42 days of the end of the period by when accounts should be laid before the general meeting.
For a private company, this is 10 months after the end of the relevant accounting reference date and for public company, it is seven months after the said date. The Companies Act 1995 does not give powers to the registrar to strike off the name of a company if it fails to submit financial statements for a number of years.
However, article 325 lays down a procedure whereby a company can be struck off as defunct if it is not carrying on business. A total of 41,000 companies have been registered since 1965. Of these, 7,000 have been struck off while another 5,500 are currently in dissolution. Of the remaining 28,500, 6,000 are shipping companies, which are exempt from filing annual financial statements, while an estimated 1,500 are not operational.
Thus in practice the number of companies required to file annual financial statements is in the region of 21,000.
Counting the cost of delay
The registrar currently only charges one per cent of the fines stipulated by law... In this example, a company late with three years' accounts should be paying Lm29,580.
Example:
If a company fails to submit annual accounts for the accounting period ending December 31 of the years 2003, 2004 and 2005, the penalties due up to the end of February 2007 are as follows:-
Acc.2003 - (maximum due date is 12/12/2004) - Lm10 for non filing + Lm161.60 (808 days @ 20c per day) = Lm171.60
Acc.2004 - (maximum due date is 12/12/2005) - Lm10 for non filing + Lm88.60 (443 days @ 20c per day) = Lm 98.60
Acc.2005 - (maximum due date is 12/12/2006) - Lm10 for non filing + Lm15.60 (78 days @ 20c per day) = Lm 25.60
Total amount due Lm295.80
The increase is the result of better enforcement, sources said, adding that it was in companies' best interests to bring themselves up to date and to stay in compliance thereafter.
The Companies Act 1995 stipulates that the penalty for failure to deliver or delivering defective annual accounts to the registrar is a fixed fine of Lm1,000 and a daily fine of Lm20 until these documents are filed.
The current practice, however, is for the registrar to claim 1 per cent of the penalties stipulated by the law.
Directors must deliver a copy of their company's annual accounts within 42 days of the end of the period by when accounts should be laid before the general meeting.
For a private company, this is 10 months after the end of the relevant accounting reference date and for public company, it is seven months after the said date. The Companies Act 1995 does not give powers to the registrar to strike off the name of a company if it fails to submit financial statements for a number of years.
However, article 325 lays down a procedure whereby a company can be struck off as defunct if it is not carrying on business. A total of 41,000 companies have been registered since 1965. Of these, 7,000 have been struck off while another 5,500 are currently in dissolution. Of the remaining 28,500, 6,000 are shipping companies, which are exempt from filing annual financial statements, while an estimated 1,500 are not operational.
Thus in practice the number of companies required to file annual financial statements is in the region of 21,000.
Counting the cost of delay
The registrar currently only charges one per cent of the fines stipulated by law... In this example, a company late with three years' accounts should be paying Lm29,580.
Example:
If a company fails to submit annual accounts for the accounting period ending December 31 of the years 2003, 2004 and 2005, the penalties due up to the end of February 2007 are as follows:-
Acc.2003 - (maximum due date is 12/12/2004) - Lm10 for non filing + Lm161.60 (808 days @ 20c per day) = Lm171.60
Acc.2004 - (maximum due date is 12/12/2005) - Lm10 for non filing + Lm88.60 (443 days @ 20c per day) = Lm 98.60
Acc.2005 - (maximum due date is 12/12/2006) - Lm10 for non filing + Lm15.60 (78 days @ 20c per day) = Lm 25.60
Total amount due Lm295.80