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URSB to deregister companies that have failed to file returns
URSB registrar general Mercy Kainobwisho. URSB says there is increased neglect in filing fundamentals that validate the legality of companies. Photo / File
What you need to know:
- URSB says that many companies, majority of which are small and mid-sized enterprises, have refused or neglected to file returns for more than five years
Uganda Registration Services Bureau (URSB) has said it will, effective August 30, de-register companies that have ignored or refused to file annual returns.
The move is part of a plan to clean up the URSB register, amid growing concern due to an increase in the number of companies that have either neglected or refused to file fundamentals that validate their legal existence.
“Companies that fail to apply for restoration by August 30, 2024, will be deregistered and their names will be made available for use by other applicants,” URSB said in a notice.
Last year, URSB started the clean-up process by striking 110,822 companies off its register for “failure to file annual returns for five years”.
However, the affected companies were given a window through which they could be restored by fulfilling set requirements, which included payment of outstanding annual returns and a data update, among others.
It was not immediately clear how many companies have since complied, but in the notice URSB indicated that the number of companies struck off the register had by last month increased to 186,000.
URSB senior public relations and corporate affairs officer Denis Nabende, said in a telephone interview that the registrar of companies urgently needed to clean up its register and know which companies are active.
“If the owners of these companies [have] decided that they are no longer in business, they still need to file returns instead of waiting for [Uganda Revenue Authority] to assume they are still operating,” he said, noting that records show that whereas several companies have complied since they were struck off the register last year, majority, which are small and medium-sized enterprises, remain non-compliant.
“These are companies that haven’t cared to get lawyers to guide them on some of these issues,” he said.
The law only excuses dormant businesses from filing annual returns through a 12-month grace period, but the directors are still required to inform the registrar as and when the dormancy is resolved.
Any company that has or has no share capital is required under the Companies Act to file annual returns with the registrar (URSB) at least once every calendar year. The returns must include information about the company’s registered office, debentures, or any duplicate of such kept somewhere other than the registered office, names and details of the directors, and the extent to which the company has adhered to corporate governance principles.
A debenture is an unsecured bond or debt instrument that relies on the creditworthiness and reputation of the issuer, used by both companies and governments, to raise capital.
Subjected to fines
Tax and business lawyers say that because many businesses open up but fail to sustain operations, they fail to file returns, while others register, but never operationalise the business.
Tax lawyer John Sebuuma, said in an interview that a business that fails to file returns is only shooting itself in the foot because in the event there is a breach by a client, they might fail to hold them accountable because they are not properly structured.
Companies that fail to file annual returns are subjected to a fine of Shs500,000, and if the default persists for five years, URSB has the authority to deregister such an entity.
