Is your company at risk of being struck off?

THE Companies Act gives the registrar of companies (“the registrar”) authority to remove a company’s name from the register where she has reasonable cause to believe that the company is not in operation or carrying on business.

Companies have various ongoing obligations under the Act, such as the filing of notices and the filing of annual returns with the Companies Office of Jamaica (COJ). Failure by a company to comply with these obligations may result in the registrar having reasonable cause to believe the company is not in operation or carrying on business, therefore, putting the company at risk of a claim being brought by the COJ against the company and its officers or being removed by the registrar from the register.

THE PROCESS OF REMOVAL INITIATED BY THE REGISTRAR

The registrar will send by post a letter to the company at its registered office, inquiring whether the company is still in operation or carrying on business. If no response is received confirming the company is still in operation, a second letter will be sent and a notice will be published of the registrar’s intention to strike the name from the register. Upon the expiration of three (3) months, if the registrar does not receive a notification from the company confirming it is in operation, a notice will then be published in the Jamaica Gazette of the company’s name being removed from the Register of Companies. On the publication of this notice the company will, unless cause is shown to the contrary, be dissolved. The liability, if any, of every director, managing officer, and member of the company will continue and may be enforced as if the company had not been dissolved. The court has the power to wind up a company the name of which has been struck off the register.

WHAT ARE THE CONSEQUENCES OF BEING STRUCK OFF?

The assets of a company that has been removed from the register will be held on trust by the Crown for the members of that company. Where the Crown holds property for a dissolved company on trust, the Crown will not be liable to manage the property, be liable for any loss or damage to the property, or waste or in respect of any claim by a third party.

WHAT CAN YOU DO TO RESTORE A COMPANY TO THE REGISTER?

An application may be made to have the company restored, before the expiration of twenty (20) years, by a company or any member or creditor who is aggrieved by the company having been struck off the register. The company may be restored if the registrar is satisfied that the company was, at the time of the striking off, carrying on business or in operation, or otherwise that it is just for the company to be restored to the register.

The effect of restoration to the register is that the company will be deemed to have continued in existence as if its name had not been struck off, and the trust held by the Crown will be extinguished and the property will revert to the company.

Once dissolved, the assets are held by the Crown on trust for the members of the company for two (2) years. After the expiration of the twenty-year period from the date of dissolution, if the company is not restored the property and rights of the dissolved company will be deemed bona vacantia (ownerless or vacant goods) and becomes vested in the Crown, i.e. the Government of Jamaica. However, individuals with an interest in the property may apply to the administrator-general for a disclaimer with a view to regaining ownership of these assets.

THE COJ IS NOW OFFERING A COVID-19 COMPLIANCE RELIEF INITIATIVE

Companies which have ceased trading and wish to close their operations may request removal from the register and may be eligible to benefit under this initiative.

The initiative allows companies to request the removal of the company’s name from the register without having to bring the status of the

company up to date by filing outstanding annual returns or the usual document submissions (therefore at a reduced cost). The company will be required to submit a letter to the registrar requesting its removal from the register, accompanied by a statutory declaration stating that the company holds no assets or liabilities. The initiative is set to expire on January 31, 2023 and there is no guarantee of an extension.

This risk that a company may be removed without the knowledge of its members or officers highlights the importance of keeping the company’s records up to date at the COJ. All documents and notices of proceedings served on the company’s registered office that coincide with the COJ records will be deemed properly served (such as these letters and notices from the Rrgistrar in the removal process). The Act requires notice of any change in the company’s registered office to be given to the registrar within fourteen (14) days of such change. Default in this obligation will result in the company and every officer of the company being liable to a fine.

Guidance from an attorney is useful in gaining a greater understanding of your company’s compliance requirements and ensuring that the company remains in good standing. If your company may be eligible to request removal speak with an attorney today to take advantage of the COJ COVID-19 Compliance Relief Initiative before it’s too late.

Rachel Poole is an associate in the Commercial Department at Myers, Fletcher and Gordon. She may be contacted at rachel. poole@mfg.com.jm or through the firm’s website www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.