COJ coronavirus relief for small businesses is here
READERS OF this column may recall that I have been advocating for the Companies Office of Jamaica, COJ, and Tax Administration Jamaica, TAJ, to offer relief to small businesses and entrepreneurs severely affected by the global coronavirus pandemic to enable them to close failed businesses easier, faster, and at a lower cost.
This is critical to speedy enterprise pivot and recovery among vulnerable risk-taking entrepreneurs, who will be fundamental to economic rebound amidst the crisis.
First, a recap of part of my column on April 26, 2020, titled ‘Give entrepreneurs a break: closing a business is too costly’.
Unfortunately, the other punishing lesson you and other entrepreneurs may learn in this crisis is how complicated and costly it is to close a business. I always warn entrepreneurs that Jamaica is a world leader when it comes to opening a business but makes it neither cheap nor easy to close one down. In the 2020 World Bank Doing Business Report, Jamaica ranked sixth out of 190 economies in the category ‘starting a business’.
However, in other categories, we didn’t rank as well, such as ‘paying taxes’, 124, and ‘enforcing contracts’. The latter rankings have a direct bearing on the ease of closing a business as it is costly and time-consuming to get clearance from the tax office to close your business.
Also, whereas you don’t need to retain the services of an accountant or any other professional to open a business, you may need the services of several professionals to help you close, such as a lawyer and accountant, in your case. Unfortunately, policymakers have not come to the realisation that when a business is forced to close, the entrepreneur is often out of money and resources and physically and emotionally drained.
It is often the time when they are least equipped to afford the lengthy time, resources, and stress of a complicated and costly closure process. On a hopeful note,
I contacted the Companies Office of Jamaica and was told that they are contemplating measures to help customers affected by COVID-19, though up to the time of writing this article, no decision or announcement had yet been made.
AUGUST 31 DEADLINE LOOMS
As an update to that column, I have some good and not-so-good news to share.
The good news is that the COJ has just announced a COVID19 relief initiative for registered business owners. The not-so-good news is that the window for uptake is very short, with a deadline for applications of August 31, and, unfortunately, this initiative does not appear to be a collaborative effort with TAJ, based on the media release issued by state news agency Jamaica Information Service.
Up to the time of writing this article, there also appeared to be no publication of this COVID19 relief initiative on the COJ’s website; therefore, customers and users would not be aware of this new initiative or ascertain further details on how to take advantage of same via that critical channel.
According to the JIS website: “The initiative will accommodate entities that have ceased or will cease operations up to August 31, 2020. Documents must be submitted by August 31, 2020. For companies and businesses wishing to close, the COJ will facilitate that by forgoing the usual document submissions and late fees. Companies that wish to be removed from the register will be required to submit a letter requesting removal along with a statutory declaration that the company has no assets or liabilities in lieu of the usual letter from an auditor or chartered accountant.
“This reduces the overall cost of removal to $7,500. The company will not be required to bring the company up to date for them to be removed. For ‘Business Names’ closures, the fee will be $600. In cases where a business has multiple outstanding renewals, the COJ will only require payment for one renewal period. If there are no outstanding periods, only the closure fee will be applicable.”
Before closing a business and removing it from the register of the Companies Office of Jamaica, there are some critical legal implications business owners should consider. For example, according to senior legal counsel Annaliesa Lindsay of Lindsay Law Chambers, registered companies, which, in law, are separate legal persons to their owners, must consider the following:
• The obligation of paying redundancy payments to staff, some of whom may have been with the company for years.
• A comprehensive review of all contractual obligations of the company and the processes necessary to engage any termination clauses. These may come with consequences that may affect the timing or otherwise of actually closing the business.
These contractual obligations include your banking relationships, which may include loans or mortgages and which may carry personal guarantees of directors or shareholders of the company, or trigger immediate repayment obligations that may tie up other banking assets you may have. This is critical.
Additionally, they include contractual obligations that may also involve life and health insurance contracts for the principals of the company and staff.
• The acquisition of real estate that may have been registered in the name of the company, and what can be done with same.
• Adopting the right process under our Companies Act in closing, which is winding up the company.
• Taking stock of all assets and liabilities of the company, the possible appointment of a liquidator, and generally assessing whether there will be a net gain or loss to the company’s shareholders. If it’s a loss, the shareholders may have to pay liabilities from their own pocket or resources.
Lindsay also noted that in her experience, some owners, having closed a business without considering these factors, have been burdened with significant challenges, particularly in disposing of property owned by companies that no longer exist, and that relisting the company to conclude such transactions will take considerable time and additional financial and other resources.
The key, therefore, in closing a business now is to act not just expeditiously, but wisely. One love!
■ Yaneek Page is the program lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of ‘The Innovators’ and ‘Let’s Make Peace’ TV series. yaneek.page@gmail.com