In Uganda, the process of striking off companies from the Register by the Registrar of Companies is a significant step that reflects the dynamic landscape of business operations and regulatory compliance. As businesses evolve and circumstances change, some companies may find themselves needing to be dissolved or removed from the National Company Register. This article delves into the process of striking off companies by the Registrar of General of companies in Uganda, reasons, and implications, behind such decisions.
The Companies Act 2012 under Section 134 mandates every company has forty-two (42) days after the annual general meeting to file the annual returns as declaration to continue doing business or winding due to varying circumstances as well as changes in the administration of the company.
PROCESS OF STRIKING OFF OF COMPANIES FROM THE REGISTER OF COMPANIES
Striking off a company from the Registrar of Companies is a formal process governed by the Companies Act, 2012. The Registrar has the authority to remove a company’s name from the official register if certain criteria are met. Upon noticing discrepancies or non-compliance, this process is initiated either by the company itself or by the Registrar.
- Registrar-Initiated Striking Off: The Registrar may also strike off a company if it fails to meet its statutory obligations, such as filing annual returns. If a company has been inactive for a prolonged period or is suspected of engaging in fraudulent activities, the Registrar may also take action to remove its name from the register.
- Voluntary Striking Off: A company can apply for voluntary striking off by submitting a formal application to the Registrar. This typically occurs when a company is no longer actively trading, has fulfilled its business objectives, or is unable to sustain its operations. In addition, a company can decide to windup due to insolvency.
REASONS FOR STRIKING OFF
- Non-Compliance: Company’s failure to submit required annual returns, financial statements or other necessary documents may lead to the Registrar considering striking off as a punitive measure.
- Fraudulent Activities: Companies involved in fraudulent activities or those attempting to evade legal responsibilities may be forcibly struck off to prevent further harm. In addition, these companies may also be blacklisted from providing services to compliant entities.
- Inactivity: Dormant companies for a prolonged period, with no business activities or transactions, may be considered for striking off to streamline the company register.
IMPLICATIONS OF STRIKING OFF
- Liability: Striking off a company does not absolve its directors, officers, or shareholders from any existing liabilities or obligations. They may still be held personally responsible for the company’s debts or any legal actions.
- Legal Cessation: Once a company’s name is struck off the register, it ceases to legally exist as a separate entity. This means that the company can no longer enter into contracts, conduct business activities, or hold assets or liabilities.
- Restoration: In certain circumstances, a company that has been struck off may apply for restoration within a specified period. This process involves satisfying any outstanding requirements and paying the necessary fees.
Note: If a company fails to comply with the URSB amended regulation by 31 December 2023, other interested parties shall be granted legal right use their names.
URSB’s decision to strike off companies from the registry is a regulatory process designed to maintain an accurate and up-to-date company registry with the aim of promoting transparency and accountability in the business environment. It also serves as a mechanism to eliminate dormant or non-compliant legal entities, ensuring that the company register accurately reflects active and compliant entities. Companies and their stakeholders are therefore advised to be aware of their statutory obligations under the law to avoid the risk of being struck off and should consider seeking experienced consultants if they are unsure about their compliance status.