Most founders treat the certificate of incorporation as the finish line. It is the start of a continuing set of obligations, and non-compliance accumulates quietly until it blocks something important.
Continuing obligations
- Annual return reflecting the current position of the company
- Filing of financial statements, as applicable to the class of company
- Notification of changes in directors, officers and registered office
- Recording of changes in shareholding and transfers of shares
- Maintenance of statutory registers
- Holding the required meetings and recording them properly
Changes must be notified
A change of director, registered office or shareholding must be notified within the prescribed period. The register is what third parties rely on, and a company whose filed position does not match reality creates problems in due diligence, banking and litigation.
Consequences of default
Penalties accrue against the company and its officers. Beyond the money, a company in default encounters obstacles in banking, tendering, obtaining finance and any transaction where a purchaser conducts diligence.
Defaults compound: a company that has not filed for several years faces a larger and more complex remediation than one that missed a single deadline.
Dormant companies still file
A company that has ceased trading remains subject to filing obligations until it is properly wound up or struck off. Simply abandoning a company does not end the exposure of its officers.
Remediation
Where filings have been missed, they can generally be brought up to date. Doing so voluntarily is materially better than waiting for enforcement, and it is the necessary first step before any sale, investment or restructuring.
What to do next
Establish what has actually been filed for your company and when. Most founders do not know, and the answer determines what needs doing.