The new Companies Act, which repealed the 2017 companies Act brought about several changes. The new reforms are related to share capital structure, duties and liabilities of members of the board of directors, protection of minority shareholders and penalties for non-compliance with the requirement to file companies’ annual accounts.
In this article I will focus the requirement to file the companies’ annual accounts. Contrary to the new law, penalties provided for under the 2009 Companies Act could not be practically enforced.
The requirement to file annual accounts with the Office of the Registrar General is now provided for under article 140 of the Companies Act. The law obliges members of the Board of Directors to ensure that the company files its annual accounts with the Office of the Registrar General within four month after its accounting reference date.
Annual accounts include a copy of signed and approved annual accounts, a copy of the auditor’s report on those accounts and the reports of members of the Board of Directors relating to the same accounting period as those annual accounts.
The above requirement is not new and was provided for under the Companies Act, 2009 in its article 258, which imposed upon all companies, other than small private companies, an obligation to file copies of their financial statements together with a copy of the auditor’s report on those statements within thirty days from the date of their signature by the company’s directors.
It should be noted that a small private company under the regime of the Companies Act, 2009 was a company whose annual turnover was less than Rwf150,000,000.
While the requirement under the new Act and the Companies Act, 2009 are almost similar, the new law provides for practically enforceable penalties in case of non-compliance with this requirement, which was not in the previous legislation.
The Companies Act, 2009 provided for a penalty equalling two times fees applicable for business registration, but this could not be practically enforced given that for the time being business registration is done free of charge.
Nevertheless, the situation is different under the new Companies Act which provides for a specific amount as penalty for non-compliance. The applicable penalties are enshrined under article 292 of the new Companies Act which provides for an administrative fine ranging between Rwf1, 000,000 and Rwf10, 000,000.
This change brought about by the new Companies Act is very important as it is now clear that companies that are not compliant can be penalised.
Accordingly, all companies registered under the laws of Rwanda must ensure that their annual accounts are filed with the Office of Registrar General on time.
Corporations’ attitude towards this needs to change to avoid penalties. Indeed, the new Companies Act is quite fresh and what is yet to been seen is how the Office of the Registrar General will be proactive in enforcing the provisions of article 292 of the new Companies Act.
In any case, the law is now clear and nothing would prevent the Office of the Registrar General to inflict the said fines against non-compliant companies.
The writer is an advocate of the High Court and associate at ENSafrica.