The Corporate Affairs Commission (CAC) says it has begun the process of delisting 38,717 dormant or portfolio companies from its register.
The commission’s Director of Public Affairs, Mr Churchill Williams, said this in an interview.
Williams said the affected companies were those that failed to file their annual returns to CAC as required by sections 370 to 378 of the Companies and Allied Matters Act (CAMA).
According to him, the move becomes necessary after the companies also failed to respond to several notices of de-registration from the commission through various channels.
``The comprehensive list of the affected companies was sent to all the state offices, apart from newspaper publications, and also on the (commission’s) website, to enable people check and then file their annual returns.
``The issue of annual returns is very vital to CAMA because it informs the commission of the viability of a company and its status as a going concern.
``So, failure to file annual returns has very serious consequences on the commission itself because dormant companies don’t contribute anything to the economy because people register these companies for a one-off purpose.
``Maybe they have a promise to be given a contract and so they just rush to the Corporate Affairs Commission; we would not know anyway.
``They would register the company, execute the contract or maybe they are not able to get the contract, and so they dump the company and that is the end of it.
``Things like that will not help the commission. They just add to the data base of the commission, making it very large, and then they are not functioning.’’
Churchill said that dormant companies impeded the efficiency of the commission to manage and provide better supervisory services in line with its mandate.
According to him, an economy made up of largely dormant companies makes economic planning difficult.
``These names they register are very important too.
``So, if they are not useful or they are just put in portfolios and kept in their bedrooms, and are not in use, I mean it doesn’t help anybody.
``Annual returns come with detailed information about the companies, what they do and all that.
``It also enables the commission to manage and provide better supervisory services.
``Of course, the names of the de-listed companies should be available to those who will want to use them.
``That is why it is very important that companies file annual returns.
``This is even in the interest of these companies because most a time when companies want to go for a facility in a bank; these banks will write a letter to the commission for some kind of due diligence checks.
``They want to know the status of these companies, and so if we don’t have this information with us, we will not be able to respond to these requests from the banks.
``It is in the interest of these companies at times to the extent that even some investors have come around to ask us, ‘These companies, what do they do?’
``Maybe they want to do business with them and so they want to know the nature of business they do and then their activities. So, if we have this information, it is in the interest of these companies.’’
The public affairs director said that some of the affected 38,717 companies had responded to the notice either by filing their returns or writing to be re-listed.
He, however, explained the companies that had now complied with CAC’s requirements would be removed from the black list.