COJ Receives First Order for Imprisonment of a Director

KINGSTON — The Companies Office of Jamaica (COJ) has strengthened its enforcement mechanisms on penalties for companies which are downright delinquent, having received its very first Order to commit a Director to prison for failure to file annual returns.

Compliance Manager/Attorney-at-law at the COJ, Heather Mae Sutherland, explained to JIS News that "on October 27, the COJ scored a major point, as for the first time in its history, we secured from the Supreme Court of Jamaica, an Order directing that a Director be imprisoned for a period of seven days unless he files his outstanding annual returns."

She further informed that the Director has been committed to the St. Catherine District Prison for contempt of court after failing to comply with the Supreme Court’s Order to file his returns.

Miss Sutherland noted that due process was followed leading up to this point. “We got an order in October 2009 directing that this company file its returns and up to the present, the company has failed to file. So,  having gone through the process of securing an Order, and the company having failed to file, we pursued the matter further to have the Directors imprisoned for failure to comply with the Order,” the Compliance Manager said.        

"As it relates to the Order for committal,” Miss Sutherland continued, “this is something that is directed to all the Directors of the company…because within company law, whilst the company can be found guilty for its failure to file,it is the Directors who have responsibility for the company and would be pursued," she said.

Explaining the process, the Compliance Manager outlined that once companies are delinquent, that is, they have more than two annual returns outstanding or any other company documents, such as change of directors, change of company secretary or change of registered office, the COJ is allowed, by law, to approach the Supreme Court to secure an Order to have the outstanding documents filed.

"The first Order sought from the court normally allows the Directors and company 30 days in which to file these returns,” Miss Sutherland pointed out, adding that, “not filing these returns within 30 days, the Order clearly states that you are liable to be imprisoned or have your company and/ordirectors’ assets confiscated."

Miss Sutherland said the COJ is having “a big issue with delinquency,” with approximately 41 per cent of companies being delinquent.

To address the issue, she explained that the COJ informs the companies by way of notice that the annual return or any other document is outstanding and offers various options to aid them in becoming compliant.

"The procedure of litigation is an expensive one and as such, it is something that we do not undertake lightly, it is our last resort,” the Attorney-at-law noted, adding that the COJ's Field Officers provide companies with assessment notices and follow up with a phone call or visits to encourage filing and compliance.

"They have 14 days to comply with these notices, but usually we do not take action until at least a year after, so persons have adequate time to comply with that first notice,” Miss Sutherland said.

She added that failure to comply with that first notice, the COJ would proceed by way of litigation which is, approaching the court to have an order directing that the returns be filed.

To avoid penalties, the Compliance Manager urged companies to file their returns on an annual basis.

"For a company that has just been incorporated, the first annual return is due on the anniversary date of incorporation,” she pointed out, adding that an additional 28-day grace period is given after which time the annual return becomes overdue.

“The earlier you come in to file, the less expensive it is. If it is that the matter reaches court, litigation is a very expensive process; you probably would have to retain counsel to defend you and pay legal fees to retain the attorney, in addition to the legal cost of the Registrar if the court issues an Order in favour of the Registrar. So, at the end of the day, you are paying much more than just the filing of the annual return,” Miss Sutherland reasoned.

She encouraged persons, more so directors and company secretaries, to come in prior to the matter reaching this last stage.

For forms and procedure for filing returns, persons may visit the COJ website at: www.orcjamaica.com or call 908-4419.

By Kadian Brown, JIS PRO