The Annual Return is a statutory return in terms of the Companies and Close Corporations Acts and therefore MUST be complied with.
An Annual Return often shortened to AR is not to be confused with an Annual Report, also often shortened to AR. These are 2 entirely different documents. I will continue defining the Annual Return.
In very basic terminology the Annual Return is used to determine whether the business is still doing business or will be doing business in the future. The return is used to determine how much the companies turnover has increased or decreased on average each year, during the preceding 12 months and will determine whether or not the company is still financially viable.
If the Annual Return is not filed the Companies and Intellectual Properties Commision (CIPC) assumes that the company is dormant and no longer doing business. The CIPC then starts the process of de-registering the company from the register of active businesses and the company would cease to exist. It is for this reason that a zero return must be submitted if the company has not made any progress during the preceding 12 months.
The AR can also measure the level of compliance with the Companies Act with regard to financial reporting.
An fee amount, determined by the annual turnover, will need to be paid to CIPC each year however should you delay your return you will be charged a penalty fee in addition to your annual fee.
The Companies and Intellectual Property Commission – eService website offers informative guidelines and videos on the submission of the Annual Return.