Mass terminations of company registrations loom
Mbongeni Mguni | Friday May 29, 2020 18:21
Under the provisions of several acts passed in 2018, any company not migrating to the new Online Business Registration System (OBRS) will be deregistered after June 2. After Tuesday, there will be no provision for “dormant” companies; all companies in Botswana will either be active and registered online or deregistered.
The policy move is part of government’s efforts to plug money laundering loopholes and also enhance the ease of doing business.
On Wednesday evening, Companies and Intellectual Property Authority (CIPA) officials told BusinessWeek the official statistics on registrations and deregistrations would be released on Monday.
There was no word on whether the deadline for migration would be extended.
“We will release a statement on the way forward on Monday,” CIPA officials said.
Company registration experts told BusinessWeek that while active companies had largely responded to the year-long migration, Tuesday would come with mass terminations for many companies as they had opted out of the exercise.
Companies not on the OBRS after Tuesday will also give up their right to their names, allowing anyone to snap up their names, brands and gain whatever value comes with them.
“Those that did not migrate to the OBRS said they don’t have money to do so or complained that it was expensive to,” Ontiretse Mosepele, a company registration expert told BusinessWeek.
“Some said they could not afford companies secretaries to guide them through the process.”
BusinessWeek is informed that many of those entities who skipped registration are drawing comfort from prior registrations on supplier databases such as with local authorities or existing arrangements with clients.
However, the loopholes are tightening across the board, to the extent that unregistered entities will be unable to commercially exist in the country.
Mosepele said some companies had also expressed discomfort with the new legal requirement to disclose their beneficial shareholders as part of the re-registration exercise.
“There will be trouble if CIPA finds out a company has not disclosed their beneficial shareholder,” he said.
According to Armstrong Attorney’s pupil attorney, Kagi Mogae, the introduction of amendments around beneficial owners is designed to squeeze loopholes in the law for money laundering and other practices. A “beneficial owner” is defined as a person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise is the ultimate beneficiary of a share or other securities in a company, he said.
“The law requires that companies disclose who their beneficial owners are to ensure that they are not being used as a vehicle for money laundering, terrorist financing or other illegal activities,” Mogae said in a previous commentary.