For many persons, scheduling an annual medical has become a ritual. Similarly, checking the health of your company (be it an operating company, a non-operating holding company or one of a group of companies) should be regularly scheduled on your calendar. In place of tests for blood pressure, sugar levels and cholesterol levels (the list goes on), highlighted below are some of the recommended tests to verify the health (aka good standing or compliance) of your company:
Starting with the low hanging fruit makes any task a bit less daunting. Each company incorporated in Trinidad and Tobago under the Companies Act is required to comply with certain filing requirements prescribed in that Act. It is advisable to create a folder or file for your company in which copies of all filed documents for the company are stored.
The most common filings made under the Companies Act include the filing of a notice with the Registrar General’s Department any time that there is a change in: (1) the directors of a company; (2) the secretary of a company; and (3) the registered office of the company. The timeframe for filing these notices are 30 days from the date of the change, except in the case of a notice of change of registered office which must be filed within 15 days of the change. In addition, all companies must file an annual return with the Registrar General’s Department within 30 days of the anniversary date of the company’s date of incorporation, continuance or amalgamation (whichever is the later). There are other filings that are required in circumstances where specific events relating to a company occurs, including: a change in the articles of a company; the granting of certain legal charges over the property of a company; and the appointment of a receiver or liquidator in respect of a company.
It is therefore important to be familiar with the filing obligations under the Companies Act to ensure compliance, particularly as penalties accrue in respect of the late filing of many of these documents.
Public or regulated companies
In addition to filings with the Registrar General’s Department under the Companies Act, public companies or companies regulated by other legislation (such as the Financial Institutions Act; the Insurance Act or the Securities Act) have additional regular filings and disclosure obligations. These filings include interim and annual financial statements; annual reports; credit exposure and related-party transaction reports; material change reports and trading reports.
Some of these reports are required to be submitted at the same time each year while others may arise only in circumstances where certain events occur. The late filing of these reports will often result in fines or other penalties being imposed by the respective regulators and, as such, keeping track of these filings is critical.
Public or regulated companies should therefore consider creating a schedule of all filing obligations and the timeframes within which the filing must be made. Ideally, where a company has access to scheduling or calendaring software, consider scheduling all known filing obligations at the beginning of each year along with reminders or alarms in advance of the deadline to ensure that those filing obligations are met. Copies of all documents filed with regulators (and all correspondence with regulators) should be maintained on a file kept by the company for filings and correspondence with each regulator. A public or regulated company should regularly verify that all requisite filings have been submitted and copies retained by the company.
Covenants, undertakings and other agreements
In the course of business, an operating company is likely to enter into contractual arrangements from time to time. Often, such contractual arrangements would include certain agreements (commonly referred to as covenants or undertakings) by each party to take (or refrain from taking) certain action. Where such covenants require a company to carry out certain steps or obligations, it is important that the company keeps track of such provisions to avoid finding itself in breach of its commitments, particularly as a breach of one contract may also trigger breaches in other contracts of the company.
Depending on the nature of the covenants, there are different ways in which a company may decide to keep track of them. However, if a company is regularly contracting with other parties, keeping track of many different covenants with different obligations and timelines can become a burden. While there no doubt is an “app for that” or software tailored specifically for keeping track of tasks, the cost of software can in itself become a burden that outweighs the benefit. A company that is regularly entering into contractual arrangements may alternatively consider creating a table or schedule in which it lists all of the company’s contractual obligations with a note as to the contract under which such obligation arises and the timeframe applicable to the obligation. A company can then regularly test itself against such obligations ‘at a glance’ without needing to turn to each contract.
A company incorporated in Trinidad and Tobago (even if not an operating company) should obtain a Board of Inland Revenue (BIR) number and to file tax returns with the BIR. As to the taxes payable by a company and the tax rates that apply, specific tax advice depending on the operations of the company should be obtained. However, what does apply to all companies incorporated in Trinidad and Tobago is that a tax file or folder should be maintained in which all filed tax returns in respect of that company are stored. At a minimum, you should ensure that the filed tax returns for a company’s preceding six (6) financial years are maintained on file.
In our practice, we are often asked to assist a company at a time when something ‘out of the ordinary’ is happening. Be it a sale of the company, a dispute with a regulator, counterparty to a contract or even the BIR, the most critical things that we will require to assist the company are the company’s records. A company with more up to date and complete records will often increase its chances of obtaining a positive (and less costly) outcome or result in those circumstances. While it might not always be practical to hire an employee or engage lawyers or consultants to regularly maintain or keep track of a company’s filing or other obligations, the simple tips and tools set out above should put a company on the right track to good health, or at least, to remaining in good standing.
Disclaimer: This Document Provides General Guidance Only And Nothing In This Document Constitutes Legal Advice. Should You Require Specific Assistance, Please Contact Your Attorney-At-Law.