CHEATING NON-PROFIT ENTITIES TO PAY

MBABANE – Woe unto non-profit making associations who are doing exactly the opposite of what they stand for!

This declaration has been made by Registrar of Companies Msebe Malinga, who has made it clear that they will not take kindly to non-profit organisations that make profits and share them among themselves, much against tenets of section 17 of the Companies Act No.8 of 2009.

Non-profit making associations in terms of the law should deal with the promotion of either religion, education, sciences, charity, art, wildlife and flora or any other communal act.  However, the registry of companies has uncovered that some of these entities which were registered as non-profit are generating revenue and enjoying the profits.

Accordance

“We will soon be conducting period inspections to ascertain whether the non-profit associations are still serving the populace in accordance with their mandate as stipulated in the companies Act. Should they be found on the wrong side of the law they will have to pay up what is due as annual fees,” said Malinga.   
Non-profit associations do not pay annual renewal fees to the registry of companies. They are only required to submit audited financials at the end of the financial year. Meanwhile, private and public companies are expected to file their audited financials and also pay their annual fees.

Depending on the shares or nominal capital, the minimum amount of money that should be paid by companies as renewal fees starts from E470 (minimum) up to E1 670 (maximum).

It should be mentioned that not only will the non-profit associations be compelled to pay what is due in terms of the companies Act, but they could also be charged for the misrepresentation of facts in the memorandum of association.

Misrepresentation

The misrepresentation would be on the basis of the fact that they would have been found not to be doing what they claimed they would do.
Asked what had prompted the inspections, Malinga said among other things they closely followed a growing number of church disputes which were brought before the courts of law bordering around funds.

“We are not barring registration of churches or other forms of non-profit associations per se, but greatly concerned about the non-compliance,” Malinga clarified.

There were 100 new registrations of non-profit associations between January and May 2019. This was an increase from 78 during the previous year.
It has also been recently reported that the registry of companies registered a total of 1 377 businesses during the same period this year.

This was an overall increase of 269 businesses when compared to the same period (January to May) in 2018, where 1 108 companies managed to successfully be uploaded into the system. Independent calculations by the Business Desk based on the above figures translated to a 19.5 per cent overall increase. 
During the current year, 1 250 private companies made it through, which was lesser than the 1 016 registered in 2018. Investopedia, an online research engine, explains that a private company is a firm held under private ownership.

It was stated that private companies may issue stock and have shareholders, but their shares do not trade on public exchanges and are not issued through an initial public offering (IPO).
In terms of public companies, 24 got formal recognition by government, which was almost half of the entities recorded during the previous year where there were only 13.

Floated

Investopedia defines a public company as an entity that issued securities through an IPO and trades its stock on at least one stock exchange or over-the-counter market. Although a small percentage of shares are initially floated to the public, daily trading in the market determines the value of the entire company. It is considered to be ‘public’ since shareholders, who become equity owners of the company, may be composed of anybody who purchases stock in the firm.
The registry statistics also pointed out that there were three foreign companies which showed an interest to do business in Eswatini, while there was only one in 2018.

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