Over 2600 local companies will be removed from the list of legally recognised business entities in the country unless they seek re-registration with the Rwanda Development Board (RDB) within the next two months.

The announcement was made on Tuesday by the Registrar General of Companies at RDB, Louise Kanyonga, who said that some 2641 companies are required to check with her office or lose license to operate in the country.

She said that the list, which was also published in the media, is a notice of intention to remove the companies if no objections are received regarding their removal within the two-month period.

The companies are being removed because they didn’t re-register with RDB as was required by the company law of 2009, Kanyonga said, which could mean that they have probably ceased operations as all active companies have complied with the requirement.

"This removal, is therefore, meant to clean up the registry of companies. It is important to note that the Office of the Registrar General (ORG) has previously conducted communication campaigns and published notices calling on companies to re-register and a very large number of companies re-registered following these different communications,” she said in an interview.

If a company is removed from the registry, it ceases to have legal personality in the country and is not able to conduct any transaction in the name of that company.

It also means that no claims or liabilities can be legally brought against the company, experts say.

But the biggest blow for the companies de-registered by the ORG at RDB is that they can’t get tenders to conduct businesses because they are not considered as legal entities by professional clients.

"You can never get a tender since you wouldn’t have a trading licence. You are basically an illegal company if you are not registered,” said one expert who works with the Rwanda Private Sector Federation (PSF).

The expert sought anonymity to freely share views for this story because it is not yet clear if any of the PSF members are on the list of the companies to be de-registered and may therefore need confidential and professional support from the body to negotiate with RDB.

The source said that it makes sense to de-register redundant companies because there is no need of keeping them in the register when they aren’t working or diligently contributing towards paying taxes.

 "There is no need to keep a huge chunk of companies on the list when some of them are redundant. Sometimes some of the companies to be de-registered may have been careless and not followed through the registration process out of ignorance. But it makes no sense to keep companies that don’t work on the register,” the expert said.

The Registrar General says the removal of companies that are no longer operational enables the government to keep track of companies that are in actual operation and maintain accurate data of the number of businesses operating in the country.

 "This ensures better informed policy decisions as well as more efficient tax administration,” Kanyonga said.

Many of the companies which face removal from the register are Small and Medium Enterprises (SMES) which are involved in almost all business areas in the country, from construction and manufacturing to security and IT services.

The Registrar General has given two months to anyone with an objection to the notice to come forth.

She said that those who are expected to make the objection include company directors or shareholders themselves as well as anyone who has an ongoing transaction with the company to be de-registered or has a claim against the company such as a debt.

 editorial@newtimes.co.rw