Deregistration is the process whereby a dormant company or close corporation is brought to a legal end.
If one of your businesses is dormant, consider following the guidelines for voluntary deregistration – at least it puts the business out of existence and gives peace of mind that it is now behind you.
Deregistration can be either compulsory or voluntary –
- The CIPC will, after notice, deregister a business that fails to file annual returns for two years, or
- An entity may voluntarily file for deregistration if it has stopped trading and has no assets or insufficient assets to warrant liquidation.
If an entity wishes to file for deregistration it needs to write to the CIPC on its business letterhead (a third party must use its own letterhead), signed by all “active” directors and stating that the business is dormant and its assets cannot justify liquidation. If the application is from a third party, the letter needs to have documentary proof of the above. Tax clearance (or written confirmation from SARS that there is no tax owing) must be attached and the tax number is to be shown plus the signatures and certified ID copies of all directors (or any third party making the application).
The CIPC will check to see if annual returns are up to date and if so will decline any third party applications.
If there are any errors, the application will be returned and must be filled in as per CIPC requirements.
If it is successful, an “in deregistration process” notice is issued.
The entity or any third party (such as a creditor) may object to a deregistration application or notice. If deregistration is due to not completing annual returns then bringing them up to date will stop the deregistration process. If for any other reason, certified copies of the IDs of those opposing the deregistration must accompany the objection.
Once CIPC have completed all the administration, a “final deregistered” notice is issued and the entity no longer legally exists.
The books and documents of the business may be disposed of in such way as CIPC directs.
The consequences of deregistration
The entity ceases to exist as a legal entity but the debts of the business are not expunged, merely rendered unenforceable against the entity. Thus sureties remain liable under their suretyships. Directors, “prescribed officers” (certain senior managers with substantial powers) and shareholders who may have become personally liable for any company debt “in respect of any act or omission that took place before the company was removed from the register” remain liable. Moreover the name/s of the entity will become available for use and any interested party may then acquire the name.
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