The Companies Act, Act 71 of 2008, provides for a number of different reasons and situations that may lead to deregistration of a company. However, failure to file annual returns has become an increasingly common cause for deregistration of a company with the Companies and Intellectual Property Commission (hereafter referred to as “CIPC”). This article aims to inform the reader of the consequences of deregistration as well as the effect of re-instatement of the company.
The Companies Act, and more specifically sections 82 and 83 thereof, deals with the dissolution of companies and the removal from company register respectively, as well as the effect of the removal. What most directors and shareholders do not realize is that all the property of a company automatically vests in the State as “vacant goods” once a company is deregistered.
Should the company be re-instated, the obvious question would be what happens to the assets that were surrendered to the State. In Peninsula Eye Clinic (Pty) Ltd v Newlands Surgical Clinic and Others (21325/11)  ZAWCHC 156, the court found that upon re-instatement of a company its separate legal personality and right to property will automatically be restored. Obviously a fee will have to be paid and application will have to be made to the CIPC. The only problem that remains is the dealings of the company during the period which it was deregistered. The fact that a director of a company may not have known that the company was deregistered when he signed a contract to acquire an asset for the company is irrelevant. Important to remember is that the company basically ceases to exist during this period of deregistration and it therefore follows that any actions taken during this period must be null and void.
In the absence of an agreement to the contrary, the only option for the company would be to have an “interested person” apply to court to have the dissolution declared void. It would be interesting to note the approach of the courts if this section were used by an applicant to set aside the dissolution based on failure to file an annual return.
As a result of the aforesaid, it is advisable to maintain contact with the company’s attorney and/or accountant and to stay up to date regarding the status of the company, so as to prevent similar situations from arising.
By Dwayne Williams (LL.B)