If you own a business in South Africa, it is important to know what happens when you decide to deregister it. There are several reasons people want to deregister their company or close a corporation:
Deregistration requirements for companies
To deregister a company, you must first notify the Registrar of Companies (ROC) by completing and submitting the [Deregistration Request Form](https://www.cipc.org.za/data/documents/123_deregistration_requestform_-_2019-2020.pdf). You will also need to provide:
- A declaration that your company has no outstanding assets or liabilities;
- A declaration that the company has no outstanding legal proceedings against it; and
- An acknowledgement that any false or misleading statements made may result in criminal prosecution, imprisonment and/or fines.
Deregistration requirements for close corporations
There are several things you’ll need to do before you can deregister your business:
- Ensure that the company is solvent. This means that there are no outstanding debts or liabilities.
- Ensure that there are no outstanding claims against the company. If someone has claimed against your company, it might have a right to be paid out of its assets while it’s in liquidation. If this happens, any unpaid creditors cannot get their money back and so should be avoided at all costs!
- Make sure that there are no outstanding judgments against the business (e.g., court orders). These could cause criminal penalties for those responsible for them (including imprisonment), so if anything comes up like this during your deregistration process then please consult an attorney immediately!
Deregistering a company
There are many reasons you may want to deregister your company. For example, you may have sold the business, or it has become defunct. However, before you can deregister a company with CIPC and SARS, there are certain steps that need to be followed.
- You ensure that you have settled all outstanding assets and liabilities.
- You also need to check if your business is still trading for 3 consecutive years prior to deregistration and has no outstanding creditors against it at the time of deregistration;
- In addition, it is important that there are no employees working for your company after termination; and finally…
- If applicable: All members who were given notice by the registered letter should have received confirmation from each member confirming receipt thereof within 30 days after sending out said notice.”
Deregistering a close corporation
If you’re looking for a simple way to deregister a close corporation, then look no further. Deregistering a close corporation is even easier than registering one! There is no specific form to complete and all you need to do is fill out the forms.
Here’s what your company needs:
- To be in good standing with the South African Reserve Bank (SARB). This means that there must be no outstanding liabilities or assets, plus it must not be in liquidation nor have any pending court cases against it.
- A certificate confirming these conditions from the SARB will take about three weeks to process, so make sure your paperwork gets sent off early enough if you want everything done on time. You can get this through their official website here: https://www.resbank.co.za/services/corporate-docs/.
- The deregistration fee costs R750 per month of registration remaining on your termination date (i.e., if your registration expires on July 5th and was initially registered as a Close Company Limited by Shares on March 1st 2012 – 10 years ago – then this would mean an annual fee of R7500).
The effect of deregistration on your rights and obligations as a director or member
When a company is deregistered, its rights and obligations cease and the director or member ceases to be legally responsible for the company’s affairs. They also no longer have any liability for their debts.
In addition, if you are a director or member of the company you can no longer decide on behalf of the company (or sometimes at all) unless they have granted you special powers to do so by your fellow directors or shareholders.
Liquidation of a company
A company can be wound up if it has been in business for at least six months, but this is not necessarily the case. The liquidation process will only be initiated by the court if:
- The company has assets and liabilities; and
- A liquidator (a person appointed to manage the winding up of a company) has been appointed.
Liquidation of a close corporation
If you want to liquidate a close corporation, you must follow the process described in the Close Corporations Act.
To begin the process, a person or persons must submit a notice of intention to liquidate and a report to the Registrar at CIPC. You must also send a copy of this document to every shareholder and creditor who has an interest in the closed corporation. The person submitting these documents does not need to be an authorised officer of any company; however, they may only submit one document per day and each document must contain its own unique reference number.
Once all shareholders have been notified about their impending liquidation (or if there are no shareholders), it’s time for them to decide whether they want to accept or reject it:
- If they reject it, then their shares will be automatically cancelled on 30 November 2021;
- If they accept it but do not contribute any money toward its liquidation costs (which total R150k), then those costs will be paid by CIPC;
- If they accept with contributions made equal to or greater than R150k as required under section 55B(2)(d) of South African law whereupon Section 55B(5) provides that such contributions will become part of your estate when you die – after which point anyone who inherits these assets might sue for them back again!
The Companies and Intellectual Property Commission (CIPC) allows you to deregister your business if it no longer is doing business and has no outstanding assets or liabilities. You can also dissolve your company if it is not doing business.
Deregistration and liquidation are two different processes. The former means that the company has ceased to exist and has removed its name from the register of companies, while the latter refers to how a company sells off its assets, pays off its debts and distributes what is left over among shareholders.
Conclusion
The first step in this process is to make sure you have all the relevant documentation. You will need to have your company’s Certificate of Incorporation and Memorandum of Articles of Association, as well as a certificate from the director confirming that the company has no outstanding assets or liabilities. Once you have all these documents, you can contact CIPC and request their help in deregistering your business.
