Abstract
Abstract : Deregistration of a company will affect different stakeholders within a company. A director no longer has the capacity and authority to act on behalf of such a company. Employees are left in the employ of a company that does not exist legally. The claims of creditors become unenforceable. The assets of the company vest in the state and an attachment of property held as security becomes impossible. Furthermore, shareholders will no longer have the right to share in the net assets of that company. South African company law has shortcomings with regards to the procedural aspects relating to deregistration. Notices of deregistration often do not reach the intended parties in the case of annual return and voluntary deregistrations. The Act does not make provision for notification of parties in relation to deregistration, whether as a result of inactivity, a request for deregistration by third parties or the transfer of a company’s seat to another jurisdiction. The Act is also silent with regards to objections to deregistration. It appears that the regulations and the commission’s practice notes only attempted to provide detailed procedures for annual return deregistration. This dissertation analyses the South African law relating to deregistration against the background of a comparative study of the law of New Zealand. Several features of the approach in New Zealand may be proposed for purposes of reform because they are responsive to stakeholder protection. Notice of deregistration is given not only to the public and the company, but also to persons with registered security interests. Furthermore, there is a list of various grounds for objecting to a notice of deregistration. Secured creditors with a real security interest may take possession of the company’s property held as security or its proceeds without subjecting the company to a process of reinstatement. Directors are held directly liable if a company’s annual returns are not submitted. It is a requirement that a request for deregistration must be accompanied by shareholder approval or authorisation in a company's memorandum of incorporation. In addition to the approaches adopted in New Zealand, alternative measures such as notifications of deregistration by way of publication in local newspapers or through radio announcements may be implemented. Any parties with an interest in the company should be allowed to object to pending deregistration, provided they can show satisfactory reasons for the company to remain registered. The commission’s objective should be prevention of unnecessary deregistration rather than a quick fix deregistration process, because although an applicant may resort to reinstatement, this process may be lengthy and expensive for third party applicants.
LL.M. (Commercial Law)