Abstract
Section 82 of the Companies Act 71 of 2008 (the Companies Act 2008), makes provision for the removal of companies from the register of the Companies and Intellectual Property Commission (CIPC). Companies may be deregistered for failure to file annual returns for two consecutive years, if it appears they have been inactive for at least seven years, or if the company requests a deregistration if it is no longer carrying on business or after winding up.
The effect of deregistration is that the company will cease to exist from date of its removal from the company register. It loses its corporate existence and capacity. The property it held before deregistration will vest in the state automatically without a need for its delivery. This position will affect various stakeholders of the company. For instance, company creditors will no longer be able to claim their debts, as they cannot even litigate against a deregistered company. For creditors to recover their debts, they have to apply for reinstatement of the company in terms of section 83(4) of the Companies Act 2008.
The legislation can mitigate the effects of deregistration by, for instance, making it possible for all stakeholders to file objection to the intended deregistration and/or requiring the CIPC to follow a liquidation process when companies are deregistered, unless there are no assets to be liquidated.
This research will also analyse the effect of deregistration in terms of Australian Corporations Act of 2001. Even though deregistration leads to companies ceasing to exist and property vesting in the state, the Australian Corporations Act makes further provision relating to the state taking responsibility to settle certain claims despite the company debtor being deregistered. This reduces the burden on the creditors, as they do not always have to apply for reinstatement in order to claim their debts.
LL.M. (Corporate Law)