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Your property and deregistered companies: avoid a rude awakening.

Written by  Smith Tabata Buchanan Boyes
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The Companies and Intellectual Property Commission (CIPC), previously known as CIPRO, have recently confirmed that more than one million companies and close corporations have lately been either deregistered or are in the process of deregistration due to their failure to submit their annual returns.

The legal consequences of deregistration are severe: companies and close corporations lose their status as legal entities, their assets pass to the State and agreements concluded with them may be negatively affected. For example, should such an entity be the owner of immovable property, it would not be possible for it to sell or pass transfer of this property. 

 The good news is that the new Companies Act (section 82(4) read with Schedule 3, Part 8) provides that application can be made to reinstate the registration of both a company and close corporation if it was deregistered as a result of non-filing of annual returns.  Such a reinstatement will have the effect of reviving the company or close corporation’s rights and obligations.

However, when such an entity is the owner of immovable property, additional requirements are laid down: the written consent of both the Departments of Treasury and Public Works are to be obtained prior to lodging the application.
Since the process of transfer of any property owned or purchased by such entities are effectively stayed until such entity is reregistered, significant delays are to be expected when a deregistered entity is involved.

You would therefore be well advised to verify the status of your Company or Close Corporation with CIPC, as well as that of any entity you intend to transact with prior to entering into a contract for the sale of immovable property.

Smith Tabata Buchanan Boyes

Smith Tabata Buchanan Boyes

Smith Tabata Buchanan Boyes