According to a Midrand-based company, JTG Business Consulting, the Companies and Intellectual Property Commission deregistered more than 100 000 companies and corporations on 26 August for non-compliance with annual returns.
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Commenting on this move, managing director at the consulting company, Tshakalisa Dube, said this is due to the initial, planned deregistration in May which was postponed twice to give a grace period for entities to comply. He added that, in March 2013, more than 92 000 companies and close corporations were deregistered.
“All companies, including external companies such as non-profit, private and public companies and close corporations are required to submit their annual returns filed with the commission every year. An annual return is a statutory return in terms of the Companies and Close Corporations Acts and must be complied with.”
He explained that an annual return is different from a tax return in that an annual return is a renewal and confirms the most up-to-date information of a company or close corporation. Dube stated that a tax return focuses on taxable income of a company or close corporation in order to determine its tax liability to the State and is filed with the South African Revenue Services.
Failure to submit annual returns implies that the company or close corporation is not doing business now and will not do business in the future, and this is non-compliance and leads to deregistration.
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Companies are given 30 business days from the submission due date before they become non-compliant with the Companies Act. Dube stated that the legal consequences of deregistration are severe. They include the withdrawal of juristic personality and the company or close corporation ceases to exist.
The assets of the deregistered entity get confiscated, passed on to the State and agreements concluded with them are negatively affected. The company will not be able to sell or pass transfer of immovable property such as land and buildings.
“Any debts due by a company, such as rentals, are not extinguished but are rendered unenforceable while the company is deregistered. Anyone who purports to contract in the name of a company that has been deregistered does not incur personal liability on the contract, the contract is a nullity,” he said.
Dube strongly advised that companies be compliant and prevent deregistration. Re-reinstatement of a deregistered company is possible, but it requires a consultant to assist and is a rather tedious exercise that should be avoided by ensuring compliance.
Re-reinstatement will have the effect of reviving the company or close corporation’s rights and obligations. A lot of requirements are laid down including the written consent of the Department of Public Works and it is a long process, concluded Dube.
