A SPANNER IN THE WORKS – Ensure that your Company Secretarial Matters are up to date
An event worth popping the champagne for is one where you finally conclude a property sale transaction by signing your name on the dotted line.
Unfortunately, several companies, acting as parties to such an agreement, are hindered from putting pen to paper due to the silent deregistration of their companies. A deregistered status on the Companies and Intellectual Properties Commission’s (“the CIPC”) records can be due to, amongst other reasons, outstanding annual returns of the company. The result is an unnecessary and considerable delay in the conclusion of a transaction of anywhere between two and four months. That such an insignificant misstep can have such serious repercussions, is hard to imagine.
This, unfortunately, can happen to both the seller and the purchaser. A further result is that your company can not be party to any agreement while it has a “deregistered status”.
Should a company, as the seller or the purchaser, intend to enter into an agreement for the sale or purchase of a property, it needs to be ensured that all the company’s secretarial matters are in line to avoid unnecessary delays.
If, after further investigation, it is established that a company has actually been deregistered, here is what needs to be done:
If the company does not have a designated person attending to the company secretarial work, an independent expert or company can be appointed to manage this process on its behalf.
Firstly, it is necessary to inspect and ensure that the names of all (and only) the current directors of the company are displayed on the CIPC’s records. If this is not the case, the CIPC will request the signatures of all the directors on their records before making any changes to your company profile that may be requested by the board. This becomes problematic if one or more of the directors might have died or has resigned from the board of the company. If it is established that the list of directors on the CIPC’s records does not accord with the list of current directors of the company then a C.o.R 39 form must be submitted in order to notify the CIPC that the composition of the board of directors have changed. According to the CIPC, this process takes approximately 6 – 8 weeks.
Only once confirmation is received that the above changes (if applicable) have been effected, an application to have your company re-instated may be launched. This process also takes approximately 6 – 8 weeks to conclude.
Upon receipt of confirmation that the company has been re-instated and is again active, the value of the outstanding annual return can be determined, after which same can be submitted to the CIPC. The company will have to pay to the CIPC a small penalty fee for each outstanding annual return together with another fee, of which the amount is based on the company’s annual turnover. The higher the annual turnover of the company, the higher the additional fee that he company will have to cough up.
As soon as the above procedures have been completed and your company secretarial matters are up to date, you are entitled to enter into an agreement with another party for the sale or purchase of a property, or any other agreement for that matter.
The periods mentioned above (6-8 weeks) are fairly lengthy. The processing time is solely dependant on the workload, processing time and backlog of the CIPC and is unfortunately not in the hands of the person attempting to rectify the situation.
Oosthuizen and Co Meyer de Waal attorneys
Will same apply, as in your article, if the company was listed on the JSE and is now de-listed ?
Please refer to section 83 of the new Act. I am of the opinion that the removal from the register has the effect of the property registered in the name of the Coy becoming bona vacatia.
Readers opinions will be appreciated