Liquidating a close corporation
This can be effected in the form of an application or by order of court, before any transaction can be proceeded with, in respect of assets registered in its name.The effect of deregistration is that a Company or Close Corporation is deprived of its legal existence.Upon the dissolution of a Company the liability of its directors, officers and members ceases, whereas this is not the case with deregistration.Furthermore, the effect of declaring a dissolution void is not retrospective, but when the registration of a deregistered Company is restored, the Company’s rights and obligations, prior to deregistration, revive and the order declaring the deregistration void operates retrospectively.As it stands at the moment creditors do not have much hope of recovering any debt due to it by a deregistered Company or Close Corporation.EFFECT OF DISSOLUTION OF A COMPANY OR CLOSE CORPORATION ON CONVEYANCING TRANSACTIONS In 1964 at the Annual Conference of Registrars were confronted with the following scenario: “Where a company has been struck off the roll, can a messenger or sheriff give transfer to a purchase at a sale in execution of property registered in the company’s name?EFFECT OF DEREGISTRATION ON CONVEYANCING TRANSACTIONS It is incumbent on the conveyancer to determine whether the Company or Close Corporation has been deregistered or not.
The assets (if any) of the Company or Close Corporation automatically passes to the State as 1981(4) SA 291 (W) the court held that a debt that is due to a creditor of Company or Close Corporation that has been deregistered is not extinguished, but unenforceable.One option for a creditor is to apply to the CIPC for the restoration of the registration of the Company.Section 82(4) of the Act reads as follows: "If the Commission deregisters a company as contemplated in subsection (3), any interested person may apply in the prescribed manner and form to the Commission, to reinstate the registration of the company." In terms of the Old Companies Act this application could be made to court. This section of the Act is also applicable for the deregistration of a Close Corporation.Note that in these circumstances the institution of proceedings against the company can proceed as if the company had not been dissolved.However, where assets of a company are not transferred prior to its final dissolution and no application as referred to 1914 TPD 596).