Why you must save your business from CIPC deregistration

A company or close corporation may decide to shut down for a variety of legitimate reasons. Under South African law, the closure includes formal deregistration with CIPC, bringing an end to the legal persona of the business. But, did you know that failure to comply with CIPC filing requirements could jeopardise the continued registration status of your business ultimately resulting in deregistration with CIPC?

It happens so easily because as a new business owner, you are easily swept up in the excitement of your new venture, but do not file annual returns either because you forget to or because you are unaware of these requirements.

What are the consequences of deregistration due to non-compliance?

  • The legal entity legally no longer exists and therefore can no longer trade or enter into transactions that are legally binding on either party to the transaction.
  • The registered name of the entity in question is available for use by any person wishing to register an entity with that name.
  • All assets of the business are forfeited to the South African Government.
  • Creditors of the now deregistered entity cannot take legal action for the payment of outstanding monies.
  • Can your business registration be reinstated?

The good news is that it can be, provided:

  • The entity was in business at the time that the deregistration occurred. The CIPC would require the business to provide bank statements for a period of 6 months before and 6 months after the deregistration date to prove that it was in fact trading; or
  • It can be proved that immovable property owned by the entity in question is still registered in the name of the deregistered business; or
  • A South African court of law has issued an order to the effect that the business is to be reinstated.

If your intention is to remain in business for the foreseeable future, honouring your CIPC filing responsibilities is certainly more cost- and time efficient than dealing with the downside of an automatic deregistration.

The MMS Group has a team of experts in matters of a Company Secretarial nature, capable of assisting and advising you on CIPC filing requirements and applicable registration. Reach out to our team on email to info@mmsgroup.co.za should you require any assistance with your CIPC compliance concerns.



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