Subject to change at any time due to CIPC’s apparent inability to create one functioning, coherent website – or to stick to their own processes.
Did you register a company on a whim when a new idea popped into your head – just to secure the name? This is one of several reasons entrepreneurs find themselves as directors of multiple dormant companies.
It’s commonly thought that you can just leave those dormant companies, and that there should be no consequences – after all, if you weren’t trading, and the shell company didn’t even open a bank account, you’ve made no money and should therefore incur no tax liability – right?
Unfortunately, this is a misconception, as a client of ours recently found out. SARS issued him administrative penalties on each one of his companies for which he had failed to file annual returns – irrespective of the fact that these dormant companies hadn’t traded.
So, if you don't intend to use a company to trade, and unless you really want to keep the name for intellectual property purposes, it may be better to deregister the company before you incur unnecessary tax issues and financial loss.
Here's how to deregister a company in South Africa.
Note: links have been removed for cyber safety. Note that these links are correct at the date of publication, but may have changed. Maybery Inc. takes no responsibility for their correctness, accuracy nor safety or security of these links or the sites they link to.
In theory, deregistration of companies must be conducted in accordance with Section 82 of the Companies Act 71 of 2008.
Practically, as of August 2024, the exasperated entrepreneur must follow whichever is the CIPC’s new process – currently found at https:// www. cipc. co. za/.
However, first note that SARS has requirements before it will “permit” you to deregister the company you’ve never used: https://www.sars.gov.za/businesses-and-employers/my-business-and-tax/closing-a-business-or-company/ .
Do this step first.
When you’ve completed the SARS steps, then go to CIPC.
The CIPC deregistration process
Go to the CIPC website.
Scroll halfway down the page and find “Enterprise Maintenance”
3. Most business owners will then select “MAINTAIN A PRIVATE OR PERSONAL LIABILITY COMPANY”.
4. Click “CHANGES TO MANAGEMENT, ADMIN & GOVERNANCE”.
5. Choose “Voluntary Deregistration”. The following notice will then appear.
Deregistering/Closing your Company
A business can be referred for deregistration upon request from the company or close corporation or any other third party, provided that the company or close corporation has ceased to carry on business; and has no assets or, because of the inadequacy of its assets, there is no reasonable probability of the company or close corporation being liquidated.
Deregistration will also be triggered when two or more successive annual returns are outstanding, in which case the company or close corporation will be automatically referred by the system and then notified by registered mail or alternative electronic methods of communication. The contact details as per the Commission records will be used to communicate the deregistration. If your contact details are outdated or incorrect, the Commission is not liable if you have not received such notification before deregistration.
Companies and close corporations are responsible for informing the Commission of contact details to ensure that they receive relevant notifications and reminders.
To de-register your company and/or close corporation, follow these steps:
Write a letter to CIPC
The letter must include the following statement confirming that:
The company or close corporation is not carrying on business or is dormant; and
Has no assets, or because of the inadequacy of its assets, that there is no reasonable probability of the close corporation being liquidated (if third party, the statement must be supplemented with sufficient documentary proof confirming the statement);
If the company or close corporation submits the request, the letter must be signed by at least 50% of the active directors of the company or members of the close corporation, or otherwise by the third party who is requesting the deregistration; and
Tax number (if available).
Prepare supporting information
CIPC will be unable to proceed with the changes unless the following supporting documentation is attached to the letter:
Tax clearance certificate or any other written confirmation from SARS that no tax liability is outstanding;
Certified ID copy of any of the persons signing the letter wherein deregistration is requested;
If a third party is applying for the deregistration, documentary proof must be submitted confirming the statement that:
the company or close corporation is not carrying on business or is dormant and
has no assets, or because of the inadequacy of its assets, that there is no reasonable probability of the company being liquidated (If third party, the statement must be supplemented with sufficient documentary proof confirming the statement).
E-mail the letter to deregistrations@cipc.co.za.
Don’t let sleeping companies lie dormant - have either your commercial attorneys or your accountants close them, or do it yourself. The consequences of failing to undertake these company secretarial steps can have extremely expensive consequences - for example, failing to ensure your shareholding is filed can result in loss of shares - or expensive litigation to prove ownership, as was found in Are You Sure You're A Shareholder? - below.
At your wits end with deregistration and other company secretarial tasks?
Contact us for help.
DISCLAIMER
The above information is for illustrative purposes only and does not take into account your specific circumstances. It therefore cannot constitute legal advice. Please contact us for comprehensive advice to address your circumstances.
Under no circumstances should any person use the above information in an attempt to circumvent the provisions of legislation or contract, or to cause damage to any other person. Always ensure you and your company are in compliance with the law in all dealings.
We are not tax practitioners and no content on our website should be taken as tax advice.
The information is accurate as of the date of publication but is subject to change at any time.
Maybery Inc. accepts no liability for the accuracy of the above processes, nor the safety or security of the sites mentioned. CIPC processes are subject to change at any time.
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