DEREGISTRATION AND REINSTATEMENT OF REGISTRATION OF DEREGISTERED COMPANIES

Abstract

One of the grounds upon which a company can be deregistered by the Companies and Intellectual Property Commission (hereinafter “CIPC”) is where a company has failed to lodge annual returns for two or more years in succession. Prior to the Companies Act 71 of 2008 coming into operation, a large number of entities (approximately 900 000) were deregistered for failure to submit annual returns. While the then Companies and Intellectual Property Registration Office (CIPRO) was well within its rights to de-register noncompliant entities, many of these entities continued to operate despite their deregistration. Many creditors who were unaware of the deregistration commenced proceedings against the deregistered entities. Once creditors became aware of the deregistration, the validity of proceedings entered into during the period of deregistration was questioned. Section 82(4) of the Companies Act 71 of 2008 provides that any interested person may apply to CIPC to have a deregistered company reinstated (administrative reinstatement). At any time after a company has been dissolved, the liquidator of the company, or other interested person, may apply to court for an order declaring the dissolution void, or any other order that is just and equitable in the circumstances. In Newlands Surgical Clinic v Peninsula Eye Clinic (086/2014) [2015] ZASCA 25 (20 March) , the court held that reinstatement of the registration of a company in terms of section 82(4) is completely retrospective to the date of deregistration. The court held that the retrospectivity includes the validation of corporate actions during the period of deregistration. This decision brought to an end the conflicting decisions of different divisions of the High Court on the retrospective validity of corporate actions during deregistration. This note discusses the decision of the Supreme Court of Appeal in Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd. The note also considers some aspects relating to the interpretation of section 82(4) and section 83(4).