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A SPANNER IN THE WORKS – Ensure that your company secretarial matters are up to date

15 Mar

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.

How annoying would it not be if you should find out that there is a major spanner in the works (that you were blissfully unaware of) which will delay the conclusion of the transfer of a property with almost 2-4 months?

This, unfortunately, can happen to both the seller and the purchaser.  The obstacle referred to here is the silent deregistration of a company by the Companies and Intellectual Property Commission (“the CIPC”) due to outstanding annual returns.  That such an insignificant misstep can have such serious repercussions, is hard to imagine.  It is definitely not a pleasant experience to find out that your company does in fact not exist, even if the situation is just temporary.  The result is that your company can not be party to any agreement while it has a “deregistered status”.

Should you be in a position where your company, as the seller or the purchaser, intends to enter into an agreement for the sale or purchase of a property, ensure that all your company’s secretarial matters are in line to avoid unnecessary delays.

If, after further investigation, you come to learn that your company has actually been deregistered, here is what you need to do:

If your company does not have a designated person attending to the company secretarial work, you can appoint an independent expert or company to manage this process on your behalf.

Firstly, you need 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 you may request.  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 your company then one has to submit a C.o.R 39 form in order to notify the CIPC that the composition of the board of directors have changed.  This process takes approximately 6 – 8 weeks.

Only once you receive confirmation that the above changes have been effected (if applicable), you may launch an application to have your company re-instated.  This process also takes approximately 6 – 8 weeks to conclude.

Upon receipt of confirmation that your 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.

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.

We appreciate that 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 our hands.

All the abovementioned procedures can be done and managed through our correspondent.  Please contact us at 021 461 0065 or alternatively at legalassist@oostco.co.za for more information in this regard.

 
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Posted by on 15/03/2012 in Content

 

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