Any entrepreneur will know that when their business hits a rough patch, the first thing they need to do is try and fix the problem. But sometimes, this isn’t possible – and you have to face the sad but inevitable decision of shutting down your company entirely. However, all may not be lost! Re-instating a company in South Africa is possible, but there are a few things to take into account before starting the process. In this article, we’ll tell you everything you need to know about company re-instatement in South Africa.
In a country where the unemployment rate is stubbornly high, it can be difficult for businesses to stay afloat. But what happens when a company has to temporarily close its doors? Can it ever reopen? This is the question that we will explore so If you’re feeling discouraged or down about your business, hopefully this post will give you some inspiration!
- What Is Required To Re-instate A Company In South Africa?
- What If I Don’t Have Bank Statements? What Other Documentary Proof Can I Present?
- Who Can Apply To Re-instate A Company?
- What Is The Cost Of Re-instating A Company?
- What Documents Are Needed To Re-Instate A Company?
- What Is The Process Of Re-Instating A Company?
- How Do I know If The Re-instatement Application Is Processed?
- What Happens After The Application Has Been Processed?
- How Do I File Outstanding Annual Returns?
- What If Outstanding Annual Returns Aren’t Filed After Submitting The CoR40.5?
- What Are The Benefits Of Registering A New Company?
What Is Required For Re-instating A Company In South Africa?
A corporation will be reinstated by CIPC only if it meets the following criteria:
- At the moment of deregistration, the firm was operating (This requires bank statements for the six months prior to and after deregistration to serve as proof).
- The deregistered business’s moveable property is registered in its name; or
- The firm or close corporation was re-established by a court order.
If none of the above can be proven by documentary evidence, the CIPC will not re-establish the company or close corporation, and it is recommended that a new company be formed at a cost of R125.00 without a name and R50 for each name reservation application.
What If I Don’t Have Bank Statements? What Other Documentary Proof Can I Present?
Please file a ticket through the CIPC online inquiry system with a thorough description of the circumstances and accompanying papers so that the re-instatement team can determine if the business or close corporation may be re-instated and what additional evidence is required.
Who Can Apply To Re-instate A Company?
Any interested party can seek to re-instate a company or a corporation under section 82(4) of the Companies Act. The company or close corporation itself, or any of its creditors, or any other person who requires the company or close corporation re-instated in order to pursue further legal action against the firm or close corporation, may petition for re-instatement.
If the re-instatement application is filed by someone other than the business or close corporation or its lawfully chosen agent, a court order for re-instatement should be sought. The company or close corporation is only fully re-instated (or its legal identity restored) if all outstanding annual returns are filed, according to Companies Regulation 40(6). The annual returns can only be filed by the company or close corporation or its lawfully authorized agent.
What Is The Cost Of Re-instating A Company?
It costs R200 to re-instate a company in South Africa, payable to CIPC using their bank details.
What Documents Are Needed For Re-instating A Company?
- Certified ID copy of the applicant (director/member);
- Certified ID copy of the customer filing the application;
- A letter of authorization from the applicant on whose behalf the application is being filed; and
- Documentary evidence that the company or close corporation was in operation or had any outstanding assets or obligations at the time of deregistration is required.
What Is The Process Of Re-Instating A Company?
Step 1: Evaluation
- Determine if the company or close corporation was operating at the time of deregistration or if the firm or close corporation has immovable property.
- Please do not submit a re-instatement application if there is no immovable property registered in the entity’s name or if the entity has not been active.
- Please do not file a re-instatement application if you are a creditor. Request that the firm or close corporation be reinstated by a court order.
Step 2: Deposit Funds
- Make an R200 deposit into the CIPC bank account. Bank account information can be found here.
- There is no charge for a court order re-instating an entity
Step 3: Re-instating the company or close corporation
Once the above has been completed, the company can be re-instated through one of following ways:
Re-instating by court order
A court order to re-establish a company or closure corporation must be emailed to [email protected]. It will then be forwarded to the appropriate processing unit for execution. Refer to Practice Notes 4 and 5 of 2016 for further information on how to submit a court document or court order to CIPC.
The court order and all other supporting papers, as indicated in Practice Notes 4 and 5 of 2016, must be in PDF or TIFF format, and the application must be provided as a single e-mail.
Re-instating by submitting a CoR40.5 form
Scanned and signed documents should be emailed to [email protected], together with the abovementioned supporting documents. All attachments must be in PDF or TIFF format, and the application must be sent as one email.
Step 4: File outstanding annual returns
To complete the re-instatement procedure, the firm or close corporation must file all outstanding annual returns after the CoR40.5 has been completed. The entity cannot be re-instated (or its legal personality restored) unless a court order for re-instatement is submitted if yearly returns are not filed.
The CIPC service standards may be found here.
How Do I know If The Re-instatement Application Is Processed?
A confirmation letter and web certificate will be sent to the email that appears on the customer code profile. If you haven’t received one, please submit a request using the CIPC’s online inquiry system.
What Happens After The Application Has Been Processed?
Once the payment, application and supporting documents have been received, the status will be changed to “re-instatement process”. In accordance to Companies Regulation 40(6), CIPC can only re-instate or completely effect the re-instatement procedure when all outstanding annual returns have been filed, at which point the status will change to “in business”.
How Do I File Outstanding Annual Returns?
Annual returns may only be filed through the CIPC annual return website or a CIPC Self-Service Terminal (SST). Annual returns can only be filed by someone from the company, close corporation or its lawfully authorized agent with a valid customer code.
WARNING: Making a deposit to the CIPC account is not the same as filing. Actual data must still be submitted through the annual return website or SST.
What If Outstanding Annual Returns Aren’t Filed After Submitting The CoR40.5?
If the company or close corporation fails to file annual returns within 30 business days of its re-instatement, it will be deregistered again without further notice. If you wish to proceed with the re-instatement, payment must be made again then submit the CoR40.5 form and accompanying documents [email protected].
What Are The Benefits Of Registering A New Company?
While re-instating a company can be a viable option, it’s often more beneficial to register a new company. Some of the benefits include:
- Re-instatement has a cost disadvantage since it involves payment for the re-instatement application (R200.00) as well as the submission of any overdue yearly returns (depending on entity type and payment scale), whereas a new business registration simply requires a payment of R175.00.
- Following the submission of delayed annual reports, the entity’s records must be amended by filing relevant statutory modification forms (e.g. CoR39, CoR 21.1, CK2), as well as any adjustments to a company’s memo of incorporation.
- It is quicker since it eliminates the need for several deed searches, affidavits, a newspaper advertisement, and maybe a letter from the Department of Public Works, which are all required supporting documentation for the re-instatement application.
*Please note all the above information is best to be discussed with one of our qualified accountants to verify all information is accurate, correct and up to date.