What will happen if the company or close corporation do not comply with / file annual returns?
The CIPC will assume that the company or close corporation is inactive, and as such CIPC will start the deregistration process to remove the company or close corporation from its active records. The legal effect of the deregistration process is that the juristic personality is withdrawn and the company or close corporation ceases to exist.
There are cost implications for late filings. Continuous non-filing will result in the company or close corporation being placed into deregistration and eventually being finally deregistered. During the deregistration process or final deregistration, government departments, SARS, banks and other organisations or the service providers of the company or close corporation may refuse to do business with the company or close corporation until such time that outstanding annual returns have been submitted.
Deregistration will be automatically triggered by the CIPC when two or more successive annual returns are outstanding. During deregistration companies and close corporations will be notified by registered mail or alternative electronic methods of communication of the pending deregistration. The contact details as per the CIPC records will be used to communicate the business status. If your contact details are outdated or incorrect, you will not receive such notification.
If finally deregistered, the business will have to be re-instated first before it can continue doing business.
Disclaimer:
Please note that the information provided does not constitute legal or professional advice, but rather the applicability of existing theory to a given practical situation. Due care is taken to ensure that the information is correct, but it remains subjective and an interpretation of application of information.