Closing a dormant company in South Africa is a relatively straightforward process but it is important to follow the correct steps to ensure that the company is properly dissolved and that all legal obligations are met.
Here is a step-by-step guide on how to close a dormant company:
Check the company’s status
Before you begin the process of closing a dormant company you should first verify that it is indeed dormant. This means that the company has not carried out any business activities such as selling goods or services, or generating revenue in the past financial year.
Notify the Companies and Intellectual Property Commission (CIPC)
Once you have confirmed that the company is dormant you must notify the CIPC of your intention to close the company. This can be done via email or by submitting a form in person at the CIPC’s offices and the turnaround time is approximately 6 months.
Supporting documents required are as follows:
- Resolution/letter on company letterhead signed by all directors approving the intention to deregister the company-stating it is dormant and has no assets and liabilities.
- Tax Clearance certificate
- Certified copy of each director’s ID not older than three months
Pay any outstanding fees and taxes
Before the CIPC can process your request to close the company you must ensure that all outstanding fees and taxes have been paid. This includes any annual return fees or taxes owed to the South African Revenue Service (SARS)
File the necessary documents
In order to close a dormant company you will need to file certain documents with the CIPC. These include a ‘Notice of Intention to De-register a Company’ form and a ‘Notice of Resolution to De-register a Company’ form.
Grounds for de-registration: A company or close corporation may be referred for de-registration:-
- upon application by any party subject to the requirements for a request for de-registration,
- if annual returns are outstanding for more than 2 successive years, or
- if the Commission believes that the company or close corporation has been inactive for 7 years.
Wait for approval
Once you have submitted all the necessary documents and have paid any outstanding fees and taxes (see article on ‘This is what a dormant company will cost you in tax’) the CIPC will review your request to close the company. If everything is in order, they will approve your request and begin the process of de-registering the company.
Dispose of company assets
If the company has any assets such as property or equipment you will need to dispose of these before the company can be fully dissolved. This may involve selling the assets or transferring them to another entity.
Publish a notice in the Government Gazette
Once the CIPC has approved your request to close the company you must publish a notice in the Government Gazette announcing the company’s de-registration.
Notify creditors and shareholders
If the company has any creditors or shareholders you must notify them of the company’s de-registration. This can be done through a notice in the Government Gazette or by sending a letter to each creditor or shareholder individually.
Finally, it would be wise to seek professional assistance from an accredited tax practitioner to make sure you are compliant.
At Hobbs Sinclair we specialise in all company secretarial functions. Should you need assistance with closing your dormant company or any other company matters please contact: