Deregistration vs liquidation

Closing down a solvent company in South Africa is referred to as “liquidation” in common law terms. It involves a certain number of formal steps and the overall process can take months to complete. Companies can be liquidated either by “de-registration” or “winding up”. Although both procedures will result in the dissolution of a company, however, the processes they require are significantly different:

Company Deregistration

This is a relatively simple, inexpensive, and quick procedure for dissolving non-operational private companies that meet certain requirements.

In order to deregister a company, the assets and liabilities must be disposed of prior to commencing the deregistration process. It will usually take between +/- 3 to 7 months for the Companies and Intellectual Property Commission (CIPC) to effect the deregistration.

Note: If a company is deregistered any interested person may apply to the Commission to reinstate the registration of the company. The Directors will then be reinstated to their position as Directors of the Company as though it had not been removed from the Register and any claim against the Directors enforced.

Deregistration vs Liquidation

Company Deregistration

Company Liquidation

Companies would prefer to voluntary liquidate when any interested party such as, creditors and disgruntled staff members, have claimed against the Company prior to a final liquidation order has been issued by the High Court. If such party does not claim against the Company they cannot do so after the liquidation has taken place. This could be a voluntary liquidation or brought upon by creditors and as such the process to liquidate the company requires specific liquidation services to ensure all is done according to the law and companies act.

There have been a few instances where the Master of the High Court has voided a liquidation order, however this is not the norm and is a very expensive procedure. While a solvent member’s voluntary liquidation requires that all liabilities and taxes be settled. Due to the complexities involved, we strongly advised that the company engages an expert to handle the closing down of your company in South Africa.

We have specialist staff who will attend to either deregistering or liquidating your company, keeping you up to date every step of the way.

Following the correct procedures, we’ll ensure that your company is liquidated / terminated in the most speedy and efficient manner without unnecessary complexities or delays.

Deregistration vs Liquidation

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