The Companies and Intellectual Property Commission (CIPC) has announced a significant wave of deregistrations due to continued non-compliance with the Companies Act. As of January 17, 2025, a large volume of companies have been deregistered for failing to meet obligations such as Annual Returns and Beneficial Ownership declarations.
The CIPC has highlighted that the high level of inactive businesses among companies significantly contributes to low compliance levels. Directors are advised to register companies only when there is a genuine economic or business opportunity. Even dormant companies must comply with the provisions of the Companies Act, as they pose risks of being used for money laundering, terror financing, and other criminal activities.
The consequences of deregistration for non-compliant businesses are severe. Directors may be held personally liable for the company’s debts, bank accounts may be frozen, service providers may refuse to deliver services, and creditors may refuse to pay, as the business does not legally exist. Although businesses can apply for reinstatement after final deregistration, only those that can provide confirmation of economic activity or other economic value at the time of final deregistration will be reinstated. The reinstatement process is cumbersome, requiring evidence of economic activity along with the relevant form.
The CIPC issues reminders to businesses about their responsibilities to comply with annual returns and beneficial ownership requirements via email and SMS directly to the provided contact details of directors and members. Clients are urged to ensure that their contact details are up to date at all times.
Businesses are advised to check their company status via Bizportal or e-Services. If the current business status is AR deregistration process, businesses must submit all outstanding Annual Returns and Beneficial Ownership Declarations urgently to avoid final deregistration and the consequences thereof.
Should you require professional advice in this regard please do not hesitate to contact our offices.
