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[2024] ZAECELLC 28
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Goosen v Minister of Trade and Industry and Others (EL 639/2024) [2024] ZAECELLC 28 (15 April 2024)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, EAST LONDON CIRCUIT COURT)
CASE
NO. EL 639/2024
In
the matter between:
GIDEON
JOUBERT GOOSEN
Applicant
and
MINISTER
OF TRADE AND INDUSTRY
First Respondent
MINISTER
OF FINANCE
Second Respondent
BLUE
LABEL DISTRIBUTION (PTY) LTD
Third Respondent
RECEIVER
OF REVENUE
Fourth Respondent
COMPANIES
AND INTELLECTUAL
PROPERTY
COMMISSION
Fifth Respondent
JUDGEMENT
(URGENT APPLICATION)
HARTLE
J
[1]
The
applicant, acting as an interested party, sought an order before me
on an urgent basis that Goosen Marketing CC (with registration
number
1999/0513069/23), recently deregistered evidently due to a systematic
annual return final deregistration process,
[1]
be re-registered and/or reinstated to the database of registered
companies maintained by the registrar of the Companies and
Intellectual
Property Commission (“
CIPC
”).
[2]
The clear purpose for the order is that he be placed in a position to
continue with litigation that is underway in the
trial court (“
the
trial
”). By arrangement the trial which is part-heard
before Gwala AJ was set down to be completed during the Easter
recess.
[3]
In that matter (Case No EL 763/14), the applicant is sued by the
third respondent (“
Blue Label
”) as a co-surety
together with the close corporation in a contractual dispute. The
latter entity has a counterclaim against
the third respondent which
it self-evidently cannot presently prosecute through the applicant
who, together with his wife as co-member
of the close corporation,
had initiated the counterclaim on its behalf and was conducting its
defence (as well as his own) in the
action.
[4]
The action was commenced in 2014 but the actual trial, which as I
have indicated is part-heard, only commenced in April
2023 when there
was no impediment of the close corporation having been de-registered.
[5]
The
applicant claims to have been unaware of the de-registration which
took effect on 20 January 2024. It was however brought
to the
attention of the trial judge on 9 April 2024 by Mr. Schultz (who
appears on behalf of Blue Label in the trial and the present
application) that such impediment is now at play and affects the
continuation of the trial.
[2]
[6]
It is
common cause that the de-registration occurred due to a failure of
those responsible on behalf of the close corporation to
have
submitted annual returns in respect of it to the CIPC.
[3]
[7]
The applicant launched these proceedings without reference to any
provision of the
Companies Act, No. 71 of 2008
merely contending that
it was a simple matter to have the close corporation re-registered
pronto and that all it requires is that
the proposed order which I
have been called upon to make is emailed to the CIPC using a
specified designated email address. In
the notice of motion he asks
the court to condone his failure to comply with the time limits and
forms prescribed by the rules
of court, permitting the matter to be
entertained on an urgent basis, and for further orders that the
property of the close corporation
be declared not to be
bona
vacantia
and that it be re-registered and restored to the
registrar of the CIPC.
[8]
The applicant has made it clear that the only reason he asks for the
order is so that he can continue to take the proceedings
in the trial
on behalf of the close corporation.
[9]
The first, second, fourth and fifth respondents were served (albeit
on very short notice) by electronic mail according
to my first
directive issued and
via
the office of the State Attorney
(also by electronic mail) in a supplementary directive which I
issued. There was no appearance
on their behalf and indeed the
fifth respondent (the CIPC) has acknowledged receipt of the
application and indicated in effect
that it will act on the order of
the court provided that the unique identifier for its purposes (i.e.
the registration number of
the relevant entity concerned) is
indicated so that it can effectively implement the terms of whatever
order is issued by this
court.
[10]
The third
respondent, Blue Label, vociferously opposed the application. Its
concerns relate predominantly to matters that would
concern the other
respondents, the notional interests of third parties and creditors
that would be impacted by the relief sought
without having been
served, and the form of the relief sought. Mr. Schultz
contended on its behalf that it was inappropriate
to apply for final
relief pointing out that an “
order
of restoration
”
should, as a matter of practice, be preceded by a rule
nisi
calling upon all interested parties to show cause why the close
corporation’s registration should be restored.
[4]
In making the latter submission the parties were
ad
idem
that the applicant was intent on relying on the provisions of
section
83
(4) of the
Companies Act in
respect of the order sought by him.
[11]
It also objected to the applicant’s approach on the basis of
urgency despite recognizing the stalemate in the trial
court and Mr.
Cole’s attempts to effectively utilise the opportunity that the
trial judge has given them during recess to
finalise the matter.
The application was advanced on the basis that no costs order would
be asked for and evidently it was
not envisaged that it would be
opposed by any of the respondents since the granting of the proposed
relief, so the applicant’s
argument went, would be in
everyone’s best interest.
[12]
As far as I can tell there is no real objection to the close
corporation’s particulars being reinstated on the
CIPC database
vis-à-vis the third respondent and the applicant being placed
in a position where the proceedings on behalf
of the close
corporation can continue to be taken.
[13]
The question left begging though was what the route was that was
required to be taken in the ordinary course and what
the necessary
requirements are in this respect. I was concerned that this was not
spelt out in the application papers and I especially
required the
assistance of the parties in this connection.
[14]
The
wherewithal and the peculiar procedures lie in the provisions of
sections 82
and
83
of the
Companies Act,
[5
]
read together with regulation 40 of the Companies Regulations
[6]
and the current Practice Note of the CIPC. Mr. Schultz also
referred me to authorities applicable to applications for
“
restoration
”
generally and the requirement that the public at large should be
given an opportunity to oppose relief sought under the
caption of an
application premised on the provisions of
section 83
(4) of the
Companies Act.
[15]
I set out below the full provisions of
section 82
, so that the
various scenarios under which deregistration (brought on a par with
dissolution) can occur, are kept in mind. I have
however italicized
the portions that appear to apply in this instance.
“
82. Dissolution
of companies
and removal from
register
.
—
(1) The Master must
file a certificate of winding up of a company in the prescribed form
when the affairs of the company
have been completely wound up.
2)
Upon receiving a certificate in terms of
subsection
(1)
,
the Commission must—
(
a
) record the
dissolution of the company in the prescribed manner; and
(
b
) remove the
company’s name from the companies register.
3) In
addition to the duty to deregister a company contemplated
in
subsection
(2) (b)
,
the Commission may otherwise remove a company from the companies
register only if
—
(
a
)
the
company
has transferred its registration to a foreign jurisdiction in
terms of
subsection
(5)
,
or—
(i)
has failed to file an annual return in terms of
section
33
for two or more years in succession; and
(ii)
on demand by the Commission, has failed to—
(aa)
give satisfactory reasons for the failure to file the required
annual returns; or
(bb)
show satisfactory cause for the company to remain registered
;
or
(
b
)
the Commission—
(i) has determined in the
prescribed manner that the company appears to have been inactive for
at least seven years, and no person
has demonstrated a reasonable
interest in, or reason for, its continued existence; or
(ii) has received a
request in the prescribed manner and form and has determined that the
company—
(
aa
)
has ceased to carry on business; and
(
bb
)
has no assets or, because of the inadequacy of its assets, there is
no reasonable probability of the company being liquidated.
(4)
If
the Commission deregisters a company as contemplated in
subsection
(3)
,
any interested person may apply in the prescribed manner and form to
the Commission, to reinstate the registration of the company.
(5) A
company may apply to be deregistered upon the transfer of its
registration to a foreign jurisdiction, if—
(
a
)
the shareholders have adopted a special resolution approving such an
application and transfer of registration; and
(
b
)
the company has satisfied the prescribed requirements for doing so.
(6) The
Minister may prescribe criteria and procedural requirements that must
be satisfied by a company before it may
be de-registered in terms
of subsection
(5).”
[16]
Firstly to appreciate the source of the
obligation on an entity to provide annual returns as well as the
costs implication thereby,
it is necessary to set out the provisions
of
section 33
of the
Companies Act:
“
>33. Annual
return.
—
(1) Every
company must file an annual return in the prescribed form with the
prescribed fee, and within the prescribed
period after the end of the
anniversary of the date of its incorporation, including in that
return—
(a)
a
copy of its annual financial statements, if it is required to have
such statements audited in terms of
section 30
(2) or
the regulations contemplated in
section 30
(7);
(aA)
a copy of the company’s securities register as required in
terms of
section 50
;
(aB)
a copy of the register of the disclosure of beneficial interest as
required in terms of
section 56
(7) (aA); and
(b)
any
other prescribed information.
(1A) (a) The
Commission must make the annual return contemplated in
subsection
(1)
available
electronically to any person as prescribed.
(b) The
prescribed requirements referred to in paragraph (a) must be
prescribed after consultation with the Minister
of Finance and the
Financial Intelligence Centre, established by section 2 of
the Financial Intelligence Centre Act,
2001 (Act No. 38 of 2001).
(2) Every
external company must file an annual return in the prescribed form
with the prescribed fee, and within the
prescribed period after the
anniversary of the date on which it was registered in terms
of section 23 (1).
(3) Each
year, in its annual return filed in terms of
subsection
(1)
,
every company must designate a director, employee or other person who
is responsible for the company’s compliance with the
requirements of this Part, and Chapter 3, if it applies to the
company.”
[17]
The entitlement to apply for
reinstatement of the close corporation’s registration despite
its failure to have provided annual
returns is clearly envisaged by
section 82 (4) and is promoted on the CIPC website for all affected
entities who have in similar
circumstances recently found themselves
removed from the database by the systematic annual return final
deregistration process.
The subsection however obviously contemplates
an administrative process, that is an application on the prescribed
form that envisages
the provision of stipulated information and/or
documentation required which the CIPC considers necessary for its
essential purposes.
It is evident that this process will take
its own time.
[18]
Section 83(4)
of the
Companies Act
however
provides that the liquidator of a company or a person with an
interest in it may apply to a court for an order declaring the
dissolution
to have been void (in my view such a situation can hardly
pertain here where the close corporation was deregistered due to
non-submission
of annual returns), or any other order that it is just
and equitable in all the circumstances. I set out the entire
section
so that it is understood contextually:
“
83. Effect
of removal of company from register.
—
(1) A company is dissolved as
of the date its name is removed from the companies register unless
the reason for the removal is that
the company’s registration
has been transferred to a foreign jurisdiction, as contemplated
in
section 82
(5).
(2) The
removal of a company’s name from the companies register does
not affect the liability of any former director
or shareholder of the
company or any other person in respect of any act or omission that
took place before the company was removed
from the register.
(3) Any
liability contemplated in
subsection
(2)
continues
and may be enforced as if the company had not been removed from the
register.
(4) At
any time after a company has been dissolved—
(a)
the liquidator of the company, or other person with an interest in
the company, may apply to a court for an order declaring
the
dissolution to have been void, or any other order that is just and
equitable in the circumstances; and
(b)
if the court declares the dissolution to have been void, any
proceedings may be taken against the company as might have been
taken
if the company had not been dissolved.”
[19]
Next
it is necessary to have regard to provisions of regulation 40 (6) of
the Companies Regulations which pertains to applications
to reinstate
registration of deregistered entities made administratively in terms
of section 82(4). The relevant regulation (which
also highlights the
peculiar process that was adopted against the applicant in this
instance leading up to the de-registration)
[7]
provides as follows:
“
40. Winding-up,
dissolution and de-registration of companies and external companies.
—
See s. 79 to 83— (1) A
resolution by a solvent company to wind up must be filed with Form
CoR 40.1.
(2) If
a company or external company has failed to file an annual return for
two years in succession, as contemplated
in section 82 (3) (a),
the Commission may deliver a demand in Form CoR 40.3 to the company
or external company by registered
post, or other means of verified
communication, requiring the company or external company to provide
the satisfactory information
contemplated in section 82 (3) (a) (ii).
(3) If
a company or external company responds to a demand sent to it in
terms of
sub-regulation
(2)
,
the Commission—
(a)
may deregister the company or external company if the information
received in response to the
demand confirms that the company or
external company is no longer active; or
(b)
if the information received in response to the demand confirms that
the company or external company
is active—
(i)
may require additional information if the information provided is
unsatisfactory in terms of section 82 (3) (a) (ii);
or
(ii)
may issue a compliance notice requiring the company or external
company to file an annual return for every year that it has
failed to
do so; or
(iii)
must issue a compliance certificate, if the information is
satisfactory and the company or external company has filed an annual
return for every year that it had failed to do so.
(4) If
a company or external company fails to respond within 20 business
days after receiving a demand under sub-regulation
2 (a) or
a request or, in responding, fails to provide satisfactory additional
information required in terms of
sub-regulation
(3) (b) (i)
,
the Commission may—
(a)
issue a Notice of Pending Deregistration in Form CoR 40.4 to the
company or external company; and
(b)
deregister the company or external company at any time more than 20
business days after delivering the Notice of Pending Deregistration,
unless during that time the company or external company has filed its
annual return for every year that it had failed to file.
(5) When
any company or external company has been deregistered the books and
papers of the company or external company
may be disposed of in such
way as the Commission may direct.
(6) The
Commission may re-instate a deregistered company or external company
only after it has filed the outstanding
annual returns and paid the
outstanding prescribed fee in respect thereof.
(7) An
application to re-instate a de-registered company or external company
must be made in Form CoR 40.5 and must comply
with such conditions as
the Commission may determine.
(8) A
notice by a company to transfer its registration to a jurisdiction
outside the Republic, as contemplated in section
82 (5), must be
filed in Form CoR 40.2, and must be accompanied by—
(a)
a copy of a special resolution approving the transfer of the
company’s registration to that jurisdiction;
(b)
satisfactory evidence that the company satisfies the requirements to
register in that jurisdiction; and
(c)
The fee set out in Table CR 1
.”
(Emphasis
added)
[20]
Finally the provisions of the relevant
Practice Note, which emphasises the conditions which the Commission
has indicated would be
of application, are set out below:
“
GN
1213 of 3 November 2017: Practice Note (8/2017):
Requirements for
Re-instatement in terms of Regulation
4 (2) (b)
(
Government Gazette No.
41224
)
DEPARTMENT
OF TRADE AND INDUSTRY
Note
that PRACTICE Notice 6 of 2008 is hereby withdrawn on 1 May 2017 and
replace(d) with Practice Note 08 of 2017.
[8]
This
practice note is issued in terms of Regulation 4 (2) (b) of
the Companies Regulations, 2011, and is applicable to
the
re-instatement of companies and close corporations in terms of
Companies Regulation 40 (6) and (7).
In
order to re-instate a company or close corporation from 1 May 2017,
the re-instatement application on a form CoR40.5 must comply
with the
following requirements regardless of the cause or date of
deregistration—
(1)
Certified identity copy of the applicant;
(2)
Certified identity copy of the owner of the customer code;
(3)
Multiple Deed search (deed search of each of the 10 regional deeds
offices);
(4)
Letter from the Department of Public Works, ONLY if the multiple deed
search reflects immovable property;
(5)
Sufficient
documentary
proof indicating that the
company or close corporation was in business or that it had any
outstanding assets or liabilities (e.g
property, intellectual
property rights),
at the time of deregistration
;
(6)
Mandate from the applicant confirming that the customer may submit on
his/her behalf.
CIPC
will only consider re-instating a company or close corporation if it
can provide proof that it was conducting business at the
time of
deregistration, or has any other economic value.
Upon
the successful processing of the re-instatement application, all
outstanding annual returns must be filed in order to complete
the
process. If the close corporation or company fails to file all
outstanding annual returns within 30 business days from date
of the
re-instatement, the company or close corporation will be finally
deregistered again without any further notification
.”
[21]
The
applicant has confirmed that the close corporation owns no immovable
property and that it has not traded since 2017. He
cannot
ignore that it has liabilities, including a judgment debt owing to
Nedbank that was revealed by a director of the third
respondent’s
attorneys acing on its behalf in the present application who
coincidentally happened to know of it.
[9]
[22]
The applicant asserts that the close
corporation has no assets other than the contingent claim being
prosecuted by way of the counterclaim
in the action which might
provide “
economic value
”
for its re-registration so that the applicant can pursue the claim to
finality on its behalf. That is however for
the Commissioner to
decide.
[23]
The applicant was evidently in pursuit
of the close corporation’s interests in the action at the time
of its deregistration
even if only to dispose of the remaining
litigation and for this reason it certainly appears vital that its
registration be reinstated.
[24]
The
only question though is whether an order in final terms should issue
on the papers before me as currently framed and whether
the CIPC’s
requirements for reinstatement can be averted given the unique reason
for the close corporation’s de-registration
in the first
place. In both
ABSA
Bank Limited v Companies and Intellectual Property Commission of
South Africa and others; ABSA Bank Limited v Voigro Investments
19
CC
[10]
and
Nulandis
(Pty) Limited v National Minister of Finance and another
[11]
the respective courts held that where an entity has been deregistered
for failing to file its annual returns, the registration
thereof can
be reinstated only by the Commissioner and only administratively in
terms of
section 82
(4) of the
Companies Act. In
Nulandis
the court found that
section 84
(3) does not provide for restoration
of a company on the companies’ register. It held further
that it cannot order
the reinstatement of registration where the
Commission’s requirements have not been met.
Section 83
(4) provides a remedy to avoid dissolution at the instance of
creditors who hope to avoid dissolution and recover their debts.
[25]
In this instance the applicant appears
to have conflated the two remedies.
[26]
He acknowledged however that he will be obliged to attend to the
outstanding annual returns and pay whatever is due by
way of
prescribed fees, suggesting that he is inclined to go along with what
the Commissioner will expect the close corporation
to do if he wishes
it to be reinstated on the CIPC’s register.
[27]
It is not open to this court to give the
applicant a pass from following the administrative processes that are
applicable.
Even if I were inclined to issue a declarator that
he is on the right track however, reinstatement will not come in time
to promote
a continuation of the trial in the short term. As
commendable as it is for the parties to make the best use of Gwala
AJ’s
availability to conclude the trial in the forthcoming
week, I do not believe that it is possible for the procedure to be
fast tracked
to meet that exigency at the expense of the applicant
first addressing the CIPC’s administrative requirements for its
standards
of record keeping.
[28]
In conclusion I am unable to come to the
applicant’s assistance on the basis requested.
[29]
Further, I am inclined to uphold the
argument advanced on behalf of the third respondent that the
launching of the present application
on an urgent basis with
extremely truncated time limits was self-serving to the applicant and
ill conceived. I agree that no case
was made out that he would not
have been afforded substantial redress in due course, a fundamental
requirement for urgency. The
issues between the parties arising from
the late realisation as to the defunct status of the close
corporation should have been
worked out consensually in the trial
court or ruled upon by the presiding judge. As advised to the parties
when the matter was
argued before me, I felt extremely uncomfortable
by hearing argument in an urgent application literally next door to
my colleague
in respect of issues that should have been ruled upon by
him.
[30]
I need go no further than that in
justifying my order to dismiss the application with a costs order to
follow that result.
[31]
In conclusion I issue the following
order:
1.
The application is dismissed.
2.
The applicant is liable for the costs of
the application.
B
HARTLE
JUDGE
OF THE HIGH COURT
DATE
OF HEARING :
12 April 2024
DATE
OF JUDGMENT :
15 April 2024
Appearances:
For
the applicants: Mr. S Cole instructed by Vaughn Holmes &
Associates, East London (ref. Mr. Armstrong).
For
the first, second, fourth and fifth respondents: Mr. N Schultz
instructed by Bate Chubb & Dickson, East London (ref. Ms
Kopke)
[1]
See
CIPC Notice 3 of 2024, which was foreshadowed by Notice 74 of 2023.
[2]
It
is a trite principle that the effect of the deregistration of a
company is that all its property, including any claims it might
have
against third parties, thereupon vest in the State as
bona
vacantia
.
Thus without any need for an act of cession or anything of the like,
the State has the right, should it so decide, to prosecute
the
action against the defendant. See
Rainbow
Diamonds EDMS Bpk en Andere v Suid-Afrikaanse Nasionale
Lewensassuransiemaatskappy
1984
(3) SA 1
(A) at 10C-12G.
[3]
See
footnote 1. The CIPC website reports a systematic failure on
the part of entities to have lodged annual returns for
a period in
excess of 3 years which, as of 19 January 2024, culminated in a
final annual return deregistration process. Evidently
the CIPC has
as a result since then been inundated with requests by affected
entities for reinstatement. This is reported in
Notice 9 of 2024 on
its website.
[4]
Ex
Parte Sengol Investments (Pty) Ltd
1982
(3) SA 474
(T), which was followed in
Ex
Parte Jacobson: In re Alec Jaconson Holdings
1984
(2) SA 372 (W).
[5]
In
terms of
section 26
of the
Close Corporations Act, No. 69 of 1984
,
sections 81
(1)(f),
81
(3),
82
(3) and (4), and
83
of the
Companies
Act, each
read with the changes required by the context, apply with
respect to the deregistration of a corporation.
[6]
GNR.351
of 26 April 2011: Companies Regulations, 2011 (
Government
Gazette
No.
34239), as amended
[7]
Sub-regulation
(4) by obvious import refers.
[8]
The earlier Practice Note, which evidently attracted more onerous
requirements, provided as follows:
“
In
order to re-instate a company or close corporation from
1
November 2012
, the re-instatement application on an
original signed form CoR40.5 must comply with the following
requirements
regardless
of the
cause or date of deregistration—
(1)
Certified ID copy of the applicant (director/member);
(2)
Certified ID copy of the customer filing the application;
(3)
Deed search (reflecting ownership of immovable property or not);
(4)
Letters from National Treasury and the Department of Public Works,
indicating that such departments have no objection to the
re-instatement, if it has immovable property;
(5)
Advertisement in a local newspaper giving 21 days’ notice of
proposed application for re-instatement;
(6)
Affidavit indicating the reasons for the non-filing of annual
returns, if deregistration was due to non-compliance in relation
to
annual returns;
(7)
Affidavit indicating the reason for the original request for
deregistration, if the company or close corporation itself applied
for deregistration; and
(8)
Sufficient
documentary
proof indicating that the
company or close corporation was in business or that it had any
outstanding assets or liabilities (e.g.
property, intellectual
property rights)
at the time of deregistration
.
Upon
the successful processing of the re-instatement application, all
outstanding annual returns must be filed in order to complete
the
process. If the close corporation or company fails to file all
outstanding annual returns within 30 business days from date
of the
re-instatement, the company or close corporation will be finally
deregistered, without any further notification.
It
should be noted that the CIPC will no longer re-instate a company or
close corporation solely based on a statement that the
company or
close corporation is in business or will be in business in the near
future. The re-instatement process is reserved
for companies and
close corporations that can prove that it was in business at the
time of deregistration, have outstanding assets
and/or liabilities
which must be transferred or liquidated.
For
purposes of determining whether a company or close corporation is in
business, it is sufficient to prove that the company
or close
corporation has been conducting business related activities at the
time of deregistration, e.g. selling and buying of
goods and
services, leasing or renting property or equipment, marketing of
goods and services, and/or an active bank account.
”
[9]
It
further has the contingent liability which is the subject matter of
the trial action and might have incurred costs in prosecuting
its
claim since 2014.
[10]
[2013]
2 All SA 137 (WCC).
[11]
[2013]
JOL 30396
(KZP).