Your property investment company has come across the bargain of the century, you sign the Offer to Purchase and want to take the transfer as soon as possible.
It comes to your attention that the selling entity has been deregistered with the Companies and Intellectual Properties commission or CIPC.
This happens where the company or CC fails to submit annual returns for two or more years or has been inactive for at least seven years. This renders the entity unable to sell or transfer the property it owned.
Where you are dealing with a legal entity, it is advisable to ensure that the entity is still registered with the CIPC as it is possible that affected companies themselves might not even be aware of the deregistered status.
Purchasing from a deregistered entity may bring serious delays and complications to the transaction.
There is a solution however as an application may be made to the CIPC to reinstate the registration of either the company or Closed Corporation.
According to the Companies Act, Section 82(4) read with Schedule Three, Part Eight, reinstatement would revive the companies’ rights and obligations. However, where the entity is an owner of the immovable property, prior written consent must also be obtained from the Department of Public Works.
Also required, would be an affidavit stating the reason for non-filing of returns as well as documentary proof that the entity was in business and had assets at the time of deregistration. As can be well imagined, compliance with all of the above requirements can present a great delay and inconvenience to the finalisation of the transaction.
The whole process will be delayed until such time as the company is re-registered, it is advisable to do a proper due diligence before purchasing from a property owning entity.
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