New requirements to re-instate a company or close corporation

B4A company or close corporation may be deregistered upon request from the company or close corporation or any other third party. A company or close corporation may also be re-instated. However, since the withdrawal of Practice Note 6 of 2008, and its replacement with Notice 08 of 2017, there are new requirements for the re-instatement.

The 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).

What are the new requirements?

Since December 2016, to re-instate a company or close corporation, the re-instatement application on a form CoR40.5 must comply with the following requirements regardless of the cause or date of deregistration:

  • Certified identity copy of the applicant;
  • Certified identity copy of the owner of the customer code;
  • Multiple deed search (deed search of each of the 10 regional deeds offices);
  • Letter from the Department of Public Works, only if the multiple deed search reflects immovable property;
  • Sufficient documentary proof indicating that the company or close corporation was in business or that it had any outstanding assets or liabilities, at the time of deregistration;
  • Mandate from the applicant confirming that the customer may submit on his/her behalf.

When can a company or close corporation be re-instated?

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. Furthermore, upon the successful processing of the re-instatement application, all outstanding annual returns must be filed in order to complete the process, within 30 business days from date of the re-instatement.

Reference:

  • Companies and Intellectual Property Commission | CIPC. Practice Note 08 of 2017, Requirements for re-instatement in terms of Regulations 4(2)(b).

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE). 

Sectional titles: What is the role of the
body corporate?

B3When it comes to sectional title schemes, there is still widespread misunderstanding of even the basics, starting with the body corporate and how it is established, as well as what its functions and powers are. This misunderstanding often gives rise to many problems and disputes in sectional title schemes which could quite easily have been avoided.

What is a sectional title?

A Sectional Title Development Scheme, usually referred to as a “scheme”, provides for separate ownership of a property, by individuals. These schemes fall under the control of the Sectional Titles Act, which came into effect on 1 June 1988.

When you buy a property that’s part of a scheme, you own the inside of the property i.e. the space contained by the inner walls, ceilings & floors of the unit. You are entitled to paint or decorate or undertake alterations as desired, providing such alterations do not infringe on municipal by-laws.

What is the body corporate?

The Body Corporate is the collective name given to all the owners of units in a scheme. Units usually refers to the townhouses or flats in a development. The body corporate comes into existence as soon as the developer of the scheme transfers a unit to a new owner. This means that all registered owners of units in a scheme are members of the Body Corporate.

  1. The Body Corporate controls and runs the Scheme.
  2. Day-to-day administration of the Scheme is vested in trustees who are appointed by the Body Corporate.
  3. Major decisions regarding the Scheme are made by the Body Corporate, usually at the annual general meeting (AGM), or at a special general meeting (SGM). At these meetings, matters, which affect the Scheme, are discussed, budgets are approved, rules can be changed and trustees are appointed. Each member of a Body Corporate is entitled to vote at these meetings, providing that the member is not in arrears with levy payments or in serious breach of the rules.

The Body Corporate exists to manage and administer the land and buildings in the scheme. This means, that the Body Corporate is required to enforce the legislation and rules in the Sectional Titles Act, the Management Rules and the Conduct Rules of the scheme. Amongst their other duties, the Trustees manage the Body Corporate’s funds, enforce the rules and resolve conflict to the best of their ability.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

The benefits of creating
a trust

B2Trusts are well-known to facilitate effective estate planning and continuity planning strategies. That said, setting up a trust – whether an inter vivos (between the living) or a testamentary (created in a will) − should be carefully considered and not just implemented blindly.

The difference between testamentary and inter vivos trusts

  1. A testamentary trust is established when a person (the founder) makes provision for establishing a trust in their will. The trust does not come into existence until the founder dies.
  2. An inter vivos trust is set up between the living. In other words, property is transferred before death to the trust by its founder and managed by the trustees for the benefit of another person or persons.

The death benefits of creating an inter vivos trust exceeds the cost – both in time and money. According to The Estate Duty Act, upon death, a duty is levied against your estate known as estate duty. The nett value of any estate will be determined by deducting all liabilities from your assets of your estate, both real and deemed.

Should you create a testamentary trust, upon death the assets are in your name and will need to be transferred to the trust posthumously, meaning all assets are taken into account when assessing the duty payable.

Advantages

Taking the above into account, here are some benefits you could experience from creating a trust:

  1. Reducing estate duty: Inter vivos trusts can be used to minimise estate duty. No estate duty should be payable on assets owned by the trust as a trust does not die.
  2. Protection against creditors: As the trust’s assets are not owned by the beneficiaries, creditors do not have a claim on the assets. This advantage is especially important for people who could be exposed to potential liability. Companies as well as individuals are able to transfer assets into trusts.
  3. Efficient succession: Since trusts never die, beneficiaries will be able to continue enjoying the assets if one beneficiary were to pass away.

Disadvantages

Despite the advantages, there are also some disadvantages of having a trust. They include the following:

  1. Costs: The costs of setting up a trust can be high. If assets are transferred into the trust, then transfer duty needs to also be paid.
  2. Duties of trustees: Trustees could find themselves personally liable for losses suffered by the trust if it can be proven that they did not act with care, diligence and skill according to Section 9 of the Trust Property Control Act.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

The Competition Commission:
Play fair or else

B1There has been a lot of activity in the commercial sector regarding unfair behaviour according to the Competition Commission. Claims arose that retail giants blocked rivals by means of exclusive mall leases, which essentially impedes competition by preventing smaller operators from entering the market. A complaint also arose that Ster-Kinekor and Nu Metro engaged in market allocation with regards to lease agreements at the V&A Waterfront.

Fortunately, there is a Competition Commission that specifically deals with such cases.

What is the Competition Commission?

The Competition Commission is a statutory body constituted in terms of the Competition Act, No. 89 of 1998. Its purpose is to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the South African economy.

To achieve its purpose, the Commission’s core functions, set out in section 21 of the Act, are to:

Investigate and prosecute restrictive horizontal and vertical practices;

  1. Investigate and prosecute restrictive horizontal and vertical practices;
  2. Investigate and prosecute abuse of dominant positions;
  3. Decide on mergers and acquisitions applications;
  4. Conduct formal inquiries in respect of the general state of competition in a particular market;
  5. Grant or refuse applications for exemption from the application of the Act;
  6. Conduct legislative reviews; and
  7. Develop and communicate advocacy positions on specific competition issues.

How to lodge a complaint with the Commission?

Step 1: Complaining against another party: To begin the procedure officially, you will need to complete and send Form CC1 to the Commission.

Step 2: Joining in a case started by someone else with a similar complaint: After the Commission has received a complaint, it may publish a notice in the Government Gazette and/or other media, inviting any person who believes that the alleged practice has affected, or is affecting, a material interest of that person to file a complaint about the matter.

Step 3: Giving relevant information: The information that needs to be submitted to the Commission must contain the following:

  1. Name of complainant.
  2. Name of the party complained of, the respondent.
  3. A brief description of the conduct giving rise to the complaint.
  4. State whether the conduct is still continuing – if not, the date on which the conduct ceased.
  5. Provide a written submission setting out, in detail, the complainant’s cause for the complaint, how it arose, the parties involved, relevant dates and any other relevant information.
  6. Provide contactable details for the complainant, i.e. postal address, fax number or email address.

Step 4: Protecting information given to the Commission: If the information sent to the Commission contains trade, business or industrial information that belongs to you or a firm, has a particular economic value, and is not generally available to or known by others – and you do not want it revealed to others – you may request that it should be kept confidential by completing.

Step 5: Seeking interim relief: Any person who has lodged a complaint with the Commission concerning a restrictive practice, as explained above, may ask the Competition Tribunal for an interim relief order, whether or not a hearing or investigation has commenced in respect of the alleged prohibited practice.

Step 6: Where the Commission would not act: If the Commission declines to refer a complainant’s case to the Competition Tribunal for prosecution, the complainant may refer, within 10 days after receiving a “Notice of Non-Referral” from the Commission, the matter to the Competition Tribunal at his/her own cost.

Step 7: Withdrawal of a Complaint: In terms of Rule 16 of the Act, at any time during an investigation, a complainant may withdraw a complaint lodged with the Commission.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)