Closing a company: deregistration, liquidation or rescue

Which route are you on?

One test decides most of it: can the company pay everything it owes? If yes, deregistration or solvent winding-up. If no, rescue or insolvent liquidation. Guessing is expensive, because CIPC will not accept a CM100 statement of affairs that does not actually show insolvency, and will tell you to deregister or file a CoR40.1 instead.

Deregistration, for a company that is simply finished

Section 82(3)(b)(ii) lets CIPC deregister a company on request where it has ceased to carry on business and has no assets, or so few assets that there is no reasonable probability of it being liquidated. This is the route for the shelf company that never traded and the small business that closed its doors years ago.

• What CIPC needs: written proof that the company is dormant and has no assets, a tax clearance certificate or other written confirmation from SARS that no tax is outstanding, and a certified copy of the identity document of everyone signing the request.
• How long: the request goes through immediately once the one-time password is verified, but finalisation takes about four months because the statutory notices have to run. Since August 2025 the investigation notice and the final letter go by email only.
• Watch the notices. There is a minimum of 20 business days between the notice of pending deregistration and the final deregistration, which is the window for anyone to object.
• Directors are not off the hook. Section 83(2) says removal from the register does not affect any liability of a former director or shareholder for anything done before the company was removed.
• It can be undone. Reinstatement is form CoR40.5 at R200, and needs proof the company was trading or had assets at the time. Every outstanding annual return, beneficial ownership filing and financial statement is then due within 30 business days.

CIPC also deregisters companies on its own initiative when annual returns are two or more years outstanding. That happens to businesses that are still trading, which is how a live company suddenly cannot open a bank account or sign a contract.

Voluntary liquidation of a solvent company

Section 80 of the Companies Act: the shareholders pass a special resolution, and it is filed with CIPC on form CoR40.1 with the R250 fee. Before filing, the company must deal with security. Either it lodges security with the Master for the payment of its debts within twelve months, or it obtains the Master’s consent to dispense with security, which requires a sworn statement by a director that the company has no debts and a certificate from the auditor, or someone qualified to be one, that the company appears to have no debts.

1. Special resolution by the shareholders, with the notice, agenda and minutes kept, because CIPC wants a certified copy.
2. Security dealt with at the Master, either the bond or the consent to dispense with it.
3. File CoR40.1 with the R250 in your CIPC customer code, certified identity documents of the directors and the filer, and a power of attorney if someone else files. CIPC’s service standard is three working days.
4. The Master appoints a liquidator from the national list of insolvency practitioners, and the company’s status becomes voluntary liquidation. From that moment the directors’ powers pass to the liquidator.
5. The liquidator winds it up, pays the creditors, and finalises the liquidation and distribution account.
6. The Master issues the certificate of completion and CIPC records the company as dissolved. Only a court order can reverse a liquidation, so this is not a decision to test.

CIPC puts the typical duration at six months to two years.

When the company cannot pay

An insolvent voluntary winding-up is done under the old Companies Act of 1973, which still governs insolvent liquidations. The filing is form CM26 with a CM100 statement of affairs and an R80 fee.

• The CM100 is where these filings fail. It has to be completed in full with irrelevant parts struck out, signed before a commissioner of oaths whose details are traceable, and it has to balance: assets must reconcile to the attached lists, and liabilities plus share capital must equal creditors’ assets plus contributories.
• It must actually show insolvency. CIPC states plainly that the CM100 applies only to insolvent liquidations, and that if you cannot show insolvency you should file a CoR40.1 or deregister instead.
• A false statement is an offence under section 214 of the Act.
• Somebody has to fund it. The Master will not appoint a liquidator on a defective statement of affairs, and the costs of the liquidation and the security have to come from somewhere.

Business rescue, and its clocks

Chapter 6 exists for the company that is in trouble but savable. The board resolves to begin rescue if it has reasonable grounds to believe the company is financially distressed and there appears to be a reasonable prospect of rescuing it. Distressed has a definition: reasonably unlikely to pay all debts as they fall due in the next six months, or reasonably likely to become insolvent in the next six months.

• File CoR123.1 with the board resolution. Nothing happens until it is filed, and it cannot be done once liquidation proceedings have started.
• Five business days to publish the notice to every affected person, with a sworn statement of the grounds, and to appoint a practitioner who meets section 138 and has consented in writing.
• Two business days to file the notice of appointment, then five more to publish it. Miss these and the resolution is a nullity, and the company cannot try again for three months without a court’s permission.
• The moratorium starts immediately. Section 133 stops legal proceedings and enforcement against the company or its property without the practitioner’s written consent or the court’s leave.
• Twenty-five business days for the practitioner to publish the rescue plan, unless creditors or the court extend it, then a meeting within ten business days.
• Three months and monthly progress reports to affected persons if the proceedings have not ended.
• The practitioner is paid by tariff: the regulations cap hourly rates including VAT at R1 250 for a small company, R1 500 for a medium one and R2 000 for a large or state-owned company, with daily maximums, and further remuneration can be agreed under section 143.

If the board believes the company is distressed but decides not to start rescue, section 129(7) obliges it to deliver a notice to every affected person setting out the criteria and the reasons for not acting. Skipping that notice is itself a red flag in any later insolvency inquiry.

Where directors get personally caught

• Reckless or fraudulent trading. Section 22 prohibits carrying on business recklessly, with gross negligence, or with intent to defraud creditors. Section 77(3)(b) makes a director liable for the loss caused by acquiescing in it.
• Preferring one creditor. Paying a friendly supplier, or yourself on a loan account, while the company sinks is exactly what a liquidator investigates and can set aside.
• Personal surety. Most bank facilities and landlord leases are signed personally. Liquidation ends the company, not the surety, and section 133(2) only limits enforcement of sureties given by the company.
• Employee money and SARS. Unpaid PAYE, UIF and pension deductions attract personal liability under separate laws and are the first thing a liquidator looks for.
• Deposits taken for work you cannot deliver. This is where reckless trading becomes a criminal complaint rather than a civil one.

Frequently asked questions