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Liquidation South Africa: How to liquidate a company
CICP LIQUIDATION IN SOUTH AFRICA
In South Africa, a business can be liquidated at the Companies Offices (CIPC). We draft the necessary documentation and after signature lodge it at CIPC. It takes about 3 weeks to get a liquidation letter. Note that we can liquidate a company for you whether your business is in Cape, Town, Johannesburg, Durban, Bloemfontein, Pretoria (Tshwane), Port Elizabeth, Pofadder or anywhere in South Africa. We also handle liquidations for expatriates who need to wind up business in South Africa.
HIGH COURT LIQUIDATION IN SOUTH AFRICA
A South African business can be liquidated in the High Court. An application for the liquidation will be placed on the Court roll and a provisional liquidation order granted on that day. The matter will be postponed to a return date in a minimum of one month. On the return date, if nobody opposed the provisional liquidation order, the court will make the order final on the return date. We are liquidation attorneys working in Cape Town, Johannesburg, Pretoria/Tshwane, Durban, Port Elizabeth, Bloemfontein, Kimberley as well as all other areas of the country.
There are two methods to wind up a Company or a Close Corporation in South Africa:
VOLUNTARY LIQUIDATION IN SOUTH AFRICA
The directors sign a resolution to liquidate the business voluntarily.
It is better to liquidate voluntarily as it gives you the time to manage your affairs and we can assist you with carrying on with business so that you can stay on your feet during this process.
COMPULSORY LIQUIDATION IN SOUTH AFRICA
A creditor or an aggrieved director can bring a forced liquidation against the business. It is a good method to collect an outstanding debt or to place assets under the control of a liquidator. To ensure that they are not lost.
LIQUIDATION WRITES DEBT OFF
The only debt that you remain liable for personally is any debt that you signed surety for in your personal capacity.
You need to deal with this debt. We will explain to you how when you consult with us.
TAKE THE RIGHT ACTION NOW, HERE ARE YOUR OPTIONS:
SARS AND LIQUIDATION
Does your business owe SARS monies and you fear that SARS will persecute you?
A business can still be liquidated even if it owes SARS money.
Tax Administration Act (Act 28 of 2011) (the TAA)
The TAA makes provision that the directors/members, as well as their internal bookkeepers and external auditors, can personally be held liable for the taxes of the business by SARS.
For the last 15 years and after hundreds of liquidations, SARS has not taken legal action against any of our clients in their personal capacities after liquidation. When there is a liquidation, SARS nearly always writes the monies off.
In any case, the directors can also personally sequestrate to get rid of any SARS business debt that SARS may want to claim from the directors.
The only time that SARS definitely does not write the debt of after a liquidation, is if there are taxes due in terms of the Customs and Excise Act, or if they are in the process of a fraud case against the company or the director. The reason for this is that in terms of the Customs and Excise Act, the manager of the premises and not the business, is liable for any customs and excise duties. With regards to a fraud case – fraud is fraud and if a director committed fraud, a liquidation will not make the criminal case go away. Directors must first commit fraud to be charged with fraud. The average business owner does not commit fraud.
Other than that, SARS has never held any of our directors (or members of Close Corporations) personally liable for the taxes of the business.
In any case, as far as VAT is concerned, SARS cannot hold the directors personally liable for the non-payment of VAT. Read our articles here on the Court’s confirmation that directors are not personally liable for VAT. (lyn the articles I am referring to are: Owing VAT to SARS is not a crime and Owing VAT is not theft.
If you don’t liquidate the entity, SARS has ample opportunity to take legal action against directors if they decide to do so
Before liquidation SARS might just decide to take legal action against the directors in their personal capacity in terms of the Tax Administration Act. Leaving that particular door open is not an advisable option. It is therefore so important that you take action to liquidate the entity sooner rather than later if your taxes are in arrears and you can’t catch up.
The sooner you liquidate, the sooner the problem goes away.
Directors and liability after liquidation
NO PERSONAL LIABILITY FOR DIRECTORS AFTER LIQUIDATION OF A COMPANY
*Providing no surety has been signed
Unless a director/member signed surety for the debt of the Close Corporation or the Company, they will not be liable for the debt of the business after liquidation.
Clause 129(7) of the Companies Act (Act 71 of 2008) as amended by the Companies Amendment Act 3 of 2011), states that you have three choices with a Company that is in financial trouble, namely:
Liquidate the insolvent Company (or Close Corporation); or
Place the insolvent Company under business rescue; or
Send a notice to the creditors, staff and trade unions of the business as to why the business is not being liquidated.
If you as the director or member do not do one of the three above when the business experiences financial problems, you as the director or member can be held personally liable for the debt of the business, even if you did not sign surety for the debt of the business.
THEREFORE THERE IS AN OBLIGATION ON MEMBERS/DIRECTORS TO LIQUIDATE THE BUSINESS SOONER RATHER THAN LATER
HOW DO YOU KNOW YOUR LIQUIDATION APPLICATION WILL BE SUCCESSFUL?
HOW TO APPLY FOR LIQUIDATION
We prepare and lodge the application and we also assist you with staying on your feet and continuing with business if you wish to do so.
It is possible to buy assets back and it is possible to finish jobs where you have already received deposits.
We are liquidation lawyers and manage liquidations all over South Africa. We have clients in Johannesburg, Cape Town, Pretoria/Tshwane, Durban, Port Elizabeth, Somerset West, East London, Kimberley, Bloemfontein and many other cities and villages in the country. We also have clients abroad who are expats and need our help with liquidating companies they have left behind. We can help you too.
Tel- 010 286 1966
Fax- 012 663 5627
Cell- 072 855 8106
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