Under what circumstances can a private company and/or close corporation be deregistered?

During the registration of a company or close corporation that entity acquires a legal personality. This legal personality comes to an end when the directors and/or members decide to deregister the entity. A company or close corporation can be deregistered in one or more of the following ways:

  • by means of a request from the directors and/or members of the company or close corporation or a similar request by a third party in instances where the entity is no longer trading, has no assets or liabilities and there is no reasonable likelihood that it will be liquidated;
  • by means of a request from the Companies and Intellectual Property Commission (CIPC) in instances where a company or close corporation’s prescribed annual returns have been outstanding for two years or longer;
  • by means of a request from the CIPC when it is found that a company or close corporation has for at least seven years been inactive and no person has demonstrated a reasonable interest in the continued existence of the entity; and
  • in instances where the registration of the company and/or close corporation is transferred to a foreign jurisdiction.

In terms of Article 33 of the Companies Act No. 71 of 2008 (the Act) companies and close corporations are required to submit annual returns to the CIPC. The purpose of such CIPC return is to confirm that:

  • a company or close corporation is in business;
  • a company or close corporation is trading; and
  • a company or close corporation will still be in business and trading in the near future.

If a company or close corporation fails to submit the prescribed CIPC returns for two or more years the CIPC will assume that the entity is inactive and will take the necessary steps to deregister it. The effect of such deregistration will be the following:

  • that the company or close corporation will be deprived of its legal personality and will consequently no longer be able to enter into binding business transactions and agreements;
  • that the company or close corporation may no longer trade under its registered name;
  • that the assets of a deregistered company or close corporation are automatically transferred to the state as bona vacantia;
  • that, should there be existing debts to creditors, these debts are not cancelled but become unenforcable against the entity;
  • that CIPC removes the name of the company or close corporation from the register and the name becomes available for future use;
  • that any summons served on a deregistered company or close corporation cannot be enforced but also that a deregistered company or close corporation may not serve a summons on a debtor that fails to pay.

In an instance where CIPC deregisters a company or close corporation as described above, any interested person, including a third party who has a direct or indirect financial interest in the company or close corporation, may apply to have the deregistration reversed. It is also possible to apply to the court to request CIPC to reverse the deregistration.

When the deregistration of a company or close corporation is reversed, the company or close corporation acquires similar legal personality, and any rights or privileges that existed before deregistration again vests in the company or close corporation. The general effect is that the entity is deemed not to have been deregistered in the first place.

This article is a general information sheet and should not be used or relied upon as 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Tax deductions against salary earnings

Our clients who earn only a salary will know that very few tax deductions are available against salary income for income tax purposes and whereby they may reduce the taxable income derived ultimately from such remunerations. Section 23(m) of the Income Tax Act[1] provides that none of the deductions ordinarily available to taxpayers in terms of section 11 are allowed against salary income, other than for a limited few. We set out these deductions which are available below:

  1. Contributions made by taxpayers to a pension fund, provident fund or retirement annuity fund may be deducted against salary income in accordance with the provisions of section 11F;
  2. To the extent that an individual incurs legal fees, wear and tear-related costs or bad or doubtful debts as part of his/her employment, such expenditure will be deductible.[2] (Although it is possible that a wear and tear-related allowance may be available against a laptop or textbooks acquired as example, it is in our experience practically highly unlikely for legal fees, bad debts and doubtful debts to arise from an employment trade);
  3. Where amounts received, either as a restraint of trade payment or as ordinary remuneration for employment services rendered, are refunded by the employee, those amounts refunded may be legitimately claimed as an income tax deduction;[3] and
  4. Expenses incurred towards rent of, cost of repairs[4] of or expenses in connection with any dwelling, house or domestic premises, those costs may be claimed as deductions, to the extent that it is incurred as part of the individual’s employment and on condition that it does not offend the provisions of section 23(b) which deal with “home office” expenses.

Other than for the above, very few other deductions are available for individual taxpayers earning only a salary. Outside the ambit of section 11, the only other deductions which we typically encounter are medical aid contributions incurred, amounts claimed against travel allowances received or donations made to qualifying public benefit organisations. Of late, investments in section 12J “venture capital companies” may also be claimed as income tax deductions against salary income.

The above limitations only apply to salaried income received from employment though. Where an individual is also engaged in another trade (such as the renting out of an apartment), the above limitations do not apply to that separate trade. In such case, section 23(m) will not make the deductions in section 11 unavailable, although this is only as relates to the separate (rental) trade.

 

[1] No. 58 of 1962.

[2] Sections 11(a), (c), (i) and (j) respectively.

[3] Sections 11(nA) and (nB) respectively.

[4] In terms of section 11(d).

This article is a general information sheet and should not be used or relied upon as 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Korporatiewe Beheer – Naamsveranderinge

Dit staan ʼn maatskappy of beslote korporasie vry om sy naam te verander indien verkies.  Vir maatskappye sal die naamsverandering ʼn spesiale besluit tot gevolg hê wat deur die aandeelhouers van die maatskappy goedgekeur moet word en in die geval van ʼn beslote korporasie moet die lede van die beslote korporasie die naamsverandering goedgekeur.

Voor die naam van die maatskappy of beslote korporasie verander kan word, moet voorgestelde name aan die “Companies and Intellectual Property Commission” (“CIPC”) voorgelê word vir goedkeuring. Daar kan vier opsies van moontlike name verskaf word aan CIPC in volgorde van keuse. Wanneer CIPC tevrede is met ʼn voorgestelde naam, sal hulle dit vir die gebruik van die maatskappy of beslote korporasie reserveer vir ʼn tydperk van 6 maande.  Die reservering kan ná 6 maande vir ʼn verdere tydperk van 1 maand verleng word, maar kan daarna nie verder verleng word nie en sal verval, waarna  ʼn aansoek weer ingedien sal moet word.

Die voorgestelde name van maatskappye en beslote korporasies moet aan verskeie vereistes voldoen soos uiteengesit in Artikel 11 van die Maatskappywet van 2008 (“die Wet”).  Hieronder volg ʼn lys van enkele van hierdie vereistes –

  • die naam mag woorde in enige taal insluit;
  • die naam mag nie dieselfde of verwarrend soortgelyk wees aan –
    • die naam van ʼn ander maatskappy, geregistreerde buitelandse maatskappy, beslote korporasie of koöperasie nie, tensy die maatskappy/beslote korporasie deel uitmaak van ʼn groep wat soortgelyke name gebruik;
    • ʼn naam geregistreer vir die gebruik van ʼn persoon as ʼn besigheidsnaam ingevolge die Wet op Besigheidsname, Wet no. 27 van 1960, nie;
    • ʼn geregistreerde handelsmerk wat aan ʼn ander persoon behoort, of ʼn handelsmerk ten opsigte van ʼn aansoek vir registrasie as ʼn handelsmerk in die Republiek ingedien is nie, of ʼn welbekende handelsmerk soos in Artikel 35 van die Wet op Handelsmerke, Wet no. 194 van 1993, beoog nie;
    • ʼn handelsmerk, woord of uitdrukking waarvan die gebruik ingevolge die Wet op Handelswaremerke, Wet no. 17 van 1941, beperk of beskerm word nie;
  • die naam mag nie valslik impliseer of voorgee, of sodanig wees dat dit ʼn persoon redelikerwys sal mislei om verkeerdelik te glo dat die maatskappy/beslote korporasie –
    • deel is van of geassosieer word met ʼn ander persoon of entiteit nie;
    • ʼn staatsorgaan of ʼn hof is, of deur die staat, ʼn staatsorgaan of ʼn hof bedryf, geborg, gesteun of onderskryf word nie;
    • besit, bestuur of bedryf word deur ʼn persoon of persone wat ʼn bepaalde opvoedkundige benaming het nie;
    • besit, bedryf, geborg, gesteun of onderskryf word deur, of die ondersteuning geniet van enige internasionale organisasie, buitelandse staat, staatshoof, regeringshoof, regering of administrasie van ʼn departement van so ʼn regering of administrasie nie;
  • die naam mag nie ʼn woord, uitdrukking of simbool insluit wat, in isolasie of in samehang met die res van die naam redelikerwys geag kan word as oorlogspropaganda, aanhitsing tot onmiddellike geweld of voorspraak vir haat gebaseer op ras, etnisiteit, geslag of geloof, of aanhitsing om skade te veroorsaak uit te maak nie.

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

Changing banking details with SARS

In order to prevent fraud, the South African Revenue Service (“SARS”) requires confirmation of new or any changes to existing banking details and will only process any refunds due once these new details have been verified. (This often leads to frustration among taxpayers whose refunds are being withheld without notification of banking details that require verification.)

Taxpayers have various options available on how to proceed with this verification process. It can either be done in person at any SARS branch (if the person is not registered on eFiling) or the details can, in limited instances, be updated when completing the person’s income tax return (for both individuals and companies). The banking details can also be updated when requesting a transfer duty refund or by completing the relevant RAV01 form[1] on eFiling. SARS will not allow updates to the SARS system via other forms of communication (e.g. email, fax, post[2] or telephone).

Registering or changing of banking details for customs and excise clients cannot be done via eFiling. These taxpayers need to visit a SARS branch office and submit a completed DA185 application form[3] together with specific supporting documentation.

SARS will only accept as a valid bank account a cheque, savings or transmission account in the name of the relevant taxpayer. Credit card, bond and foreign bank accounts are not accepted.

Persons that are allowed to change banking details only include the relevant taxpayer, a registered representative of that taxpayer (whose details match those on the SARS system) or a registered tax practitioner acting on behalf of the taxpayer. A tax practitioner may not further delegate an employee to act on behalf of the client, but needs to be present him- or herself to request the necessary changes.[4] SARS lists certain exceptional circumstances where banking details may be changed by someone other than the aforementioned persons (for example, in the case of estates or where the taxpayer is a non-resident unable to go to a branch office).

SARS also provides detailed guidance on the supporting documentation what should be provided when changing banking details. Typically, this includes the original ID document of the taxpayer, a certified copy of that document and proof of the residential or business address of the taxpayer. The same is required of the registered representative or tax practitioner if applicable. SARS also requires the taxpayer to present bank statements of the account holder (not older than 3 months) as proof thereof that the bank details provided are correct.

To avoid having to stand in those long SARS queues (potentially, more than once) ask us to assist with this process.

[1] Registration, Amendment and Verification form

[2] This also includes placing documents in the drop-box at a SARS branch.

[3] Registration / Licensing of Customs and Excise

[4] See form ASPOA – Authority on Special Power of Attorney by Tax Practitioner.

This article is a general information sheet and should not be used or relied upon as 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)