Since the promulgation of the Companies Act 2008 (the Act),
there has been a lack of clarity regarding the effect of the
reinstatement of a deregistered company in terms of the Act. In
particular, it was not certain whether the reinstatement of a
deregistered company under the Act automatically retrospectively
validates the corporate actions of the relevant company during
deregistration, or whether a court order is required for these
purposes. The different divisions of the High Court have made
various decisions in this regard, ranging from total
retrospectivity in some instances to partial retrospectivity and in
certain instances no retrospectivity.
In Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic
(Pty) Ltd. 2015 (4) SA 34 (SCA), the Supreme Court of
Appeals (SCA) considered the effects of reinstating a company under
A company would generally be deregistered after being wound up,
or as a result of being liquidated, but may also be deregistered
for failing to pay its annual returns to the Companies and
Intellectual Property Commission (CIPC). The deregistration of a
company puts an end to the existence of that company, and all
subsequent actions purportedly taken on behalf of a deregistered
company are consequently void and of no effect. The property of the
deregistered company passes automatically to the State.
If a company is deregistered, an interested third party may
apply to the CIPC for the reinstatement of that company in terms of
section 82(4) of the Act.
In the Newlands Surgical Clinic case, Newlands Surgical
Clinic (the Newlands Clinic) and Peninsula Eye Clinic (the
Peninsula Clinic) were parties to arbitration proceedings, in terms
of which an award was made in favour of the Peninsula Clinic. It
subsequently came to the Peninsula Clinic's attention that the
Newlands Clinic had been deregistered prior to the commencement of
the arbitration proceedings. Accordingly, the arbitration
proceedings and related court proceedings were invalidated by the
deregistration of the Newlands Clinic.
The Peninsula Clinic made a successful application for the
reinstatement of the Newlands Clinic in terms of the Act. However,
it was not clear whether the successful reinstatement validated the
arbitration proceedings and related court proceedings that took
place during the period of deregistration.
Accordingly, the Peninsula Clinic applied to the High Court for
an order declaring that the reinstatement of the Newlands Clinic by
the CIPC operates retrospectively so as to validate actions
performed on behalf of the company during its period of
Findings of the SCA
The SCA found that the reinstatement of a company by the CIPC
under the Act automatically validates all company actions with
retrospective effect. Therefore, the arbitration proceedings and
related court proceedings against Newlands Clinic during the period
of deregistration, together with the awards and orders made under
those proceedings, were automatically validated when Newlands
Clinic was reinstated as a company.
The effect of this judgment is that third parties are not
required to make an application to court for the retrospective
validation of corporate actions by a company whilst such a company
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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