The Deregistration of Dormant Companies in South Africa: A Growing Concern
A trending topic in South Africa right now is the deregistration of dormant companies. Most of these entities were registered during the COVID-19 years—particularly around 2020. Many founders are only now in a position to deal with the consequences of having registered a company and then leaving it dormant, often because they returned to the workplace or found new employment.
From the beginning, I believed that the CIPC, in conjunction with SARS, should have implemented some form of amnesty—making it easier for founders to deregister purely dormant companies (i.e., those that never traded or even opened a bank account). This would have helped clean up the company register while offering relief to citizens—a win-win. But, as is often the case, individuals are left to figure it out themselves. Unfortunately, many end up being exploited in the process. Let me explain why.
The Process (If You’ve Met the Minimum Requirements)
If your company’s Annual Returns and Beneficial Ownership (BO) returns are up to date, deregistration is more straightforward. The next hurdle is with SARS—the founder must appoint themselves as the Registered Representative, which is a process on its own.
Once this is done, the founder (or their tax practitioner) can access SARS eFiling to update all outstanding SARS returns and obtain a Tax Clearance Certificate. This certificate, along with a few other documents, is then submitted via email to CIPC's deregistration department—and then, you wait.
But What If Your Annual Returns Aren’t Up to Date?
This is where it gets messy. If you missed submitting two consecutive Annual Returns, your company would have been automatically deregistered by the CIPC. Ironically, to now formally deregister it, you must first reinstate the company. Yes, you read that right.
You’re required to reinstate a dormant, inactive company—just to deregister it properly. It’s a cycle that doesn’t make much sense, but it is what it is.
Once reinstated, the process continues: register with SARS, update returns, obtain your tax clearance, and submit everything to the CIPC.
What If I Just Leave It?
Some founders throw their hands in the air and say, “Leave it!” But here’s the catch: while I can’t say exactly what consequences you’ll face, unresolved company registrations could pose problems down the line—especially when trying to emigrate or wrap up your estate. If you leave the country, you may be stopped at the gates. If you leave this world, your heirs may inherit a bureaucratic mess.
The Bottom Line
The process is time-consuming, often frustrating, and potentially costly. But it can be managed—and we can help.
Need assistance deregistering your dormant company?
We’ve been around this block many times before. Contact us today.
| Topic | Source Title / Description | Link |
|---|---|---|
| CIPC Deregistration due to non-compliance | CIPC warns non-compliant companies – final deregistrations underway | View |
| Reinstatement process updates | CIPC automates reinstatement applications for companies and close corporations | View |
| Annual Return deregistration risks | Annual Return Deregistration in South Africa: A Silent Yet Serious Threat – VDMA Attorneys | View |
| SARS deregistration of CIT | Government Connect: Deregistration of Income Tax Reference Numbers – SARS | View |
| Reinstatement procedure overview | Reinstatement of Companies and Close Corporations – The Accounting Academy | View |
| Legal overview of deregistration process | Deregistration and Reinstatement of Companies in South Africa – CMS Law | View |
| Community experience & tax clearance tips | Reddit Thread: Deregistering dormant companies – PersonalFinanceZA | View |
| Real-world experience with SARS/CIPC | Reddit Thread: Dormant company deregistration process explained | View |
Disclaimer: The views expressed in this post are my personal opinion and based on experience in the field. It should not be taken as legal or financial advice.