Directors and company secretaries need to know that CIPC (the Companies and Intellectual Property Commission) has recommended that all companies – existing and new – ensure that their registered office is recorded as “the address where the administrative business of the company is conducted or, should they have more than one office, their principal office”. The common practice of using “an address for convenience” – normally the auditors’ address – should be discontinued.
This follows a High Court decision to the effect that, due to differences between the old and new Companies Acts, a company’s “registered address” must now be the same as its “principal office”. Previously it was quite possible for a company to have two totally separate addresses, namely a “registered address” and a different “main place of business” (often referred to as the “principal place of business”).
In the case in question, a dispute arose as to which Court had jurisdiction over a company subject to liquidation and business rescue applications. It was in the end found to fall under the sole jurisdiction of the Western Cape High Court because the company’s “central administration”, books and records, banking account etc were all situated in Cape Town.
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What do you do if your company is in “financial distress”? Help is at hand – the new business rescue procedure is aimed at helping such companies to return to commercial viability, or – where full or partial rescue is impossible – to at least secure a better return for creditors and other stakeholders than would result from a liquidation. For this purpose the company is given temporary protection from creditors whilst a business rescue practitioner takes over control from the directors and – where feasible – formulates a business rescue plan.
Directors – your risk!
Bearing in mind that directors who continue to trade when failure looms risk both criminal prosecution and personal liability for company debts, they should take immediate advice on the best course of action in each case. Continue reading