One of my bugbears over the years has been the ineffectiveness of the personal liability of members of deregistered close corporations provisions of the Close Corporation Act (Section 26). Such much so that I have written numerous articles/letters about in various publications including the official attorneys magazine, De Rebus.

The gist of my rants were that while when one is faced with a situation where you are the creditor of a close corporation which has ceased trading with no real assets one can apply for the deregistration of the close corporation which renders the members personally liable for the debts of the corporation, that the process is unduly delayed by the Registrar of Close Corporations in its instances of first referring the matter to various government departments, including SARS, before deregistering the close corporation. In some case it was taking up to six years to effect deregistration and effectively rendering the personal liability provisions useless.

However I must say that eventually the Registrar of Close Corporations has got its act together, in that while it still appears to be first referring the deregistration to the various government departments, they have speeded up the entire process. In my last deregistration application, we managed to effect the entire deregistration within two months, which is an incredible improvement on previous applications. It would appear that the other government departments have speeded up their side of things and now creditors can use this as an effective tool against debtors.