In Reddy v Absa Bank (20096/2014) [2015] ZASCA 83 (28 May 2015), P Reddy the sole member of Missouri Trading Close Corporation (“Missouri”) appealed against a decision of the Kwa-Zulu Natal division of the High Court. The facts are as follows: Missouri was deregistered in terms of s 82(3)(a) of the Companies Act 71 of 2008 (“the Act”) on 29 July 2011 as result of it failing to file its annual returns.  Missouri was then reinstated in terms of s 82(4) of the Act on 18 April 2013.

On 31 May ABSA obtained a provisional winding up order against Missouri, and the final winding up order was made on 27 August 2012. During the winding up procedure and the appointment of liquidators it was discovered by both ABSA and P Reddy that Missouri has been in deregistration since 29 July 2011. P Reddy then attempted to declare the winding up proceedings as invalid, void and of no force and effect due to the fact that the winding up proceedings were executed during deregistration of Missouri. ABSA subsequently opposed P Reddy’s application based on the fact that the reinstatement of Missouri on 18 April 2013 has retrospective effect.

Koen J in the court a quo dismissed P Reddy’s initial application, it was clear that the outcome of this appeal would depend on whether the reinstatement of Missouri retrospectively validated the corporate activities of Missouri during the period of it being in deregistration.

The Supreme Court of Appeal (“SCA”) makes reference to Newlands Surgical Clinic v Peninsula Eye Clinic [2015] ZASCA 25 (20 March 2015). In paragraph 29 of Newlands, Brand JA stated that s 82(4) of the Act ‘has automatic retrospective effect, not only in revesting the company with its property but also in validating its corporate activities during the period of its deregistration’. The SCA therefore stated it is accordingly not necessary to analyse the reasoning of the court a quo. Accordingly, upon Missouri being reinstated, all of its corporate activities during the deregistration process, including the winding up proceedings, were therefore validated retrospectively.

Therefore, it can be safely assumed that should a company or close corporation go into deregistration and is subsequently reinstated in terms of the Act, all of its corporate activities during deregistration will be valid and binding.