MAKE GOOD ON YOUR RE­TURNS

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW -

pur­port­edly taken on be­half of the com­pany or CC is in­valid and has no le­gal ef­fect at the time. Thus, the trans­ac­tion is void. How­ever, should the com­pany or CC be re­in­stated, it could be valid ex post facto. There­fore, should a dereg­is­tered com­pany or CC, for ex­am­ple, as­sign a trade­mark, such as­sign­ment will be null and void while it re­mains dereg­is­tered.

For­tu­nately, the act makes pro­vi­sion for two pos­si­ble av­enues to re­store or re­in­state a dereg­is­tered com­pany or CC, namely:

1. An ap­pli­ca­tion to the High Court “for an or­der declar­ing the dis­so­lu­tion to have been void, or any or­der that is just and eq­ui­table in the cir­cum­stances” in terms of Sec­tion 83(4) of the act; or

2. An ap­pli­ca­tion to the com­mis­sion for the “re­in­state­ment of the reg­is­tra­tion” of the com­pany or CC in terms of Sec­tion 82(4) of the act.

On the suc­cess­ful pro­cess­ing of the re­in­state­ment ap­pli­ca­tion, the sta­tus of the com­pany or CC will be changed to “Re-in­state­ment process”. Only once all out­stand­ing an­nual re­turns have been filed, will the sta­tus change to “In busi­ness” and the process will be com­plete. Once the process is com­plete, the com­pany or CC will be re­in­stated to its for­mer le­gal sta­tus and may then en­force trade­mark rights or as­sign such rights.

This process may seem un­rea­son­able to cred­i­tors of dereg­is­tered com­pa­nies or CCs, see­ing that these doc­u­ments are not read­ily avail­able to them and the for­mer direc­tors of the com­pany or mem­bers of the CC may not wish to co-op­er­ate in view of po­ten­tial per­sonal li­a­bil­ity in terms of the act. How­ever, this route is avail­able to trade­mark pro­pri­etors wish­ing to re­in­state a dereg­is­tered com­pany or CC to as­sign rights to third par­ties or to take ac­tion based on trade­mark in­fringe­ment.

The restora­tion-re­in­state­ment of a com­pany or CC has com­plete ret­ro­spec­tive ef­fect, in terms of which for­mer as­sets re­vert in the com­pany or CC and, equally im­por­tant, full val­i­da­tion of its cor­po­rate ac­tiv­i­ties con­ducted on be­half of the com­pany or CC dur­ing its pe­riod of dereg­is­tra­tion fol­lows. This prin­ci­ple was con­firmed in the re­cent Supreme Court of Ap­peal’s rul­ing of New­lands Sur­gi­cal Clinic v Penin­sula Eye Clinic.

There­fore, in prin­ci­ple, should a di­rec­tor or mem­ber of a dereg­is­tered com­pany or CC as­sign a trade­mark dur­ing the dereg­is­tra­tion pe­riod, the trans­ac­tion will be­come valid ex post facto once the com­pany or CC has been re­stored-re­in­stated.

While the Regis­trar of Trade Marks may ac­cept a “state­ment of case” and af­fi­davit in sup­port of the “trans­fer” of trade­marks from a dereg­is­tered com­pany (deal­ing with the al­leged “in­ten­tion” to trans­fer rights to an­other en­tity be­fore its dereg­is­tra­tion), such an ap­pli­ca­tion may be in­valid, should it not be sup­ported by a writ­ten agree­ment be­tween the dereg­is­tered com­pany or CC and the “new owner”. It is essen­tial to ap­ply for the re­in­state­ment of the dereg­is­tered com­pany be­fore it can en­force or trans­fer rights.

Con­sid­er­ing the se­vere con­se­quences of dereg­is­tra­tion of a com­pany or CC, there is an im­por­tant duty on mem­bers and direc­tors of cor­po­rate en­ti­ties and their at­tor­neysau­di­tors to en­sure that they re­main reg­is­tered at all times, es­pe­cially when en­gag­ing in com­mer­cial trans­ac­tions. The of­fi­cers and agents have an obli­ga­tion to con­firm the sta­tus of the cor­po­rate en­tity on the com­mis­sion data­base be­fore tak­ing any le­gal ac­tion or at­tempt­ing to ac­quire or trans­fer prop­erty, in­clud­ing in­tel­lec­tual prop­erty. How­ever, should it be dis­cov­ered that the cor­po­rate en­tity has been dereg­is­tered, Sec­tions 82(4) and 83(4) of the act pro­vide for the restora­tion-re­in­state­ment of the en­tity to its for­mer le­gal sta­tus.

This process may seem un­rea­son­able to cred­i­tors of dereg­is­tered com­pa­nies or CCs, see­ing that these doc­u­ments are not avail­able to them

Pic­ture: iS­TOCK

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