Dissolution of companies

Conveyancers and deeds office staff are often confronted with the problem of assets which are still registered or vested in the name of a company which is liquidated and its affairs having been fully wound up in terms of section 419 of the Companies Act 61 of 1973.

In the decision of Rainbow Diamonds (Edms) Bpk en Andere v Suid-Afrikaanse Nasionale Lewensassuransiemaatskappy 1984(3) SA 1 (A), it was held that a company's assets which were not transferred prior to the dissolution of such company accrues to the state as bona vacantia. No court order is required to vest ownership in the State. It was further held that, where an application is brought to set aside the dissolution of a company, notice must be given to the Department of Finance in the event of assets being claims or money. The Treasury will accordingly cede any claims which accrued to the State as bona vacantia to persons entitled to such claims before dissolution.

The question now begging to be answered is how the decision of the said case affects the deeds office practice. For practical purposes I will allude to three specific instances.

Firstly, where a mortgage bond is passed in favour of a company which has been liquidated and its affairs wound up in terms of section 419 of the Companies Act, the conveyancer is confronted with the problem of how to cancel the bond registered in favour of such company when the registered owner wishes to deal with such land. In terms of section 56 of the Deeds Registries Act 47 of 1937, no transfer or mortgaged land shall be attested or executed by the registrar unless the mortgage bond is disposed of (cancelled, released, etc). Who must thus sign the consent to the cancellation or disposal of the bond? It has been established practice that an order of court be obtained for such cancellation. It is the author's contention that, in view of the aforementioned decision, a registrar of deeds may accept a consent for the cancellation of a bond signed by the head of the National Treasury of the Republic of South Africa, provided the indebtedness secured by the bond has been paid in full.

Secondly, where a personal servitude, pre-emptive right or other restrictive condition is registered over land in favour of a company and such company is liquidated and the affairs wound up, the question arises as to how this condition must be dealt with on transfer of the servient tenement. Section 68(1) of the Deeds Registries Act provides that the title deed of the encumbered property can be endorsed as to the lapse of the condition, upon application by the owner or somebody on his behalf, provided proof is lodged as to the lapse of the condition. In terms of section 66 of the Deeds Registries Act and Taute v Van Rensburg 1974 (1) PH D 4 (C), personal servitudes lapse on the death of the holder thereof.

In your own words
"Our South African system is arguably among the best, if not the best, in the world" Daryl Burman Owner of property?

Furthermore in Goliath v Estate Goliath 1937 (312) CPD, a personal servitude in favour of a legal person lapses on dissolution of the company or on expiry of 100 years, whichever occurs first. It is thus clear that the proof which a registrar of deeds will require for the lapse of a personal servitude or restrictive condition is merely proof that the company has been fully wound up in terms of section 419 of the Companies Act. This should be in the form of documentary evidence from the registrar of companies.

Finally, how should immovable property still registered in a liquidated company's name be dealt with if the company's affairs have been fully wound up in terms of section 419 of the Companies Act? Section 16 of the Deeds Registries Act provides inter alia in this regard that, save as provided for in the Deeds Registries Act or any "other law", the ownership of land may be conveyed from one person to another only by means of a deed of transfer. The Afrikaans text of the Act which is the signed version refers to "ander wet". As far as my knowledge goes, there is no other legislative provision which empowers a registrar of deeds to transfer immovable property of a deregistered company into the name of the state due to it becoming bona vacantia.

Section 33 of the Deeds Registries Act provides that any person who has acquired immovable property other than by expropriation, and who is unable to procure the registration thereof in his name in the usual manner, must apply to court for an order authorising the registration in his name of the said property.

It is thus clear that the Rainbow Diamonds decision has brought relief in respect of mortgage bonds, but with regard to immovable property the long and expensive road of the court will have to be followed.

Republished with permission from SA Deeds Journal