, LRM3601 Assignment 2
Semester 2 2025
DUE 5 September 2025
Use this document as a guide and for references to answer your assignment
The Status of Contracts Entered into While a Company Is Deregistered
under the Companies Act 71 of 2008
1. Introduction
The deregistration and subsequent reinstatement of companies raise difficult and
recurring questions in South African company law. The key issue at stake in this
problem is the validity and enforceability of contracts entered into during the
period of deregistration.
In the case of Sand-Ton Computer Systems (Pty) Ltd (‘Sand-Ton’), the
company was deregistered by the Companies and Intellectual Property Commission
(“the Commission”) for failure to file annual returns in accordance with section 33
of the Companies Act 71 of 2008. During its period of deregistration, Sand-Ton
concluded a contract with the Department of Education (“the Department”) to
supply computers. Subsequently, Sand-Ton was reinstated to the register, but the
Department refused to honour its contractual obligations, arguing that Sand-Ton
was not in existence at the time of contract formation, rendering the contract
invalid.
This scenario requires careful analysis of:
The legal consequences of deregistration of a company.
The effect of reinstatement on contracts or proceedings conducted during
the period of deregistration.
The adequacy of the legislative framework under the Companies Act 71 of
2008.
Guidance from case law and academic commentary.
This discussion proceeds by first setting out the statutory framework (section 33,
section 82, section 83, and section 82(4)–(6)), followed by a review of the
jurisprudence and academic commentary, and finally applying the principles to the
facts.
Semester 2 2025
DUE 5 September 2025
Use this document as a guide and for references to answer your assignment
The Status of Contracts Entered into While a Company Is Deregistered
under the Companies Act 71 of 2008
1. Introduction
The deregistration and subsequent reinstatement of companies raise difficult and
recurring questions in South African company law. The key issue at stake in this
problem is the validity and enforceability of contracts entered into during the
period of deregistration.
In the case of Sand-Ton Computer Systems (Pty) Ltd (‘Sand-Ton’), the
company was deregistered by the Companies and Intellectual Property Commission
(“the Commission”) for failure to file annual returns in accordance with section 33
of the Companies Act 71 of 2008. During its period of deregistration, Sand-Ton
concluded a contract with the Department of Education (“the Department”) to
supply computers. Subsequently, Sand-Ton was reinstated to the register, but the
Department refused to honour its contractual obligations, arguing that Sand-Ton
was not in existence at the time of contract formation, rendering the contract
invalid.
This scenario requires careful analysis of:
The legal consequences of deregistration of a company.
The effect of reinstatement on contracts or proceedings conducted during
the period of deregistration.
The adequacy of the legislative framework under the Companies Act 71 of
2008.
Guidance from case law and academic commentary.
This discussion proceeds by first setting out the statutory framework (section 33,
section 82, section 83, and section 82(4)–(6)), followed by a review of the
jurisprudence and academic commentary, and finally applying the principles to the
facts.
