17.3 DOMESTICATED COMPANIES
A domesticated company is defined as a foreign company whose registration has been transferred to the Republic in terms of s 13(5) to 13(11). The Act makes provision for the fact that when the transfer takes place the company exists as a company in terms of this Act as if it had been originally incorporated under the Act.
In terms of s 13 (6) there are some severe restrictions which would prevent a foreign company from registering in the Republic.
a. The law of the foreign country must permit such a transfer, and the company in question must have complied with all the requirements of the transfer.
b. The transfer must be approved by its shareholders in accordance with the law of its jurisdiction in which it is registered, if that law imposes such a requirement, or by the equivalent of a special resolution in terms of this act if the law of the jurisdiction of which it is registered does not require such shareholder approval.
c. The whole or greater portion of its assets and undertaking are within the Republic other than any assets and undertaking of any subsidiary that is incorporated outside the Republic.
d. The majority of its shareholders are residents of the Republic.
e. The majority of its directors are citizens of the Republic.
f. If immediately following the transfer or registration it will satisfy the solvency and liquidity test and no longer be registered in another jurisdiction.
The application to transfer must be accompanied by a copy of a shareholder’s approval referred in b above together with satisfactory evidence that it satisfies the remainder of the requirements.
Section 13(7) contains additional restrictions
· If there are bearer shares held by the company i.e. ownership resides with the holder of the share the company may not transfer its registration.
· If it is in liquidation.
· If its property has been placed under a receivership or management by court or otherwise.
· If there are any plans that are similar to a business rescue or there is some kind of compromise or arrangements with creditors.
· If an application has been made to court in any jurisdiction and has not been disposed of.
· If the company is in liquidation or declared insolvent or there is a compromise arrangement between it and creditors or a receiver has been appointed to administer its properties.
Once the required registration details have been taken care of in terms of s 13 the CIPC must issue a registration certificate. The CIPC must also sign a unique registration number to the company and must be entered into the company register. Regulation 17 sets out the requirements for domestication of foreign companies including the documentation that must accompany any application under s 13(5).
Regulation 17(13) permits a foreign company to apply to the tribunal to review a conditional registration of refusal of registration by the CIPC.
The registration of a domesticated company in terms of terms if s 13(5) to (9)
· Does not establish a new juristic person, or prejudice or affect the identity of a juristic person constituted by that domesticated company or its continuality as a juristic person.
· Prejudice the rights of any person or affect the property rights, liabilities or obligations of that juristic person.
· Or render ineffective illegal proceedings by that jurisdiction by that person.