Company Liquidation — questions
Frequently asked questions about company liquidation
Voluntary liquidation of an insolvent company is initiated by a shareholder special resolution, filed at CIPC on Form CoR40.1, after which the Master of the High Court appoints a liquidator to realise assets and pay creditors under sections 349 and 351 of the Companies Act 61 of 1973.
What is the difference between liquidation and deregistration?
Deregistration is for solvent companies with no outstanding liabilities and is a simpler administrative process. Liquidation is required where the company cannot pay its debts, and it involves a liquidator realising assets and paying creditors according to law.
Can I use section 80 of the Companies Act to wind up an insolvent company?
No. Section 80 of the Companies Act 71 of 2008 applies only to solvent companies. An insolvent company must be wound up under sections 349 and 351 of the Companies Act 61 of 1973, applied through Schedule 5 of the 2008 Act.
How long does voluntary liquidation take?
From lodging the special resolution to final distribution typically takes six to eighteen months, depending on the complexity of the company's affairs and how quickly assets can be realised.
What happens to employees when a company is liquidated?
Employment contracts generally terminate on liquidation, and employees rank as preferent or concurrent creditors for amounts owing, applying section 38 of the Insolvency Act 24 of 1936 alongside labour law protections.
Can directors be held personally liable in a liquidation?
Yes. Directors who trade recklessly once insolvency is apparent, or who prefer certain creditors, can face personal liability claims brought by the liquidator, in addition to potential delinquency findings against them.
Who appoints the liquidator?
The Master of the High Court appoints the liquidator, generally after creditors and members have had the opportunity to nominate a candidate at the first meeting of creditors.
Is business rescue better than liquidation?
It depends on whether the underlying business has value that can be saved. Business rescue under Chapter 6 of the Companies Act 71 of 2008 aims to restructure a distressed but viable business, while liquidation is the correct route once the business itself is no longer viable.
What does your fixed fee for liquidation include?
Our fixed fee of R19,500 includes the statutory fees payable to CIPC and the Master, and covers preparing the resolution, the CIPC lodgement and the Master's office filing.
Will creditors get all their money back?
Rarely in full. Creditors are paid in a statutory order of preference, and concurrent creditors, who rank last, commonly recover only a portion of what they are owed once costs and preferent claims are settled.
Do I need a court order to liquidate my own company?
No court order is required for voluntary liquidation of an insolvent company. It proceeds by special resolution and CIPC lodgement. Compulsory liquidation, initiated by a creditor, does require a High Court order.
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Last reviewed: 2026-09-17
Written and reviewed by Dynamic Legal Services (Pty) Ltd, registration 2016/074955/07. Registered with the Department of Water and Sanitation, EAPASA applicant. Offices in Faerie Glen, Pretoria and Sandown, Sandton. Telephone 087 153 6207, support@dlegal.co.za. General information on South African regulatory practice, not advice on a specific matter — the first consultation is free.