Effect of conversion on legal status schedule 3 amendment of laws a. It is a myth that sars and other creditors that the directorsmembers did not sign surety for can hold a directormember personally liable for the debt of the company or. The new companies act introduced fundamental changes to. Since 1 may 2011, it has been impossible to incorporate a new close corporation in south africa. For guidance, the developers looked to south african company law for the 21st century. Close corporations amendment act 8 of 1994 gg 891 deemed to have come into force on 1 march 1994, except for section 5, 14 and 30. Existing close corporations can elect to continue to exist until deregistered, dissolved or converted into a private company governed under the new companies act. There can be between one and ten members, which must be natural persons. This entry also covers rules by which partnerships and trusts are governed in south africa, together with albeit in less detail cooperatives and sole. Guidelines for corporate law reform may 2004, a policy document developed by the department of. Republic of south africa close corporations act 69 of 1984. In terms of the new companies act, 2008 no new close corporations may be registered, and existing close corporations may convert to a company at no conversion fee up to 30 april 2014. Close corporations can be converted to companies, but companies can no longer be converted to close corporations. Act to provide for the formation, registration incorporation, management, control and liquidation of close corporations.
On 1 may 2011, the companies act 71 of 2008 came into effect, replacing the companies act 1973 and amending the close corporations act of 1984. The provisions of the companies act in respect of business. Act, may form a close corporation and secure its incorporation by complying with the requirements of this act in respect of the registration of its founding statement referred to in section 12. South africa must register with the compensation fund pay annual assessment sec 86 report all accidents and or occupational diseases section. It is important to understand the differences between a private company pty limited and close corporation and the. Limitation of period to incorporate close corporations or convert companies 3. A company is a business organisation which earns income by the production or sale of goods or services.
May 01, 2011 a close corporation is a legal entity with its own persona. The new companies act of 2008 what about close corporations. Close corporations under the close corporations act, 1984 i, kent diederich skelton durr, deputy minister of trade and industry, hereby, on behalf of the minister of trade and industry, by virtue of the powers vested in him by section 10 of the close corporations act, 1984 act 69 of 1984, make the regulations contained in the schedule. Close corporation copy of the ck1 and ck2 documents. To provide for the formation, registration, incorporation, management, control and liquidation of. A close corporation cc is the entity usually chosen for smaller businesses.
Limitation of period to incorporate close corporations or convert. A close corporation is subject to close corporations act 69 of 1984 and the companies act 71 of 2008. Shareholders agreements in close corporations and their. We report, as required in terms of section 621 of the. Protect the close corporation, its members, and the accounting officer by using our new association agreement. A close corporation is registered in terms of the close.
The purpose of this document is to serve as an overview of some of the key effects of the new companies act on both close corporations as well as companies. Many customers want to know what the difference is between a private company pty and a close corporation cc. Here are some of the differences but we suggest that you seek professional advice before deciding. Act 69 of 1984 the act is the provision of a simple, deregulated, decriminalized, inexpensive and flexible. No new close corporations may be formed once that act comes into operation during 2010. Together with the king 111 code and report implemented on 1 march 2010 this is the most fundamental. A close corporation may also be converted into a company. The main provisions of the close corporations act are summarised but this guide does not cover all the administrative details of a close corporation. Pdf on dec 1, 2009, jean du plessis and others published reflections. Ccs can be startups or a mature businesses with a maximum of 10 members. Report of the accounting officer to abc close corporation.
With acts you are guaranteed the latest and most up to date resource for your legislative needs. A close corporation does not have shareholders but members. Republic of south africa close corporations act 69 of 1984 cipc. A corporation shall, in accordance with the code of practice of the south african. Pdf reflections and perspectives on the south african close. In terms of the new companies act, 2008 no new close corporations may be registered, and existing close corporations may convert to a company at no conversion fee up to 30 april 2014 there is no legal obligation to convert a close corporation to a. This page contains information on the close corporations act no 69 of 1984. Close corporation amendment act 8 of 1994 married persons equality act 1 of 1996. Sections 56 and 58 of the act provide that all close corporations are required to keep accounting records and prepare annual financial statements. The terms close corporation and closely held corporation will be considered to be synonymous and will be used interchangeably. In terms of sections 59 and 62 a close corporation must appoint an accounting officer to. Existing close corporations would be administered under the close corporations act, 1984 indefinitely.
Amendment of section 1 of act 69 of 1984, as amended by section 1 of act 38 of 1986. Follow the links below to view and download the guides you require. Section 47 of the close corporations act has been substantially amended and the provisions of the companies act regarding the disqualification of directors will now largely determine who is disqualified from managing a close corporation. As such, it is intended to provide the reader or hisher entity with general information of interest. Close corporation wex us law lii legal information. Member guide south african institute of professional. The south african close corporation under the companies act of 2008. Close corporations act regulations corporate rebels. To have its own persona means that, although it is not an individual person, it can act as if it is a person and certain rights and obligations are conferred to it, seperate from its members, from the moment it is registered. Convert close corporation to a company south african.
Characteristics of close corporation 1 a close corporation is. Convert close corporation to a company if your close corporation cc has grown bigger and you want to compete with bigger companies in the same market, you can convert it into a company at the companies and intellectual property commission cipc. If your close corporation cc has grown bigger and you want to compete with bigger companies in the same market, you can convert it into a company at the companies and intellectual property commission cipc. Understanding the new companies act pwc south africa. May 15, 2017 a close corporation may also be converted into a company. Often business people still have to decide between a private company pty limited and close corporation. Converting your cc into a company will enable you to invite other parties to invest as. A close corporation is also commonly referred to as a closely held corporation. To provide for the formation, registration, incorporation, management, control and liquidation of close corporations. The new companies act introduced fundamental changes to south african company law and corporate actions. Disposal of the whole or greater part of the assets of a.
Jun 07, 2005 the close corporation election is made at the state level, and state laws vary with respect to the eligibility of close corporation status and with respect to the rules governing them. Close corporations act, no 69 of 1984 legal legal and. On this page you will find helpful guides such as the saica handbook volume 4, guide on trading whilst factually insolvent, guide on pro forma financial information and many other guides dealing with specific areas and issues. The companies act, 2008 also prohibits the registration of any new close corporation after 1 may 2011. A close corporation is a juristic person distinct from its members.
The companies act audit requirement and other matters related. See infra chapter ii section b of this document for the concept of close corporation. The act was signed by the president on 8 april 2009, but. With the new companies act, the option of a close corporation has fallen away. The south african close corporations act 69 of 1984 cca is a. Accordingly, we do not imply or express an opinion or any other form of assurance on the annual financial statements. Close corporations act 69 of 1984 application for relief in terms of s 36 and s 49 first respondent, in effect, hijacking close corporation from applicant applicant establishing case in terms of s 49 oppressive conduct by first respondent preventing applicant from adducing evidence of fair value of members interest for.
The companies act audit requirement and other matters. One of the effects of the new companies act of 2008 is the phasing out of close corporations. Acts online provides legislation, including amendments and regulations, in an intuitive, online format. Convert close corporation to a company south african government. Cipro means the companies and intellectual property registration office that constitutes a combined administrative office for the various registration offices established or deemed to be established under the act, the companies act, 1973 act 61 of 1973, the trademarks act. The memorandum of incorporation was introduced in 2008 and has replaced previous legislation that was under the companies act, no 61 of 1973 the old act. We report, as required in terms of section 621 of the close corporations act of south africa, having. The memorandum of association which was the founding document of a company. Close corporations under the close corporations act, 1984. We are the leading resource for freely available legislation in south africa and are used daily by thousands of professionals and industry leaders. Liquidating of a company or close corporation prinsloo. Close corporations act 26 of 1988 og 5658 brought into force after namibian independence on 1 march 1994 by proc.
A shelf close corporation is available for purchase. Disposal of the whole or greater part of the assets. Get adobe pdf reader when the seller of immovable property is a company or a close corporation, and the company or close corporation disposes of the whole or the major part of its assets for instance when a company cc having only one asset being its immovable property sells that property remember that compliance with the following. Guidelines for corporate law reform may 2004, a policy document developed by. Please visit the contemporary gazette page for access to a legal database. Be it enacted by the parliament of the republic of south africa, as follows. South african company law is that body of rules which regulates corporations formed under the companies act. Its main function is to address the accounting requirements, financial reporting standards, the duties of an.
Registration and incorporation of companies in south west africa proclamation, no. A business entity is being bought which is a close corporation. This study focuses mainly on companies and briefly on close corporations although the latter are being phased out by the new south african companies act. Please note that most acts are published in english and another south african official language. There are, however, still hundreds of thousands of close corporations in existence. Characteristics of close corporation 1 a close corporation. Republic of south africa close corporations act 69 of 1984 to provide for the formation, registration, incorporation, management, control and liquidation of close corporations. Close corporations act 26 of 1988 legal assistance centre. Effect of conversion of close corporation into company rohib i tio nf as soc a pne sh exc edi g we. Act 1973 and amending the close corporations act of 1984.
Act means the close corporations act, 1984 act 69 of 1984. These amendments provide for the introduction two important new principles, which will have an effect on the procedures to be followed for the registration of founding statements form ck 1 and amended founding statements forms ck 2 and ck 2a. New association agreement for close corporations memorandum. The close corporations amendment act, 2005, amended the close corporations act, 1984, with effect from 11 january 2006. A close corporation is subject to the close corporations act, 1984 and companies act, 2008. Compensation for occupational injuries and diseases act no. Under the new act, close corporations are treated a lot more like companies 2. The close corporations act, 1984 has been amended as provided for in schedule 5. The purpose of the south african close corporations.
Close corporations act, 1984 cc regulations regulations as amended cipc close corporation administrative companies and intellectual property commission close corporation as defined in the act code of professional conduct code of the south african institute of chartered accountants. Together with the king 111 code and report implemented on. The liquidation of a company or close corporation timed well, can stop sars in their tracks. The close corporation election is made at the state level, and state laws vary with respect to the eligibility of close corporation status and. Converting your cc into a company will enable you to invite other parties to invest as shareholders in. The act, amendment act together with the regulations completely replace the companies act of 1973. Close corporations administrative regulations 326 kb pdf. They are regulated chiefly by the close corporations act.
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