Close Corporations under the new Companies Act
Provided by Business Partners Ltd, South Africa's leading investor in SMEs
The new Companies Act of 2008 came into effect on the 1st of May 2011, which also saw the replacement of Cipro with the Companies and Intellectual Property Commission (CIPC).
Take note of the following important aspects with regards to close corporations (CCs):
- No new close corporations can be registered, but new companies can be registered. For more information on New Company registrations you can visit the CIPC website.
- No company conversions to close corporations will be registered.
- A close corporation can convert to a company without any payment in terms of the New Companies Act
- Any future changes to a close corporation would still have to be made in terms of the Close Corporations Act for the following:
When any changes are made to a registered CC, it is necessary to notify the Close Corporation Registration Office. Changes may, for example, relate to membership (new members being added, resigned members, etc.) or changes regarding the accounting officer, or the postal address of the CC.
- Changes must be recorded on the "Amended Founding Statement" - form CK2. The lodgment of this form can be done electronically on the CIPC website.
Members of a CC
- The members of a CC are the registered "owners" and are listed as part of the registration process.
- Any changes in respect of the members of the CC must be notified to the Close Corporation Registration Office in Pretoria
- Non South Africans may be members of a CC, provided that their membership details are authorised by the Registration Office
- A close corporation may have a minimum of one member or a maximum of 10 members. However there are no limitations in respect of the number of employees in a CC
- If the member of a CC is under 18, the registration document must be signed by a parent or guardian, and the capacity in which the parent/guarding is signing must be indicated (for example mother/father/guardian)
Signatures of members
The Close Corporations Act requires that an amended founding statement (CK2) must be signed by or on behalf of every person who:
- a new member being added
- is a current member and any changes are registered
- is a person who ceases to be a member or
- is resigning as a member
If an amended founding statement is signed on behalf of a member, the statement may only be so signed if properly authorised by a written power of attorney. The bearer of the power of attorney must sign amended founding statement in his or her own name and the power of attorney must be lodged with the said amended founding statement.
If the founding statement does not comply with these conditions, the Registrar of Close Corporations will reject it and require an appropriate power of attorney to be lodged.
Source: CIPC Website
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