Helewix Designing - Closed Corporations vs Companies

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- Close Corporations, - Why form a CC?, - Members of a CC, - Registration Procedure, - Closed Corporations vs Companies

Close Corporations
- The Close Corporation (CC) is a more simplified and flexible business than a company. It is ideally suited to small businesses. The managerial and administrative requirements for Close Corporations are less formal than for companies.
- In contrast to a company, the CC act has been so designed that the ordinary person would be able to draft the papers and register the corporation by her/himself.
- Although a Close Corporation is required to have an Accounting Officer, audited financial statements are not required. The Companies Act prescribes compulsory meetings for Companies, such as annual general meetings. There are no equivilant requirements for Close Corporations. Meetings are usually held between members on an ad hoc basis. The members of CCs do not all have to take an active role in the running of the business. Although in most CCs, the “members” are also the managers of the business.

- Close Corporations are governed by the Close Corporations Act 69 of 1984.

Why form a CC?

Small businesses, whose members have a close relationship and want to start up with simple administration and legal procedures, are advised to register for a CC. Other advantages include:

- A CC is a legal entity
- No annual returns are currently required
- Audited financial statements are not required
- Meetings are not compulsory and can be held on an ad hoc basis
- CCs may become shareholders in other companies
- All members may take part in management
- The proprietor or member is not personally liable for the debts of a CC
- The legal procedures for registration and administration are kept relatively simple.

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 [Procedures to follow.]
- 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 Close Corporation.

Registration Procedure
- Register a new account with Helewix Designing
- Click on the Register new CC link
- Fill out the electronic form
- Make your payment
- And we do the rest

Comparison between a Private Company and a Close Corporation

Private Company	Close Corporation
Juristic Person	Juristic Person
Enjoys Perpetual Succession	Enjoys Perpetual Succession
Can Have A Maximum Of 50 Members	Can Have A Maximum Of 10 Members
Companies Can Be Share Holders	Companies Cannot Hold A Member’s Interest
Comprise Of Directors And Shareholders	Comprise Of Members
Has A Memorandum	Has A Founding Statement
Registered Articles Of Association	Articles Of Association Are Not Required
Compulsory Annual Return To Be Lodged	No Annual Return To Be Lodged
Has A Share Capital	Has Member’s Contributions
Has An Auditor	Has An Accounting Officer
Convenes An Annual General Meeting	Annual General Meeting Not Required
Certificate Of Incorporation	Certificate Of Incorporation
Members Hold Shares	Members Hold Member’s Interest
Can Acquire Its Own Shares Under Certain Circumstances	Can Purchase A Members Interest
Directors Are Responsible For The Day To Day Management Of The Company	Members Are Responsible For The Day To Day Management Of The CC
Register Of Members	No Register Of Members
Limited Liability	Limited Liability
Audited Financial Statements	Financial Statements
Prohibition On A Company To Provide Financial Assistance For The Acquisition Of Its Own Shares	No Prohibition On A CC To Provide Financial Assistance For The Acquistion Of A Member’s Interest