Close Corporations

by | Apr 8, 2016 | Uncategorized | 0 comments

Can I register a new close corporation (CC)?

No, after the implementation of the new Companies Act (Act 71 of 2008) no CC can be registered and no conversions from Companies to CCs will be allowed. However, the existing CCs will be maintained.

How do I go about making amendments to the existing founding statement of a close corporation (i.e. members, accounting officers, financial interest, financial year end, addresses etc)?
What is the registration number of a close corporation?

This can be looked up on the system by using the Name Search function.

What are the addresses of this entity?

Both the postal and the physical address of the business can be derived from the founding statement, or contact the CC.

Can a trading name also be reflected on close corporation forms?

No, a trading name should not be reflected on the close corporation forms.

Can all members of a close corporation be foreigners?

Yes, as long as the registered address of the close corporation and that of the accounting officer is in South Africa. Also important: If no identity document has been issued, a member or a foreign national should provided the following, stating:

  • Date of birth, (also to be filled in on the form in place of the identity number)
  • Reason why no identity documents can be supplied/which nationality they belong to.
  • Expired passports are not accepted.
What happens to a close corporation if the accounting officer insists that he has not consented to his appointment as accounting officer of the close corporation?

This implies that the letter of consent was obtained fraudulently and that appropriate steps can be taken through the office of the Commercial Crime Unit of the South African Police Services. In terms of the Close Corporations Act the corporation should within 14 days appoint another accounting officer. If the office of the accounting officer is vacant for a period of six months or longer, any person who was a member during that period and is aware of the vacancy shall be personally liable for every debt incurred while the vacancy existed. Since the accounting officer did not consent to being appointed, the liability also exists for the period from the fraudulent appointment.

Can a close corporation be registered as a training institution?

Yes. However its mere registration as a close corporation does not confer recognition as a training institute. There are other requirements prescribed by the Department of Education and Training, which must be complied with.

Can a close corporation or a company be a member of a close corporation?

No, only a natural person or a inter vivos trust/testamentary trust can become a member.

Can a company apply for a change of its financial year end?
Yes.  A company may change its financial year end with CIPC which must comply with the following requirements;-

(1)    it must be the first change of the financial year end for a specific year, as  a company may only change its financial year end once during a particular financial year,
(2)    the current financial year must not have ended,
(3)    the new financial year end must be later than the date of the filing of the Form with the CIPC,
(4)    the new financial year end  may not result in a financial year longer than  15 months; and
(5)    the form  must be signed by an active director, company secretary or other authorised person of the company.

In order to determine whether the formcomplies with the above requirements, the day, month and year of the current financial year end, as well as the new financial year end, must be clearly specified on the form.

Can a company file a change in financial year end for a financial year that already ended?

No.  The form  must be filed with the CIPC before the last day of its new proposed financial year end.  Thus if the current financial year end is 28 February 2013 and the new proposed financial year end is 31 December 2012, the form must be filed with the CIPC before 31 December 2012.

How does CIPC calculate the financial year period?

The form  provides for two fields that must be completed, namely the “current financial year end” and the “new financial year end”.  The date provided as the current financial year end is counted as month 12, unless the year was shorter due to a previous change in financial year end, in which case such period is used (example 8 months).  Each month after the indicated current financial year end is then counted together with the number of months in the current financial year until a count of 15 is reached.

Current financial year end:  February 2012 (1 March 2011 to 29 February 2012)
New financial year end:  July 2012Calculation:
February 2012 = month 12
March 2012 = month 13
April 2012 = month 14
May 2012 = month 15
June 2012 = month 16 (exceeds 15 months)
July 2012 = month 17 (exceeds 15 months)
Current financial year end:  February 2012 (1 May 2011 to 29 February 2012)
New financial year end:  July 2012Calculation:
February 2012 = month 10
March 2012 = month 11
April 2012 = month 12
May 2012 = month 13
June 2012 = month 14
July 2012 = month 15
If the original form  was filed in time but queried, will CIPC except and process the corrected form  after the current financial year end?
Yes.  In such cases the corrected form must be accompanied by the original query letter from CIPC that confirms that the original filing occurred in time.
Is blue-ink acceptable when completing documents for registration?

No, black ink or typed. Scanned copies of documents are not accepted.

Who qualifies to act as an accounting officer of a close corporation?

The person should be a member of one of the following Accounting and Auditing professions :

The South African Institute of Chartered Accountants (SAICA)

  • Auditors registered in terms of the provisions of the Auditing Profession Act, 2005(CA)
  • The Southern African Institute of Chartered Secretaries and Administrators (ICSA)
  • The Chartered Institute of Management Accountants (CIMA)
  • The South African Institute of Professional Accountants (SAIPA)
  • THE IAC who have obtained the Diploma in Accountancy (IAC)
  • The Association of Chartered Certified Accountants (ACCA)
  • The Chartered Institute of Business Management (MCIBM)
  • The South African Institute of Business Accountants (SAIBA)
  • The South African Institute of Government Auditors (SAIGA)
Will it be acceptable if my signature appear anywhere on the form except on the prescribed space?

No. To prevent fraud from being committed a person must sign on the prescribed space and the signature must appear on the document before registration. Any signature appearing elsewhere on the document will be regarded as invalid.

How can a member be removed from a close corporation?

A court order will have to be obtained against the member who has to be removed in terms of the CC Act.

Who can sign for a deceased member of a close corporation?

 The CC Act regulates it and is subject to any other arrangement in an association agreement. If the executor cannot transfer the interest accordingly within 28 days after his appointment, he should request the existing member to lodge an amended founding statement appointing him as representative (nomine officii) of the deceased member. The executor can then when appropriate, transfer that interest accordingly. Before the deceased member’s interest can be transferred, consent from the existing member(s) should first be obtained. If consent is not given within 28 days, the executor shall sell the interest to the corporation if there are any other members, to any remaining member proportionally to his interest or as otherwise agreed upon or to any other person who qualifies.

Can a minor be a member of a close corporation?

Yes, if his parent or guardian consent to it. A minor is a person younger than 18 years. Consent is given on the form. The guardian signs on behalf of or with the minor but the details of the minor are recorded. The guardian should also indicate below his signature his full names and relationship to the minor.

What is the difference between liquidation and deregistration process of a close corporation?

Liquidation implies that the business of an entity will cease and that its restoration will only be for the purposes of recovering some outstanding debts and that will not mean an entity can go on with business. Deregistration means that even if the entity has no legal status anymore it can go on with business operations. In both processes members remain severally and jointly liable for any irregularities that may have occurred when they were still acting as such.

How long does the deregistration process take, and why?

The deregistration process can be finalised within 3 months. Other factors like the responses from the South African Receiver of Revenue, The Worksmen’s Compensation Commissioner and the Unemployment Insurance Commissioner affect the period of the finalisation of the process.

Can this process of deregistration be stopped or cancelled?

Yes, the process can be cancelled/stopped by way of a letter even if it is a faxed request. This happens normally if there is property involved or where the legal entity decides to resumes its business operations.

Check Out These Related Posts

No Results Found

The page you requested could not be found. Try refining your search, or use the navigation above to locate the post.



Submit a Comment