A Close Corporation is more flexible and simplified than a company or Pty (LTD). A Close Corporation is ideally suited to small businesses because it is much simpler to administrate. Managerial and admin requirements for a Close Corporation are much less formal than for companies. In contrast to a company, the Close Corporation act has been designed in a way that an ordinary person would be able to complete the documents for registration of the CC.
Although a Close Corporation is required to appoint an Accounting Officer, audited financial statements are not required at this time. The Companies Act prescribes mandatory meetings for Companies, such as annual general meetings, but this is not a requirement for a Close Corporation. Meetings may be held between members when necessary.
Members of a Close Corporation do not all have to take an active role in the running process of the business. Although, because of the size of most Close Corporations the members are more often than not the managers of the busines and thus play an active role in the day to day running of the CC.
Some facts about a Close Corporation (CC)
A Close Corporation is a legal entity, which means that the law looks at a Close Corporation as an entirety. It is a business entity, as thus usually the members are excluded from financial obligations, unless specifically stipulated otherwise.
Any changes in respect of members of a Close Corporation must be communicated to the Close Corporation Registration Office in Pretoria South Africa. Non South Africans (or foreign nationals) may become members of a Close Corporation, as long as their membership details have been authorised by the Registration Office, by confirming their nationality per letter when registering the Close Corporation. A CC may have anything from one member up to a maximum of ten members at any given time. There are however no limitations as to the number of employees a Close Corporation may have. Where a member of a Close Corporation is under the age of 21, the registration documents have to be signed by either a parent or guardian.
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