Do I Convert my Close Corporation?

Members of Close Corporations are not forced (by the Companies Act, 2008) to change their Close Corporation (CC’s) into Companies.

change CC to a company or not?

Here are a few advantages and disadvantages that will help you to make an informed decision about this much talk about topic:

ADVANTAGES TO CONVERT YOUR CLOSE CORPORATION (CC) TO A PRIVATE COMPANY (PTY) LTD:

1. Ownership (shareholding) of a Company is private and not so easily accessible as for a CC
2. Companies are internationally recognised as a form of entity – Close Corporation are unique to South Africa only
3. Membership of a CC has a limit of 10 members, Companies are unlimited
4. Close Corporations with a Public Interest Score of 350 and more; will also require an Annual Audit

DISADVANTAGES TO CONVERT YOUR CLOSE CORPORATION (CC) TO A PRIVATE COMPANY (PTY) LTD:

1. Annual Return fees for Companies are higher – CC’s only pay R 100 for turnovers less than R 50 million
2. The company (once converted) gets a new registration number – many perceive an “older” registration number as being a better indication of the success of the business
3. The administration of CC’s are simpler as the role of both Directors and Shareholders are combined in the Members of the CC

B Square Financial offer Business Boot Camp Seminars to the public and various training seminars for accounting professionals nationwide. They also consult on company tax matters, offer BEE Verification services and support small businesses on financial matters.