CC Registration

What is a Close Corporation?

A close corporation (CC) is similar to a private company (Pty). It is a legal entity with its own legal personality and perpetual succession and must register as a taxpayer in its own right. A CC has no share capital and therefore no shareholders. The owners of a CC are the members of the CC.

For more info on Close Corporations, view some of the main questions most business owners ask below.

Close Corporations (CC) and Private Companies (Pty) are legal entities and have limited liability of members or shareholders.

CCs are often the type of company chosen and preferred by small business owners. CCs have members – up to a maximum of 10 natural people. The number of employees, however, is not limited. An accounting officer or bookkeeper needs to be appointed, but generally the rules for governance of a CC are slightly more relaxed. For example, CCs do not need to convene an AGM.

Private Companies (Pty) consist of directors and shareholders (up to 50 shareholders). Companies can also qualify as shareholders. The shareholders own the company and appoint directors (which may be shareholders) to run it for them. There cannot be more than 50 shareholders and shares may not be offered to the general public. A private company needs the services of an auditor or chartered accountant although there are some exclusions. Also, Private Companies need to hold an AGM and the cost to register is higher.

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.

Here is a list of a few of the benefits of having a CC:

1. There are fewer formalities which must be followed in the close corporation structure.
2. The shareholders in a close corporation have greater control of share sales.
3. There are strong liability protections offered for shareholders.
4. There is more freedom of management.
5. There is freedom in financial structuring.

Yes, you can convert it into a company at the Companies and Intellectual Property Commission (CIPC). To read more on CC to Pty Conversion, Click Here.