The future of Close Corporations

Pretoria, Thursday, 10 March 2011 - Registration of Close Corporations (CC) will cease under the new Companies Act which comes into effect on 1 April 2011; however currently registered Close Corporations will still be maintained.

The new Companies Act provides for the continued existence of currently registered Close Corporations (CC), but negates any further registrations of new CCs. All existing CCs registered with the Companies and Intellectual Property Registration Office (CIPRO) as of the effective date of the new Act (1 April) will continue to exist, and all amendments to CCs will be accommodated by the new Companies Intellectual Property Commission (CIPC) which is scheduled to be implemented at the same time that the act is put into effect.

Conversion to private company

The new Act does not force Close Corporations to convert into companies, however due to simplified legislation, reduction of regulatory burden, and simplicity of formation - this is encouraged. The Private Company will replace the CC as the preferred vehicle for small and medium businesses under the new Act.

The Companies and Intellectual Property Commission

As provided for in the New Companies Act 71 of 2008, CIPRO and the Office of Companies and Intellectual Property Enforcement (OCIPE) will join to form a Commission on the 1^st of April 2011. The Commission will be known as the Companies and Intellectual Property Commission (CIPC).

The Commission will perform the following functions: Registration of Companies, Co-operatives and Intellectual Property rights, public education and awareness, enforcement, research, legal advisory services and stakeholder management.   

Categories of companies

The new Companies Act provides for two categories of companies:

• Non profit companies - which are the successor to Companies limited by guarantee and section 21 companies; and
  • For profit companies
  • private companies;
  • public companies;
  • personal liability companies;
  • state-owned companies.

For more information, customers can visit the CIPRO website on www.cipro.gov.za, the dti website on www.thedti.gov.za or call the Call Centre on 0861 843 384.

Statement issued by Dr Elsabé Conradie, CIPRO, March 10 2011

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