Close Corporations, or “CC’s”, are legal entities that could formerly be registered in South Africa, and were the ideal choice of trading entity for small businesses and some medium-sized businesses. Owned by “members” as opposed to shareholders, the entity offered flexibility compared to that of private companies, as compliance and legislation was less onerous for Close Corporations than private companies.
Under the new Companies Act of 2008, new registrations of Close Corporations are no longer permitted, but existing CC’s may continue to trade. The new Act makes provisions for converting a CC to a (Pty) Ltd and includes certain provisions that are applicable to CC’s. As a result, CC’s effectively must comply with both the Companies Act of 2008 and the Close Corporations Act of 1984.