6th Jul, 2020
It is no longer possible to register a new close corporation or CC. However, you can carry on trading under a CC that existed before 1 May 2011. But CCs will slowly become extinct and every CC will (at some point) have to be converted into a private company (Pty Ltd).
The Pty Ltd vs CC debate is not a simple one. Pty Ltd vs CC Which one is Best? Many people chose a CC and still prefer a CC because a CC gave them the advantages of incorporation, with lower costs and simpler administration. Virtually all the advantages that a CC had, can now also be obtained by having a private company under the new Companies Act. For example: the annual return fee is the same regardless of whether you have a CC or a company small private companies do not need to be audited or produce audited financial statements small private companies do not need to convene an annual general meeting (AGM) The advantages of being a private company.
Some argue that there are actually more advantages to being a private company rather than a CC: Compete with bigger companies in the same market. Invite other parties to invest as shareholders in your business. Raise more capital to grow your company. Enable companies and CCs to be shareholders in your business.
Benefit by being regulated by a law (the new Companies Act) that is up to date with international best practice. Administer your company electronically. Ensure that the rights, duties and responsibilities of members are clearly set out. Avoid disputes between members.