Company Registrations

Converting Close Corporations To Company Registrations

Are you aware that of May this year the registration of a Close Corporation in South Africa has fallen by the wayside? This means that no new organisations or businesses can be registered as a Close Corporation anymore and that these will be registered in accordance with government regulations as a Company. This affects existing Close Corporations and these will now need to be registered as Companies under the New Companies Act of 2011. But what does this conversion of Close Corporations to company registrations make to the business environment in South Africa.

To understand the impact you need to understand the basic difference between Close Corporations and company registrations. Close Corporations were always referred to as private companies whose shares were held by a small number of people within the organisation. Companies however can register shares on the stock market for the public to invest in their organisation. However, this does not mean that once you convert your Close Corporation to Company status that you must register your shares and your organisation can remain private with a limited amount of shareholders.

There are however a number of requirements that all Close Corporations must fulfil in registering as a company in terms of the new Act. First you will need to register your company name meaning that you will need to research existing company names to ensure yours is unique. You will also need to deregister your current Close Corporation. Next you need to complete a Memorandum of Incorporation. It is advisable to employ the services of a qualified accountant to assist you with the completion of the Memorandum of Incorporations as this can be a rather complex process.

There are certain documents and other requirements that you will need to provide the accountant with for company registrations. You will need to supply the details for and the number of incorporators as well as directors for the company which means certified copies of ID documents for each of these members. Passport documentation and an affidavit to register a company are required for foreign persons within the organisation. The share capital and distribution of these shares will need to be calculated and submitted. The date that the company was incorporated as well as the financial year end of the company needs to be determined.

The list for the content of the Memorandum of Incorporation that should be completed for company registrations goes on so simply contact us for the necessary assistance.

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