Close Corporation South Africa – A close corporation (or CC) is a type of South African legal entity which was usually chosen for smaller businesses. Under the new Companies Act of 2008, close corporations can no longer be registered and they will be phased out over time.

Close Corporation under South African Law

The Close Corporation is the simplest company type in South Africa. This article explains its basic structure.
The company type Close Corporation (hereinafter referred to as CC) is from an international perspective a rare type of a simplified limited liability company. It was introduced in 1984 and is still today the most popular legal form to conduct business within South Africa as well as over the borders. It represents a cheap alternative to the established limited liability companies with share capital, being the Private Company and the Public Company under the Companies Act. Though it will probably phased out under the Companies Act, it will still be valid for the next 10 years.

What is a close corporation?

A close corporation is a legal entity much like a company. A CC is run and administered by its members, who must be natural persons (i.e. not other legal entities). A close corporation’s members are like a company’s shareholders. In the past, the members of a close corporation usually chose the entity because it was cheaper and easier to administer than a private company ((Pty) Ltd). The business could be mature or a start-up, but it could only have a maximum of 10 members. In the past, companies used to have many regulations and requirements that made the entity difficult for small businesses. These extra requirements made the close corporation a much more attractive business form.

Why small businesses need websites

Close Corporation South Africa – Under the new Companies Act

The new Companies Act does not allow new close corporations to be registered anymore, but close corporations that already exist are still valid entities. If you are looking for an entity to govern your new business, you will need to register a company. The distinction between a CC and a company is being phased out, and private companies now offer many of the same benefits (and sometimes more) as old close corporations. It is easy to convert a CC to a company, and many larger close corporations have done so. In future, there will simply be small (old CCs and private companies) and large companies.

Incorporation

A CC has minimum one but maximum 10 members, being the owners of the company, due to the fact that this company type should be used for small scale entrepreneurs and business starters. Only natural persons can be members of a CC, a legal entity, no matter where incorporated, cannot be member of a CC. The Incorporation of a CC is initiated with the founding statement of the members. It contains the basic layout for the CC and can be amended later amongst the members by concluding an association agreement that is not accessible for any non-member.

Close Corporation South Africa - Strydom Conglomerate

Close Corporation South Africa – Name

A few weeks before the founding statement is lodged with the registrar of companies, an application for name reservation has to be made. Once the name is approved this reservation is valid for two months during which the founding statement has to reach the registrar. The name has to end on the letters ‘CC’ or ‘BK’, being the Afrikaans translation , while it is possible to check six name alternatives at the same time on the same form. For selecting a proper name the standard rules for naming a company apply. Besides the names of all members the name of the company has to feature on all business correspondence, s41 Close Corporations Act.

Representation

The rules of representation usually are fixed in the association agreement. The main difference between the CC and other types of company is, that it has no registered director, only a registered accounting office, who is not usually acting to represent the CC but rather to receive all relevant and official correspondence. In daily business the CC is usually represented by its members as long as they are not legally hindered to do so. Restrictions in representation amongst members are only valid if made known to the third party in question.

Liability

Due to the fact that the CC has got its own legal persona, the company is responsible for all its statutory as well as contractual and delictual liabilities. Under exceptional circumstances certain members may attract liability if behaving in contradiction to the law.

Liquidation and winding up

A CC may be resolved out of various reasons and by different parties. Beside the voluntary liquidation of a solvent CC based on an unanimous resolution , 50% of the members may lodge an application to the court to liquidate the CC. Other reasons are in the framework of the common law, such as insolvency, long-term dormancy or loass of all business. Finally a CC ceases to exist if converted into a Private or Public Company.

Close Corporation South Africa

Financials and Audit

Other than for the Private Company the CC does not need to prepare audited year end balance sheets. A simple Overview of income and expenditures is sufficient to be submitted to the Receiver of Revenue (Taxman).

In essence the CC is a cheap and efficient company for business start-ups, small businesses and property holdings as long as this corporate form exists.

South African company law

With the new Companies Act, the option of a Close Corporation has FALLEN AWAY. Many customers want to know what the difference is between a Private Company (Pty) and a Close Corporation (CC). Both have certain benefits, but also drawbacks. Here are some of the differences but we suggest that you seek professional advice before deciding…

With the new Companies Act, the option of a Close Corporation has FALLEN AWAY. Many customers want to know what the difference is between a Private Company (Pty) and a Close Corporation (CC). Both have certain benefits, but also drawbacks. Here are some of the differences but we suggest that you seek professional advice before deciding…

Close Corporation has FALLEN AWAY

Both Close Corporations (CC) and Private Companies (Pty) count as a legal entities and have limited liability of members or shareholders.

Close Corporations are often the type of company chosen 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/ 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 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/ chartered accountant although there are some exclusions.  Also, Private Companies need to hold an AGM and the cost to register is higher.

close corporation is generally a smaller corporation that elects close corporation status and is therefore entitled to operate without the strict formalities normally required in the operation of standard corporations. Many small-business owners find this benefit invaluable.

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Close Corporation Act South Africa

Republic of South Africa Close Corporations Act 69 of 1984

To provide for the formation, registration, incorporation, management, control and liquidation of
close corporations; and for matters connected therewith.
________________________
Assented to 19 June 1984
Date of Commencement: 1 January 1985
_______________________
BE IT ENACTED by the State President and the Parliament of the Republic of South Africa, as
follows:-
Definitions
1.(1) In this Act, unless the context otherwise indicates-
‘accounting records’, in relation to a corporation, includes accounts, deeds, writings and
such other documents as may be prescribed;
‘association agreement’, in relation to any corporation or the members thereof, means
an association agreement which has been entered into in terms of section 44 by the
members of the corporation, including any such agreement which has been altered or
added to as contemplated in subsection (3) of section 49, or an agreement which has
replaced it as contemplated in that subsection;
‘Companies Act’ means the Companies Act, 1973 (Act 61 of 1973);
‘company’ means a company as defined in section 1 (1) of the Companies Act;
‘corporation’ means a close corporation referred to in section 2 (1) which has been
registered under Part III of this Act;
‘Court’, in relation to-
(a) any corporation, means any court having jurisdiction in terms of section 7; and
(b) any offence under this Act, means any court having jurisdiction in respect of that
offence;
[Definition of ‘Court’ substituted by s. 1 (a) of Act 26 of 1997.]
‘deregistration’, in relation to a corporation, means the cancellation of the registration of
the corporation’s founding statement; and ‘deregister’ has a corresponding meaning;
‘director’, in relation to a company, means a director as defined in section 1 (1) of the
Companies Act;
‘electronic’ includes created, recorded, transmitted or stored in digital or other intangible
form of electronic, optical or similar means;
[Definition of ‘electronic’ inserted by s. 1 (a) of Act 22 of 2001.]
‘founding statement’, in relation to a corporation, means the founding statement of the
corporation referred to in section 12 which has been registered in terms of section 13,
and also any amended founding statement in respect of that corporation registered in
terms of section 15 (1) or (2);
‘holding company’, in relation to a company, means a holding company as defined in
section 1 (1) of the Companies Act;
‘Master’ means the Master of the Supreme Court, and in relation to-
(a) a corporation in respect of which application is made to a Court for a winding-up
order, the Master having jurisdiction in the area of jurisdiction of the Court where
application is made;
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(b) a corporation being wound up by a Court, the Master having jurisdiction in the area
of jurisdiction of the Court which issued the winding-up order;
(c) a corporation other than a corporation referred to in paragraph (a) or (b), the
Master having jurisdiction in the area in which the registered office of that
corporation is situated;
‘member’, in relation to a corporation, means a person qualified for membership of a
corporation in terms of section 29 and designated as a member in a founding statement
of the corporation, including, subject to the provisions of this Act, a trustee, administrator,
executor or curator, or other legal representative, referred to in paragraph (c) of
subsection (2) of section 29, in respect of any such person who is insolvent, deceased,
mentally disordered or otherwise incapable or incompetent to manage his affairs, but
excluding any such person who has in terms of this Act ceased to be a member;
‘member’s interest’ or ‘interest’, in relation to a member of a corporation, means the
interest of the member in the corporation expressed in accordance with section 12 (e) as
a percentage in the founding statement of the corporation;
‘Minister’, in relation to any matter to be dealt with in the office of a Master in connection
with the winding-up of a corporation, means the Minister of Justice and, in relation to any
other matter, means the Minister of Trade and Industry;
[Definition of ‘Minister’ substituted by s. 1 of Act 38 of 1986.]
‘name’, in relation to a corporation, means the full registered name of that corporation, or
a registered literal translation of that name into any one other official language of the
Republic, or a registered shortened form of that name or any such translation thereof,
referred to in section 12(a);
[Definition of ‘name’ inserted by s . 1 (b) of Act 26 of 1997.]
‘officer’, in relation to-
(a) a corporation, means any manager or secretary thereof, whether or not such
manager or secretary is also a member of the corporation;
(b) a company, means an officer as defined in section 1 (1) of the Companies Act;
‘prescribe’ means prescribe by regulation; and ‘prescribed’ has a corresponding
meaning;
‘Registrar’ means the Registrar of Close Corporations referred to in section 4;
‘registration’, in relation to-
(a) any corporation, means the registration of the founding statement of the
corporation referred to in section 12;
(b) the founding statement or any amended founding statement of a corporation,
means the registration thereof in terms of section 13 or section 15 (1) or (2), as the
case may be;
(c) any matter in connection with a corporation, or any member thereof, particulars of
which are specified in terms of this Act in a founding statement of the corporation,
means the specifying of particulars thereof in any such statement; and
(d) any other matter in connection with which any duty or power in relation to the
registration thereof is in terms of this Act imposed on or granted to the Registrar,
means the registration thereof by him in accordance with any applicable provision
of this Act; and ‘registered’ has a corresponding meaning;
‘Registration Office’ means the Close Corporations Registration Office referred to in
section 3;
‘regulation’ means any regulation made under this Act;
‘subsidiary’, in relation to a company, means a subsidiary as defined in section 1 (1) of
the Companies Act;
‘this Act’ includes the regulations.
(2) Subject to subsection (3), the performance of the acts denoted by any of the following
words or expressions, namely-
(a) ‘give notice’;
(b) ‘issue, distribute, deliver or cause it to be done’;
(c) ‘lodge’;
(d) ‘lodge in the prescribed form’;
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(e) ‘lodge in the prescribed manner’;
(f) ‘lodge under cover of’;
(g) ‘notify in the prescribed form’;
(h) ‘payment of prescribed fee’;
(i) ‘publish’,
(j) ‘registration’; and
(k) ‘written application’,
and any word or expression derived therefrom, must be regarded as including all
electronic methods of performing such acts.
[Sub-s. (2) added by s. 1 (b) of Act 22 of 2001.]
(3) (a) Subsection (2) shall not apply to a section of this Act until the Registrar publishes a
notice in the Gazette making it applicable to that section.
(b) Different dates may be determined by the Registrar in respect of the application of
subsection (2) to different sections of this Act.
[Sub-s. (3) added by s. 1 (b) of Act 22 of 2001.]
PART I
FORMATION AND JURISTIC PERSONALITY OF CLOSE CORPORATIONS (s 2)
Formation and juristic personality of close corporations
2.(1) Any one or more persons, not exceeding ten, who qualify for membership of a close
corporation in terms of this Act, may form a close corporation and secure its incorporation
by complying with the requirements of this Act in respect of the registration of its founding
statement referred to in section 12.
(2) A corporation formed in accordance with the provisions of this Act is on registration in
terms of those provisions a juristic person and continues, subject to the provisions of this
Act, to exist as a juristic person notwithstanding changes in its membership until it is in
terms of this Act deregistered or dissolved.
(3) Subject to the provisions of this Act, the members of a corporation shall not merely by
reason of their membership be liable for the liabilities or obligations of the corporation.
(4) A corporation shall have the capacity and powers of a natural person of full capacity in so
far as a juristic person is capable of having such capacity or of exercising such powers.
PART II
ADMINISTRATION OF ACT (ss 3-11)
Registration Office and register
3.(1) For the registration of corporations under this Act there shall be an office in Pretoria
called the Close Corporations Registration Office.
(2) Registers of names and registration numbers and such other matters concerning
corporations as may be prescribed, shall be kept in the Registration Office.
Registrar
4.(1) The Minister shall, subject to the laws governing the public service, appoint a Registrar of
Close Corporations, who shall-
(a) exercise the powers and perform the duties assigned to the Registrar by this Act;
and
(b) subject to the directions of the Minister, be responsible for the administration of the
Registration Office.
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(2) The Minister may likewise appoint a Deputy Registrar and an Assistant Registrar, who
shall, subject to the control of the Registrar, exercise any power or perform any duty
conferred or imposed in terms of this Act on the Registrar, and whenever the Registrar is
for any reason unable to perform his functions the Deputy Registrar shall act in his stead.
(3) The Registrar may delegate any of the powers and entrust any of the duties assigned to
him by this Act to any officer or employee in the public service.
Inspection and copies of documents in Registration Office
5.(1) Any person may, on payment of the prescribed fee (including an additional fee if any
document is not collected personally at the Registration Office)-
(a) inspect any document kept under this Act by the Registrar in respect of any
corporation; or
(b) obtain a certificate from the Registrar as to the contents or part of the contents of
any such document open to inspection; or
(c) obtain a copy of or extract from any such document.
(1A) Any person may, on payment of the prescribed fee, through any electronic medium
approved by the Registrar-
(a) inspect any document which has been lodged with the Registrar under this Act
and converted into electronic format, or
(b) obtain a copy of or extract from any such converted document.
[Sub-s. (1A) inserted by section 2 (a) of Act 22 of 2001.]
(2) If the Registrar is satisfied-
(a) that any such inspection, certificate, copy or extract is required on behalf of a
foreign government accredited to the Government of the Republic; and
(b) that no fee is payable in the foreign country concerned in respect of a
corresponding inspection, certificate, copy or extract required on behalf of the
Government of the Republic,
no fee referred to in subsection (1) or (1A) shall be payable.
[Sub-s. (2) amended by section 2 (b) of Act 22 of 2001.]
(3) If the Registrar is satisfied that any such inspection, certificate, copy or extract is required
for purposes of research by or under the control of an institution for higher education, he
may permit such inspection or furnish such certificate, copy or extract without payment of
fees.
Payment of fees
6.(1) The payment of any fee, additional fee or other money payable to the Registrar in terms
of this Act shall, subject to the provisions of subsection (3), be effected-
(a) by affixing revenue stamps to any document concerned, which stamps may be
cancelled by a Receiver of Revenue or the Registrar; or
[NB: Para. (a) has been deleted by s. 7 of the Corporate Laws Amendment Act 39 of
2002, a provision which will be put into operation by proclamation.]
(b) by impressing a stamp on any document concerned by means of a die approved by
the Commissioner for Inland Revenue; or
[NB: Para. (b) has been deleted by s. 7 of the Corporate Laws Amendment Act 39 of
2002, a provision which will be put into operation by proclamation.]
(bA) by means of such electronic form of transfer of money as the Registrar may
approve; or
[Para. (bA) inserted by s. 3 (a) of Act 22 of 2001.]
(c) in such other manner as the Registrar may direct.
(2) No document, form, return or notice in respect of which any fee is payable or any
payment is required to be done in terms of this Act, shall be complete unless proof of
payment of the required fee or other money has been lodged with, or acknowledged as
having been received by, the Registrar.
[Sub-s. (2) substituted by s. 3 (b) of Act 22 of 2001.]
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(3) For the purposes of subsection (1) the decision of the Registrar as to the manner in
which in any particular case, or category of cases determined by him, any fee, additional
fee or other money is in terms of this Act to be paid, shall be final.
(4) Any fees and other moneys payable in terms of this Act to the Registrar, shall be debts
due to the State recoverable by the Minister in any competent court.
Courts having jurisdiction in respect of corporations
7. For the purposes of this Act any High Court and any magistrate’s court, within whose
area of jurisdiction the registered office or the main place of business of the corporation is
situated, shall have jurisdiction.
[S. 7 substituted by s. 1 of Act 64 of 1988 and by s. 2 of Act 26 of 1997.]
Security for costs in legal proceedings by corporations
8. When a corporation in any legal proceedings is a plaintiff or applicant or brings a
counterclaim or counterapplication, the court concerned may at any time during the
proceedings if it appears that there is reason to believe that the corporation or, if it is
being wound up, the liquidator thereof, will be unable to pay the costs of the defendant or
respondent, or the defendant or respondent in reconvention, if he is successful in his
defence, require security to be given for those costs, and may stay all proceedings till the
security is given.
Transmission of copies of Court orders to Registrar and Master
9. When a Court makes any order in terms of this Act in relation to any corporation, the
Registrar or clerk of the Court shall without delay by registered post transmit a copy of
the order to the Registrar and, if such order relates to the winding-up of any corporation,
a copy thereof to the Master as well.
[S. 9 amended by s. 14 of Act 22 of 2001.]
Regulations and policy
10.(1) The Minister may make regulations-
(a) providing for the conduct and administration of the Registration Office, and
prescribing the practice and procedure to be observed therein;
(b) prescribing the practice and procedure to be observed in the office of the Master in
connection with the winding-up of corporations;
(c) providing for the reproduction of any records relating to corporations in the
Registration Office or the office of the Master by means of microfilm, microcard,
miniature photographic process, the conversion into electronic format in such a
way as to allow such records to be reconverted to their original form without
changing their original contents or form or any other process deemed suitable by
the Minister;
(d) providing for the use for official purposes and the admissibility in evidence in any
proceedings, whether in a court of law or otherwise, of any reproduction
contemplated in paragraph (c);
(e) providing for the keeping and preservation of any records, or any reproductions
thereof contemplated in paragraph (c), in the Registration Office or the office of the
Master, the removal from such offices of such records or reproductions and the
preservation thereof in any other place, and prescribing the circumstances under
which such records or reproductions may be destroyed;
(f) prescribing how records required under this Act to be kept by a corporation may be
kept, and prescribing the circumstances under which such records may be
destroyed;
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(g) prescribing the procedure to be followed with respect to any matter in connection
with the winding-up of corporations;
(h) prescribing the form and the contents of any return, notice or document provided
for by this Act;
(i) prescribing when an additional copy or copies of documents to be lodged under
this Act shall require to be lodged, and whether such additional copy or copies shall
be in the form of a copy or copies certified in a defined manner or shall be in
duplicate original form;
(j) with the concurrence of the Minister of Finance, prescribing the matters in respect
of which fees shall be payable, the persons by whom and to whom the fees shall
be payable and the tariff of such fees;
(k) providing for a table of fees, subject to taxation by the Master, which shall be
payable to a liquidator as remuneration;
(l) prescribing a tariff of remuneration payable to any person performing on behalf of a
liquidator any act relating to the winding-up of a corporation which the liquidator is
not required to perform personally, and prohibiting the charging or recovery of
remuneration at a higher tariff than the tariff so prescribed;
(m) providing for the appointment by the Registrar in specified circumstances of an
inspector to investigate the affairs of a corporation, for the powers of an inspector
in conducting any such investigation, for the duty of any member, officer, employee
or accounting officer of a corporation to make available books and documents in
his or her custody or under his or her control and to afford such assistance as an
inspector may require in connection with any such investigation; for reporting by an
inspector to the Registrar; for the making available by the Registrar of any such
report to other persons; for the admissibility of any such report as evidence in legal
proceedings; and for defraying the expenses of, and in connection with, any such
investigation;
(n) as to any other matter required or permitted by this Act to be prescribed; and
(o) generally, as to any matter which he or she considers it necessary or expedient to
prescribe in order that the purposes of this Act may be achieved.
(1A) (a) The Minister may determine policy for the appointment of a liquidator by the Master
in order to promote consistency, fairness, transparency and the achievement of
equality for persons previously disadvantaged by unfair discrimination.
(b) Any policy determined in accordance with the provisions of paragraph (a) must be
tabled in Parliament before publication in the Gazette.
(2) Regulations made under subsection (1) may prescribe penalties for any contravention
thereof or failure to comply therewith, not exceeding a fine or imprisonment for a period of
six months or both a fine and such imprisonment.
[S. 10 amended by s. 2 of Act 38 of 1986 and by s. 4 of Act 22 of 2001 and
substituted by s. 20 of Act 16 of 2003.]
Functions of standing advisory committee on company law in relation to corporations
11.(1) The standing advisory committee on company law, appointed in terms of section 18 of
the Companies Act, may from time to time make recommendations to the Minister in
regard to any amendments to this Act which may appear to it to be advisable, and shall
advise the Minister on any matter pertaining to this Act referred to it by the Minister.
(2) The standing advisory committee shall constitute and maintain a standing sub-committee
for the purpose of considering and of advising it on such matters relating to corporations
as may be referred by it to the sub-committee.
(3) The provisions of-
(a) the Companies Act and regulations made thereunder in relation to standing subcommittees of the standing advisory committee, and the members thereof, shall
apply in respect of the standing sub-committee referred to in subsection (2) as if
that sub-committee were constituted under subsection (4) of section 18 of the said
Act; and
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(b) subsections (2) and (5) (in so far as they relate to the calling of persons to assist
the standing advisory committee) of the said section 18 shall apply in respect of the
standing advisory committee in the exercising by it of any power granted to it in
terms of subsection (1) of this section.
PART III
REGISTRATION, DEREGISTRATION AND CONVERSION (ss 12-27)
Founding statement
12. Any person qualified for membership in terms of section 29 or, subject to section 28, any
number of such persons who intend to form a corporation, shall draw up a founding
statement in the prescribed form in one of the official languages of the Republic,
which shall be signed by or on behalf of every person who is to become a member
of the corporation upon its registration and which shall, subject to the provisions of
this Act, contain the following particulars:
(a) The full name of the corporation: Provided that a literal translation of that name into
any one other official language of the Republic, or a shortened form of that name or
such translation thereof, may in addition be given;
[Para. (a) substituted by s. 3 of Act 26 of 1997.]
(b) the principal business to be carried on by the corporation;
(c) (i) a postal address for the corporation; and
(ii) the address (not being the number of a post office box) of the office of the
corporation referred to in section 25 (1);
(d) the full name of each member, his identity number or, if he has no such number,
the date of his birth, and his residential address;
[Para. (d) substituted by s. 1 of Act 81 of 1992.]
(e) the size, expressed as a percentage, of each member’s interest in the corporation;
(f) particulars of the contribution of each member to the corporation in accordance
with section 24 (1), including-
(i) any amounts of money; and
(ii) a description, and statement of the fair value, of any property (whether
corporeal or incorporeal) or any service referred to in section 24 (1);
(g) (i) the name and postal address of a qualified person who or firm which has
consented in writing to his or its appointment as accounting officer of the
corporation; and
(ii) the date of the end of the financial year of the corporation.
Registration of founding statement
13. If a founding statement referred to in section 12 complying with the requirements of this
Act is lodged with the Registrar in the manner prescribed, and if the business to be
carried on by the corporation is lawful, the Registrar shall upon payment of the prescribed
fee register such statement in his or her registers and shall give notice of the registration
in the Gazette.
[S. 13 substituted by s. 3 of Act 38 of 1986 and by s. 5 of Act 22 of 2001.]
Certificate of incorporation
14.(1) Upon the registration of such founding statement the Registrar shall assign a registration
number to the corporation concerned and endorse under his or her hand on the
statement, or otherwise issue in writing, a certificate that the corporation is incorporated:
Provided that the Registrar may change or amend such registration number in order to
rectify duplications of such numbers or to achieve any other objective which it is
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necessary or expedient to achieve for the proper maintenance of the register of close
corporations.
[Sub-s. (1) substituted by s. 6 of Act 22 of 2001.]
(2) A certificate of incorporation given by the Registrar in terms of subsection (1) or section
27 (4) (c), or a copy thereof, as the case may be, shall upon its mere production, in the
absence of proof of fraud or error, be conclusive evidence that all the requirements of this
Act in respect of registration of the corporation concerned and of matters precedent and
incidental thereto have been complied with, and that the corporation concerned is duly
incorporated under this Act.
[Sub-s. (2) substituted by s. 4 of Act 38 of 1986.]
Registration of amended founding statement
15.(1) If any change is made or occurs in respect of any matter particulars of which are stated in
a founding statement of a corporation in accordance with paragraph (b), (d), (e) or (f) of
section 12, the corporation shall, subject to the provisions of section 29 (3) (c) and (d),
within 28 days after such change lodge with the Registrar for registration in his or her
registers an amended founding statement, in the prescribed form together with the
prescribed fee, signed by or on behalf of every member of the corporation and by or on
behalf of any person who will become a member on such registration, and which contains
particulars and the date of the change.
[Sub-s. (1) substituted by s. 2 (a) of Act 81 of 1992 and by s. 7 (a) of Act 22 of 2001.]
(2) If any change is made or occurs in respect of any matter particulars of which are so
stated in accordance with paragraph (a), (c) or (g) of section 12, an amended founding
statement shall in accordance with the requirements of subsection (1) be lodged with the
Registrar for registration, and any such change shall only take effect when such
statement has been so registered in the relevant registers, or upon a later date
mentioned in such statement: Provided that a statement in the prescribed form which
upon registration thereof shall form part of the founding statement or amended founding
statement, shall, instead of an amended founding statement, be lodged with the Registrar
for registration if any such change is made or occurs in respect of-
(a) any matter of which particulars are so stated in accordance with paragraph (c) of
section 12, in which case the accounting officer may sign such statement on behalf
of the members if the corporation has approved of the said change and the
accounting officer so certifies in writing; or
(b) the name or address of the duly appointed accounting officer, in which case the
accounting officer may sign such statement on behalf of the members, and the said
change shall take effect upon the date mentioned in the statement.
[Sub-s. (2) amended by s. 2 (b) of Act 81 of 1992.]
(2A) If a founding statement is altered or something is added thereto by an order of court
referred to in section 49, the provisions of subsection (1) in relation to the lodging of an
amended founding statement therein referred to, shall mutatis mutandis apply in respect
of such founding statement.
[Sub-s. (2A) inserted by s. 5 (a) of Act 38 of 1986.]
(2B) Upon registration of any amended founding statement in accordance with the
requirements of subsection (1), (2) or (2A), the Registrar shall issue a certificate to the
effect that the amended founding statement has been registered.
[Sub-s. (2B) inserted by s. 7 (b) of Act 22 of 2001.]
(3) (a) If a corporation fails to lodge an amended founding statement in terms of and in
accordance with the provisions of subsection (1), (2) or (2A), as the case may be,
the Registrar may on his own initiative or on application by any member or creditor
of the corporation serve on the members of the corporation in accordance with
section 25 (2) (a) a reminder by registered post to make good the default within 28
days of the date of the reminder.
[Para. (a) substituted by s. 5 (b) of Act 38 of 1986 and amended by s. 14 of Act 22 of 2001.]
9
(b) If the members concerned fail to comply with any such reminder, the Registrar may
direct those members by written notice, so served on the members by registered
post, to make good the default within 28 days of the date of the notice.
[Para. (b) amended by s. 14 of Act 22 of 2001.]
(c) If the members concerned fail to comply with any such direction, the Registrar may
by further written notice so served on the members by registered post, impose on
the members, or any of them, a penalty not exceeding five rand per day from the
date upon which the reminder referred to in paragraph (a) was sent.
(d) When the Registrar has served a notice referred to in paragraph (c) on the
members, he may not less than 21 days after the date of that notice forward a
certified copy thereof to the clerk of the magistrate’s court in whose area of
jurisdiction the registered office of the corporation is situated, who shall record it,
and thereupon such notice shall have the effect of a civil judgment of that
magistrate’s court against every such member for the amount of the penalty in
question.
(e) On application by one or more of the members concerned the court in question
may reduce or rescind the penalty, or exempt any one or some of the members
from the effect of the notice.
[NB: A. s. 15A has been inserted by s. 8 of the Corporate Laws Amendment Act 39 of
2002, a provision which will be put into operation by proclamation. See PENDLEX.]
Keeping of copies of founding statements by corporations
16.(1) A corporation shall keep a copy of its founding statement and any proof of its registration
at the registered office of the corporation.
(2) A document referred to in subsection (1) shall during the business hours of the
corporation be open to inspection by any person upon payment to the corporation, in the
case of a person who is not a member of the corporation, of one rand or such lesser
amount as the corporation may determine.
(3) A member or officer of a corporation who refuses access for the purposes of an
inspection in terms of subsection (2) to a person entitled thereto, shall be guilty of an
offence.
No constructive notice of particulars in founding statement and other documents
17. No person shall be deemed to have knowledge of any particulars merely because such
particulars are stated, or referred to, in any founding statement or other document
regarding a corporation registered by the Registrar or lodged with him, or which is kept at
the registered office of a corporation in accordance with the provisions of this Act.
18. ……
[S. 18 repealed by s. 4 of Act 26 of 1997.]
Undesirable names and reservation of names
19.(1) No founding statement containing a name for a corporation to be incorporated and no
amended founding statement containing a new name for a corporation shall be registered
if the name is in the opinion of the Registrar undesirable.
(2) Any person who intends to form a corporation or any corporation which intends to change
its name shall, on the prescribed form and on payment of the prescribed fee, apply to the
Registrar for the reservation of a name: Provided that a company being converted into a
corporation in terms of this Act shall not be required to so reserve its name if the name
remains identical.
(3) A reservation contemplated in subsection (2) shall be valid from the date of approval by
the Registrar for a period not exceeding two months.
[S. 19 substituted by s. 5 of Act 26 of 1997.]
10
Order to change name
20.(1) If within a period of one year after the registration of a founding statement of a
corporation it appears to the Registrar that a name mentioned in the founding statement
is undesirable, he shall order the corporation concerned to change such name.
(2) Any interested person may-
(a) within a period of one year referred to in subsection (1), on payment of the
prescribed fee apply in writing to the Registrar for an order directing the corporation
to change its name on the ground of undesirability or that such name is calculated
to cause damage to the applicant; or
(b) within a period of two years after the registration of a founding statement apply to a
Court for an order directing the corporation to change its name on the ground of
undesirability or that such name is calculated to cause damage to the applicant,
and the Court may on such application make such order as it deems fit.
[Sub-s. (2) substituted by s. 3 (a) of Act 81 of 1992.]
(3) The Registrar may, after application has been made in terms of paragraph (a) of
subsection (2), in writing order the corporation concerned to change its name if, in the
opinion of the Registrar, it is or has become undesirable.
(3A) Any person feeling aggrieved by any decision or order of the Registrar under this section
may, within one month after the date of such decision or order, apply to a competent
provincial or local division of the Supreme Court for relief, and the Court may consider the
merits of any such matter, receive further evidence and make any order it deems fit.
[Sub-s. (3A) inserted by s. 3 (b) of Act 81 of 1992.]
(3B) No prescribed fee mentioned in section 15 (1) shall be payable in respect of the
registration of an amended founding statement by virtue of an order under subsection (1)
or (3) of this section.
[Sub-s. (3B) inserted by s. 3 (b) of Act 81 of 1992 and substituted by s. 8 of Act 22 of 2001.]
(4) A corporation which fails within any period mentioned in an order under subsection (1) or
(3) to comply with any such order, shall be guilty of an offence.
(5) No provision of this Act shall be construed as affecting the rights of any person at
common law to bring an action against any corporation for passing off any business,
goods or services as those of another person.
Effect of change of name
21.(1) A change in terms of this Act of a name of a corporation shall not affect any right or
obligation of the corporation or any legal proceedings instituted by or against the
corporation, and any legal proceedings that could have been continued or commenced
by or against the corporation prior to the change of name may, notwithstanding such
change of name, after the change be continued or commenced by or against the
corporation, as the case may be.
(2) Upon the production by a corporation of a certified copy of a founding statement
reflecting a change of name of that corporation to any registrar or other officer charged
with the maintenance of a register under any law, and on compliance with all the
requirements pursuant to any such law as to the form of application (if any) and the
payment of any required fee, such registrar or other officer shall make in his register all
such alterations as are necessary, by reason of the change of name in respect of the
corporation.
Formal requirements as to names and registration numbers
22.(1) The abbreviation CC, in capital letters, or its equivalent in any other official language,
shall be subjoined to the name used by a corporation.
[Sub-s. (1) substituted by s. 6 (a) of Act 26 of 1997.]
(2) A corporation shall refer to the registration number of the corporation on all prescribed
documents and correspondence sent by the corporation to the Registration Office.
11
(3) If a corporation is being wound up, the statement ‘In Liquidation’ or ‘In Voluntary
Liquidation’, as the case may be, shall for the duration of such winding-up be subjoined to
the name used by the corporation.
[Sub-s. (3) substituted by s. 6 (b) of Act 26 of 1997.]
(4) Any corporation which fails to comply with the provisions of subsection (3) shall be guilty
of an offence.
[Sub-s. (4) inserted by s. 6 (c) of Act 26 of 1997.]
Improper references to incorporation in terms of Act
22.A Any person carrying on business under a name or title-
(a) to which an abbreviation contemplated in section 22 (1) is subjoined; or
(b) of which the words ‘close corporation’ or its equivalent in any other official language
or any abbreviation thereof form part in a way which indicates incorporation as a
close corporation in terms of this Act,
shall, unless duly incorporated as a close corporation in terms of this Act, be guilty of an
offence.
[S. 22A inserted by s. 4 of Act 81 of 1992 and substituted by s. 7 of Act 26 of 1997.]
Use and publication of names
23.(1) Every corporation-
(a) shall display its registered full name (or a registered literal translation thereof into
any one other official language of the Republic) and registration number in a
conspicuous position and in characters easily legible on the outside of its
registered office and every office or place in which its business is carried on;
[Para. (a) substituted by s. 8 (a) of Act 26 of 1997.]
(b) shall have that name (or such translation thereof) and registration number
mentioned in legible characters in all notices and other official publications of the
corporation, including notices or other offical publications in electronic format, and
in all bills of exchange, promissory notes, endorsements, cheques and orders for
money, goods or services purporting to be signed by or on behalf of the
corporation, and all letters, delivery notes, invoices, receipts and letters of credit of
the corporation; and
[Para. (b) substituted by s. 5 of Act 81 of 1992 and by s. 9 of Act 22 of 2001.]
(c) shall use a registered shortened form of that name only in conjunction with that
name or such literal translation thereof.
(2) If any member of, or any other person on behalf of, a corporation-
(a) issues or authorizes the issue of any such notice or official publication of the
corporation, or signs or authorizes to be signed on behalf of the corporation any
such bill of exchange, promissory note, endorsement, cheque or order for money,
goods or services; or
(b) issues or authorises the issue of any such letter, delivery note, invoice, receipt or
letter of credit of the corporation,
[Para. (b) substituted by s. 8 (b) of Act 26 of 1997.]
without the name of the corporation, or such registered literal translation thereof, and its
registration number being mentioned therein in accordance with subsection (1) (b), he
shall be guilty of an offence, and shall further be liable to the holder of the bill of
exchange, promissory note, cheque or order for money, goods or services for the amount
thereof, unless the amount is duly paid by the corporation.
(3) Any corporation which fails to comply with any provision of subsection (1) shall be guilty
of an offence.
12
Contributions by members
24.(1) Every person who is to become a member of a corporation upon its registration, shall
make to the corporation an initial contribution of money, of property (whether corporeal or
incorporeal), or of services rendered in connection with and for the purposes of the
formation and incorporation of the corporation, and particulars of such contribution shall
be stated in the founding statement of the corporation referred to in section 12, as
required by paragraph (f) of that section.
(2) The amount or value of the members’ contributions, or of the contribution of any one or
more members, may from time to time by agreement among all the members-
(a) be increased by additional contributions of money or property (whether corporeal or
incorporeal) to the corporation by existing members or, in terms of section 33 (1)
(b), by a person becoming a member of a registered corporation; or
(b) be reduced, provided that a reduction by way of a repayment to any member shall
comply with the provisions of section 51 (1).
(3) Particulars of any increase or reduction of a member’s contribution in terms of subsection
(2) shall be furnished in an amended founding statement referred to in section 15 (1).
(4) Money or property referred to in subsection (1) or (2) (a) shall, in order to vest ownership
thereof in the corporation, be paid, delivered or transferred, as the case may be, to the
corporation within a period of 90 days-
(a) after the date of registration of the corporation, in the case of an initial contribution
referred to in subsection (1); or
(b) after the date of the registration of an amended founding statement in connection
with any additional contribution referred to in subsection (2) (a).
(5) An undertaking by a member to make an initial or an additional contribution to a
corporation shall be enforceable by the corporation in legal proceedings.
Postal address and registered office
25.(1) Every corporation shall have in the Republic a postal address and an office to which,
subject to subsection (2), all communications and notices to the corporation may be
addressed.
(2) Any-
(a) notice, order, communication or other document which is in terms of this Act
required or permitted to be served upon any corporation or member thereof, shall
be deemed to have been served if it has been delivered at the registered office, or
has been sent by registered post to the registered office or postal address, of the
corporation; and
[Para. (a) amended by s. 14 of Act 22 of 2001.]
(b) process which is required to be served upon any corporation or member thereof
shall, subject to applicable provisions in respect of such service in any law, be
served by so delivering or sending it.
Deregistration
26.(1) If the Registrar has reasonable cause to believe that a corporation is not carrying on
business or is not in operation, he shall serve on the corporation at its postal address a
letter by registered post in which the corporation is notified thereof and informed that if he
is not within 60 days from the date of his letter informed in writing that the corporation is
carrying on business or is in operation, the corporation will, unless good cause is shown
to the contrary, be deregistered.
[Sub-s. (1) amended by s. 14 of Act 22 of 2001.]
[NB: Sub-s. (1) has been substituted by s. 9 of the Corporate Laws Amendment Act 39 of
2002, a provision which will be put into operation by proclamation. See PENDLEX.]
13
(2) After the expiration of the period of 60 days mentioned in a letter referred to in subsection
(1), or upon receipt from the corporation of a written statement signed by or on behalf of
every member to the effect that the corporation has ceased to carry on business and has
no assets or liabilities, the Registrar may, unless good cause to the contrary has been
shown by the corporation, deregister that corporation.
(3) Where a corporation has been deregistered, the Registrar shall give notice to that effect
in the Gazette, and the date of the publication of such notice shall be deemed to be the
date of deregistration.
(4) The deregistration of a corporation shall not affect any liability of a member of the
corporation to the corporation or to any other person, and such liability may be enforced
as if the corporation were not deregistered.
Conversion of companies into corporations
27.(1) Any company having ten or fewer members all of whom qualify for membership of a
corporation in terms of section 29 of this Act, may be converted into a corporation,
provided that every member of the company becomes a member of the corporation.
(2) In respect of a conversion referred to in subsection (1), there shall be lodged with the
Registrar-
(a) an application for conversion, in the prescribed form, signed by all the members of
the company, containing a statement that upon conversion the assets of the
corporation, fairly valued, will exceed its liabilities, and that after conversion the
corporation will be able to pay its debts as they become due in the ordinary course
of its business;
(b) a statement in writing by the auditor of the company that he has no reason to
believe that a material irregularity contemplated in subsection (3) of section 26 of
the Public Accountants’ and Auditors’ Act, 1951 (Act 51 of 1951), has taken place
or is taking place in relation to the company or, where steps have been taken in
terms of that subsection, that such steps and other proceedings in terms of the
subsection have been completed; and
(c) a founding statement referred to in section 12 lodged in accordance with section
13.
(3) For the purposes of the founding statement referred to in subsection (2) (c)-
(a) there shall, in regard to the requirements of section 12 (f), be a statement of the
aggregate of the contributions of the members, which shall be for an amount not
greater than the excess of the fair value of the assets to be acquired by the
corporation over the liabilities to be assumed by the corporation by reason of the
conversion: Provided that the corporation may treat any portion of such excess not
reflected as members’ contributions, as amounts which may be distributed to its
members;
(b) the members’ interests stated in terms of section 12 (e) need not necessarily be in
proportion to the number of shares in the company held by the respective members
at the time of the conversion.
(4) If the provisions of subsection (2) have been complied with, the Registrar shall, if he is
satisfied that the company concerned has complied materially with the requirements of
the Companies Act-
(a) register the founding statement in accordance with the provisions of section 13;
(b) satisfy himself that, simultaneously with such registration, the registration of the
memorandum and the articles of association of the company concerned is
cancelled in accordance with the provisions of the Companies Act;
(c) endorse on the founding statement, or otherwise issue in writing, a certificate of
incorporation as provided by section 14 (1): Provided that such certificate shall
state the fact that the corporation has been converted from a company and shall
mention the name and registration number of the former company; and
[Para. (c) substituted by s. 7 of Act 38 of 1986 and amended by s. 10 of Act 22 of 2001.]
14
(d) give notice in the Gazette of the conversion.
[Sub-s. (4) amended by s. 6 of Act 81 of 1992.]
(5) (a) On the registration of a corporation converted from a company, the assets, rights,
liabilities and obligations of the company shall vest in the corporation.
(b) Any legal proceedings instituted by or against the company before the registration
may be continued by or against the corporation, and any other thing done by or in
respect of the company shall be deemed to have been done by or in respect of the
corporation.
(c) The conversion of a company into a corporation shall in particular not affect-
(i) any liability of a director or officer of the company to the company on the
ground of breach of trust or negligence, or to any other person pursuant to
any provision of the Companies Act; or
(ii) any liability of the company, or of any other person, as surety.
(d) The juristic person which prior to the conversion of a company into a corporation
existed as a company, shall notwithstanding the conversion continue to exist as a
juristic person but in the form of a corporation.
[Para. (d) added by s. 2 (1) of Act 64 of 1988.]
(6) The corporation shall forthwith after its conversion from a company, give notice in writing
of the conversion to all creditors of the company at the time of conversion, and to all other
parties to contracts or legal proceedings in which the company was involved at the time
of the conversion.
(7) Upon the production by a corporation which has been converted from a company of a
certified copy of its founding statement referred to in subsection (4) (a), to any registrar or
other officer charged with the maintenance of a register under any law, and on
compliance with all the requirements pursuant to any such law as to the form of
application (if any) and the payment of any required fee, such registrar or officer shall
make in his register all such alterations as are necessary by reason of the conversion of
the company into a corporation: Provided that no transfer or stamp duties shall be
payable in respect of such alterations in registers.
(8) If the accounting officer mentioned in the founding statement of a converted corporation
is not the person who or firm which has acted as auditor for the company, the
appointment of that person or firm shall lapse upon the conversion into a corporation.
(9) If a corporation is converted into a company in accordance with the provisions of the
Companies Act, the registration of the founding statement of the corporation shall be
cancelled simultaneously with the registration of the memorandum and articles of
association of the company in terms of that Act.
PART IV
MEMBERSHIP (ss 28-41)
Number of members
28. A corporation may at its incorporation have one or more members, but at no time shall
the number of members exceed ten.
Requirements for membership
29.(1) Subject to the provisions of subsection (2) (b) and (c), only natural persons may be
members of a corporation and no juristic person or trustee of a trust inter vivos in that
capacity shall directly or indirectly (whether through the instrumentality of a nominee or
otherwise) hold a member’s interest in a corporation.
[Sub-s. (1) substituted by s. 3 (1) of Act 64 of 1988.]
(1A) The provisions of subsection (1) shall not apply to the membership of a corporation of a
natural person who holds that membership for the benefit of a trust inter vivos if
immediately before 13 April 1987 a natural person held membership of the corporation for
the benefit of that trust: Provided that-
15
(a) no juristic person shall directly or indirectly be a beneficiary of that trust;
(b) the member concerned shall, as between himself and the corporation, personally
have all the obligations and rights of a member;
(c) the corporation shall not be obliged to observe or have any obligation in respect of
any provision of or affecting the trust or any agreement between the trust and the
member concerned of the corporation; and
(d) if at any time the number of natural persons at that time entitled to receive any
benefit from the trust shall, when added to the number of members of the
corporation at that time, exceed 10, the provisions of, and exemption under, this
subsection shall cease to apply and shall not again become applicable
notwithstanding any diminution in the number of members or beneficiaries.
[Sub-s. (1A) inserted by s. 1 of Act 17 of 1990.]
(2) The following persons shall qualify for membership of a corporation:
(a) Any natural person entitled to a member’s interest;
(b) a natural or juristic person, nomine officii, who is a trustee of a testamentary trust
entitled to a member’s interest, provided that-
(i) no juristic person is a beneficiary of such trust; and
(ii) if the trustee is a juristic person, such juristic person is not directly or
indirectly controlled by any beneficiary of the trust; and
(c) a natural or juristic person, nomine officii, who, in the case of a member who is
insolvent, deceased, mentally disordered or otherwise incapable or incompetent to
manage his affairs, is a trustee of his insolvent estate or an administrator, executor
or curator in respect of such member or is otherwise a person who is his duly
appointed or authorized legal representative.
(3) (a) The membership of any person qualified therefor in terms of subsection (2) shall
commence on the date of the registration of a founding statement of the
corporation containing the particulars required by section 12 in regard to such
person and his member’s interest.
(b) Where any person is to become a member of a registered corporation the existing
member or members of the corporation shall ensure that the requirements of
section 15 (1) regarding the lodging of an amended founding statement with the
Registrar are complied with.
(c) A trustee of an insolvent estate, administrator, executor or curator, or other legal
representative, referred to in subsection (2) (c), in respect of any member of a
corporation, who is not obliged or who does not intend to transfer the interest of the
member in the corporation in accordance with the provisions of this Act within 28
days of his assuming office to any other person, shall within that period, or any
extended period allowed by the Registrar on application by him, request the
existing member or members of the corporation to lodge with the Registrar in
accordance with section 15 (1) an amended founding statement designating him,
nomine officii, as representative of the member of the corporation in question.
(d) Where the corporation has no other member, any such representative himself
shall, in the circumstances contemplated in paragraph (c), act on behalf of the
corporation in accordance with the provisions of section 15 (1), read with the said
paragraph (c).
(e) The provisions of paragraphs (c) and (d) shall not affect the power of such
representative, as from the date of his assuming office, and whether or not any
such amended founding statement has been lodged, to represent the member
concerned in all matters in which he himself as a member could have acted, until
the interest of that member in the corporation has in accordance with the provisions
of this Act been transferred to any other qualified person.
(4) A corporation is not concerned with the execution of any trust in respect of any member’s
interest in the corporation.
16
Nature of member’s interest
30.(1) The interest of any member in a corporation shall be a single interest expressed as a
percentage and shall be moveable property which shall be transferable in the manner
provided by this Act.
[Sub-s. (1) substituted by s. 9 of Act 26 of 1997.]
(2) Two or more persons shall not be joint holders of the same member’s interest in a
corporation.
Certificate of member’s interest
31. Each member of a corporation shall be issued with a certificate, signed by or on behalf of
every member of that corporation, and stating the current percentage of such member’s
interest in the corporation.
Representation of members
32.(1) A minor who is a member of a corporation, other than a minor whose guardian has
lodged a written consent referred to in section 47 (1) (a) (ii), shall be represented in the
corporation by his guardian.
(2) ……
[Sub-s. (2) deleted by s. 11 of Act 22 of 2001.]
(3) A member subject to any other legal disability shall be represented in the corporation by
his duly appointed or authorized legal representative referred to in paragraph (c) of
subsection (2) of section 29.
Acquisition of member’s interest by new member
33.(1) A person becoming a member of a registered corporation shall acquire his member’s
interest required for membership-
(a) from one or more of the existing members or his or their deceased or insolvent
estates; or
(b) pursuant to a contribution made by such person to the corporation, in which case
the percentage of his member’s interest is determined by agreement between him
and the existing members, and the percentages of the interests of the existing
members in the corporation shall be reduced in accordance with the provisions of
section 38 (b).
(2) The contribution referred to in subsection (1) (b) may consist of an amount of money, or
of any property (whether corporeal or incorporeal) of a value agreed upon by the person
concerned and the existing members.
Disposal of interest of insolvent member
34.(1) Notwithstanding any provision to the contrary in any association agreement or other
agreement between members, a trustee of the insolvent estate of a member of a
corporation may, in the discharge of his duties, sell that member’s interest-
(a) to the corporation, if there are one or more members other than the insolvent
member;
(b) to the members of the corporation other than the insolvent member, in proportion to
their member’s interests or as they may otherwise agree upon; or
(c) subject to the provisions of subsection (2), to any other person who qualifies for
membership of a corporation in terms of section 29.
(2) If the corporation concerned has one or more members other than the insolvent, the
following provisions shall apply to a sale in terms of subsection (1) (c) of the insolvent
member’s interest:
17
(a) The trustee shall deliver to the corporation a written statement giving particulars of
the name and address of the proposed purchaser, the purchase price and the time
and manner of payment thereof;
(b) for a period of 28 days after the receipt by the corporation of the written statement
the corporation or the members, in such proportions as they may agree upon, shall
have the right, exercisable by written notice to the trustee, to be substituted as
purchasers of the whole, and not a part only, of the insolvent member’s interest at
the price and on the terms set out in the trustee’s written statement; and
(c) if the insolvent member’s interest is not purchased in terms of paragraph (b), the
sale referred to in the trustee’s written statement shall become effective and be
implemented.
Attachment and sale in execution of member’s interest
34.A The provisions of section 34 shall apply mutatis mutandis to any attachment and sale in
execution of a member’s interest in a corporation.
[S. 34A substituted by s. 10 of Act 26 of 1997.]
Disposal of interest of deceased member
35. Subject to any other arrangement in an association agreement, an executor of the estate
of a member of a corporation who is deceased shall, in the performance of his duties-
(a) cause the deceased member’s interest in the corporation to be transferred to a
person who qualifies for membership of a corporation in terms of section 29 and is
entitled thereto as legatee or heir or under a redistribution agreement, if the
remaining member or members of the corporation (if any) consent to the transfer of
the member’s interest to such person; or
(b) if any consent referred to in paragraph (a) is not given within 28 days after it was
requested by the executor, sell the deceased member’s interest-
(i) to the corporation, if there is any other member or members than the
deceased member;
(ii) to any other remaining member or members of the corporation in proportion
to the interests of those members in the corporation or as they may
otherwise agree upon; or
(iii) to any other person who qualifies for membership of a corporation in terms of
section 29, in which case the provisions of subsection (2) of section 34 shall
mutatis mutandis apply in respect of any such sale.
(5) If a corporation is deregistered while having outstanding liabilities, the persons who are
members of such corporation at the time of deregistration shall be jointly and severally
liable for such liabilities.
[Sub-s. (5) substituted by s. 6 (1) of Act 38 of 1986.]
(6) The Registrar may on application by any interested person, if he is satisfied that a
corporation was at the time of its deregistration carrying on business or was in operation,
or that it is otherwise just that the registration of the corporation be restored, restore the
said registration.
(7) The Registrar shall give notice of the restoration of the registration of a corporation in the
Gazette, and as from the date of such notice the corporation shall continue to exist and
be deemed to have continued in existence as from the date of deregistration as if it were
not deregistered.
18
Cessation of membership by order of Court
36.(1) On application by any member of a corporation a Court may on any of the following
grounds order that any member shall cease to be a member of the corporation:
(a) Subject to the provisions of the association agreement (if any), that the member is
permanently incapable, because of unsound mind or any other reason, of
performing his part in the carrying on of the business of the corporation;
(b) that the member has been guilty of such conduct as taking into account the nature
of the corporation’s business, is likely to have a prejudicial effect on the carrying on
of the business;
(c) that the member so conducts himself in matters relating to the corporation’s
business that it is not reasonably practicable for the other member or members to
carry on the business of the corporation with him; or
(d) that circumstances have arisen which render it just and equitable that such
member should cease to be a member of the corporation:
Provided that such application to a Court on any ground mentioned in paragraph (a) or
(d) may also be made by a member in respect of whom the order shall apply.
(2) A Court granting an order in terms of subsection (1) may make such further orders as it
deems fit in regard to-
(a) the acquisition of the member’s interest concerned by the corporation or by
members other than the member concerned; or
(b) the amounts (if any) to be paid in respect of the member’s interest concerned or the
claims against the corporation of that member, the manner and times of such
payments and the persons to whom they shall be made; or
(c) any other matter regarding the cessation of membership which the Court deems fit.
Other dispositions of members’ interests
37. Every disposition by a member of a corporation of his interest, or a portion thereof, in the
corporation, other than a disposition provided for in section 34, 35 or 36, whether to the
corporation, any other member or any other person qualifying for membership in terms of
section 29, shall be done-
(a) in accordance with the association agreement (if any); or
(b) with the consent of every other member of the corporation:
Provided that no member’s interest shall be acquired by the corporation unless it has one
or more other members.
Maintenance of aggregate of members’ interests
38. The aggregate of the members’ interests in a corporation expressed as a percentage
shall at all times be one hundred per cent, and for that purpose-
(a) any transfer of the whole, or a portion, of a member’s interest shall be effected by
the cancellation or the reduction, as the case may be, of the interest of the member
concerned and the allocation in the name of the transferee, if not already a
member, of a member’s interest of the percentage concerned, or the addition to the
interest of an existing member of the percentage concerned;
(b) when a person becomes a member of a registered corporation pursuant to a
contribution made by him to the corporation, the percentage of his member’s
interest shall be agreed upon by him and the existing members, and the
percentages of the interests of the existing members shall be reduced
proportionally or as they may otherwise agree; and
(c) any member’s interest acquired by the corporation shall be added to the respective
interests of the other members in proportion to their existing interests or as they
may otherwise agree.
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Payment by corporation for members’ interests acquired
39.(1) Payment by a corporation in respect of its acquisition of a member’s interest in the
corporation shall be made only-
(a) with the previously obtained written consent of every member of the corporation,
other than the member whose interest is acquired, for the specific payment;
(b) if, after such payment is made, the corporation’s assets, fairly valued, exceed all its
liabilities;
(c) if the corporation is able to pay its debts as they become due in the ordinary course
of its business; and
(d) if such payment will in the particular circumstances not in fact render the
corporation unable to pay its debts as they become due in the ordinary course of its
business.
(2) For the purposes of subsection (1) ‘payment’ shall include the delivery or transfer of any
property.
Financial assistance by corporation in respect of acquisition of members’ interests
40. A corporation may give financial assistance (whether directly or indirectly and whether by
means of a loan, guarantee, the provision of security or otherwise) for the purpose of, or
in connection with, any acquisition of a member’s interest in that corporation by any
person, only-
(a) with the previously obtained written consent of every member of the corporation for
the specific assistance;
(b) if, after such assistance is given, the corporation’s assets, fairly valued, exceed all
its liabilities;
(c) if the corporation is able to pay its debts as they become due in the ordinary course
of its business; and
(d) if such assistance will in the particular circumstances not in fact render the
corporation unable to pay its debts as they become due in the ordinary course of its
business.
Publication of names of members
41.(1) A corporation shall not issue or send to any person any business letter, whether in
electronic or any other format, bearing a registered name of the corporation, unless the
forenames (or the initials) and surname of every member thereof are stated thereon.
[Sub-s. (1) substituted by s. 12 of Act 22 of 2001.]
(2) Any corporation which contravenes any provision of subsection (1) shall be guilty of an
offence.
PART V
INTERNAL RELATIONS (ss 42-52)
Fiduciary position of members
42.(1) Each member of a corporation shall stand in a fiduciary relationship to the corporation.
(2) Without prejudice to the generality of the expression ‘fiduciary relationship’, the
provisions of subsection (1) imply that a member-
(a) shall in relation to the corporation act honestly and in good faith, and in particular-
(i) shall exercise such powers as he may have to manage or represent the
corporation in the interest and for the benefit of the corporation; and
(ii) shall not act without or exceed the powers aforesaid; and
(b) shall avoid any material conflict between his own interests and those of the
corporation, and in particular-
20
(i) shall not derive any personal economic benefit to which he is not entitled by
reason of his membership of or service to the corporation, from the
corporation or from any other person in circumstances where that benefit is
obtained in conflict with the interests of the corporation;
(ii) shall notify every other member, at the earliest opportunity practicable in the
circumstances, of the nature and extent of any direct or indirect material
interest which he may have in any contract of the corporation; and
(iii) shall not compete in any way with the corporation in its business activities.
(3) (a) A member of a corporation whose act or omission has breached any duty arising
from his fiduciary relationship shall be liable to the corporation for-
(i) any loss suffered as a result thereof by the corporation; or
(ii) any economic benefit derived by the member by reason thereof.
(b) Where a member fails to comply with the provisions of subparagraph (ii) of
paragraph (b) of subsection (2) and it becomes known to the corporation that the
member has an interest referred to in that subparagraph in any contract of the
corporation, the contract in question shall, at the option of the corporation, be
voidable: Provided that where the corporation chooses not to be bound a Court
may on application by any interested person, if the Court is of the opinion that in
the circumstances it is fair to order that such contract shall nevertheless be binding
on the parties, give an order to that effect, and may make any further order in
respect thereof which it may deem fit.
(4) Except as regards his duty referred to in subsection (2) (a) (i), any particular conduct of a
member shall not constitute a breach of a duty arising from his fiduciary relationship to
the corporation, if such conduct was preceded or followed by the written approval of all
the members where such members were or are cognisant of all the material facts.
Liability of members for negligence
43.(1) A member of a corporation shall be liable to the corporation for loss caused by his failure
in the carrying on of the business of the corporation to act with the degree of care and
skill that may reasonably be expected from a person of his knowledge and experience.
(2) Liability referred to in subsection (1) shall not be incurred if the relevant conduct was
preceded or followed by the written approval of all the members where such members
were or are cognisant of all the material facts.
Association agreements
44.(1) The members of a corporation having two or more members may at any time enter into a
written association agreement signed by or on behalf of each member, which regulates-
(a) any matter which in terms of this Act may be set out or agreed upon in an
association agreement; and
(b) any other matter relating to the internal relationship between the members, or the
members and the corporation, in a manner not inconsistent with the provisions of
this Act.
(2) A corporation shall keep any association agreement at the registered office of the
corporation where any member may inspect it and may make extracts therefrom or
copies thereof.
(3) Whether or not an association agreement exists, any other agreement, express or
implied, between all the members of a corporation on any matter that may be regulated
by an association agreement shall be valid, provided that such express or implied
agreement-
(a) is not inconsistent with any provision of an association agreement;
(b) does not affect any person other than the corporation or a member who is a party
to it; and
(c) ceases to have any effect when any party to it ceases to be a member of the
corporation.
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(4) Subject to the provisions of this Act, an association agreement or an agreement referred
to in subsection (3) shall bind the corporation to every member in his capacity as a
member of that corporation and, in such capacity, every member to the corporation and
to every other member.
(5) A new member of a corporation shall be bound by an existing association agreement
between the other members as if he has signed it as a party thereto.
(6) Any amendment to, or the dissolution of, an association agreement shall be in writing and
signed by or on behalf of each member, including a new member referred to in
subsection (5).
No access to or constructive notice of association agreements
45. No person who is not a member of a corporation shall, except by virtue of a provision of
this Act, be entitled to inspect any association agreement in respect of that corporation,
and no person dealing with the corporation shall be deemed to have knowledge of any
particular thereof merely because it is stated or referred to therein, whether or not the
agreement is in accordance with section 44 (2) kept at the registered office of the
corporation.
Variable rules regarding internal relations
46. The following rules in respect of internal relations in a corporation shall apply in so far as
this Act or an association agreement in respect of the corporation does not provide
otherwise:
(a) Every member shall be entitled to participate in the carrying on of the business of
the corporation;
(b) subject to the provision of section 47, members shall have equal rights in regard to
the management of the business of the corporation and in regard to the power to
represent the corporation in the carrying on of its business: Provided that the
consent in writing of a member holding a member’s interest of at least 75 per cent,
or of members holding together at least that percentage of the members’ interests,
in the corporation, shall be required for-
(i) a change in the principal business carried on by the corporation;
(ii) a disposal of the whole, or substantially the whole, undertaking of the
corporation;
(iii) a disposal of all, or the greater portion of, the assets of the corporation; and
(iv) any acquisition or disposal of immovable property by the corporation;
[Para. (b) amended by s. 8 of Act 38 of 1986.]
(c) differences between members as to matters connected with a corporation’s
business shall be decided by majority vote at a meeting of members of the
corporation;
(d) at any meeting of members of a corporation each member shall have the number
of votes that corresponds with the percentage of his interest in the corporation;
(e) a corporation shall indemnify every member in respect of expenditure incurred or to
be incurred by him-
(i) in the ordinary and proper conduct of the business of the corporation; and
(ii) in regard to anything done or to be done for the preservation of the business
or property of the corporation; and
(f) payments by a corporation to its members by reason only of their membership in
terms of section 51 (1) shall be of such amounts and be effected at such times as
the members may from time to time agree upon, and such payments shall be made
to members in proportion to their respective interests in the corporation.
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Disqualified persons regarding management of corporation
47. Notwithstanding any other provision of this Act or in any association agreement or any
other agreement to the contrary, the following persons shall be disqualified from taking
part in the management of a corporation:
(a) Any person under legal disability, except-
(i) ……
[Sub-para. (i) deleted by s. 13 of Act 22 of 2001.]
(ii) a minor who has attained at least the age of 18 years and whose guardian
has lodged with the corporation a written consent to the minor’s participation
in the management of the business of the corporation;
(b) save under authority of a Court –
(i) an unrehabilitated insolvent;
(ii) any person removed from an office of trust on account of misconduct;
(iii) any person who has at any time been convicted of theft, fraud, forgery or
uttering a forged document, perjury, any offence under the Prevention of
Corruption Act, 1958 (Act 6 of 1958), the Corruption Act, 1992 (Act 94 of
1992), Part 1 to 4, or section 17, 20 or 21 (in so far as it relates to the
aforementioned offences) of Chapter 2 of the Prevention and Combating of
Corrupt Activities Act, 2004, or any offence involving dishonesty or in
connection with the formation or management of a company or a corporation,
and has been sentenced therefor to imprisonment for at least six months
without the option of a fine; and
[Sub-para. (iii) substituted by s. 36 (1) of Act 12 of 2004.]
(c) any person who is subject to any order of a court under the Companies Act
disqualifying him from being a director of a company.
[Sub-s. (1) amended by s. 11 (b) of Act 26 of 1997.]
(2) Any person disqualified under the provisions of subsection (1) (b) or (c) who directly or
indirectly takes part in or is concerned with the management of any corporation, shall be
guilty of an offence.
[Sub-s. (2) substituted by s. 11 (c) of Act 26 of 1997.]
[S. 47 amended by s. 11 (a) of Act 26 of 1997.]
Meetings of members
48.(1) Any member of a corporation may by notice to every other member and every other
person entitled to attend a meeting of members, call a meeting of members for any
purpose disclosed in the notice.
(2) Unless an association agreement provides otherwise-
(a) a notice referred to in subsection (1) shall, as regards the date, time and venue of
the meeting, fix a reasonable date and time, and a venue which is reasonably
suitable for all persons entitled to attend the particular meeting;
(b) three-fourths of the members present in person at the meeting, shall constitute a
quorum; and
(c) only members present in person at the meeting may vote at that meeting.
[Para. (c) added by s. 9 (c) of Act 38 of 1986.]
(2A) Unless an association agreement provides otherwise, a meeting at which a quorum is not
present within half an hour after the time appointed for the meeting, shall be adjourned to
a day not earlier than seven days and not later than 21 days after the date of that
meeting, and if at such adjourned meeting a quorum is not present within half an hour
after the time appointed for the meeting, the members present in person shall constitute a
quorum.
[Sub-s. (2A) inserted by s. 12 of Act 26 of 1997.]
(2B) Where a meeting has been adjourned as contemplated in subsection (2A), the member
who adjourned the meeting shall, upon a date not more than three days after the
adjournment, send a written notice to each member of the corporation stating-
(a) the date, time and place to which the meeting has been adjourned;
23
(b) the matters before the meeting when it was adjourned; and
(c) the grounds for the adjournment.
[Sub-s. (2B) inserted by s. 12 of Act 26 of 1997.]
(3) (a) A corporation shall record a report of the proceedings at a meeting of its members
within 14 days after the date on which the meeting was held in a minute book
which shall be kept at the registered office of the corporation.
(b) A resolution in writing, signed by all the members and entered into the minute
book, shall be as valid and effective as if it were passed at a meeting of the
members duly convened and held.
Unfairly prejudicial conduct
49.(1) Any member of a corporation who alleges that any particular act or omission of the
corporation or of one or more other members is unfairly prejudicial, unjust or inequitable
to him, or to some members including him, or that the affairs of the corporation are being
conducted in a manner unfairly prejudicial, unjust or inequitable to him, or to some
members including him, may make an application to a Court for an order under this
section.
(2) If on any such application it appears to the Court that the particular act or omission is
unfairly prejudicial, unjust or inequitable as contemplated in subsection (1), or that the
corporation’s affairs are being conducted as so contemplated, and if the Court considers
it just and equitable, the Court may with a view to settling the dispute make such order as
it thinks fit, whether for regulating the future conduct of the affairs of the corporation or for
the purchase of the interest of any member of the corporation by other members thereof
or by the corporation.
(3) When an order under this section makes any alteration or addition to the relevant
founding statement or association agreement, or replaces any association agreement,
the alteration or addition or replacement shall have effect as if it were duly made by
agreement of the members concerned.
(4) A copy of an order made under this section which-
(a) alters or adds to a founding statement shall within 28 days of the making thereof be
lodged by the corporation with the Registrar for registration; or
(b) alters or adds to or replaces any association agreement, shall be kept by the
corporation at its registered office where any member of the corporation may
inspect it.
(5) Any corporation which fails to comply with any provision of subsection (4) shall be guilty
of an offence.
Proceedings against fellow-members on behalf of corporation
50.(1) Where a member or a former member of a corporation is liable to the corporation-
(a) to make an initial contribution or any additional contribution contemplated in
subsections (1) and (2) (a), respectively, of section 24; or
(b) on account of-
(i) the breach of a duty arising from his fiduciary relationship to the corporation
in terms of section 42; or
(ii) negligence in terms of section 43,
any other member of the corporation may institute proceedings in respect of any such
liability on behalf of the corporation against such member or former member after
notifying all other members of the corporation of his intention to do so.
(2) After the institution of such proceedings by a member the leave of the Court concerned
shall be required for a withdrawal of the proceedings or for any settlement of the claim,
and the Court may in connection with such withdrawal or settlement make such orders as
it may deem fit.
24
(3) If a Court in any particular case finds that the proceedings, if unsuccessful, have been
instituted without prima facie grounds, it may order the member who has instituted them
on behalf of the corporation, himself to pay the costs of the corporation and of the
defendant in question in such manner as the Court may determine.
Payments by corporation to members
51.(1) Any payment by a corporation to any member by reason only of his membership, may be
made only-
(a) if, after such payment is made, the corporation’s assets, fairly valued, exceed all its
liabilities;
(b) if the corporation is able to pay its debts as they become due in the ordinary course
of its business; and
(c) if such payment will in the particular circumstances not in fact render the
corporation unable to pay its debts as they become due in the ordinary course of its
business.
(2) A member shall be liable to a corporation for any payment received contrary to any
provision of subsection (1).
(3) For the purposes of this section-
(a) without prejudice to the generality of the expression ‘payment by a corporation to
any member by reason only of his membership’, that expression-
(i) shall include a distribution, or a repayment of any contribution, or part
thereof, to a member;
(ii) shall exclude any payment to a member in his capacity as a creditor of the
relevant corporation and, in particular, a payment as remuneration for
services rendered as an employee or officer of the corporation, a repayment
of a loan or of interest thereon or a payment of rental; and
(b) ‘payment’ shall include the delivery or transfer of any property.
Prohibition of loans and furnishing of security to members and others by corporation
52.(1) A corporation shall not, directly or indirectly, make a loan-
(a) to any of its members;
(b) to any other corporation in which one or more of its members together hold more
than a 50 per cent interest; or
(c) to any company or other juristic person (except a corporation) controlled by one or
more members of the corporation,
and shall not provide any security to any person in connection with any obligation of any
such member, or other corporation, company or other juristic person.
(2) The provisions of subsection (1) shall not apply in respect of the making of any particular
loan or the provision of any particular security with the express previously obtained
consent in writing of all the members of a corporation.
(3) Any member of a corporation who authorizes or permits or is a party to the making of any
loan or the provision of any security contrary to any provision of this section-
(a) shall be liable to indemnify the corporation and any other person who had no actual
knowledge of the contravention against any loss directly resulting from the invalidity
of such loan or security; and
(b) shall be guilty of an offence.
(4) For the purposes of this section-
(a) ‘loan’ includes-
(i) a loan of any property; and
(ii) any credit extended by a corporation where the debt concerned is not
payable or is not being paid in accordance with normal business practice in respect
of the payment of debts of the same kind;
25
(b) one or more members of a corporation shall only be deemed to control a company
or other juristic person as contemplated in subsection (1) (c), if the circumstances
envisaged in section 226 (1A) (b) of the Companies Act in relation to a director or
manager or his nominee, or directors or managers or their nominees, referred to in
that section, and a company or body corporate, are present in respect of any such
member or his nominee, or such members or their nominees, and any such
company or other juristic person; and
(c) ‘security’ includes a guarantee.
PART VI
EXTERNAL RELATIONS (ss 53-55)
Pre-incorporation contracts
53.(1) Any contract in writing entered into by a person professing to act as an agent or a trustee
for a corporation not yet formed, may after its incorporation be ratified or adopted by such
corporation as if the corporation had been duly incorporated at the time when the contract
was entered into.
(2) The ratification or adoption by a corporation referred to in subsection (1) shall be in the
form of a consent in writing of all the members of the corporation, given within a time
specified in the contract or, if no time is specified, within a reasonable time after
incorporation.
Power of members to bind corporation
54.(1) Subject to the provisions of this section, any member of a corporation shall in relation to a
person who is not a member and is dealing with the corporation, be an agent of the
corporation.
(2) Any act of a member shall bind a corporation whether or not such act is performed for the
carrying on of the business of the corporation unless the member so acting has in fact no
power to act for the corporation in the particular matter and the person with whom the
member deals has, or ought reasonably to have, knowledge of the fact that the member
has no such power.
[S. 54 amended by s. 10 of Act 38 of 1986 and substituted by s. 13 of Act 26 of 1997.]
Application of sections 37 and 226 of Companies Act, 1973
55.(1) If the relationship between any company and any corporation is such that the corporation,
if it were a company, would be a holding company of such company, the provisions of
section 37 of the Companies Act regarding-
(a) the employment of funds of a company in a loan to; or
(b) the provision of any security by a company to another person in connection with an
obligation of,
its holding company, or a company which is a subsidiary of that holding company but is
not a subsidiary of itself, shall mutatis mutandis apply in relation to any such employment
of funds or provision of security by any such company in respect of any such corporation
and in respect of any company which would be a subsidiary of the corporation were it a
company, but which is not a subsidiary of the first-mentioned company.
(2) In the application in terms of subsection (1) of the provisions of subsection (3) (b) of the
said section 37 of the Companies Act any reference therein to a director or officer, or a
former director or officer, of a holding company, shall be construed as a reference to any
member or officer, or former member or officer, of a corporation envisaged in subsection
(1).
26
(3) If the relationship between any company and any corporation is as envisaged in
subsection (1), the provisions of section 226 of the Companies Act regarding the making
by a company of any loan to, or the provision of security by a company to another person
in connection with any obligation of-
(a) any director or manager of the company’s holding company or of another company
which is a subsidiary of its holding company; or
(b) another company or another juristic person controlled by one or more directors or
managers of the company’s holding company or of a company which is a
subsidiary of its holding company,
[Para. (b) substituted by s. 2 (a) of Act 17 of 1990.]
shall mutatis mutandis apply in relation to any such loan or provision of security by any
such company in respect of-
(i) any member or officer of any such corporation, or any director or officer of
another company which would be a subsidiary of any such corporation were
the corporation a company; and
(ii) another company or another juristic person controlled by one or more
members of any such corporation, or by one or more directors or managers
of a company which would be a subsidiary of the corporation were it a
company.
[Sub-para. (iii) substituted by s. 2 (b) of Act 17 of 1990.]
(4) In the application in terms of subsection (3) of the provisions of subsection (5) of the said
section 226 of the Companies Act any reference therein to any director or officer of a
holding company, shall be construed as a reference to any member or officer of a
corporation envisaged in subsection (1).
PART VII
ACCOUNTING AND DISCLOSURE (ss 56-62)
Accounting records
56.(1) A corporation shall keep in one of the official languages of the Republic such accounting
records as are necessary fairly to present the state of affairs and business of the
corporation, and to explain the transactions and financial position of the business of the
corporation, including-
(a) records showing its assets and liabilities, members’ contributions, undrawn profits,
revaluations of fixed assets and amounts of loans to and from members;
(b) a register of fixed assets showing in respect thereof the respective dates of any
acquisition and the cost thereof, depreciation (if any), and where any assets have
been revalued, the date of the revaluation and the revalued amount thereof, the
respective dates of any disposals and the consideration received in respect
thereof: Provided that in the case of a corporation which has been converted from
a company in terms of section 27, the existing fixed asset register of the company
shall be deemed to be such a register in respect of the corporation, and such
particulars therein shall be deemed to apply in respect of it;
[Para. (b) amended by s. 7 of Act 81 of 1992.]
(c) records containing entries from day to day of all cash received and paid out, in
sufficient detail to enable the nature of the transactions and, except in the case of
cash sales, the names of the parties to the transactions to be identified;
(d) records of all goods purchased and sold on credit, and services received and
rendered on credit, in sufficient detail to enable the nature of those goods or
services and the parties to the transactions to be identified;
(e) statements of the annual stocktaking, and records to enable the value of stock at
the end of the financial year to be determined; and
(f) vouchers supporting entries in the accounting records.
(2) The accounting records relating to-
(a) contributions by members;
27
(b) loans to and from members; and
(c) payments to members,
shall contain sufficient detail of individual transactions to enable the nature and purpose
thereof to be clearly identified.
(3) The accounting records referred to in subsection (1) shall be kept in such a manner as to
provide adequate precautions against falsification and to facilitate the discovery of any
falsification.
(4) The accounting records shall be kept at the place or places of business or at the
registered office of the corporation and shall, wherever kept, be open at all reasonable
times for inspection by any member.
(5) (a) Any corporation which fails to comply with any provision of any of the preceding
subsections of this section, and every member thereof who is a party to such
failure or who fails to take all reasonable steps to secure compliance by the
corporation with any such provision, shall be guilty of an offence.
(b) In any proceedings against any member of a corporation in respect of an offence
consisting of a failure to take reasonable steps to secure compliance by a
corporation with any provision referred to in paragraph (a), it shall be a defence if it
is proved that the accused had reasonable grounds for believing and did believe
that a competent and reliable person was charged with the duty of seeing that any
such provision was complied with, and that such person was in a position to
discharge that duty, and that the accused had no reason to believe that such
person had in any way failed to discharge that duty.
Financial year of corporation
57.(1) (a) A corporation shall fix a date on which, in each year, its financial year will end.
(b) The financial year of a corporation shall be its annual accounting period.
(2) The date referred to in subsection (1) (a) may, subject to the provisions of section 15 (2),
be changed by the corporation to any other date: Provided that the corporation may not
change the date referred to in subsection (1) (a) more than once in any financial year.
[Sub-s. (2) amended by s. 3 (a) of Act 17 of 1990.]
(3) Subject to any increase or reduction of the duration of a financial year by reason of the
provisions of subsection (4), the duration of each financial year of a corporation shall be
12 months ending on the date or other date referred to in subsection (1) (a) or (2).
(4) Notwithstanding the provisions of subsection (3)-
(a) the first financial year of a corporation shall commence on the date of its
registration and shall end on the date referred to in subsection (1) (a) occurring not
less than 3 nor more than 15 months after the date of registration: Provided that
the first financial year of a corporation converted from a company in terms of
section 27, shall end on the date on which the financial year of the company would
have ended had it not been so converted; and
[Para. (a) amended by s. 11 of Act 38 of 1986.]
(b) in the case of a corporation which has in terms of subsection (2) changed the date
referred to in subsection (1) (a), the financial year shall commence at the end of the
previous financial year and shall end on the date as changed occurring not less
than 3 or more than 18 months after the end of that previous financial year.
[Para. (b) substituted by s. 3 (b) of Act 17 of 1990.]
Annual financial statements
58.(1) The members of a corporation shall within nine months after the end of every financial
year of the corporation cause annual financial statements in respect of that financial year
to be made out in one of the official languages of the Republic.
[Sub-s. (1) amended by s. 4 (a) of Act 64 of 1988.]
(2) The annual financial statements of a corporation-
(a) shall consist of-
(i) a balance sheet and any notes thereon; and
28
(ii) an income statement or any similar financial statement where such form is
appropriate, and any notes thereon;
(b) shall in conformity with generally accepted accounting practice, appropriate to the
business of the corporation, fairly present the state of affairs of the corporation as
at the end of the financial year concerned, and the results of its operations for that
year;
(c) shall disclose separately the aggregate amounts, as at the end of the financial
year, of contributions by members, undrawn profits, revaluations of fixed assets
and amounts of loans to or from members, and the movements in these amounts
during the year;
(d) shall be in agreement with the accounting records, which shall be summarised in
such a form that-
(i) compliance with the provisions of this subsection is made possible; and
(ii) an accounting officer is enabled to report to the corporation in terms of
section 62 (1) (c) without it being necessary to refer to any subsidiary
accounting records and vouchers supporting the entries in the accounting
records:
Provided that nothing contained in this paragraph shall be construed as preventing an
accounting officer, if he deems it necessary, from inspecting such subsidiary accounting
records and vouchers; and
[Para. (d) added by s. 12 (1) (b) of Act 38 of 1986.]
(e) shall contain the report of the accounting officer referred to in section 62 (1) (c).
[Para. (e) added by s. 12 (1) (b) of Act 38 of 1986.]
[Sub-s. (2) amended by s. 4 (a) of Act 64 of 1988.]
(3) The annual financial statements shall be approved and signed by or on behalf of a
member holding a member’s interest of at least 51%, or members together holding
members’ interests of at least 51%, in the corporation .
[Sub-s. (3) substituted by s. 4 (b) of Act 64 of 1988.]
(4) (a) Any member of a corporation who fails to take all reasonable steps to comply or to
secure compliance with any provision of this section, shall be guilty of an offence.
(b) In any proceedings against any member of a corporation under paragraph (a) the
defence referred to in section 56 (5) (b) shall be available to him.
[Para. (b) substituted by s. 12 (1) (c) of Act 38 of 1986.]
Appointment of accounting officers
59.(1) Every corporation shall appoint an accounting officer in accordance with the provisions of
this Act.
(2) The appointment of the first accounting officer of a corporation referred to in section 12
(g) (i) shall take effect on the date of the registration of the corporation.
(3) If a vacancy occurs in the office of an accounting officer, whether as a result of a
removal, resignation or otherwise, the corporation shall within 28 days appoint another
accounting officer and comply with the provisions of subsection (2) of section 15:
Provided that the provisions of subsection (3) of the said section 15 shall apply where the
said subsection (2) of that section has not so been complied with, whether or not an
appointment of such other accounting officer has been made.
[Sub-s. (3) amended by s. 14 (a) of Act 26 of 1997.]
(4) A corporation shall inform its accounting officer in writing of his removal from office.
(5) (a) An accounting officer shall on resignation or removal from office forthwith inform
every member of the corporation thereof in writing, and shall send a copy of the
letter to the last known address of the registered office of the corporation and shall
in addition forthwith by registered post inform the Registrar-
(i) that he has resigned or been removed from office;
(ii) of the date of his resignation or removal from office;
(iii) of the date up to which he performed his duties; and
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(iv) whether, at the time of the resignation or removal from office of the
accounting officer, that officer was aware of any matters in the financial
affairs of the corporation which are in contravention of the provisions of this
Act: Provided that an accounting officer who was aware of any such matter
shall submit the full particulars thereof in writing to the Registrar.
[Sub-para. (iv) substituted by s. 14 (b) of Act 26 of 1997.]
[Para. (a) substituted by s. 8 of A ct 81 of 1992 and amended by s. 14 of Act 22 of 2001.]
(b) If an accounting officer who has been removed from office is of the opinion that he
was removed for improper reasons, he shall forthwith by registered post inform the
Registrar thereof, and shall send a copy of the letter to every member.
[Para. (b) amended by s. 14 of Act 22 of 2001.]
Qualifications of accounting officers
60.(1) No person shall be appointed as or hold the office of an accounting officer of a
corporation, unless he is a member of a recognized profession which-
(a) as a condition for membership, requires its members to have passed examinations
in accounting and related fields of study which in the opinion of the Minister would
qualify such members to perform the duties of an accounting officer under this Act;
(b) has the power to exclude from membership those persons found guilty of
negligence in the performance of their duties or of conduct which is discreditable to
their profession; and
(c) has been named in a notice referred to in subsection (2).
[Sub-s. (1) amended by s. 9 (a) of Act 81 of 1992.]
(2) The Minister may from time to time publish by notice in the Gazette the names of those
professions whose members are qualified to perform the duties of an accounting officer in
terms of this Act.
(3) A member or employee of a corporation, and a firm whose partner or employee is a
member or employee of a corporation, shall not qualify for appointment as an accounting
officer of such corporation unless all the members consent in writing to such
appointment.
(4) A firm as defined in section 1 of the Public Accountants’ and Auditors’ Act, 1991 (Act 80
of 1991), and any other firm may be appointed as an accounting officer of a corporation,
provided each partner in the latter firm is qualified to be so appointed.
[Sub-s. (4) substituted by s. 9 (b) of Act 81 of 1992.]
Right of access and remuneration of accounting officers
61.(1) An accounting officer of a corporation shall at all times have a right of access to the
accounting records and all the books and documents of the corporation, and to require
from members such information and explanations as he considers necessary for the
performance of his duties as an accounting officer.
(2) The remuneration of an accounting officer shall be determined by agreement with the
corporation.
Duties of accounting officers
62.(1) The accounting officer of a corporation shall, not later than three months after completion
of the annual financial statements-
(a) subject to the provisions of section 58 (2) (d), determine whether the annual
financial statements are in agreement with the accounting records of the
corporation;
[Para. (a) substituted by s. 13 (1) (a) of Act 38 of 1986.]
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(b) revi ew the appropriateness of the accounting policies represented to the
accounting officer as having been applied in the preparation of the annual financial
statements; and
[Para. (b) substituted by s. 13 (1) (a) of Act 38 of 1986 and by s. 4 (a) of Act 17 of
1990.]
(c) report in respect of paragraphs (a) and (b) to the corporation.
(2) (a) If during the performance of his duties an accounting officer becomes aware of any
contravention of a provision of this Act, he shall describe the nature of such
contravention in his report.
(b) Where an accounting officer is a member or employee of a corporation, or is a firm
of which a partner or employee is a member or employee of the corporation, his
report shall state that fact.
(3) If an accounting officer of a corporation-
(a) at any time knows, or has reason to believe, that the corporation is not carrying on
business or is not in operation and has no intention of resuming operations in the
foreseeable future; or
(b) during the performance of his duties finds-
(i) that any change, during a relevant financial year, in respect of any particulars
mentioned in the relevant founding statement has not been registered;
(ii) that the annual financial statements indicate that as at the end of the financial
year concerned the corporation’s liabilities exceed its assets; or
(iii) that the annual financial statements incorrectly indicate that as at the end of
the financial year concerned the assets of the corporation exceed its
liabilities, or has reason to believe that such an incorrect indication is given,
[Sub-para. (iii) added by s. 13 (1) (d) of Act 38 of 1986.]
he shall forthwith by registered post report accordingly to the Registrar.
[Sub-s. (3) amended by s. 14 of Act 22 of 2001.]
(4) If an accounting officer of a corporation has in accordance with subparagraph (ii) or (iii) of
paragraph (b) of subsection (3) reported to the Registrar that the annual financial
statements of the corporation concerned indicate that as at the end of the financial year
concerned the corporation’s liabilities exceed its assets or that the annual financial
statements incorrectly indicate that as at the end of the financial year concerned the
assets of the corporation exceed its liabilities, or that he has reason to believe that such
an incorrect indication is given, and he finds that any subsequent financial statements of
the corporation concerned indicate that the situation has changed or has been rectified
and that the assets concerned then exceed the liabilities or that they no longer incorrectly
indicate that the assets exceed the liabilities or that he no longer has reason to believe
that such an incorrect indication is given, as the case may be, he may report to the
Registrar accordingly.
[Sub-s. (4) added by s . 4 (b) of Act 17 of 1990.]
PART VIII
LIABILITY OF MEMBERS AND OTHERS FOR DEBTS OF CLOSE CORPORATION (ss 63-65)
Joint liability for debts of corporation
63. Notwithstanding anything to the contrary contained in any provision of this Act, the
following persons shall in the following circumstances together with a corporation be
jointly and severally liable for the specified debts of the corporation:
(a) Where the name of the corporation is in any way used without the abbreviation as
required by section 22 (1), any member of the corporation who is responsible for,
or who authorized or knowingly permits the omission of such abbreviation, shall be
so liable to any person who enters into any transaction with the corporation from
which a debt accrues for the corporation while that person, in consequence of such
omission, is not aware that the person is dealing with a corporation;
[Para. (a) substituted by s. 15 (a) of Act 26 of 1997.]
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(b) where any member fails to pay money or to deliver or transfer property to the
corporation as required by section 24 (4), that member shall be so liable for every
debt of the corporation incurred from the date of registration of the founding
statement in which particulars of the contribution concerned are stated to the date
of the actual payment, delivery or transfer of such money or property;
[Para. (b) substituted by s. 15 (b) of Act 26 of 1997.]
(c) ……
[Para. (c) deleted by s. 15 (c) of Act 26 of 1997.]
(d) where a juristic person or a trustee of a trust inter vivos in that capacity purports to
hold, whether directly or indirectly, a member’s interest in the corporation in
contravention of any provision of section 29, such juristic person or trustee of a
trust inter vivos and any nominee referred to in that section shall, notwithstanding
the invalidity of the holding of such interest, be so liable for every debt of the
corporation incurred during the time the contravention continues;
[Para. (d) substituted by s. 5 (1) of Act 64 of 1988.]
(e) where the corporation makes a payment in respect of the acquisition of a member’s
interest in contravention of any provision of section 39, every person who is a
member at the time of such payment and who is aware of the making of such
payment, including a member or a former member who receives or who received
such payment, shall be so liable for every debt of the corporation incurred prior to
the making of such payment unless, in the case of a member who is so aware, he
proves that he took all reasonable steps to prevent the payment;
(f) where the corporation gives financial assistance for the purpose of or in connection
with any acquisition of a member’s interest in contravention of any provision of
section 40, every person who is a member at the time of the giving of such
assistance and who is aware of the giving of such assistance, and the person who
receives such assistance, shall be so liable for every debt of the corporation
incurred prior to the giving of such assistance unless, in the case of a member who
is so aware, he proves that he took all reasonable steps to prevent the payment;
(g) where a person takes part in the management of the business of the corporation
while disqualified from doing so in terms of section 47 (1) (b) or (c), that person
shall be so liable for every debt of the corporation which it incurs as a result of his
participation in the management of the corporation; and
(h) where the office of accounting officer of the corporation is vacant for a period of six
months, any person who at any time during that period was a member and aware
of the vacancy, and who at the expiration of that period is still a member, shall be
so liable for every debt of the corporation incurred during such existence of the
vacancy and for every such debt thereafter incurred while the vacancy continues
and he still is a member.
Liability for reckless or fraudulent carrying-on of business of corporation
64.(1) If it at any time appears that any business of a corporation was or is being carried on
recklessly, with gross negligence or with intent to defraud any person or for any
fraudulent purpose, a Court may on the application of the Master, or any creditor,
member or liquidator of the corporation, declare that any person who was knowingly a
party to the carrying on of the business in any such manner, shall be personally liable for
all or any of such debts or other liabilities of the corporation as the Court may direct, and
the Court may give such further orders as it considers proper for the purpose of giving
effect to the declaration and enforcing that liability.
(2) Without prejudice to any other criminal liability incurred where any business of a
corporation is carried on in any manner contemplated in subsection (1), every person
who is knowingly a party to the carrying on of the business in any such manner, shall be
guilty of an offence.
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Powers of Court in case of abuse of separate juristic personality of corporation
65. Whenever a Court on application by an interested person, or in any proceedings in which
a corporation is involved, finds that the incorporation of, or any act by or on behalf of, or
any use of, that corporation, constitutes a gross abuse of the juristic personality of the
corporation as a separate entity, the Court may declare that the corporation is to be
deemed not to be a juristic person in respect of such rights, obligations or liabilities of the
corporation, or of such member or members thereof, or of such other person or persons,
as are specified in the declaration, and the Court may give such further order or orders as
it may deem fit in order to give effect to such declaration.
PART IX
WINDING-UP (ss 66-81)
Application of Companies Act, 1973
66.(1) The provisions of the Companies Act which relate to the winding-up of a company,
including the regulations made thereunder, (except sections 311, 312, 313, 337, 338,
344, 345, 346 (2), 347 (3), 349, 364, 365 (2), 367 to 370, inclusive, 377, 387, 389, 390,
395 to 399, inclusive, 400 (1) (b), 401, 402, 417, 418, 419 (4), 421, 423 and 424), shall
apply mutatis mutandis and in so far as they can be applied to the liquidation of a
corporation in respect of any matter not specifically provided for in this Part or in any
other provision of this Act.
[Sub-s. (1) substituted by s. 16 of Act 26 of 1997.]
(2) For the purposes of subsection (1)-
(a) any reference in a relevant provision of the Companies Act, and in any provision of
the Insolvency Act, 1936 (Act 24 of 1936), made applicable by any such provision-
(i) to a company, shall be construed as a reference to a corporation;
(ii) to a share in a company, shall be construed as a reference to a member’s
interest in a corporation;
(iii) to a member, director, shareholder or contributory of a company, shall be
construed as a reference to a member of a corporation;
(iv) to an auditor of a company, shall be construed as a reference to an
accounting officer of a corporation;
(v) to an officer or a secretary of a company, shall be construed as a reference
to a manager or a secretary who is an officer of a corporation;
(vi) to a registered office of a company, shall be construed as a reference to a
registered office of a corporation;
(vii) to a memorandum or articles of association of a company, shall be construed
as a reference to a founding statement and an association agreement of a
corporation, respectively;
(viii) to the Registrar of Companies, shall be construed as a reference to the
Registrar;
(ix) to the Companies Act or the regulations made thereunder, or to any provision
thereof, shall be construed as including a reference to this Act or the
regulations made thereunder, or to any corresponding provision thereof, as
the case may be;
(x) to an insolvent estate, shall be construed as a reference to a corporation;
(xi) to a provisional liquidator of a company, or to a liquidator of a company or a
trustee of an insolvent estate, shall be construed as a reference to a
provisional liquidator and to a liquidator of a corporation, respectively;
(xii) to a sheriff of a province, shall be construed as including a reference to a
messenger of a magistrate’s court;
(xiii) to a Registrar of a Court, shall be construed as including a reference to a
clerk of a magistrate’s court;
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(xiv) to a Court, shall be construed as a reference to a Court having jurisdiction
under this Act; and
(xv) to a Master, shall be construed as a reference to a Master having jurisdiction
under this Act;
(b) a reference to a special resolution-
(i) referred to in sections 340 (2), 350 (1), 351 (1), 352, 356 (2), 357 (3) and (4),
359 (1), 362 (1) and 363 (1) of the Companies Act, shall be construed as a
reference to a written resolution for the voluntary winding-up of a corporation
in terms of section 67 of this Act; and
(ii) referred to in section 422 (1) (b) of the Companies Act, shall be construed as
a reference to a written resolution signed by or on behalf of all the members
of a corporation; and
(c) it shall be deemed that the following paragraph has been substituted for paragraph
(b) of section 358 of the Companies Act:
‘(b) where any other action or proceeding is being or about to be instituted
against the company in any court in the Republic, apply to such court for an
order restraining further proceedings in the action or proceeding,’.
Voluntary winding-up
67.(1) A corporation may be wound up voluntarily if all its members so resolve at a meeting of
members called for the purpose of considering the winding-up of the corporation, and
sign a written resolution that the corporation be wound up voluntarily by members or
creditors, as the case may be.
(2) A copy of the written resolution, in duplicate in the prescribed form, shall be lodged within
28 days after the date of the passing of the resolution, together with the prescribed fee,
with the Registrar, who shall register such resolution if it complies with the provisions of
subsection (1).
(3) If such copy of the written resolution is not so registered by the Registrar within 90 days
from the date of the passing of the resolution, the resolution shall lapse and be void.
(4) A resolution in terms of this section shall not take effect until it has been registered by the
Registrar.
Liquidation by Court
68. A corporation may be wound up by a Court, if-
(a) members having more than one half of the total number of votes of members, have
so resolved at a meeting of members called for the purpose of considering the
winding-up of the corporation, and have signed a written resolution that the
corporation be wound up by a Court;
(b) the corporation has not commenced its business within a year from its registration,
or has suspended its business for a whole year;
(c) the corporation is unable to pay its debts; or
(d) it appears on application to the Court that it is just and equitable that the
corporation be wound up.
Circumstances under which corporation deemed unable to pay debts
69.(1) For the purposes of section 68 (c) a corporation shall be deemed to be unable to pay its
debts, if-
(a) a creditor, by cession or otherwise, to whom the corporation is indebted in a sum of
not less than two hundred rand then due has served on the corporation, by
delivering it at its registered office, a demand requiring the corporation to pay the
sum so due, and the corporation has for 21 days thereafter neglected to pay the
sum or to secure or compound for it to the reasonable satisfaction of the creditor;
or
34
(b) any process issued on a judgment, decree or order of any court in favour of a
creditor of the corporation is returned by a sheriff, or a messenger of a magistrate’s
court, with an endorsement that he has not found sufficient disposable property to
satisfy the judgment, decree or order, or that any disposable property found did not
upon sale satisfy such process; or
(c) it is proved to the satisfaction of the Court that the corporation is unable to pay its
debts.
(2) In determining for the purposes of subsection (1) whether a corporation is unable to pay
its debts, the Court shall also take into account the contingent and prospective liabilities
of the corporation.
Repayments by members
70.(1) Subject to the provisions of this section, no member of a corporation shall in the windingup of the corporation be liable for the repayment of any payment made by the corporation
to him by reason only of his membership, if such payment complies with the requirements
of section 51 (1).
(2) In the winding-up of a corporation unable to pay its debts, any such payment made to a
member by reason only of his membership within a period of two years before the
commencement of the winding-up of the corporation, shall be repaid to the corporation by
the member, unless such member can prove that-
(a) after such payment was made, the corporation’s assets, fairly valued, exceeded all
its liabilities; and
(b) such payment was made while the corporation was able to pay its debts as they
became due in the ordinary course of its business; and
(c) such payment, in the particular circumstances, did not in fact render the
corporation unable to pay its debts as they became due in the ordinary course of its
business.
(3) A person who has ceased to be a member of the corporation concerned within the said
period of two years, shall also be liable for any repayment provided for in subsection (2)
if, and to the extent that, repayments by present members, together with all other
available assets, are insufficient for paying all the debts of the corporation.
(4) A certificate given by the Master as to the amount payable by any member or former
member in terms of subsection (2) or (3) to the corporation, may be forwarded by the
liquidator to the clerk of the magistrate’s court in whose area of jurisdiction the registered
office of the corporation is situated, who shall record it, and thereupon such notice shall
have the effect of a civil judgment of that magistrate’s court against the member or former
member concerned.
(5) The court in question may, on application by a member or former member referred to in
subsection (3), make any order that it deems fit in regard to any certificate referred to in
subsection (4).
Repayment of salary or remuneration by members
71.(1) If a corporation being wound up is unable to pay its debts, and-
(a) any direct or indirect payment of a salary or other remuneration was made by the
corporation within a period of two years before the commencement of its windingup to a member in his capacity as an officer or employee of the corporation; and
(b) such payment was, in the opinion of the Master, not bona fide or reasonable in the
circumstances,
the Master shall direct that such payment, or such part thereof as he may determine, be
repaid by such member to the corporation.
(2) A person who has within a period of two years referred to in subsection (1) (a) ceased to
be a member of a corporation referred to in that subsection may, under the
circumstances referred to therein, be directed by the Master to make a repayment
provided for in subsection (1), if, and to the extent that, any such repayments by present
35
members are, together with all other available assets, insufficient for paying all the debts
of the corporation.
(3) The provisions of subsections (4) and (5) of section 70 shall mutatis mutandis apply in
respect of any repayment to a corporation in terms of subsection (1) or (2).
Composition
72.(1) Any person, in this section referred to as ‘the offeror’, may at any time after the
commencement of the liquidation of a corporation which is unable to pay its debts, submit
to the liquidator a written offer of composition.
(2) If the liquidator is of the opinion that the creditors will probably accept the offer of
composition, the liquidator shall send by registered post or deliver to every known
creditor as well as the Master, a copy of the offer referred to in subsection (1) with the
liquidator’s report thereon, and an explanation of the effect of the composition.
(3) If the liquidator is of the opinion that there is no likelihood that the creditors will accept the
composition or that he or she has insufficient information at his or her disposal to make a
recommendation, the liquidator shall inform the offeror in writing that the offer is
unacceptable and that he or she does not propose to send a copy thereof to the creditors
and the Master.
(4) The offer or may, within 30 days from the date on which the liquidator advised that offer
or of the rejection of the offer, submit representations in writing to the Master who, after
having allowed the liquidator 14 days to comment in writing, shall consider the
representations and comment and may thereafter direct the liquidator to send by
registered post or deliver a copy of the offer to every known creditor of the corporation
together with the liquidator’s report thereon, and an explanation of the effect of the
composition.
(5) Whenever the liquidator posts or delivers to the creditors and the Master an offer of
composition in terms of the provisions of this section, he or she shall simultaneously give
notice to the creditors of the meeting at which the offer and any other matter mentioned in
the notice, are to be considered.
(6) An offer of composition may be considered at a general meeting of creditors of the
corporation in terms of this Act, provided that notice was given to creditors and the
Master not less than 10 days and not more than 28 days before the date of such a
meeting.
(7) An offer of composition which has been accepted by creditors whose votes amount to not
less than two-thirds in value and two-thirds in number, calculated in accordance with the
provisions of section 52 of the Insolvency Act, 1936 (Act 24 of 1936), of the votes of all
the creditors who proved claims against the corporation, shall be binding upon every
person who had notice of and was entitled to vote at that meeting, whether or not that
person was present or represented at the meeting, as if that person were a party to the
composition: Provided that –
(a) no offer may be so accepted if it contains any condition whereby any creditor would
obtain any benefit to which that creditor would not have been entitled upon the
distribution of the estate in the ordinary way;
(b) payment under the composition has been made or security for such payment has
been given as specified in the offer of composition; and
(c) the right of any secured or preferent creditor shall not be prejudiced thereby,
except insofar as that creditor has expressly and in writing waived the preference.
(8) A composition shall not affect the liability of a surety of the corporation.
(9) Any money to be paid and anything to be done for the benefit of creditors in pursuance of
a composition shall be paid and done through the liquidator: Provided that any creditor
who has failed to prove a claim before the liquidator has made a final distribution
amongst those creditors who have proved their claims, shall be entitled to prove a claim
and share in such final distribution up to the amount to which that creditor may have been
entitled to under the composition: Provided further, that no claim shall be proved against
the corporation after the expiration of six months as from the date of the meeting at which
36
the composition was accepted, except with leave of the Court or Master and on payment
of such sum to cover the costs or any part thereof, occasioned by the late proof of the
claim, as the Court or Master may direct.
(10) When a composition has been entered into between a corporation and its creditors, the
liquidator shall, in terms of this Act, frame an account and plan of distribution of all the
assets which are or will become available for creditors under the composition.
(11) If an accepted offer of composition so provides, the offeror may apply to the Court for the
setting aside of the winding-up of the corporation and the Court may make such an order
provided that the offeror has, not less than three weeks before making the application,
given notice by advertisement in the Gazette, of the intention to make the application and
has served a copy of the application on the Master, the Registrar and the liquidator.
(12) The application for the setting aside of the liquidation of the corporation may be opposed
by any creditor or other interested person on the following grounds:
(a) That the composition approved under this section unfairly prejudices the interests
of a creditor of the corporation;
(b) that there has been some material irregularity at or in the relation to the meetings
held for the consideration of the composition;
(c) that insufficient or materially inaccurate information on the composition was
disclosed; or
(d) any other grounds that the Court may deem sufficient.
[S. 72 substituted by s. 17 of Act 26 of 1997.]
Repayments, payments of damages and restoration of property by members and others
73.(1) Where in the course of the winding-up of a corporation it appears that any person who
has taken part in the formation of the corporation, or any former or present member,
officer or accounting officer of the corporation has misapplied or retained or become
liable or accountable for any money or property of the corporation, or has been guilty of
any breach of trust in relation to the corporation, a Court may, on the application of the
Master or of the liquidator or of any creditor or member of the corporation, inquire into the
conduct of such person, member, officer or accounting officer and may order him to
repay or restore the money or property, or any part thereof, with interest at such rate as
the Court considers just, or to contribute such sum to the assets of the corporation by
way of compensation or damages in respect of the misapplication, retention or breach of
trust, as the Court considers just.
(2) The provisions of subsection (1) shall apply in respect of any person, member, officer or
accounting officer referred to therein, notwithstanding the fact that such person may also
be criminally responsible in respect of any conduct contemplated therein.
Appointment of liquidator
74.(1) For the purposes of conducting the proceedings in a winding-up of a corporation, the
Master shall, in accordance with policy determined by the Minister, appoint a suitable
natural person as liquidator.
[Sub-s. (1) substituted by s. 21 of Act 16 of 2003.]
(2) The Master shall make an appointment as soon as is practicable after a provisional
winding-up order has been made, or a copy of a resolution for a voluntary winding-up has
been registered in terms of section 67 (2).
(3) When the Master in the case of a voluntary winding-up by members makes an
appointment, he shall take into consideration any further resolution at a meeting of
members nominating a person as liquidator.
(4) In the case of a creditors’ voluntary winding-up and a winding-up by the Court, the Master
shall, subject to the provisions of section 76, if a person is nominated as co-liquidator at
the first meeting of creditors, appoint such person as co-liquidator as soon as he has
given security to the satisfaction of the Master for the proper performance of his duties.
37
Vacancies in office of liquidators
75.(1) When a vacancy occurs in the office of a liquidator of a corporation, the Master may –
(a) where the vacancy occurs in the office of a liquidator nominated by members or
creditors, direct any remaining liquidator to convene a meeting of creditors or
members, as the case may be, to nominate a liquidator to fill the vacancy;
(b) in a case other than a case contemplated in paragraph (a), if he is of opinion that
any remaining liquidator will be able to complete the winding-up, dispense with the
appointment of a liquidator to fill the vacancy, and direct the remaining liquidator to
complete the winding-up; or
(c) in any other case, appoint a liquidator to fill the vacancy.
(2) The provisions of the Companies Act relating to the nomination or appointment of a
liquidator, as applied by section 66 of this Act, and of this Act, shall apply to the
nomination or appointment of a liquidator to fill a vacancy in the office of liquidator.
Refusal by Master to appoint nominated person as liquidator
76.(1) If a person who has been nominated as liquidator by any meeting of creditors or of
members of a corporation was not properly nominated, or is disqualified from being
nominated or appointed as liquidator pursuant to section 372 or 373 of the Companies
Act, as applied by section 66 of this Act, or has failed to give within a period of 21 days as
from the date upon which he was notified that the Master had accepted his nomination or
within such further period as the Master may allow, the security mentioned in section 375
(1) of the Companies Act, as so applied, or, if in the opinion of the Master the person
nominated as liquidator should not be appointed as liquidator of the corporation
concerned, the Master shall give notice in writing to the person so nominated that he
declines to accept his nomination or to appoint him as liquidator, and shall in such notice
state his reasons for declining to accept his nomination or to appoint him: Provided that if
the Master declines to accept the nomination for appointment as liquidator because he is
of the opinion that the person nominated should not be appointed as liquidator, it shall be
sufficient if the Master states in that notice, as such reason, that he is of the opinion that
the person nominated should not be appointed as liquidator of the corporation concerned.
[Sub-s. (1) amended by s. 14 of Act 38 of 1986.]
(2) (a) When the Master has so declined to accept the nomination of any person or to
appoint him as liquidator, or when the Minister has under section 371 (3) of the
Companies Act, as applied by section 66 of this Act, set aside the appointment of a
liquidator, the Master shall convene a meeting of creditors or members, as the
case may be, of the corporation concerned for the purpose of nominating another
person for appointment as liquidator.
(b) In the notice convening any said meeting the Master shall state that he has
declined to accept the nomination for appointment as liquidator of the person
previously nominated, or to appoint the person so nominated and, subject to the
proviso to subsection (1), the reasons therefor, or that the appointment of the
person previously appointed as liquidator has so been set aside by the Minister, as
the case may be, and that the meetings are convened for the purpose of
nominating another person for appointment as liquidator.
(c) The Master shall post a copy of such notice to every creditor whose claim against
the company was previously proved and admitted.
(d) Any meeting referred to in paragraph (a) shall be deemed to be a continuation of
the relevant first meeting of creditors or of members, or of any such meeting
referred to in section 75, as the case may be.
(3) If the Master again so declines for any reason mentioned in subsection (1) to accept the
nomination for appointment as liquidator by any meeting referred to in subsection (2), or
to appoint a person so nominated-
(a) he shall act in accordance with the provisions of subsection (1); and
38
(b) if the person so nominated as sole liquidator has not or if all the persons so
nominated have not been appointed by him or her, he or she shall, in accordance
with policy determined by the Minister, appoint as liquidator or liquidators of the
corporation concerned any other person or persons not disqualified from being
liquidator of that corporation.
[Para. (b) substituted by s. 22 of Act 16 of 2003.]
Resignation and absence of liquidator
77.(1) At the request of a liquidator the Master may relieve him of his office upon such
conditions as the Master may think fit.
(2) A liquidator shall not be absent from the Republic for a period exceeding 60 days, unless-
(a) the Master has before his departure from the Republic granted him permission in
writing to be absent; and
(b) he complies with such conditions as the Master may think fit to impose.
(3) Every liquidator who is relieved of his office by the Master, or who is permitted to absent
himself for a period exceeding 60 days from the Republic, shall give notice thereof in the
Gazette.
First meeting of creditors and members
78.(1) A liquidator shall as soon as may be and, except with the consent of the Master, not later
than one month after a final winding-up order has been made by a Court or a resolution
of a creditors’ voluntary winding-up has been registered-
(a) summon a meeting of the creditors of the corporation for the purpose of-
(i) considering the statement as to the affairs of the corporation lodged with the
Master;
(ii) the proving of claims against the corporation;
(iii) deciding whether a co-liquidator should be appointed and, if so, nominating a
person for appointment; and
(iv) receiving or obtaining, in a winding-up by the Court or a creditors’ voluntary
winding-up, directions or authorization in respect of any matter regarding the
liquidation; and
(b) summon a meeting of members of the corporation for the purpose of-
(i) considering the said statement as to the affairs of the corporation, unless the
meeting of members when passing a resolution for the voluntary winding-up
of the corporation has already considered the said statement; and
(ii) receiving or obtaining directions or authorization in respect of any matter
regarding the liquidation.
(2) (a) The provisions of the law relating to insolvency in respect of voting, the manner of
voting and voting by an agent at meetings of creditors, shall apply mutatis mutandis
in respect of any meeting referred to in this section: Provided that in a winding-up
by the Court a member or former member of a corporation shall have no voting
right in respect of the nomination of a liquidator based on his loan account with the
corporation or claims for arrear salary, travelling expenses or allowances due by
the corporation, or claims paid by such member or former member on behalf of the
corporation.
(b) The provisions of paragraph (a) shall mutatis mutandis apply in respect of a person
to whom a right contemplated in that paragraph has been ceded.
Report to creditors and members
79. Except in the case of a members’ voluntary winding-up, a liquidator shall, as soon as
practicable and, except with the consent of the Master, not later than three months after
the date of his appointment, submit to a general meeting of creditors and members of the
corporation concerned a report as to the following matters:
39
(a) The estimated amounts of the corporation’s assets and liabilities;
(b) if the corporation has failed, the causes of the failure;
(c) whether or not he has submitted or intends to submit to the Master a report under
section 400 (2) of the Companies Act, as applied by section 66 of this Act;
(d) whether or not any member or former member appears to be liable-
(i) to the corporation on the ground of breach of trust or negligence;
(ii) to make repayments to the corporation in terms of section 70 (2) or (3) or
section 71 (1) or (2);
(iii) to either a creditor of the corporation or the corporation itself, as the case
may be, by virtue of any provision of Part VIII of this Act;
(e) any legal proceedings by or against the corporation which may have been pending
at the date of the commencement of the winding-up, or which may have been or
may be instituted;
(f) whether or not further enquiry is in his opinion desirable in regard to any matter
relating to the formation or failure of the corporation or the conduct of its business;
(g) whether or not the corporation has kept the accounting records required by section
56 and, if not, in what respects the requirements of that section have not been
complied with;
(h) the progress and prospects in respect of the winding-up; and
(i) any other matter which he may consider fit, or in connection with which he may
require the directions of the creditors.
Repayments by members or former members
80. The liquidator of a corporation unable to pay its debts-
(a) shall ascertain whether members or former members of the corporation are liable
in terms of section 70 (2) or (3) to make repayments;
(b) shall ascertain whether circumstances justify an approach to the Master for a
direction that members or former members of the corporation make repayments in
terms of section 71 (1) or (2);
(c) may, if necessary, enforce such repayments; and
(d) may, in the event of the death of such member or former member liable for or
directed to make a repayment, or of the insolvency of his estate, claim the amount
due from the estate concerned.
Duties of liquidator regarding liability of members to creditors or corporation
81.(1) The liquidator of a corporation unable to pay its debts shall ascertain whether, on the
facts reasonably available to him, there is reason to believe that any member or former
member of the corporation, or any other person, has by virtue of any provision of Part VIII
of this Act incurred any liability to a creditor of the corporation or to the corporation itself,
as the case may be.
(2) If the liquidator finds that there is such reason in respect of any creditor who has proved a
claim, he shall in writing inform such creditor accordingly, and if the creditor recovers the
amount of his claim or part thereof from such member or former member, or from such
other person, the liquidator shall take such recovery into account in determining the
dividend payable to that creditor.
(3) In particular the liquidator shall determine whether an application to the Court in terms of
section 64 (1) is justified and advisable.
40
PART X
PENALTIES AND GENERAL (ss 82-83)
Penalties
82.(1) Any corporation or a member or officer of a corporation or any other person convicted of
any offence in terms of this Act, shall be liable to be sentenced, in the case of an offence
referred to-
(a) in section 52, 56 or 64, to a fine not exceeding R2 000 or imprisonment for a period
not exceeding two years, or to both such fine and such imprisonment;
(b) in section 58, to a fine not exceeding R1 000 or imprisonment for a period not
exceeding one year, or to both such fine and such imprisonment;
(c) in section 20, 22, 22A, 23 or 47, to a fine not exceeding R500 or imprisonment for a
period not exceeding six months, or to both such fine and such imprisonment; and
[Para. (c) substituted by s. 10 of Act 81 of 1992 and by s. 18 of Act 26 of 1997.]
(d) in section 16, 41 or 49, to a fine not exceeding R100 or imprisonment for a period
not exceeding three months, or to both such fine and such imprisonment.
(2) The Court convicting any such corporation, member, officer or person for failure to
perform any act required to be performed by it or him under this Act, may, in addition to
any penalty which the Court imposes, order such corporation, member, officer or person
to perform such act within such period as the Court may determine.
(3) Any person who, in respect of any offence under any provision of the Companies Act, or
of the Insolvency Act, 1936 (Act 24 of 1936), which is made applicable by any provision
of this Act, is convicted of any such offence under any such provision as so applied, shall
be liable to be sentenced to the penalties which are imposed in respect of any such
offence by any applicable provision of the said Companies Act or Insolvency Act, as the
case may be.
Short title and commencement
83. This Act shall be called the Close Corporations Act, 1984, and shall come into operation
on a date fixed by the State President by proclamation in the Gazette.
41
PENDLEX: Close Corporations Act 69 of 1984 after amendment by the Corporate Laws
Amendment Act 39 of 2002
Section 6 (1) (a) and (b) – deleted
Section 15A – Annual return
(1) In order to assist the Registrar to determine whether the information required to be
disclosed in terms of this Act by a corporation has been disclosed and is still valid, every
corporation shall not later than the end of the month following upon the month within
which the anniversary of the date of its incorporation occurs, on payment of the
prescribed fee, lodge with the Registrar a return in the prescribed form.
(2) A copy of the annual return contemplated in subsection (1) shall be kept at the registered
office of the corporation, and the provisions of section 16 relating to the inspection of the
founding statement and proof of its registration shall apply mutatis mutandis to the annual
return by a corporation.
(3) Any corporation which has failed to lodge a return required by subsection (1) within the
period prescribed therein, may thereafter lodge such return, subject to the payment to the
Registrar of the prescribed additional fee in respect of each such failure: Provided that
the Registrar may, upon good cause shown, waive payment of the fee concerned.
Section 26 (1)
If a corporation has failed, for a period of more than six months, to lodge an annual return in
compliance with section 15A or if the Registrar has reasonable cause to believe that a
corporation is not carrying on business or is not in operation, the Registrar shall serve on the
corporation at its postal address a letter by registered post in which the corporation is notified
thereof and informed that if the Registrar is not within 60 days from the date of the letter informed
in writing that the corporation is carrying on business or is in operation, the corporation will,
unless good cause is shown to the contrary, be deregistered.

2(b)a corporation being wound up by a Court, the Master having jurisdiction in the area of jurisdiction of the Court which issued the winding-up order;(c)a corporation other than a corporation referred to in paragraph(a) or (b), the Master having jurisdiction in the area in which the registered office of thatcorporation is situated;’member’, in relation to a corporation, means a person qualified for membership of a corporation in terms of section 29 and designated as a member in a founding statement of the corporation, including, subject to the provisions of this Act, a trustee, administrator, executor or curator, or other legal representative, referred to in paragraph(c) ofsubsection (2) of section 29, in respect of any such person who is insolvent, deceased, mentally disordered or otherwise incapable or incompetent to manage his affairs, but excluding any such person who has in terms of this Act ceased to be a member;’member’s interest’ or ‘interest’, in relation to a member of a corporation, means the interest of the member in the corporation expressed in accordance with section 12 (e) as a percentage in the founding statement of the corporation;’Minister’, in relation to any matter to be dealt with in the office of a Master in connection with the winding-up of a corporation, means the Minister of Justice and, in relation to any other matter, means the Minister of Trade and Industry;[Definition of ‘Minister’ substituted by s. 1 of Act 38 of 1986.]’name’, in relation to a corporation, means the full registered name of that corporation, or a registered literal translation of that name into any one other official language of the Republic, or a registered shortened form of that name or any such translation thereof, referred to in section 12(a);[Definition of ‘name’ inserted by s . 1 (b) of Act 26 of 1997.]’officer’, in relation to-(a)a corporation, means any manager or secretary thereof, whether or not such manager or secretary is also a member of the corporation;(b)a company, means an officer as defined in section 1 (1) of the Companies Act;’prescribe’ means prescribe by regulation; and’prescribed’ has a correspondingmeaning;’Registrar’ means the Registrar of Close Corporations referred to in section 4;’registration’, in relation to-(a)any corporation, means the registration of the founding statement of thecorporation referred to in section 12;(b)the founding statement or any amended founding statement of a corporation,means the registration thereof in terms of section 13 or section 15 (1) or (2), as the case may be;(c)any matter in connection with a corporation, or any member thereof, particulars of which are specified in terms of this Act in a founding statement of the corporation, means the specifying of particulars thereof in any such statement; and(d)any other matter in connection with which any duty or power in relation to theregistration thereof is in terms of this Act imposed on or granted to the Registrar, means the registration thereof by him in accordance with any applicable provisionof this Act; and ‘registered’ has a corresponding meaning;’Registration Office’ means the Close Corporations Registration Office referred to in section 3;’regulation’ means any regulation made under this Act;’subsidiary’, in relation to a company, means a subsidiary as defined in section 1 (1) of the Companies Act;’this Act’ includes the regulations.(2)Subject to subsection (3), the performance of the acts denoted by any of the following words or expressions, namely-(a) ‘give notice’;(b) ‘issue, distribute, deliver or cause it to be done’;(c) ‘lodge’;(d) ‘lodge in the prescribed form’;

3(e) ‘lodge in the prescribed manner’;(f) ‘lodge under cover of’;(g) ‘notify in the prescribed form’;(h) ‘payment of prescribed fee’;(i) ‘publish’,(j) ‘registration’; and(k) ‘written application’,and any word or expression derived therefrom, must be regarded as including all electronic methods of performing such acts.[Sub-s. (2) added by s. 1 (b ) of Act 22 of 2001.](3)(a)Subsection (2) shall not apply to a section of this Act until the Registrar publishes a notice in the Gazette making it applicable to that section.(b)Different dates may be determined by the Registrar in respect of the application of subsection (2) to different sections of this Act.[Sub-s. (3) added by s. 1 (b) of Act 22 of 2001.]PART IFORMATION AND JURISTIC PERSONALITY OF CLOSE CORPORATIONS (s 2)Formation and juristic personality of close corporations2.(1)Any one or more persons, not exceeding ten, who qualify for membership of a close corporation in terms of this Act, may form a close corporation and secure its incorporation by complying with the requirements of this Act in respect of the registration of its founding statement referred to in section 12.(2)A corporation formed in accordance with the provisions of this Act is on registration in terms of those provisions a juristic person and continues, subject to the provisions of this Act, to exist as a juristic person notwithstanding changes in its membership until it is in terms of this Act deregistered or dissolved.(3) Subject to the provisions of this Act, the members of a corporation shall not merely by reason of their membership be liable for the liabilities or obligations of the corporation.(4)A corporation shall have the capacity and powers of a natural person of full capacity in so far as a juristic person is capable of having such capacity or of exercising such powers.PART IIADMINISTRATION OF ACT (ss 3-11)Registration Office and register3.(1)For the registration of corporations under this Act there shall be an office in Pretoria called the Close Corporations Registration Office.(2) Registers of names and registration numbers and such other matters concerningcorporations as may be prescribed, shall be kept in the Registration Office.Registrar4.(1)The Minister shall, subject to the laws governing the public service, appoint a Registrar of Close Corporations, who shall-(a)exercise the powers and perform the duties assigned to the Registrar by this Act; and(b)subject to the directions of the Minister, be responsible for the administration of the Registration Office.

4(2)The Minister may likewise appoint a Deputy Registrar and an Assistant Registrar, who shall, subject to the control of the Registrar, exercise any power or perform any duty conferred or imposed in terms of this Act on the Registrar, and whenever the Registrar is for any reason unable to perform his functions the Deputy Registrar shall act in his stead.(3)The Registrar may delegate any of the powers and entrust any of the duties assigned to him by this Act to any officer or employee in the public service.Inspection and copies of documents in Registration Office5.(1)Any person may, on payment of the prescribed fee (including an additional fee if any document is not collected personally at the Registration Office)-(a)inspect any document kept under this Act by the Registrar in respect of any corporation; or(b)obtain a certificate from the Registrar as to the contents or part of the contents of any such document open to inspection; or(c)obtain a copy of or extract from any such document.(1A)Any person may, on payment of the prescribed fee, through any electronic medium approved by the Registrar-(a) inspect any document which has been lodged with the Registrar under this Act and converted into electronic format, or(b) obtain a copy of or extract from any such converted document. [Sub-s. (1A) inserted by section 2 (a) of Act 22 of 2001.](2)If the Registrar is satisfied-(a)that any such inspection, certificate, copy or extract is required on behalf of a foreign government accredited to the Government of the Republic; and(b)that no fee is payable in the foreign country concerned in respect of acorresponding inspection, certificate, copy or extract required on behalf of the Government of the Republic,no fee referred to in subsection (1) or (1A) shall be payable.[Sub-s. (2) amended by section 2 (b) of Act 22 of 2001.](3)If the Registrar is satisfied that any such inspection, certificate, copy or extract is required for purposes of research by or under the control of an institution for higher education, he may permit such inspection or furnish such certificate, copy or extract without payment of fees.Payment of fees6.(1)The payment of any fee, additional fee or other money payable to the Registrar in ter msof this Act shall, subject to the provisions of subsection (3), be effected-(a)by affixing revenue stamps to any document concerned, which stamps may be cancelled by a Receiver of Revenue or the Registrar; or[NB: Para. (a) has been deleted by s. 7 of the Corporate Laws Amendment Act 39 of 2002, a provision which will be put into operation by proclamation.](b)by impressing a stamp on any document concerned by means of a die approved by the Commissioner for Inland Revenue; or[NB: Para. (b)has been deleted by s. 7 of the Corporate Laws Amendment Act 39 of 2002, a provision which will be put into operation by proclamation.](bA)by means of such electronic form of transfer of money as the Registrar may approve; or[Para.(bA) inserted by s. 3 (a) of Act 22 of 2001.](c)in such other manner as the Registrar may direct.(2)No document, form, return or notice in respect of which any fee is payable or any payment is required to be done in terms of this Act, shall be complete unless proo f of payment of the required fee or other money has been lodged with, or acknowledged as having been received by, the Registrar.[Sub-s. (2) substituted by s. 3 (b) of Act 22 of 2001.]

5(3)For the purposes of subsection (1) the decision of the Registra r as to the manner in which in any particular case, or category of cases determined by him, any fee, additional fee or other money is in terms of this Act to be paid, shall be final.(4)Any fees and other moneys payable in terms of this Act to the Registrar, shall be debts due to the State recoverable by the Minister in any competent court.Courts having jurisdiction in respect of corporations 7.For the purposes of this Act any High Court and any magistrate’s court, within whose area of jurisdiction the registered office or the main place of business of the corporation is situated, shall have jurisdiction.[S. 7 substituted by s. 1 of Act 64 of 1988 and by s. 2 of Act 26 of 1997.]Security for costs in legal proceedings by corporations8.When a corporation in any legal proceedings is a plaintiff or applicant or brings acounterclaim or counterapplication, the court concerned may at any time during the proceedings if it appears that there is reason to believe that the corporation or, if it is being wound up, the liquidator thereof, will be unable to pay the costs of the defendant or respondent, or the defendant or respondent in reconvention, if he is successful in his defence, require security to be given for those costs, and may stay all proceedings till the security is given.Transmission of copies of Court orders to Registrar and Master9.When a Court makes any order in terms of this Act in relation to any corporation, the Registrar or clerk of the Court shall without delay by registered post transmit a copy of the order to the Registrar and, if such order relates to the winding-up of any corporation, a copy thereof to the Master as well.[S. 9 amended by s. 14 of Act 22 of 2001.]Regulations and policy10.(1)The Minister may make regulations-(a)providing for the conduct and administration of the Registration Office, andprescribing the practice and procedure to be observed therein; (b)prescribing the practice and procedure to be observed in the office of the Master in connection with the winding-up of corporations; (c)providing for the reproduction of any records relating to corporations in theRegistration Office or the office of the Master by means of microfilm, microcard,miniature photographic process, the conversion into electronic format in such a way as to allow such records to be reconverted to their original form without changing their original contents or form or any other process deemed suitable by the Minister; (d)providing for the use for official purposes and the admissibility in evidence in any proceedings, whether in a court of law or otherwise, of any reproductioncontemplated in paragraph (c);(e)providing for the keeping and preservation of any records, or any reproductions thereof contemplated in paragraph (c), in the Registration Office or the office of the Master, the removal from such offices of such records or reproductions and the preservation thereof in any other place, and prescribing the circumstances under which such records or reproductions may be destroyed; (f)prescribing how records required under this Act to be kept by a corporation may be kept, and prescribing the circumstances under which such records may bedestroyed;

6(g)prescribing the procedure to be followed with respect to any matter in connection with the winding-up of corporations; (h)prescribing the form and the contents of any return, notice or document provided for by this Act; (i)prescribing when an additional copy or copies of documents to be lodged under this Act shall require to be lodged, and whether such additional copy or copies shall be in the form of a copy or copies certified in a defined manner or shall be in duplicate original form; (j)with the concurrence of the Minister of Finance, prescribing the matters in respect of which fees shall be payable, the persons by whom and to whom the fees shall be payable and the tariff of such fees; (k)providing for a table of fees, subject to taxation by the Master, which shall be payable to a liquidator as remuneration; (l)prescribing a tariff of remuneration payable to any person performing on behalf of a liquidator any act relating to the winding-up of a corporation which the liquidator isnot required to perform personally, and prohibiting the charging or recovery of remuneration at a higher tariff than the tariff so prescribed; (m)providing for the appointment by the Registrar in specified circumstances of an inspector to investigate the affairs of a corporation, for the powers of an inspector in conducting any such investigation, for the duty of any member, officer, employee or accounting officer of a corporation to make available books and documents in his or her custody or under his or her control and to afford such assistance as an inspector may require in connection with any such investigation; for reporting by an inspector to the Registrar; for the making available by the Registrar of any such report to other persons; for the admissibility of any such report as evidence in legal proceedings; and for defraying the expenses of, and in connection with, any such investigation;(n)as to any other matter required or permitted by this Act to be prescribed; and (o)generally, as to any matter which he or she considers it necessary or expedient to prescribe in order that the purposes of this Act may be achieved.(1A)(a)The Minister may determine policy for the appointment of a liquidator by the Master in order to promote consistency, fairness, transparency and the achievement of equality for persons previously disadvantaged by unfair discrimination.(b)Any policy determined in accordance with the provisions of paragraph (a) must be tabled in Parliament before publication in theGazette.(2) Regulations made under subsection (1) may prescribe penalties for any contravention thereof or failure to comply therewith, not exceeding a fine or imprisonment for a period of six months or both a fine and such imprisonment.[S. 10 amended by s. 2 of Act 38 of 1986 and by s. 4 of Act 22 of 2001 and substituted by s. 20 of Act 16 of 2003.]Functions of standing advisory committee on company law in relation to corporations11.(1)The standing advisory committee on company law, appointed in terms of section 18 of the Companies Act, may from time to time make recommendations to the Minister in regard to any amendments to this Act which may appear to it to be advisable, and shall advise the Minister on any matter pertaining to this Act referred to it by the Minister.(2)The standing advisory committee shall constitute and maintain a standing sub -committeefor the purpose of considering and of advising it on such matters relating to corporations as may be referred by it to the sub-committee.(3)The provisions of-(a)the Companies Act and regulations made thereunder in relation to standing sub-committees of the standing advisory committee, and the members thereof, shall apply in respect of the standing sub-committee refer red to in subsection (2) as if that sub-committee were constituted under subsection (4) of section 18 of the said Act; and

7(b)subsections (2) and (5) (in so far as they relate to the calling of persons to assist the standing advisory committee) of the said section 18 shall apply in respect of the standing advisory committee in the exercising by it of any power granted to it in terms of subsection (1) of this section.PART IIIREGISTRATION, DEREGISTRATION AND CONVERSION (ss 12-27)Founding statement12.Any person qualified for membership in terms of section 29 or, subject to section 28, any number of such persons who intend to form a corporation, shall draw up a founding statement in the prescribed form in one of the official languages of the Republic, which shall be signed by or on behalf of every person who is to become a member of the corporation upon its registration and which shall, subject to the provisions of this Act, contain the following particulars:(a)The full name of the corporation: Provided that a literal translation of that name into any one other official language of the Republic, or a shortened form of that name or such translation thereof, may in addition be given;[Para.(a) substituted by s. 3 of Act 26 of 1997.](b)the principal business to be carried on by the corporation;(c)(i)a postal address for the corporation; and(ii)the address (not being the number of a post office box) of the office of the corporation referred to in section 25 (1);(d)the full name of each member, his identity number or, if he has no such number, the date of his birth, and his residential address;[Para.(d) substituted by s. 1 of Act 81 of 1992.](e)the size, expressed as a percentage, of each member’s interest in the corporation;(f)particulars of the contribution of each member to the corporation in accordance with section 24 (1), including-(i)any amounts of money; and(ii)a description, and statement of the fair value, of any property (whethercorporeal or incorporeal) or any service referred to in section 24 (1);(g)(i)the name and postal address of a qualified person who or firm which has consented in writing to his or its appointment as accounting officer of the corporation; and(ii)the date of the end of the financial year of the corporation.Registration of founding statement13.If a founding statement referred to in section 12 complying with the requirements of this Act is lodged with the Registrar in the manner prescribed, and if the business to be carried on by the corporation is lawful, the Registrar shall upon payment of the prescribed fee register such statement in his or her registers and shall give notice of the registration in the Gazette.[S. 13 substituted by s. 3 of Act 38 of 1986 and by s. 5 of Act 22 of 2001.]Certificate of incorporation14.(1)Upon the registration of such founding statement the Registrar shall assign a registration number to the corporation concerned and endorse under his or her hand on thestatement, or otherwise issue in writing, a certificate that the corporation is incorporated: Provided that the Registrar may change or amend such registration number in order to rectify duplications of such numbers or to achieve any other objective which it is

8necessary or expedient to achieve for the proper maintenance of the register of close corporations.[Sub-s. (1) substituted by s. 6 of Act 22 of 2001.](2)A certificate of incorporation given by the Registrar in terms of subsection (1) or section 27 (4) (c), or a copy thereof, as the case may be, shall upon its mere production, in the absence of proof of fraud or error, be conclusive evidence that all the requirements of this Act in respect of registration of the corporation concerned and of matters precedent and incidental thereto have been complied with, and that the corporation concerned is duly incorporated under this Act.[Sub-s. (2) substituted by s. 4 of Act 38 of 1986.]Registration of amended founding statement15.(1)If any change is made or occurs in respect of any matter particulars of which are stated in a founding statement of a corporation in accordance with paragraph (b),(d),(e) or (f) of section 12, the corporation shall, subjec t to the provisions of section 29 (3) (c) and (d),within 28 days after such change lodge with the Registrar for registration in his or her registers an amended founding statement, in the prescribed form together with theprescribed fee, signed by or on behalf of every member of the corporation and by or on behalf of any person who will become a member on such registration, and which contains particulars and the date of the change.[Sub-s. (1) substituted by s. 2 (a) of Act 81 of 1992 and by s. 7 (a) of Act 22 of 2001.](2)If any change is made or occurs in respect of any matter particulars of which are so stated in accordance with paragraph (a),(c) or (g) of section 12, an amended founding statement shall in accordance with the requirements of subsec tion (1) be lodged with the Registrar for registration, and any such change shall only take effect when suchstatement has been so registered in the relevant registers, or upon a later datementioned in such statement: Provided that a statement in the pres cribed form which upon registration thereof shall form part of the founding statement or amended founding statement, shall, instead of an amended founding statement, be lodged with the Registrar for registration if any such change is made or occurs in respect of-(a)any matter of which particulars are so stated in accordance with paragraph (c) of section 12, in which case the accounting officer may sign such statement on behalf of the members if the corporation has approved of the said change and theaccounting officer so certifies in writing; or(b)the name or address of the duly appointed accounting officer, in which case the accounting officer may sign such statement on behalf of the members, and the said change shall take effect upon the date mentioned in the statement.[Sub-s. (2) amended by s. 2 (b) of Act 81 of 1992.](2A)If a founding statement is altered or something is added thereto by an order of court referred to in section 49, the provisions of subsection (1) in relation to the lodging of an amended founding statement therein referred to, shall mutatis mutandis apply in respect of such founding statement.[Sub-s. (2A) inserted by s. 5 (a) of Act 38 of 1986.](2B) Upon registration of any amended founding statement in accordance with therequirements of subsection (1), (2) or (2A), the Registrar shall issue a certificate to the effect that the amended founding statement has been registered.[Sub-s. (2B) inserted by s. 7 (b) of Act 22 of 2001.](3)(a)If a corporation fails to lod ge an amended founding statement in terms of and in accordance with the provisions of subsection (1), (2) or (2A), as the case may be, the Registrar may on his own initiative or on application by any member or creditor of the corporation serve on the membe rs of the corporation in accordance with section 25 (2) (a) a reminder by registered post to make good the default within 28 days of the date of the reminder.[Para.(a) substituted by s. 5 (b) of Act 38 of 1986 and amended by s. 14 of Act 22 of 2001.]

9(b)If the members concerned fail to comply with any such reminder, the Registrar may direct those members by written notice, so served on the members by registered post, to make good the default within 28 days of the date of the notice.[Para.(b) amended by s. 14 of Act 22 of 2001.](c) If the members concerned fail to comply with any such direction, the Registrar may by further written notice so served on the members by registered post, impose on the members, or any of them, a penalty not exceeding five rand per day from the date upon which the reminder referred to in paragraph (a) was sent.(d)When the Registrar has served a notice referred to in paragraph(c) on the members, he may not less than 21 days after the date of that notice forward acertified copy thereof to the clerk of the magistrate’s court in whose area ofjurisdiction the registered office of the corporation is situated, who shall record it, and thereupon such notice shall have the effect of a civil judgment of thatmagistrate’s court against every such member for the amount of the penalty in question.(e)On application by one or more of the members concerned the court in question may reduce or rescind the penalty, or exempt any one or some of the members from the effect of the notice.[NB: A. s. 15A has been inserted by s. 8 of the Corporate Laws Amendment Act 39 of 2002, a provision which will be put into operation by proclamation. See PENDLEX.]Keeping of copies of founding statements by corporations16.(1)A corporation shall keep a copy of its founding statement and any proof of its registration at the registered office of the corporation.(2)A document referred to in subsection (1) shall during the business hours of thecorporation be open to inspection by any person upon payment to the corporation, in the case of a person who is not a member of the corporation, of one rand or such lesser amount as the corporation may determine.(3)A member or officer of a corporation who refuses access for the purposes of aninspection in terms of subsection (2) to a person entitled thereto, shall be guilty of an offence.No constructive notice of particulars in founding statement and other documents17.No person shall be deemed to have knowledge of any particulars merely because such particulars are stated, or referred to, in any founding statement or other documentregarding a corporation registered by the Registrar or lodged with him, or which is kept at the registered office of a corporation in accordance with the provisions of this Act.18. ……[S. 18 repealed by s. 4 of Act 26 of 1997.]Undesirable names and reservation of names 19.(1)No founding statement containing a name for a corporation to be incorporated and no amended founding statement containing a new name for a corporation shall be registered if the name is in the opinion of the Registrar undesirable. (2)Any person who intends to form a corporation or any corporation which intends to change its name shall, on the prescribed form and on payment of the prescribed fee, apply to the Registrar for the reservation of a name: Provided that a company being converted into a corporation in terms of this Act shall not be required to so reserve its name if the nameremains identical. (3)A reservation contemplated in subsection (2) shall be valid from the date of approval by the Registrar for a period not exceeding two months.[S. 19 substituted by s. 5 of Act 26 of 1997.]

10Order to change name20.(1)If within a period of one year after the registration of a founding statement of acorporation it appears to the Registrar that a name mentioned in the founding statement is undesirable, he shall order the corporation concerned to change such name.(2)Any interested person may-(a)within a period of one year referred to in subsection (1), on payment of theprescribed fee apply in writing to the Registrar for an order directing the corporation to change its name on the ground of undesirability or that such name is calculated to cause damage to the applicant; or(b)within a period of two years after the registration of a founding statement apply to a Court for an order directing the corporation to change its name on the ground of undesirability or that such name is calculated to cause damage to the applicant, and the Court may on such application make such order as it deems fit.[Sub-s. (2) substituted by s. 3 (a) of Act 81 of 1992.](3)The Registrar may, after application has been made in terms of paragraph(a) ofsubsection (2), in writing order the corporation concerned to change its name if, in the opinion of the Registrar, it is or has become undesirable.(3A)Any person feeling aggrieved by any decision or order of the Registrar under this section may, within one month after the date of such decision or order, apply to a competent provincial or local division of the Supreme Court for relief, and the Court may consider the merits of any such matter, receive further evidence and make any order it deems fit.[Sub-s. (3A) inserted by s. 3 (b) of Act 81 of 1992.](3B)No prescribed fee mentioned in section 15 (1) shall be payable in respect of theregistration of an amended founding statement by virtue of an order under subsection (1) or (3) of this section.[Sub-s. (3B) inserted by s. 3 (b) of Act 81 of 1992 and substituted by s. 8 of Act 22 of 2001.](4)A corporation which fails within any period mentioned in an order under subsection (1) or (3) to comply with any such order, shall be guilty of an offence.(5)No provision of this Act shall be construed as affecting the rights of any person at common law to bring an action against any corporation for passing off any business, goods or services as those of another person.Effect of change of name21.(1)A change in terms of this Act of a name of a corporation shall not affect any right or obligation of the corporation or any legal proceedings instituted by or against thecorporation, and any legal proceedings that could have been continued or commenced by or against the corporation prior to the change of name may, notwithstanding such change of name, after the change be continued or commenced by or against thecorporation, as the case may be.(2)Upon the production by a corporation of a certified copy of a founding statementreflecting a change of name of that corporation to any registrar or other officer charged with the maintenance of a register under any law, and on compliance with all therequirements pursuant to any such law as to the form of application (if any) and the payment of any required fee, such registrar or other officer shall make in his register all such alterations as are necessary, by reason of the change of name in respect of the corporation.Formal requirements as to names and registration numbers22.(1)The abbreviation CC, in capital letters, or its equivalent in any other official language, shall be subjoined to the name used by a corporation.[Sub-s. (1) substituted by s. 6 (a) of Act 26 of 1997.](2)A corporation shall refer to the registration number of the corporation on all prescribed documents and correspondence sent by the corporation to the Registration Office.

11(3) If a corporation is being wound up, the statement ‘In Li quidation’ or ‘In VoluntaryLiquidation’, as the case may be, shall for the duration of such winding-up be subjoined to the name used by the corporation.[Sub-s. (3) substituted by s. 6 (b) of Act 26 of 1997.](4)Any corporation which fails to comply with the provisions of subsection (3) shall be guilty of an offence.[Sub-s. (4) inserted by s. 6 (c) of Act 26 of 1997.]Improper references to incorporation in terms of Act22.AAny person carrying on business under a name or title-(a)to which an abbreviation contemplated in section 22 (1) is subjoined; or(b)of which the words ‘close corporation’ or its equivalent in any other official language or any abbreviation thereof form part in a way which indicates incorporation as a close corporation in terms of this Act, shall, unless duly incorporated as a close corporation in terms of this Act, be guilty of an offence.[S. 22A inserted by s. 4 of Act 81 of 1992 and substituted by s. 7 of Act 26 of 1997.]Use and publication of names23.(1)Every corporation-(a)shall display its registered full name (or a registered literal translation thereof into any one other official language of the Republic) and registration number in a conspicuous position and in characters easily legible on the outside of itsregistered office and every office or place in which its business is carried on;[Para.(a) substituted by s. 8 (a) of Act 26 of 1997.](b)shall have that name (or such translation thereof) and registration numb ermentioned in legible characters in all notices and other official publications of the corporation, including notices or other offical publications in electronic format, and in all bills of exchange, promissory notes, endorsements, cheques and orders formoney, goods or services purporting to be signed by or on behalf of thecorporation, and all letters, delivery notes, invoices, receipts and letters of credit of the corporation; and[Para.(b) substituted by s. 5 of Act 81 of 1992 and by s. 9 of Act 2 2 of 2001.](c)shall use a registered shortened form of that name only in conjunction with that name or such literal translation thereof.(2)If any member of, or any other person on behalf of, a corporation-(a)issues or authorizes the issue of any such notice or official publication of the corporation, or signs or authorizes to be signed on behalf of the corporation any such bill of exchange, promissory note, endorsement, cheque or order for money, goods or services; or(b)issues or authorises the issue of any such letter, delivery note, invoice, receipt or letter of credit of the corporation,[Para.(b) substituted by s. 8 (b) of Act 26 of 1997.]without the name of the corporation, or such registered literal translation thereof, and its registration number being mentioned therein in accordance with subsection (1) (b), he shall be guilty of an offence, and shall further be liable to the holder of the bill of exchange, promissory note, cheque or order for money, goods or services for the amountthereof, unless the amount is duly paid by the corporation.(3)Any corporation which fails to comply with any provision of subsection (1) shall be guilty of an offence.

2(b)a corporation being wound up by a Court, the Master having jurisdiction in the area of jurisdiction of the Court which issued the winding-up order;(c)a corporation other than a corporation referred to in paragraph(a) or (b), the Master having jurisdiction in the area in which the registered office of thatcorporation is situated;’member’, in relation to a corporation, means a person qualified for membership of a corporation in terms of section 29 and designated as a member in a founding statement of the corporation, including, subject to the provisions of this Act, a trustee, administrator, executor or curator, or other legal representative, referred to in paragraph(c) ofsubsection (2) of section 29, in respect of any such person who is insolvent, deceased, mentally disordered or otherwise incapable or incompetent to manage his affairs, but excluding any such person who has in terms of this Act ceased to be a member;’member’s interest’ or ‘interest’, in relation to a member of a corporation, means the interest of the member in the corporation expressed in accordance with section 12 (e) as a percentage in the founding statement of the corporation;’Minister’, in relation to any matter to be dealt with in the office of a Master in connection with the winding-up of a corporation, means the Minister of Justice and, in relation to any other matter, means the Minister of Trade and Industry;[Definition of ‘Minister’ substituted by s. 1 of Act 38 of 1986.]’name’, in relation to a corporation, means the full registered name of that corporation, or a registered literal translation of that name into any one other official language of the Republic, or a registered shortened form of that name or any such translation thereof, referred to in section 12(a);[Definition of ‘name’ inserted by s . 1 (b) of Act 26 of 1997.]’officer’, in relation to-(a)a corporation, means any manager or secretary thereof, whether or not such manager or secretary is also a member of the corporation;(b)a company, means an officer as defined in section 1 (1) of the Companies Act;’prescribe’ means prescribe by regulation; and’prescribed’ has a correspondingmeaning;’Registrar’ means the Registrar of Close Corporations referred to in section 4;’registration’, in relation to-(a)any corporation, means the registration of the founding statement of thecorporation referred to in section 12;(b)the founding statement or any amended founding statement of a corporation,means the registration thereof in terms of section 13 or section 15 (1) or (2), as the case may be;(c)any matter in connection with a corporation, or any member thereof, particulars of which are specified in terms of this Act in a founding statement of the corporation, means the specifying of particulars thereof in any such statement; and(d)any other matter in connection with which any duty or power in relation to theregistration thereof is in terms of this Act imposed on or granted to the Registrar, means the registration thereof by him in accordance with any applicable provisionof this Act; and ‘registered’ has a corresponding meaning;’Registration Office’ means the Close Corporations Registration Office referred to in section 3;’regulation’ means any regulation made under this Act;’subsidiary’, in relation to a company, means a subsidiary as defined in section 1 (1) of the Companies Act;’this Act’ includes the regulations.(2)Subject to subsection (3), the performance of the acts denoted by any of the following words or expressions, namely-(a) ‘give notice’;(b) ‘issue, distribute, deliver or cause it to be done’;(c) ‘lodge’;(d) ‘lodge in the prescribed form’;

3(e) ‘lodge in the prescribed manner’;(f) ‘lodge under cover of’;(g) ‘notify in the prescribed form’;(h) ‘payment of prescribed fee’;(i) ‘publish’,(j) ‘registration’; and(k) ‘written application’,and any word or expression derived therefrom, must be regarded as including all electronic methods of performing such acts.[Sub-s. (2) added by s. 1 (b ) of Act 22 of 2001.](3)(a)Subsection (2) shall not apply to a section of this Act until the Registrar publishes a notice in the Gazette making it applicable to that section.(b)Different dates may be determined by the Registrar in respect of the application of subsection (2) to different sections of this Act.[Sub-s. (3) added by s. 1 (b) of Act 22 of 2001.]PART IFORMATION AND JURISTIC PERSONALITY OF CLOSE CORPORATIONS (s 2)Formation and juristic personality of close corporations2.(1)Any one or more persons, not exceeding ten, who qualify for membership of a close corporation in terms of this Act, may form a close corporation and secure its incorporation by complying with the requirements of this Act in respect of the registration of its founding statement referred to in section 12.(2)A corporation formed in accordance with the provisions of this Act is on registration in terms of those provisions a juristic person and continues, subject to the provisions of this Act, to exist as a juristic person notwithstanding changes in its membership until it is in terms of this Act deregistered or dissolved.(3) Subject to the provisions of this Act, the members of a corporation shall not merely by reason of their membership be liable for the liabilities or obligations of the corporation.(4)A corporation shall have the capacity and powers of a natural person of full capacity in so far as a juristic person is capable of having such capacity or of exercising such powers.PART IIADMINISTRATION OF ACT (ss 3-11)Registration Office and register3.(1)For the registration of corporations under this Act there shall be an office in Pretoria called the Close Corporations Registration Office.(2) Registers of names and registration numbers and such other matters concerningcorporations as may be prescribed, shall be kept in the Registration Office.Registrar4.(1)The Minister shall, subject to the laws governing the public service, appoint a Registrar of Close Corporations, who shall-(a)exercise the powers and perform the duties assigned to the Registrar by this Act; and(b)subject to the directions of the Minister, be responsible for the administration of the Registration Office.

4(2)The Minister may likewise appoint a Deputy Registrar and an Assistant Registrar, who shall, subject to the control of the Registrar, exercise any power or perform any duty conferred or imposed in terms of this Act on the Registrar, and whenever the Registrar is for any reason unable to perform his functions the Deputy Registrar shall act in his stead.(3)The Registrar may delegate any of the powers and entrust any of the duties assigned to him by this Act to any officer or employee in the public service.Inspection and copies of documents in Registration Office5.(1)Any person may, on payment of the prescribed fee (including an additional fee if any document is not collected personally at the Registration Office)-(a)inspect any document kept under this Act by the Registrar in respect of any corporation; or(b)obtain a certificate from the Registrar as to the contents or part of the contents of any such document open to inspection; or(c)obtain a copy of or extract from any such document.(1A)Any person may, on payment of the prescribed fee, through any electronic medium approved by the Registrar-(a) inspect any document which has been lodged with the Registrar under this Act and converted into electronic format, or(b) obtain a copy of or extract from any such converted document. [Sub-s. (1A) inserted by section 2 (a) of Act 22 of 2001.](2)If the Registrar is satisfied-(a)that any such inspection, certificate, copy or extract is required on behalf of a foreign government accredited to the Government of the Republic; and(b)that no fee is payable in the foreign country concerned in respect of acorresponding inspection, certificate, copy or extract required on behalf of the Government of the Republic,no fee referred to in subsection (1) or (1A) shall be payable.[Sub-s. (2) amended by section 2 (b) of Act 22 of 2001.](3)If the Registrar is satisfied that any such inspection, certificate, copy or extract is required for purposes of research by or under the control of an institution for higher education, he may permit such inspection or furnish such certificate, copy or extract without payment of fees.Payment of fees6.(1)The payment of any fee, additional fee or other money payable to the Registrar in ter msof this Act shall, subject to the provisions of subsection (3), be effected-(a)by affixing revenue stamps to any document concerned, which stamps may be cancelled by a Receiver of Revenue or the Registrar; or[NB: Para. (a) has been deleted by s. 7 of the Corporate Laws Amendment Act 39 of 2002, a provision which will be put into operation by proclamation.](b)by impressing a stamp on any document concerned by means of a die approved by the Commissioner for Inland Revenue; or[NB: Para. (b)has been deleted by s. 7 of the Corporate Laws Amendment Act 39 of 2002, a provision which will be put into operation by proclamation.](bA)by means of such electronic form of transfer of money as the Registrar may approve; or[Para.(bA) inserted by s. 3 (a) of Act 22 of 2001.](c)in such other manner as the Registrar may direct.(2)No document, form, return or notice in respect of which any fee is payable or any payment is required to be done in terms of this Act, shall be complete unless proo f of payment of the required fee or other money has been lodged with, or acknowledged as having been received by, the Registrar.[Sub-s. (2) substituted by s. 3 (b) of Act 22 of 2001.]

5(3)For the purposes of subsection (1) the decision of the Registra r as to the manner in which in any particular case, or category of cases determined by him, any fee, additional fee or other money is in terms of this Act to be paid, shall be final.(4)Any fees and other moneys payable in terms of this Act to the Registrar, shall be debts due to the State recoverable by the Minister in any competent court.Courts having jurisdiction in respect of corporations 7.For the purposes of this Act any High Court and any magistrate’s court, within whose area of jurisdiction the registered office or the main place of business of the corporation is situated, shall have jurisdiction.[S. 7 substituted by s. 1 of Act 64 of 1988 and by s. 2 of Act 26 of 1997.]Security for costs in legal proceedings by corporations8.When a corporation in any legal proceedings is a plaintiff or applicant or brings acounterclaim or counterapplication, the court concerned may at any time during the proceedings if it appears that there is reason to believe that the corporation or, if it is being wound up, the liquidator thereof, will be unable to pay the costs of the defendant or respondent, or the defendant or respondent in reconvention, if he is successful in his defence, require security to be given for those costs, and may stay all proceedings till the security is given.Transmission of copies of Court orders to Registrar and Master9.When a Court makes any order in terms of this Act in relation to any corporation, the Registrar or clerk of the Court shall without delay by registered post transmit a copy of the order to the Registrar and, if such order relates to the winding-up of any corporation, a copy thereof to the Master as well.[S. 9 amended by s. 14 of Act 22 of 2001.]Regulations and policy10.(1)The Minister may make regulations-(a)providing for the conduct and administration of the Registration Office, andprescribing the practice and procedure to be observed therein; (b)prescribing the practice and procedure to be observed in the office of the Master in connection with the winding-up of corporations; (c)providing for the reproduction of any records relating to corporations in theRegistration Office or the office of the Master by means of microfilm, microcard,miniature photographic process, the conversion into electronic format in such a way as to allow such records to be reconverted to their original form without changing their original contents or form or any other process deemed suitable by the Minister; (d)providing for the use for official purposes and the admissibility in evidence in any proceedings, whether in a court of law or otherwise, of any reproductioncontemplated in paragraph (c);(e)providing for the keeping and preservation of any records, or any reproductions thereof contemplated in paragraph (c), in the Registration Office or the office of the Master, the removal from such offices of such records or reproductions and the preservation thereof in any other place, and prescribing the circumstances under which such records or reproductions may be destroyed; (f)prescribing how records required under this Act to be kept by a corporation may be kept, and prescribing the circumstances under which such records may bedestroyed;

6(g)prescribing the procedure to be followed with respect to any matter in connection with the winding-up of corporations; (h)prescribing the form and the contents of any return, notice or document provided for by this Act; (i)prescribing when an additional copy or copies of documents to be lodged under this Act shall require to be lodged, and whether such additional copy or copies shall be in the form of a copy or copies certified in a defined manner or shall be in duplicate original form; (j)with the concurrence of the Minister of Finance, prescribing the matters in respect of which fees shall be payable, the persons by whom and to whom the fees shall be payable and the tariff of such fees; (k)providing for a table of fees, subject to taxation by the Master, which shall be payable to a liquidator as remuneration; (l)prescribing a tariff of remuneration payable to any person performing on behalf of a liquidator any act relating to the winding-up of a corporation which the liquidator isnot required to perform personally, and prohibiting the charging or recovery of remuneration at a higher tariff than the tariff so prescribed; (m)providing for the appointment by the Registrar in specified circumstances of an inspector to investigate the affairs of a corporation, for the powers of an inspector in conducting any such investigation, for the duty of any member, officer, employee or accounting officer of a corporation to make available books and documents in his or her custody or under his or her control and to afford such assistance as an inspector may require in connection with any such investigation; for reporting by an inspector to the Registrar; for the making available by the Registrar of any such report to other persons; for the admissibility of any such report as evidence in legal proceedings; and for defraying the expenses of, and in connection with, any such investigation;(n)as to any other matter required or permitted by this Act to be prescribed; and (o)generally, as to any matter which he or she considers it necessary or expedient to prescribe in order that the purposes of this Act may be achieved.(1A)(a)The Minister may determine policy for the appointment of a liquidator by the Master in order to promote consistency, fairness, transparency and the achievement of equality for persons previously disadvantaged by unfair discrimination.(b)Any policy determined in accordance with the provisions of paragraph (a) must be tabled in Parliament before publication in theGazette.(2) Regulations made under subsection (1) may prescribe penalties for any contravention thereof or failure to comply therewith, not exceeding a fine or imprisonment for a period of six months or both a fine and such imprisonment.[S. 10 amended by s. 2 of Act 38 of 1986 and by s. 4 of Act 22 of 2001 and substituted by s. 20 of Act 16 of 2003.]Functions of standing advisory committee on company law in relation to corporations11.(1)The standing advisory committee on company law, appointed in terms of section 18 of the Companies Act, may from time to time make recommendations to the Minister in regard to any amendments to this Act which may appear to it to be advisable, and shall advise the Minister on any matter pertaining to this Act referred to it by the Minister.(2)The standing advisory committee shall constitute and maintain a standing sub -committeefor the purpose of considering and of advising it on such matters relating to corporations as may be referred by it to the sub-committee.(3)The provisions of-(a)the Companies Act and regulations made thereunder in relation to standing sub-committees of the standing advisory committee, and the members thereof, shall apply in respect of the standing sub-committee refer red to in subsection (2) as if that sub-committee were constituted under subsection (4) of section 18 of the said Act; and

7(b)subsections (2) and (5) (in so far as they relate to the calling of persons to assist the standing advisory committee) of the said section 18 shall apply in respect of the standing advisory committee in the exercising by it of any power granted to it in terms of subsection (1) of this section.PART IIIREGISTRATION, DEREGISTRATION AND CONVERSION (ss 12-27)Founding statement12.Any person qualified for membership in terms of section 29 or, subject to section 28, any number of such persons who intend to form a corporation, shall draw up a founding statement in the prescribed form in one of the official languages of the Republic, which shall be signed by or on behalf of every person who is to become a member of the corporation upon its registration and which shall, subject to the provisions of this Act, contain the following particulars:(a)The full name of the corporation: Provided that a literal translation of that name into any one other official language of the Republic, or a shortened form of that name or such translation thereof, may in addition be given;[Para.(a) substituted by s. 3 of Act 26 of 1997.](b)the principal business to be carried on by the corporation;(c)(i)a postal address for the corporation; and(ii)the address (not being the number of a post office box) of the office of the corporation referred to in section 25 (1);(d)the full name of each member, his identity number or, if he has no such number, the date of his birth, and his residential address;[Para.(d) substituted by s. 1 of Act 81 of 1992.](e)the size, expressed as a percentage, of each member’s interest in the corporation;(f)particulars of the contribution of each member to the corporation in accordance with section 24 (1), including-(i)any amounts of money; and(ii)a description, and statement of the fair value, of any property (whethercorporeal or incorporeal) or any service referred to in section 24 (1);(g)(i)the name and postal address of a qualified person who or firm which has consented in writing to his or its appointment as accounting officer of the corporation; and(ii)the date of the end of the financial year of the corporation.Registration of founding statement13.If a founding statement referred to in section 12 complying with the requirements of this Act is lodged with the Registrar in the manner prescribed, and if the business to be carried on by the corporation is lawful, the Registrar shall upon payment of the prescribed fee register such statement in his or her registers and shall give notice of the registration in the Gazette.[S. 13 substituted by s. 3 of Act 38 of 1986 and by s. 5 of Act 22 of 2001.]Certificate of incorporation14.(1)Upon the registration of such founding statement the Registrar shall assign a registration number to the corporation concerned and endorse under his or her hand on thestatement, or otherwise issue in writing, a certificate that the corporation is incorporated: Provided that the Registrar may change or amend such registration number in order to rectify duplications of such numbers or to achieve any other objective which it is

8necessary or expedient to achieve for the proper maintenance of the register of close corporations.[Sub-s. (1) substituted by s. 6 of Act 22 of 2001.](2)A certificate of incorporation given by the Registrar in terms of subsection (1) or section 27 (4) (c), or a copy thereof, as the case may be, shall upon its mere production, in the absence of proof of fraud or error, be conclusive evidence that all the requirements of this Act in respect of registration of the corporation concerned and of matters precedent and incidental thereto have been complied with, and that the corporation concerned is duly incorporated under this Act.[Sub-s. (2) substituted by s. 4 of Act 38 of 1986.]Registration of amended founding statement15.(1)If any change is made or occurs in respect of any matter particulars of which are stated in a founding statement of a corporation in accordance with paragraph (b),(d),(e) or (f) of section 12, the corporation shall, subjec t to the provisions of section 29 (3) (c) and (d),within 28 days after such change lodge with the Registrar for registration in his or her registers an amended founding statement, in the prescribed form together with theprescribed fee, signed by or on behalf of every member of the corporation and by or on behalf of any person who will become a member on such registration, and which contains particulars and the date of the change.[Sub-s. (1) substituted by s. 2 (a) of Act 81 of 1992 and by s. 7 (a) of Act 22 of 2001.](2)If any change is made or occurs in respect of any matter particulars of which are so stated in accordance with paragraph (a),(c) or (g) of section 12, an amended founding statement shall in accordance with the requirements of subsec tion (1) be lodged with the Registrar for registration, and any such change shall only take effect when suchstatement has been so registered in the relevant registers, or upon a later datementioned in such statement: Provided that a statement in the pres cribed form which upon registration thereof shall form part of the founding statement or amended founding statement, shall, instead of an amended founding statement, be lodged with the Registrar for registration if any such change is made or occurs in respect of-(a)any matter of which particulars are so stated in accordance with paragraph (c) of section 12, in which case the accounting officer may sign such statement on behalf of the members if the corporation has approved of the said change and theaccounting officer so certifies in writing; or(b)the name or address of the duly appointed accounting officer, in which case the accounting officer may sign such statement on behalf of the members, and the said change shall take effect upon the date mentioned in the statement.[Sub-s. (2) amended by s. 2 (b) of Act 81 of 1992.](2A)If a founding statement is altered or something is added thereto by an order of court referred to in section 49, the provisions of subsection (1) in relation to the lodging of an amended founding statement therein referred to, shall mutatis mutandis apply in respect of such founding statement.[Sub-s. (2A) inserted by s. 5 (a) of Act 38 of 1986.](2B) Upon registration of any amended founding statement in accordance with therequirements of subsection (1), (2) or (2A), the Registrar shall issue a certificate to the effect that the amended founding statement has been registered.[Sub-s. (2B) inserted by s. 7 (b) of Act 22 of 2001.](3)(a)If a corporation fails to lod ge an amended founding statement in terms of and in accordance with the provisions of subsection (1), (2) or (2A), as the case may be, the Registrar may on his own initiative or on application by any member or creditor of the corporation serve on the membe rs of the corporation in accordance with section 25 (2) (a) a reminder by registered post to make good the default within 28 days of the date of the reminder.[Para.(a) substituted by s. 5 (b) of Act 38 of 1986 and amended by s. 14 of Act 22 of 2001.]

9(b)If the members concerned fail to comply with any such reminder, the Registrar may direct those members by written notice, so served on the members by registered post, to make good the default within 28 days of the date of the notice.[Para.(b) amended by s. 14 of Act 22 of 2001.](c) If the members concerned fail to comply with any such direction, the Registrar may by further written notice so served on the members by registered post, impose on the members, or any of them, a penalty not exceeding five rand per day from the date upon which the reminder referred to in paragraph (a) was sent.(d)When the Registrar has served a notice referred to in paragraph(c) on the members, he may not less than 21 days after the date of that notice forward acertified copy thereof to the clerk of the magistrate’s court in whose area ofjurisdiction the registered office of the corporation is situated, who shall record it, and thereupon such notice shall have the effect of a civil judgment of thatmagistrate’s court against every such member for the amount of the penalty in question.(e)On application by one or more of the members concerned the court in question may reduce or rescind the penalty, or exempt any one or some of the members from the effect of the notice.[NB: A. s. 15A has been inserted by s. 8 of the Corporate Laws Amendment Act 39 of 2002, a provision which will be put into operation by proclamation. See PENDLEX.]Keeping of copies of founding statements by corporations16.(1)A corporation shall keep a copy of its founding statement and any proof of its registration at the registered office of the corporation.(2)A document referred to in subsection (1) shall during the business hours of thecorporation be open to inspection by any person upon payment to the corporation, in the case of a person who is not a member of the corporation, of one rand or such lesser amount as the corporation may determine.(3)A member or officer of a corporation who refuses access for the purposes of aninspection in terms of subsection (2) to a person entitled thereto, shall be guilty of an offence.No constructive notice of particulars in founding statement and other documents17.No person shall be deemed to have knowledge of any particulars merely because such particulars are stated, or referred to, in any founding statement or other documentregarding a corporation registered by the Registrar or lodged with him, or which is kept at the registered office of a corporation in accordance with the provisions of this Act.18. ……[S. 18 repealed by s. 4 of Act 26 of 1997.]Undesirable names and reservation of names 19.(1)No founding statement containing a name for a corporation to be incorporated and no amended founding statement containing a new name for a corporation shall be registered if the name is in the opinion of the Registrar undesirable. (2)Any person who intends to form a corporation or any corporation which intends to change its name shall, on the prescribed form and on payment of the prescribed fee, apply to the Registrar for the reservation of a name: Provided that a company being converted into a corporation in terms of this Act shall not be required to so reserve its name if the nameremains identical. (3)A reservation contemplated in subsection (2) shall be valid from the date of approval by the Registrar for a period not exceeding two months.[S. 19 substituted by s. 5 of Act 26 of 1997.]

10Order to change name20.(1)If within a period of one year after the registration of a founding statement of acorporation it appears to the Registrar that a name mentioned in the founding statement is undesirable, he shall order the corporation concerned to change such name.(2)Any interested person may-(a)within a period of one year referred to in subsection (1), on payment of theprescribed fee apply in writing to the Registrar for an order directing the corporation to change its name on the ground of undesirability or that such name is calculated to cause damage to the applicant; or(b)within a period of two years after the registration of a founding statement apply to a Court for an order directing the corporation to change its name on the ground of undesirability or that such name is calculated to cause damage to the applicant, and the Court may on such application make such order as it deems fit.[Sub-s. (2) substituted by s. 3 (a) of Act 81 of 1992.](3)The Registrar may, after application has been made in terms of paragraph(a) ofsubsection (2), in writing order the corporation concerned to change its name if, in the opinion of the Registrar, it is or has become undesirable.(3A)Any person feeling aggrieved by any decision or order of the Registrar under this section may, within one month after the date of such decision or order, apply to a competent provincial or local division of the Supreme Court for relief, and the Court may consider the merits of any such matter, receive further evidence and make any order it deems fit.[Sub-s. (3A) inserted by s. 3 (b) of Act 81 of 1992.](3B)No prescribed fee mentioned in section 15 (1) shall be payable in respect of theregistration of an amended founding statement by virtue of an order under subsection (1) or (3) of this section.[Sub-s. (3B) inserted by s. 3 (b) of Act 81 of 1992 and substituted by s. 8 of Act 22 of 2001.](4)A corporation which fails within any period mentioned in an order under subsection (1) or (3) to comply with any such order, shall be guilty of an offence.(5)No provision of this Act shall be construed as affecting the rights of any person at common law to bring an action against any corporation for passing off any business, goods or services as those of another person.Effect of change of name21.(1)A change in terms of this Act of a name of a corporation shall not affect any right or obligation of the corporation or any legal proceedings instituted by or against thecorporation, and any legal proceedings that could have been continued or commenced by or against the corporation prior to the change of name may, notwithstanding such change of name, after the change be continued or commenced by or against thecorporation, as the case may be.(2)Upon the production by a corporation of a certified copy of a founding statementreflecting a change of name of that corporation to any registrar or other officer charged with the maintenance of a register under any law, and on compliance with all therequirements pursuant to any such law as to the form of application (if any) and the payment of any required fee, such registrar or other officer shall make in his register all such alterations as are necessary, by reason of the change of name in respect of the corporation.Formal requirements as to names and registration numbers22.(1)The abbreviation CC, in capital letters, or its equivalent in any other official language, shall be subjoined to the name used by a corporation.[Sub-s. (1) substituted by s. 6 (a) of Act 26 of 1997.](2)A corporation shall refer to the registration number of the corporation on all prescribed documents and correspondence sent by the corporation to the Registration Office.

11(3) If a corporation is being wound up, the statement ‘In Li quidation’ or ‘In VoluntaryLiquidation’, as the case may be, shall for the duration of such winding-up be subjoined to the name used by the corporation.[Sub-s. (3) substituted by s. 6 (b) of Act 26 of 1997.](4)Any corporation which fails to comply with the provisions of subsection (3) shall be guilty of an offence.[Sub-s. (4) inserted by s. 6 (c) of Act 26 of 1997.]Improper references to incorporation in terms of Act22.AAny person carrying on business under a name or title-(a)to which an abbreviation contemplated in section 22 (1) is subjoined; or(b)of which the words ‘close corporation’ or its equivalent in any other official language or any abbreviation thereof form part in a way which indicates incorporation as a close corporation in terms of this Act, shall, unless duly incorporated as a close corporation in terms of this Act, be guilty of an offence.[S. 22A inserted by s. 4 of Act 81 of 1992 and substituted by s. 7 of Act 26 of 1997.]Use and publication of names23.(1)Every corporation-(a)shall display its registered full name (or a registered literal translation thereof into any one other official language of the Republic) and registration number in a conspicuous position and in characters easily legible on the outside of itsregistered office and every office or place in which its business is carried on;[Para.(a) substituted by s. 8 (a) of Act 26 of 1997.](b)shall have that name (or such translation thereof) and registration numb ermentioned in legible characters in all notices and other official publications of the corporation, including notices or other offical publications in electronic format, and in all bills of exchange, promissory notes, endorsements, cheques and orders formoney, goods or services purporting to be signed by or on behalf of thecorporation, and all letters, delivery notes, invoices, receipts and letters of credit of the corporation; and[Para.(b) substituted by s. 5 of Act 81 of 1992 and by s. 9 of Act 2 2 of 2001.](c)shall use a registered shortened form of that name only in conjunction with that name or such literal translation thereof.(2)If any member of, or any other person on behalf of, a corporation-(a)issues or authorizes the issue of any such notice or official publication of the corporation, or signs or authorizes to be signed on behalf of the corporation any such bill of exchange, promissory note, endorsement, cheque or order for money, goods or services; or(b)issues or authorises the issue of any such letter, delivery note, invoice, receipt or letter of credit of the corporation,[Para.(b) substituted by s. 8 (b) of Act 26 of 1997.]without the name of the corporation, or such registered literal translation thereof, and its registration number being mentioned therein in accordance with subsection (1) (b), he shall be guilty of an offence, and shall further be liable to the holder of the bill of exchange, promissory note, cheque or order for money, goods or services for the amountthereof, unless the amount is duly paid by the corporation.(3)Any corporation which fails to comply with any provision of subsection (1) shall be guilty of an offence.

 

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