Moonstone: CC de-registration: new business format after 1 May a better option?

When the new companies Act comes into effect on I May, no new close corporations may be registered.

A report in the Citizen quoted Trade and Industry Minister Rob Davies’s views on the alternative available from this date.

It is not necessary to rush to register close corporations before the new Companies Act comes into effect on 1 May, according to the report.

‘I am told there are huge queues outside the Cipro office because people are concerned about registering close corporations... there is no need to do that,’ Davies said at the launch of the Companies and Intellectual Property Commission (CIPC) in Midrand. The CIPC is a merger of the Companies and Intellectual Property Registration Office (Cipro) and the Office of the Company and Intellectual Property Enforcement, and would come into effect with the new Act on 1 May. The new Companies Act provides for the indefinite continued existence of the Close Corporations Act, but the Act will no longer be available to register new close corporations.

Davies reassured business owners that the new Act's provisions would be better than that of close corporations. ‘... the processes after 1 May will give them everything of a CC but it will be simplified... it should allow... them to be more competitive than they are now.’

The CC format proved to be the ideal vehicle for implementing an acceptable succession planning strategy for sole proprietors and one-person businesses which would allow the continuation of the business in the event of an untimely death.