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Summary Financial Accounting 178 (Chapters 9-11) -> all remaining work in exam $3.50   Add to cart

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Summary Financial Accounting 178 (Chapters 9-11) -> all remaining work in exam

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Close Corporations, Liquidations and Partnerships. (NB- these will be tested thoroughly in final exam) For a full set of free past papers (after you have purchased this document) and possible tutoring, contact me on @sun.ac.za

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  • November 26, 2018
  • 31
  • 2018/2019
  • Summary
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9. Close Corporations
A CC is formed when a founding statement (CK1 form) is registered with the Registrar of Close
Corporations and a certificate of incorporation is issued. A registration number is allocated by
the Registrar to the CC at formation and the Registrar approves the following items:
 Name of the CC
 Registered address
 Accounting officer, his occupation and address
 Main business of the CC
 % interest of each member
 Descriptions of each of the member’s contributions
 Names and addresses of the members
 Financial year-end of the CC

After 1 May 2011 existing CC’s have the option to continue as a CC, or to convert into a
company.

Characteristics:

 A CC is a separate legal person.
 A CC continues to exist even if members change.
 Members of a CC have limited liability (restricted to capital contributions).
 A minimum of 1 and maximum of 10 natural persons can be members of a CC.
In terms of the CC Act, a CC can purchase a member’s interest or provide monetary assistance
to any person to obtain member’s interest

Members:
Members are restricted to the following:
 natural persons or testamentary trusts
 a trustee of a testamentary trust who is a natural person or legal entity, but who is not
a beneficiary of a trust and who does not control a beneficiary of a trust
 a natural person or legal entity who acts on behalf of a member who is insolvent, has
died, is mentally disturbed or otherwise unqualified.

Every member has a fiduciary duty towards the corporation. The relationship between
members is regulated by the CC Act. Members should also enter into a written association
agreement in order to arrange the internal relations. The association agreement should
stipulate the following:

 Duties of each member with regard to the management of the CC.
 How disputes should be settled.
 Remuneration of each member.
 Distribution of profits to members.
 How changes in members’ contributions should be treated.
 Powers to enter into loan agreements, etc.

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