Vehicle for busi. w/ own legal personality & corporate status by registration
ito CC Act, perpetual succession.
Designed to meet certain needs: small less technical arguably cheaper
benefits members rule (financial interest & management (agent) &
ownership & control vest in members).
No prescribed annual general meeting bcoz no board of directors, any member call
meeting (members right – unalterable provision).
Informal decision making even outside meeting, sometimes written resolution
requirement. Management = members’ equal say.
Disadvantage: every member = agent of CC, bind CC into transactions w/ 3 rd
parties, incl. transactions w/out knowledge & consent others UNLESS 3 rd party ought
to reasonably have known NO authority.
Finances = Capital & Management rules no strict rules for maintenance capital.
Solvency (A > L – Balance Sheet Test) & Liquidity ( pay debts as due & payable –
ability to trade test).
Internal Relations: fiduciary responsibility/duty duty to act w/ care & skill owed
to CC by all members certain actions of members decriminalised by Act BUT
personal liability rather than criminal prosecution less accounting & disclosure
requirements.
Features CC: juristic person limited liability – extent of members loss = value
members interest A + L (incl. creditors) = corp. separate existence perpetual
succession legal action = against CC, except if corporate veil “lifted/pierced”
members held personally liable where CC Act contravened/solevency & liquidity
NOT maintained.
CC Co.
File notice of conversion: @ any time, done ito Co Act 2008.
Notice of Conversion = NOI to CIPC.
+ written statements of consent
+ MOI
+ Fee (R175/R475)
>=75% members interest, adopt standard-form/draft own. Waived until 1 May 2014.
Commission (CIPC) registered converted CC registration no., Registration
certificate, cancel CC registration, give notice in GG, Register of Deed.
Effect of conversion: Juristic person continue to exist in different form.
Members entitled to become shareholder, not necessarily proportionate, Liability
of member for debts still in effect.
3rd Parties legal proceedings by/against continues to exist, instituted, enforced
measures (3rd not continue to enforce against co.).
, Incorporation: founding statement (can amend) name, busi., address, end fin.
year, accounting officer, member details + contribution + percentage size of interest.
Profit making purpose NOT necessary.
Association Agreement between members of CC themselves & members to
CC, optional but advisable (way in which members adapt management of CC).
In absence = s46 of CC Act = default position.
*Governs internal affairs/rules*
No joint membership CANNOT share membership.
CC can have shares in co. BUT co. not interest CC
May hold members interest in representative/official capacity eg, trustee of Insolvent
Estate/ trustee of trust. *Members interest = movable intangible property (has value
& can be sold).
Membership = 1-10, ONLY natural persons hold members interest & official
capacities (Trustee), name needs to be registered in Founding Statements.
*Members participate in management unless changed by Association Agreement*
Natural persons qualify for membership: if entitled to membership OR has official
capacity as testamentary trustee provided that NO juristic person is beneficiary of
trust OR trustee.
Trust deed + letter appointment, trust = entrusted.
Official capacity (appointed my Master of High Court) may hold member’s
interest.
Members participate in management UNLESS:
Association agreement states otherwise
Form of legal disability: minor = guardian custodian
Unrehabilitated insolvent = court consent
Remove from office of trust + ground of misconduct is dishonesty = court
consent
Convicted + imprisoned no fine OR option of fine + reason is theft/fraud/etc. =
court consent
Companies cannot be disqualified/delinquent director/on probation (by court)
Value of interest: vote = interest if in terms of CC Act – s46 (d), 1 vote = 1 member if
changes by Association Agreement.
How to become member:
From existing member (buy, donate, inherit)
CC itself (CC = contribution) & in return receive member interest.
Ito Association Agreement/not in agreement if consent existing members
NB!! Amend fin. statements + 28 days + signed by/on behalf old & new members
CIPC *only once amended fin. statements registered = interest kick in*
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