Close Corporation

Description

Close Corporation
Lester Stoffels
Mind Map by Lester Stoffels, updated more than 1 year ago
Lester Stoffels
Created by Lester Stoffels over 7 years ago
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Resource summary

Close Corporation
  1. Characteristics
    1. Suitable for small businesses
      1. 1-10 members
        1. Name must be registered and end with cc
          1. Founding statement must be completed
            1. Each member has in interest in cc
              1. The cc is a legal entity and can enter into contracts
                1. Continuity of existence
                  1. Is a legal person and pay tax
                    1. Dividends is exempt from tax
                    2. Disadvantages
                      1. Capital is restricted to what 10 members can contribute
                        1. Liability status can be lost

                          Annotations:

                          • if members are in violation of their fiduciary duty for example omitting the letters cc when signing a contract.
                          1. Consent of fellow members is required

                            Annotations:

                            • when selling an interest in a cc
                            1. CC can only be sold to a natural person

                              Annotations:

                              •  and therefore not to another cc or company
                              1. Must appoint an accounting officer
                              2. Advantages
                                1. Easy and inexpensive to establish
                                  1. CC is a legal person therefore responsible for its own assets
                                    1. Members have limited liability for the debts
                                      1. An indefinite lifespan

                                        Annotations:

                                        • means that members can change without affecting the continuity of the cc
                                        1. Members are allowed to participate in management of business
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