Results 1 to 6 of 6

Thread: Legal forms of diversification of a CC

  1. #1
    Suspended
    Join Date
    May 2012
    Location
    Hartbeespoort
    Posts
    7
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Legal forms of diversification of a CC

    Hi,

    I own a Closed Corporation. I like this form of business because I am not registered as a Director.

    Question 1: What is the latest regulation and process to change to a "Trading As" name?
    Question 2: I want to diversify into different types of businesses - e.g Retail, Services, Import/Export. I'd like to do these as separate legal entities, but under the umbrella of the existing CC. What kind of options do I have - hopefully without needing to convert to a company?

    Thanks,
    Eldon

  2. #2
    Silver Member
    Join Date
    Jan 2012
    Location
    Johannesburg
    Posts
    305
    Thanks
    112
    Thanked 53 Times in 40 Posts
    I'm no expert in this area but from what I know CCs are regulated by the old companies act so I don't think much is changed, there are many loopholes in a CC hence why they doing free changes to companies. Instead of trading as I think it's better to change the name of the CC because financial institutions don't recognise trading as anymore. I see where you are going with a holding company and it's not a bad idea in order to protect assets and minimize tax, I'm just not sure if a CC can be a holding company.
    ---There is no traffic at the extra mile---

  3. #3
    Suspended
    Join Date
    May 2012
    Location
    Hartbeespoort
    Posts
    7
    Thanks
    0
    Thanked 0 Times in 0 Posts
    Thank you, Nickolai.

    I did a bit more research. A CC may own a Company. If I do that, however, I have the additional Companie's Act requirements to meet and have to nominate the necessary Directors.

  4. #4
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    Hi Eldon
    There is little difference between being a member of a cc versus a director of a company. Both are charged with ultimate management and essentially have the same fiduciary duties.

    The issue of trading names is regulated by the Consumer Protection Act. If you were using a trading name for 12 months prior to the introduction of the act, you may continue to do so. If not, then you may only use the trading name if you have registered it as defensive name, and the cc is the owner of it. You do however have to state the registered name and number, as well as the resultant trading name and number.

    As you correctly point out, a cc may own all or some of the shares in a company. The cc could appoint you as the director, or anybody else for that matter, but it seems you are reluctant to be the director? Even if you divisionalised your operation, whether in a company or a cc, the divisions would not be separate legal or juristic persons, merely business units.

  5. #5
    Silver Member
    Join Date
    Jan 2012
    Location
    Johannesburg
    Posts
    305
    Thanks
    112
    Thanked 53 Times in 40 Posts
    Correct me if I'm wrong but as far as I know a cc can only have members, where a company has director/s, are members and directors considered the same?

    Quote Originally Posted by CLIVE-TRIANGLE View Post
    Even if you divisionalised your operation, whether in a company or a cc, the divisions would not be separate legal or juristic persons, merely business units.
    I must say this last bit doesn't make sense to me because a company is a separate entity from a person and even when a company holds shares in another company they are two separate entities and they can opperate completely independently. Now if we imagine a person who owns 5 different companies what legislation says that they are seen as one? To me this is logical, but then again I'm not an expert on this so your criticism will be appreciated.
    ---There is no traffic at the extra mile---

  6. #6
    Gold Member
    Join Date
    Jun 2010
    Location
    Johannesburg
    Posts
    843
    Thanks
    181
    Thanked 177 Times in 146 Posts
    As Clive-Triangle said, there is very little difference between the member of a cc and the director of a company. Basically a member is both a director and a shareholder rolled into one. So I'm not sure why you are trying to avoid that aspect.

    Why you want to separate the trading entities will also give you the direction as to how to structure it. To obvious solutions depending on the goals are:

    1) Several new companies can be created and the cc is the shareholder in all of them. Each company is now a separate legal entity with the cc as the umbrella entity - as you described.
    2) Register several defensive names which will each become a "division" of the main cc and can be used as trading names. Here the cc is still the umbrella enitity, but each division is merely a separate brand, not a separate legal entity.

    Of course the simplest and cheapest way is to continue to only use the cc to trade for all sections, and separate them only by internal accounting reports.

Similar Threads

  1. Pastel Forms Design help, please
    By DaisyGirl in forum Accounting Forum
    Replies: 13
    Last Post: 14-Mar-17, 11:20 PM
  2. COC Forms
    By SparkyScott in forum Electrical Contracting Industry Forum
    Replies: 1
    Last Post: 22-Feb-11, 12:21 AM
  3. Statutory adjustment from an employee - legal or not legal?
    By peanuts in forum Labour Relations and Legislation Forum
    Replies: 1
    Last Post: 16-Feb-11, 12:12 PM
  4. Pastel Forms Design Help
    By DaisyGirl in forum General Business Forum
    Replies: 1
    Last Post: 27-Nov-10, 07:35 AM
  5. Tax forms and guides
    By duncan drennan in forum Tax Forum
    Replies: 2
    Last Post: 28-Nov-08, 03:16 PM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •