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Thread: CC conversion and share allocation issues

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    CC conversion and share allocation issues

    A quick one:

    A cc (one member wit R 100 contribution) with a property registered in its name is transferred to a Pty (Ltd) with 1000 authorised shares.

    1. 500 shares issued to the shareholder (previously the member of the cc) remaining 500 not issued. is this doable?
    2. New shareholder contribute R 1 000 000 to the company and get issued the remaining 500 shares will this be in order?
    3. Will there be any CGT.

    I will appreciate your reply.

    Thanks

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    Gold Member Houses4Rent's Avatar
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    No idea really, but it sounds more like a sale.
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    Quote Originally Posted by PieterPan View Post
    A quick one:

    A cc (one member wit R 100 contribution) with a property registered in its name is transferred to a Pty (Ltd) with 1000 authorised shares.

    1. 500 shares issued to the shareholder (previously the member of the cc) remaining 500 not issued. – is this doable?
    2. New shareholder contribute R 1 000 000 to the company and get issued the remaining 500 shares – will this be in order?
    3. Will there be any CGT.

    I will appreciate your reply.

    Thanks
    I'm not sure why you would want to convert to a company, but whatever it won't affect the CGT issue.

    Provided the cc or the company is the recipient in exchange for an equity instrument, then there is no income hence no tax.

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    Diamond Member Justloadit's Avatar
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    Is the PTY a change from the CC, or is the PTY another entity?

    If the entity was a CC and re-registered as a PTY as per the new companies act, no real problem, however if the PTY is another company, with a different name, then the Title Deeds would have to change, which means a transfer has to take place, incurring transfer costs, and another issue, the CC is going to show a loss of the property value, and the PTY has acquired a property which it did not pay for. SARS will want to know how the company acquired this property.

    Unless I have misunderstood what you have said in your OP
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