New Companies Act and Informal SME?

[Mark Atkinson]

Ok, so I've skimmed through the amendments to the Close Corporations Act by the Companies Act. There are a whole lot of small tweaks that are probably irrelevant to your business. A few things to do with liquidation and dissolution of CCs, mostly.

The important thing is:

A corporation formed in accordance with the provisions of this Act is on registration in terms of those provisions a juristic person and continues, subject to the provisions of this Act, to exist as a juristic person notwithstanding changes in its membership, or its conversion to a company in terms of Schedule 2 of the Companies Act, until it is [in terms of this Act] deregistered or dissolved...

Basically, your CC will continue to exist in compliance with the Close Corporations Act until it is deregistered or dissolved.

Also, I could not find anything to do with having to submit a MOI. As long as your founding statement and (optionally) Articles of Association are lodged with the Registrar, I can't see anything else you have to comply with in that regard.

One other thing:

The members of a corporation shall within [nine] six months after the end of every financial year of the corporation cause annual financial statements in respect of that financial year to be made out in one of the official languages of the Republic.

Just a change on the slack after year end during which to submit your financial statements from 9 months to 6 months.

Also, in some instances, where a private company is required to be audited as determined by the Minister, a CC may also be subject to an audit of its financial statements.

Your accounting officer should inform you of that kind of requirement, though.

Hope that helps!

[KimH]

Mark, that helps tremendously.
I can't thank you enough for taking the time and trouble to get this information for me.
When you are in CPT... let me know - I owe you a beer or 4

[BusFact]

Companies_Act_Guide Pg 22.pdf Some further confirmation on what Mark has sent, off the DTI companies act guide on page 22.

[RogerH]

A CC will only need to do an MOI when it converts into a Company - this is not required but will be done for free within the next 3 years (according to the DTI). the process of conversion also provides an opportunity to revise and redesign a businesses structure - some of the areas that can be looked at during the conversion are highlighted HERE

[JohnSilver]

IS there still a benefit of keeping a CC, instead of converting to a company?

And what is a MOI?

[BusFact]

MOI - Memorandum of Incorporation (or something similar). Basically its the rules and constitution of your business.

The new type of company and the old cc are virtually the same thing, especially for owner managed businesses. There isn't really a strong argument either way at the moment. So I'd let inertia rule for now and not do anything.

[Just Gone]

I have just been thro this and started another business. Have taken over an existing cc from 2008 which was deregistered - re-registered the cc by paying the penalties from 2008 only. Cost about R1000. Before 2008 you need not worry about. I have been told that we have 10 years to still use the old cc whereby you have to convert. If you convert within two years from the beginning of this year it is free of charge, but no more trading as !!

[BusFact]

Hi Kevinb. I still maintain a different view on this "trading as" rule.

If you have been using a "trading as" name for a while before 2011, then you can continue using it.
If the cc you have bought has been using a "trading as" name for a while before 2011, then you can continue using it.

If you want to start using a new "trading as" name now, you cannot without registering trademarks or new companies with that specific name or through some other formal mechanism with CIPC.

The new "trading as" rules apply to any new name you want to use. It is irrelevant which type of organisation is going to use this "trading" name. It can be a pty / cc / trust / ltd, whatever, old or new, it doesn't matter. So I'm not sure how purchasing an old cc helps your case for using a new trading name. Nor do I agree with the opinion that conversion to a pty means you lose your existing right to use your existing trading name ... yet.

Admittedly there is a lot of confusion on this topic at the moment, so other opinions welcome.

[Just Gone]

What I said was if you buy an old cc you have to apply to obviously change to the name to what you want, then you cant /wont be a trading as. Ok....... we want to change the cc name because it is the name of a person. ............ i think we are saying the same thing here

[BusFact]

Ahhh, okay yes we are on the same track. I did not realise you were planning on changing the name of the cc. By doing this you are right, you no longer even need to be "trading as". And this is exactly want the CPA wanted. It wants people to use their company names to trade and not simply make up any name when it suits them.

Based on the above, I am still not sure why you went to the effort of buying an old cc. Why not simply open a new pty with the name you intend to change your cc to? The end result is the same I suppose, but are you not worried about unknown debts in the cc? A new company will have a clean slate.

[Just Gone]

Its cheaper to buy an existing cc than to open a new pty ltd at the mo. No not worried - it was a dormant cc and I know the history.

[CLIVE-TRIANGLE]

The Consumer Protection Act (CPA) prohibits you from using a trading name, unless:
- You have registered it at CIPC as a Defensive Name - renewable every 2 years, or
- You (in this case the partnership) has been using it for at least 12 months prior to the introduction of the act.

The registration of either a proposed name or a defensive name is prohibited if the name is the subject of a de-registration for non-compliance with regard to annual returns.

The CPA prescribes additional burdens regarding business names with regard to natural persons. I am not sure how this extends, if at all, to partnerships offhand.

It seems to me your best avenue would be to restore your cc.

[CLIVE-TRIANGLE]

Sorry, didn't see page 3!

[Dave A]

Sorry, didn't see page 3!

Don't sweat it - I've made the same mistake myself many times.

Besides which the point was worth repeating

[BusNavig8]

Register a defensive name . it will cost you R200, it lasts for 2 years and will need to be renewed every two years. If it was deregistered not due to annual returns - why was it deregistered?

Thats the name issue out of the ways.

The creditor issue will not change merely due to the fact that the CC was deregistered unless it was advertised in the newspaper and the Govt Gazette. - Normal presription will apply.

The Partnership - will fall outside of the companies act as far as I am concerned as it in not a legal entity, HOWEVER, another may view such as, Im not sure what the name is for it, coat tailing or something like that and can merely complete a CoR135.1 and have the entire partnership investigated. Hence I would again place an advert in the Star or a well recognised newspaper stating that the CC is now a partnership, and all interested parties must make contact with you etc etc.