Decisions Decisions Decisions - To convert my CC to Pty or stay a CC

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This question keeps comimg up. Quite a few small business will stay CC's as they will be immobilised by fear of a PTY or change.

But change is good right?

The New Companies Act is nothing short of Awesome! Due to the ramifications of the CPA, it has been reduced to 225 sections and 5 schedules.

You can convert free of fees within three years of the first May 2011. You have more latitiude in a PTY than in a CC. As a small company you are exempt from a lot of the activities that a larger PTY has to comply with. You can offer share incentive schemes.

You can amend the MOI where it does not conflict with the Companies Act at point of Conversion, You can change the name of the entity at the point of conversiom, subject to the usual name reservation procedures.

In essence you are getting back to the same place you were with your CC but with greater benfit and protection.

We have fchanged our structures in this way- formed a Holding company and converted all our trading CC as subsidiaries with a non trading company that just holds the assets with long version MOI's

[Dave A]

Out of idle interest, when you converted the CCs did you keep the same cc/coy registration number with CIPC?

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The number will change due to the fact that the digits at the end of a reg number denote the type of incorporation. The "23" at the end of a CC denote a CC. A PTY has a "07" at the end of its reg no

[Dave A]

So I may take it that the other numbers don't change?

My thoughts were running down the lines of what the more "evasive" operators might get up to with this conversion and name changing opportunity. Used to be you'd call up some companies about a problem and they'd say "no, that was my now deceased uncle. Not my problem." I could see something similar coming, like "no, that was the cc and that's dead now. The business is now under newco ownership. Not my problem."

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The numbers will change but the problem you pose will never be an issue to a prudent business person in that the conversion will reflect on the paperwork and will be in the public domain. All it would require was a CIPC check which at the very most would cost R30 for a full verification and a basic one is free. The CPA covers these issues in quite a lot of detail and what would have to the trading name? There is very specific law regarding that. Having said this though it is time for businesses to wake up and take affairs, especially credit risks much more seriously than in the past. The economic situation is dire and debt review (for individuals) and business rescue (companies) are real. We obtain mandates for all our clients where disclosures have to be made regarding insolvencies and Debt review on individuals and personal suretyships for Companies. This is not to say we wont take on these risks, we just deal with them in a different way. We have had 4 insolvencies just in our tax base in 2011, which we only became aware of when filing the actual tax return. It doesnt sound a lot, but when considering the big picture, that we have only capured .00001% of the total tax market then it is quite frightening indeed. Well thats all folks!