Close Corporations Amendment Act
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STAATSKOERANT VAN DIE REPUBLIEK VAN SUID-AFRIKA
REPUBLIC OF SOUTH AFRICA
GOVERNMENT GAZETTE
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VoL. 250 KAAPSTAD, 23 APRIL 1986
CAPE TOWN, 23 APRIL 1986 No. 10200
KANTOORVANDIESTAATSPRESIDENT STATE PRESIDENT'S OFFICE
No. 726. 23 April1986 No. 726. 23 Apri11986
Hierby word bekend gemaak dat die Staatspresident sy Eoedkeuring geheg bet aan die onderstaande Wet wat
l1ierby ter afgemene inligting gepubliseer word:-
iiiiiiiii'Jo. 38 van 1986: Wysigingswet op Beslote Korporasies, 1986.
It is hereby notified that the State President has assented to the following Act which is hereby published for general information:-
No. 38 of 1986: Close Corporations Amendment Act, 1986.
Please note that most Acts are published in English and another South African official language. Currently we only have capacity to publish the English versions. This means that this document will only contain even numbered pages as the other language is
printed on uneven numbered pages.
GOVERNMENT GAZETTE, 23 APRIL 1986 No.10200 3
CLOSE CORPORATIONS AMENDMENT ACT, 1986 Act No. 38, 1986
GENERAL EXPLANATORY NOTE:
[ ] Words in bold type in square brackets indicate omissions from existing enactments.
Words underlined with solid line indicate insertions in existing enactments.
ACT To amend the Close Corporations Act, 1984, so as to replace the
designation of the Minister concerned; to provide that the founding statement of a close corporation shall be lodged with the Registrar of Close Corporations in triplicate; and that a copy of the certificate of incorporation of a close cor- poration shall be conclusive proof of incorporation of the corporation; to provide for the lodging of an amended found- ing statement if the founding statement of a close corporation is altered by an order of court; to delete the provision con- cerning the liability of former members of a close corpor- ation for the outstanding liabilities of the corporation at de- registration; to provide that the registration number of a company converted into a close corporation shall be stated on the certificate of incorporation; that the consent in writing of a member holding a member's interest of at least 75 per cent, or of members holding together at least that percentage of the members' interests, in a close corporation, shall be re- quired for certain acts; that only members present at a meet- ing of members of a close corporation may vote at that meet- ing; and for the date on which the first financial year of a close corporation converted from a company shaD end; to make further provision in connection with the nature and contents of the annual financial statements of a close corpor- ation; to further define the duties of an accounting officer of a close corporation; to extend the period within which a liquidator of a close corporation is required to give security; and to effect certain textual improvements; and to provide for matters connected therewith.
(English text signed by the State President.) (Assented to 9 Aprill986.)
BE IT ENACTED by the State President and the Parliament of the Republic of South Africa, as follows:-
!. Section 1 of the Close Corporations Act, 1984 (hereinafter referred to as the principal Act), is hereby amended by the sub-
S stitution for the definition of "Minister" of the following defini- tion:
"'Minister', in relation to any matter to be dealt with in the office of a Master in connection with the winding-up of a corporation, means the Minister of Justice and, in re-
10 Jation to any other matter, means the Minister of [In- dustries, Commerce and Tourism] Trade and Indus- try;".
Amendment of section 1 of Act 69 of 1984.
GOVERNMENTGAZETIE,23APRIL1986
5
10
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CLOSE CORPORATIONS AMENDMENT ACT, 1986
2. Section 10 of the principal Act is hereby amended by the substitution for paragraph (m) of subsection (1) of the following paragraph:
"(m) providing for the appointment by the Registrar in specified circumstances of an inspector to investigate the affairs of a corporation, for the powers of an in- spector in conducting any such investigation, for the duty of any member, officer, employee or [accountant] accounting officer of a corporation to make available books and documents in his custody or under his con· trol and to afford such assistance as an inspector may require in connection with any such investigation; for reporting by an inspector to the Registrar; for the mak- ing available by the Registrar of any such report to other persons; for the admissibility of any such report as evidence in legal proceedings; and for defraying the expenses of, and in connection with, any such investi- gation;".
3. The following section is hereby substituted for section 13 of 20 the principal Act:
"Registra- 13. If a founding statement referred to in section r~:ndfng 12 complying with the req.uirements of this Act is statement. lodged with the Registrar m [duplicate] triplicate in
the manner prescribed, and if the business to be car- 25 ried on by the corporation is lawful, the Registrar
shall upon payment of the prescribed fee register such statement in his registers and shall give notice ofthe registration in the Gazette.".
4. Section 14 of the principal Act is hereby amended by the 30 substitution for subsection (2) of the following subsection:
"(2) A certificate of incorporation given by the Registrar in terms of subsection (1) or section 27 (4) (c), or a copy thereof, as the case may be, shall upon its mere production, in the absence of proof of fraud or error, be conclusive evi-
35 dence that all the requirements of this Act in respect of registration of the corporation concerned and of matters precedent and incidental thereto have been complied with, and that the corporation concerned is duly incorporated under this Act.".
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45
50
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5. Section 15 of the principal Act is hereby amended- ( a) by the insertion after subsection (2) of the following
subsection: " 2A If a foundin statement is altered or some-
thing is added thereto by an order of court referred to in section 49, the provisions of subsection (1) in re- lation to the lodging of an amended founding statement therein referred to, shall mutatis mutandis apply in re- spect of such founding statement."; and
(b) by the substitution for paragraph (a) of subsection (3) of the following paragraph:
"(a) If a corporation fails to lodge an amended founding statement in terms of and in accordance with the pro- visions of subsection (1) [or], (2) or (2A), as the case may be, the Registrar may on his own initiative or on application by any member or creditor of the corpo- ration serve on the members of the corporation in accordance with section 25 (2) (a) a reminder by cer- tified post to make good the default within 28 days of the date of the reminder.".
60 6. (1) Section 26 of the principal Act is hereby amended by the substitution for subsection (5) of the following subsection:
"(5) If a corporation is deregistered while having out-
No.l0200 5
Act No. 38, 1986
Amendment of section 10 of Act 69 of 1984.
Substitution of section 13 of Act 69 of 1984.
Amendment of section 14 of Act 69 of 1984.
Amendment of section 15 of Act 69 of 1984.
Amendment of section 26 of Act 69 of 1984.
GOVERNMENTGAZETIE,23APRIL 1986
CLOSE CORPORATIONS AMENDMENT ACT, 1986
standing liabilities, the persons who are members of such corporation at the time of deregistration [, and all other for· mer members,] shall be jointly and severally liable for such liabilities [incurred while they were members of the corpo-
5 ration].". (2) Subsection (1) shall be deemed to have come into opera-
tion on 1 January 1985.
7. Section 27 of the principal Act is hereby amended by the substitution for paragraph (c) of subsection (4) of the following
10 paragraph: "(c) endorse on the founding statement a certificate of in-
corporation as provided by section 14 (1): Provided that such certificate shall state the fact that the corpo- ration has been converted from a company and shall
15 mention the name and registration number of the for- mer company; and".
8. Section 46 of the J?rincipal Act is hereby amended by the substitution in the proviso to paragraph (b) for the words pre- ceding paragraph (i) of the proviso of the following words:
20 "Provided that the consent in writing of [75 per cent of the members] a member holding a member's interest of at least 75 per cent, or of members holding together at least that percentage of the members' interests, in the corporation, shall be required for-''.
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9. Section 48 of the principal Act is hereby amended- ( a) by the deletiOn at the end of paragraph (a) of subsec-
tion (2) of the word "and"; (b) by the addition at the end of paragraph (b) of subsec-
tion (2) of the word "and"; and (c) by the addition to subsection (2) of the following para-
graph: "(c) only members present in person at the meeting
may vote at that meeting.".
10. Section 54 of the principal Act is hereby amended by the 35 substitution for subsection (5) of the following subsection:
"(5) Where the consent in writing of [all] a member or members of a corporation is in any particular case required in terms of the proviso to section 46 (b), no act in con- travention of such requirement shall be binding on the cor-
40 poration with respect to any person who has, or ought reasonably to have, knowledge of the fact that the particu- lar act is performed in contravention of such requirement.".
11. Section 57 of the principal Act is hereby amended by the addition to paragraph (a) of subsection (4) of the following pro-
45 viso: "Provided that the first financial year of a corporation con- verted from a company in terms of section 27, shall end on the date on which the financial year of the company would have ended had it not been so converted; and".
No.l0200 7
Act No. 38, 1986
Amendment of section 27 of Act 69 of 1984.
Amendment of section 46 of Act 69 of 1984.
Amendment of section 48 of Act 69 of 1984.
Amendment of section 54 of Act 69 of 1984.
Amendment of section 57 of Act 69 of 1984.
50 12. (1) Section 58 of the principal Act is hereby amended- Amendment of (a) by the deletion at the end of paragraph (b) of subsec- ~c:'g9 5f1°i84
55
tion (2) of the word "and"; c 0 · (b) by the addition of the following paragraphs to subsec-
tion (2): "(d) shall be in agreement with the accounting records,
which shall be summarised in such a form that- (i) compliance with the provisions of this subsec-
tion is made possible; and (ii) an accounting officer is enabled to report to
GOVERNMENTGAZETIE, 23 APRIL 1986
CLOSE CORPORATIONS AMENDMENT ACT, 1986
the corporation in terms of section 62 (1) (c) without it being necessary to refer to any sub- sidiary accounting records and vouchers sup- porting the entries in the accounting records:
5 Provided that nothing contained in this paragraph shall be construed as preventing an accounting officer, if he deems it necessary, from inspecting such subsidiary accounting records and vouchers; and
10 (e) shall contain the report of the accounting officer referred to in section 62 (1) (c)."; and
(c) by the substitution for paragraph (b) of subsection (4) of the following paragraph:
"(b) In any proceedings against any member of a cor- 15 poration under paragraph (a) the defence referred
to in section 56 [(6)] ill (b) shall be available to him.".
(2) Subsection (1) shall be deemed to have come into opera- tion on 1 January 1985.
20 13. (1) Section 62 of the principal Act is hereby amended- ( a) by the substitution for paragraphs (a) and (b) of sub-
section (1) of the following paragraphs, respectively: "(a) subject to the provisions of section 58 (2) (d), de-
termine whether the annual financial statements 25 are in agreement with the accounting records of
the corporation; (b) determine the [principles oQ accounting policies
applied in the preparation of the annual financial statements; and";
30 (b) by the deletion of the word "or" at the end of subpara- graph (i) ofsubsection (3) (b);
(c) by the insertion of the word "or" at the end of subpara- graph (ii) of the said subsection (3) (b); and
(d) by the addition of the following subparagraph to the 35 said subsection (3) (b):
" iii) that the annual financial statements incorrectly indicate that as at the end of the financial year con- cerned the assets of the corporation exceed its liabilities, or has reason to believe that such an in-
40 correct indication is given,". (2) Subsection (1) shall be deemed to have come into opera-
tion on 1 January 1985.
14. Section 76 of the principal Act is hereby amended by the substitution in subsection (1) for the words preceding the provi-
45 so of the following words: "If a person who has been nominated as liquidator by any meeting of creditors or of members of a corporation was not properly nominated, or is disqualified from being nomi- nated or appointed as liquidator pursuant to section 372 or
50 373 of the Companies Act, as applied by section 66 of this Act, or has failed to give within a period of [seven] 21 days as from the date upon which he was notified that the"tiaster had accepted his nomination or within such further period as the Master may allow, the security mentioned in section 375
55 (1) of the Companies Act, as so applied, or, if in the opin- ion of the Master the person nominated as liquidator should not be appointed as liquidator of the corporation con- cerned, the Master shall give notice in writing to the per- son so nominated that he declines to accept his nomination
60 or to appoint him as liquidator, and shall in such notice state his reasons for declining to accept his nomination or to appoint him:".
No.10200 9
Act No. 38, 1986
Amendment of section 62 of Act 69 of 1984.
Amendment of section 76 of Act 69 of 1984.
15. This Act shall be called the Close Corporations Amend- Short title . ment Act, 1986.