Close Corporations Act
·sTAATS~OERANT
VAN DIE REPUBLIEK VAN SUID-AFRIKA
REPUBLIC OF SOUTH .. AFRICA
GOVERNMENT'. GAZETTE
As 'n Nuusblad by die Poskantoor Geregistreer Registered at the Post Office as a Newspaper
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KAAPSTAD, 4 ~ULIE 1984
CAPE TOWN I 4JUL y 1984 · · • • I ' · .! .
No. 9285
KANTOOR VAN DIE EERSTE MINISTER . OFFICE OF THE PRIME MINISTER· . . ·•
No.1354. 4 Julie 1984 No. 1354 .. 4July 1984
. Hierby word bekend gema~k dat die Staatspresident sy · .. · .. It is hereby- notified that the State President has \ goedkeuring geheg het aan die. onderstaande Wet wat assented to the following Act which is hereby published
· hierby ter algemeneinligting gepubliseer word:- , . . !or general information:-
.....j'o, 69 van 1984: Wet op Beslote Korpora~ies, 1984 .. No. 69 of 1984: Close Corporations Act, 1984.
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.
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GOVERNMENT GAZETIE, 4 JULY 1984
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CLOSE CORPORATIONS Acr, 1984' .··
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To provide for. the formation; registration;· incorporation, man- . ··: ~ . ., · agement, · control and liquidation of ~lose corporations; and
for matters connected therewith. .
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. (Engli~h -'textsigned'by the Stiue 'Pf~sident.) · (Assented to 19 June 1984.), ·
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-.. ·BE IT.ENACfED bythe .state P~esiden.t and -the House of . ' · Assembly of the Repubhc of South Afnca, as follows:-
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Act No. 69, 1984
. · · i. In this Act, unless the context other-Wise indicates-:-:. Definitions. · ..
1 • (i) "accounting ·records", in relation to a corporation, in-
5 ' - eludes accounts, . deedsi' writings and such ·other docu- . ments as may be prescribed; (xix) •: -· " '· . . (ii) "association agreement"; inrelation•to any corporation
or the members thereof, means an · association -agree- ment which has been entered into in terms of section 44
10 by the members of the corporation, including any such agreement which· has been altered · or added· to as con- templated in subsection (3) of section 49; or an agree-
·_ ' . · ' : 'ment which has replaced it as contemplated in that sub- section; (xx) . . · . _ .
15 (iii) '"Coinpanies·'Act,.• ' means ' the Companies · Act, 1973 · (Act No. 61"of 1973); (xii) · .. · · · .
(iv) ."company"; means a co'mpany as defined in· section 1 . (1) of the CompaniesAct; (xi) ' . .
(v) "corporation'~ ·!Jleans a close corporation referred to in 20 ' . section 2 (1): 'Which -has been registered under Part III · ''- " of this Act; (viii) · · · · ·
· (vi) "Court", in relation· t~ . . . (a) any corporation and any matter referred to in sec-
·. · .. :. ' tion'' 7' means . any ' court ~ haviJ.lg jurisdiction in 25 terms of that section; · · · ·' ·;
(b) any matter ·referred to in section 50, 65 or 73 (1), means . any · _court · having jurisdiction in respect · thereof; ·and · ·- :. ; · . ·,· · · · - _
(c) any offence under:this Act, means any court"hav- , 30 ing jurisdiction in respeCt of thafoffeiice; (vi)
· (vii) "deregistration", iri relation . to a corporation; 'nieiins the cancellation of the . registration of the corporation's founding statement; and "deregister" has ·a correspond- . .. ing meaning; (ii) ·. · . · ·· · ·• · .. · ·
35 (viii) "director", in relation to a company,'means a director as defined in section 1 (1) of the Companies Act;· (iii)
· (ix) "founding statement", · _in relation to' a corporation; · . means the' fotiriding statement of the corporation refer-
red to in section 12 which has been registered in terms 40 of section 13, . and 'also · any amended founding state-
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GOVERNMENT GAZETIE, 4 JULY 1984
·· CLOSE CORPORATIONS ACT;J984 •
ment in respect of that co9>oration registered in terms of section 15 (1) or (2); (xxi) · · · . · · .
(x) "holding company"; in relation to a company, means a · · . holding company as defined in ·section 1 (1) of the
5 ' • Companies Act; (vii) · '· (xi) ''Master" means the Master of the Supreme Court, and
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iri relation to-. , , · , (a) a corporation in respect of which application is , . . made to a Court for a winding-up order; the Mas-
i · ; ' ter having jurisdiction in the area of jurisdiction of · the Court where application is made; • · .
(b) a corporation being wound up by a Court, the · Master having jurisdiction in the area of jurisdic- tion of the Court. which issued· the winding-up or~ der;' · ··
(c) a corporation other than a corporation referred to in-paragraph (a) or (b), the Master having jurisdic- . tion in the area in which the registered office of .
. ', ' that corporation is situated; (xiii) · ' . , • · n. '! 20 ' ·(x~i) -"member", in relation to a corporation, means a per-
son qualified for membership of a corporation in terms ·of section,29 and designated as a member in a founding statement of the corporation, including, subject to the
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provisions of this ·Act, a trustee, administrator,. ex- . ecutor or. curator, or other legal representative, re- 'ferred to in paragraph (c) of subsection (2) of .section 29, in respect of anysuch person who is insolvent, de- ceased, mentally disordered or otherwise incapable or . incompetent to manage his affairs, but excluding any such persoll who has in terms of this Act ceased to be a
: member; (x)' · ; ' · ·• .. · -- (xiii) "member's interest" or "interest"; in relation to a r: . member of a corporation, means . the interest' of the
. member in the corporation expressed in accordance . 35 ' · ' with section- 12 (e) as a. percentage in the founding
statement of the corporation; (ix) .
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(xiv) "Minister", inrelation to any matter to be dealt with in the office of a· Mastei: in connection with the winding- up of a corporation, means the Minister of Justice and, in relation to any other matter, means the Minister of
.. Industries, Commerce and Tourism; (xiv) . . (xvf "officer", in relation to- · · · '•
· (a) "a corporation, means any ·manager or secretary. thereof, whether or not such manager onecretary
· .. is also a member of the corporation; · · · . . · "': I (b) a coinpany, means an officer as defined in· section 1
(1) of the Companies Act; (i) ·· ' · (xvi) "prescribe" means prescribe by regulation; and "pre-
. •'' · · 'scribed" has a corresponding meaning; (xxii) . 1_ • • · so· (xvii) · "Registrar~' means the Registrar of Close Corporations
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·· · referred to Iri section4; (xvii) · - ·, (xviii) "registration", in relation to-:-;. . . .·
(a) any corporation;· means the registration of the
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1 .. urt or- h II ··h· d 1 b. · 'fi d · · · . f h d derstoReg~strar s a Wit out e ay y cert1 e post transmit a copy o t e or er and Master
to the Registrar and, if such order relates to the .winding-up of · · 65 any corporation,' a copy'thereof to the Master as well. ·
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GOVERNMENT GAZETTE, 4 JULY 1984
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CLOSE CORPORATIONS ACT, 1984
._.10. (1) The-Minister may make regulations- .... , · (a) providing for the conduct and administration of the
Registration Office, and prescribing the ·practice and ·. · procedure to be observed therein; . . . ·
(b r prescribing the practice and procedure to be obserVed . · in the office of the Master in connection with tlie wind-
. ing-up of corporations; . . . . ' (c) providing for the reproductiori of any records relating .
. to corporations in the Registration Office or the office ·.of the Master by means of microfilm, microcard, · minia-
'· _ ture photographic process or any other process deemed suitable by the Minister; . . . , . . . · :. · ·
(d) · providing for. the use· for official. purposes and the ad- missibility in evidence in any proceedings, whether.in a court of hiw or otherwise, ofanyreproduction contem-
. ~plated in paragraph (c); . . · · , . , .. . (e) providing for the keeping and pre·seivation of any re-
cords, or' any reproductions thereof contemplated in paragraph (c), in the Registration Office or.the office of the Master, the removal from such offices of such re-
' .. · · cords·or reproductions· and. the preservation thereof in any other: place, and.· prescribing the circumstances
· under which such records or reproductions may be de- . stroyed; . ·. · . . . ' · . . · · ..
. (f) prescribing how records required under this Act to be ' kept by a corporation may be kept, arid prescribing the
circumstances under which such records rriay be de- stroyed; . · . · . · . : · . . . .
(g) . prescribing the. procedure to 'be followed with respect .to any matter in connection with the winding-up of cor-
. · _·porat~ons; . · __ -,_, · ._,. _ ·. · . . . , · · ' __ --~ ·· (h) prescribing, the form and _the contents, of. any return,
notice or document provided for by this Act; (i) . prescribing when an additional copy or copies of docu-
ments to be lodged under this Act shall require to be lodged, and whether such additional copy or copies
· shall be in the form of a copy or copies certified. in a defined manner or shall be in duplicate original form;
(j) with the concurrence· of the Minister of Finance, pre- . scribing the matters in. respect' of which fees shall be . payable, the persons by whom and to whom· .the fees shall be payable and the tariff of such fees; .. · · ·
(k) providing for a table offees, subject to'taxation by th~ Master, .which shall be payable . to a liquidator, as re7 llluneration; , . , . .. .
(l) prescribing a tariff of remuneration payable to any per- son performing on behalf of a liquidator any act relat-
' · ing to the winding-up. of a· corporation which the Iiqui- .. • dator is not required to perform personally, . and
. prohibiting the charging or recovery of remuneration at a higher tariff than the tariff so prescribed;
'(m)' providing for the ·appointment by tlie 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 of a. corporation to make available books and docu-
. ments in his custody or under his control and to afford · such assistance as ari inspector may require in connec- : tion with any such investigation; for reporting by an in-
spector to the Registrar; for the making available by · the Registrar of' any such report to' other persons; for the admissibility of any such report as evidence in legal proceedings; and fordefrayingthe expenses of, and in. connection with, any such investigation; .
(n) as to. any other matterrequir~d or permitt~d by this Act to be prescribed; and. ·
No.9285 11
Regulations.
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GOVERNMENT GAZETTE, 4 JULY 1984 No.9285 13
CLOSE CORPORATIONS ACT, 1984 AcfNo.' 69, 1984
(o) generally, as to any inatter' which he considers it necessary or expedient to prescribe in order that the purposes of this Act may be achieved. ·
. (2) Regulations made under subsection (1) may prescribe pen- S alties for any contravention thereof or failure to comply there-
with, not exceeding a fine of R300or imprisonment for a period of six inonths or both such fine and such imprisonment. . .
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·' 11. (1) The standing advisory committee on'company law, ap- ~uncti~nsofstand- . pointed in terms of section 18 of the Companies Act, may from m~ adVIsory com-
10 · · · k d · · t h M" · • · d nuttee on company time to t1me rna e rec?mmen a~10ns o t e mstor: Effect of change of ation shall not affect any right or obligation' of the .corporation name. or any legal proceedings instituted by or against the corporation~ and any legal . proceedings that could. have . been continued or commenced by or against the corporation prior to the change of
10 name may, notwithstanding such change· of name; after the change be continued or commenced by or against · the corpor- ation, as the case may be. ' · ' . . . · · .
(2) Upon the production by a corporation of a certified copy of a founding statement reflecting a change of name of that cor-
15 poration to any registrar or other officer charged'with the main- tenance of a register under any law, and on compliance with all the requirements pursuant to any' such law as to the form of ap- plication (if any) and the payment of any required fee, such
. registrar or 'other officer shall make in his register all such alter- 20 ations as: are 'necessary by reason of the change of naine in re-
spect of the corporation. · · · • i • I. i
. .. 22. (1) The abbreviation CC or BK, in capitalletters, shall be
subjoined to the English or Afrikaans name, as the case may be, of a corporation which it uses. . . · . ··. . . . · . . . · . .
25 (2) A corporation shall refer to the registration number of the corporation on all prescribed documents and correspondence sent by the corporation to the Registration Office. · ·
. .. : , (3) If a corporation is being wound up, the .statement "In Liquidation" shall for the duration of such winding-up be sub-
30 joined to the name of the corporation which it uses ..
Formal require- ments as to names and registration numbers.
23. (1) Every ~orporation-:- " · ' · · · ·' . , ·~ · " .. . Use and publication . . (a) shall dtsplay its regtstered full name (or a regtstered ht- of names.
eral translation thereof into the other official language of the Republic) and registration number in a conspicu~
35 .. . ous position and in characters easily legible on the out- , ~ · -- side of its registered office and every office Or place in
which its business' is carried on; ' ' . · (b) shall have· that name (or such translation thereofrand
registration number mentioned in legible characters in 40 · · · all notices and other official publications, including ad-
vertisements, of the' corporation, and iri all bills of ex- change, promissory notes, endorsements, cheques and
. orders for money. goods or seryices puq)orting to be signed by or on behalf of the corporation, and alllet-
45 ters, delivery· notes, invoices, receipts . and letters of credit of the corporation; and .
(c) shall use a registered shortened form of that name only in conjunction with that name or such literal translation thereof. . " · · ' · ' · .
50 (2) If any member of, or any other person on behalf of, a cor- poration- . . . . . . . .. , , , . . . . , . . ..
(a) issues or authorizes the issue of any such notice or of- . ficial publication of the corporation,o(signs or authpr.:
· izes to be signed on behalf of the corporation any such 55 bill of exchange, promissory note, endorsement, che~
que o(order for money, goods or services; or .. . (b) issues or authorizes the issue of any such letter, ad-
vertisement, delivery note; invoice, receipt or letter of . credit of the corporation; . . ' . . . ' . .
60 without the name of the corporation, or such registered literal translation thereof, and its registration number being mentioned therein in accordance with subsection (1) (b), he shall be guilty of an offence, and shall further be liable to the holder of the bill
· of exchange, promissory note,' cheque or order for money, 65 goods or service·s (or the amount thereof, unless the amount is
duly paid by the corporation. ·
GOVERNMENT GAZE'ITE, 4 JULY 1984
CLOSE CORPORATIONS ACf, 1984
(3) Any 'corporation which fails to comply with any provision of subsection ( 1) shall be guilty of an offence; : · · , · · ; ·'
. . ' . . . ': ~ 24. (1) Every person who is to become a member of a corp9r-
ation upon its registration, shall make to the corporation an tn- 5 itial contribution of money, of property (whether corporeal or in-
corporeal), or of services rendered in connection' with and for the purposes of the formation and incorporation of the corpor- ation, and particulars of such contribution shall be stated in the founding statement of the corporation referred to in section 12,
10 as required by paragraph (j) of that section. · ' · · ·' · _ ·: : (2) The amount or value of the members' contributions; or of
the contribution of any one or more members, may from time to time by agreement among all the members- · · ··
(a) ' be increased by additional contributions of money or 15 property {whether' corporeal or incorporeal) to the cor-
-poration· by existing members or, in terms of section 33 (1) (b), by a person becoming a member of a ·registered corporation; or -.. ' · · · · · · : ' · -· · · · · · '
(b) be reduced, provided that a reduction by way of a ·re~ 20 payment to any member shan · comply with the provi-
sions of se"ction 51 (1). . ' . ' . . . : (3) Particulars of any increase or reduction of a member's con-
tribution in terms of subsection (2) . shall be furnished in an amended founding statement referred to' in section 15 '(1); . -
25 (4) Money or property.referred.to in subsection (l),or (2)(a) shall, in order to vest ownership thereof in the corporation; be paid, delivered or transferred, as the case may be, tothe'corpor- ation within a period of 90 days- · · · . · · · : ' · · · ·
(a) after the date . of registration of the 'coq)oration,in the 30 · case of an initial· contribution referred to in subsection
(1); or . . . . . (b) after the date of the registration of an amended found-
ing statement in connection with any additional contri- . bution referred to in subsection (2) (a). .. · . 35 (5) An undertaking by a member to make an initial or an ad-
ditional contribution to a corporation shall be enforceable by the corpo.ratio~ in legal proceedings. · ·
No. 9285 21
·Act No~ 69,' 1984
Contributions by members.
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' 25. ·(1) Every co'rporation shall ·have in the Republic a postal Po~taladdress and address· and an office to which, subject to subsection (2), all reg~steredoffice.
40 communications and · notices to the corporation may be ad- dressed. · · · · · · ' (2)Any~· .
- (a) notice; order, communication or other document which is in . terms of this ·Act required or permitted to be
45 · served upon any corporation or member thereof, · shall be deemed to have been served if it has been delivered at the registered office, or has been sent by certifiedor registered post to the registered office· or postal · ad- . dress, of the corporation; and ·
50 (b) process which is required to be ser-ved upon any cor- poration ·or member thereof shall, subject to applic- able provisions in respect of such service in any law, be
· served by so delivering or sending it. · ~ . . . '
26; {1) If the Registrar has reasonable ·cause to believe that a Deregistration. 55 corporation is not carrying on business or is not in operation, he
shall serve on the corporation at its postal address a letter by certified post in which the corporation is notified thereof and in-
. formed that if he is not within 60 days from the date of his letter informed in writing that the corporation ~ is carrying on business
60 or ·is in operation, the corporation will, unless good cause is shown to the contrary, be deregistered.
· (2) After the expiration of the period of 60 days mentioned in a letter referred to in subsection (1), or upon receipt from the cor- poration of a written statement signed by or on behalf of every
65 member to the effect that the corporation has ceased to carry on business and has no assets or liabilities, the Registrar may, un- less good cause to the contrary has been shown by the corpor- ation, deregister that corporation.
GOVERNMENT GAZEITE, 4 JULY 1984
. CLOSE CORPORATIONS ACf, 1984
{3) Where a corporation has been deregistered, the Registrar shall give notice to that effect in the Gazette, and the date of the publication of such notice shall be deemed to be the date of de- registration. ·
5 (4) The deregistration of a corporation shall not affect any li- ability of a member of the corporation to the corporation or to any other person, and such liability may be enforced as if the corporation were not deregistered. . . . .
(5) If a corporation is deregistered while having outstanding li- 10 abilities, the persons who are members of such corporation at
the time of deregistration, and all other former members, shall be jointly and severally liable for such liabilities incurred while they were members of the corporation. · ·
(6) The Registrar may on application by any interested per~ 15 son, if he is satisfied that a corporation was at the time of its de-
registration carrying on business or was in operation, or that it is otherwise just that the registration of the ~orporation be restor· ed, restore the said registration. . . . (7) The Registrar shall give .notice of the restoration of the
20 registration of a corporation in the Gazette, and as from the date of such notice the corporation shall continue to exist and be deemed to have continued in existence as from the date of dere· gistration as if it were not deregistered.
No. 9285 23
Ad No; 69, 1984
. 27. (1) Any. company havi~g ten or. fewer members all of Co~ve~sionofcom- 25 whom qualify for membership of a corporation in terms of sec- p~mes mto corpor-
tion 29 of this Act, may be converted into a corporation, pro- ahons. vided that every member of .the company becomes a member of the corporation._ . . . . . . . .. . . , .. . (2) In . respect of a conversion referred to in subsection {1),
30 there shall be lodged with the Registrar- , . . . . . . (a) an application for conversion, in the prescribed form,
·signed by all the members of the company, containing a ·statement that upon conversion the assets of the cor- poration, fairly valued, will exceed its liabilities, and
35 that after conversion the corporation will be able to pay its debts as they become due in the ordinary course of
. its business; . . .. (b) a statement in writing by the auditor of the company
that he has no reason to believe that a material irregu- 40 . larity: contemplated in .subsection (3) of section 26 of
, the Public Accountants' and Auditors' . Act, 1951 (Act No. 51 of 1951), has taken place or is taking place in relation to the company or, where steps have been taken in terms of . that subsection,- that such steps and
45 , .. other proceedings in terms of the subsection have been completed; and , :•
(c) . a founding statement referred to in section 12lodged in· accordance with section 13. . . . . . .
. (3) For the purposes of the founding statement referred to in 50 subsection (2) (c)- . .· . . · • · ..
. . (a) there shall, in regard to the requirements of section 12 · (f), be a statement of the aggregate of the contributions
of, the . members, which shall be for an amount not greater than the excess of the fair value of the 'assets to
55 be acquired by the corporation over the liabilities to be assumed by the corporation by reason of the conver- sion: Provided that the corporation may treat any por· tion of such excess not reflected as members' contribu- tions, as amounts which may be distributed to its
60 · members; . . . · · . · . (b) the members' interests stated in terms of section 12 (e)
, need not necessarily be in proportion to the number of shares in the company held by the respective members at the time of the conversion.
65 (4) If the provisions· of subsection (2) have .been complied with; the Registrar shall, unless he has reason to believe that the company concerned has failed to comply with any requirement of the Companies Act- ·
(a) register the founding statement in accordance with the provisions of section 13;
GOVERNMENT GAZEITE, 4 JULY 1984
. CLOSE CORPORATIONS ACT, 1984 . .
. (b) satisfy himself that, simultaneously with such registra- tion, the registration of the memorandum and the arti- cles of association of the company concerned is can- celled in accordance with . the provisions of the
5 Companies Act;. . (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 corpor- ation has been converted from_ a company and shall
10 . mention the name of the former company; and · .. . · . (d) give notice in the Gazette of the conversion.
(5) (a) On the registration of a corporation converted from a company, the assets, rights, liabilities and obligations of the company shall vest in the corporation. :
15 (b) Any legal proceedings instituted by or against the com- pany before the registration may be continued by or against the corporation, and any other thing done by or in respect. of the company shall , be deemed to have
. been done by or in respect of the corporation. 20 (c)·· The conversion of a company into ;a corporation shall
in particular not affect- (i) any liability of a director or officer of the company
to the company on the ground of breach of trust or . negligence, or to any other person pursuant to any
25 provision of the Companies Act; or , ' • (ii) any liability· of the company, or of any other per·
son, as surety. . (6) The corporation shall forthwith after its conversion from a
company, give notice in writing of the conversion to all creditors 30 of the company"at the time of conversion, and to all other par-
ties to contracts or legal proceedings in which the company was involved at the time of the conversion.· · . :
(7) Upon.the production by a corporation which has been con- verted from· a company of a certified copy of its founding state-
35 ment referred to in subsection (4) (a), to any registrar or other officer charged with the maintenance of a register under any law, and on compliance with all the requirements p\usuant to any such law as to the form of application (if any) and the pay- ment of any required fee; such registrar or officer shall make in
40 his register all such alterations as are necessary by reason of the conversion of the company into a corporation: Provided that no transfer or stamp duties shall be payable in respect of such alter- ations in registers. ·. , .. . . · . . ' · . ' · · (8) If the accounting officer mentioned in the founding state-
45 ment of a converted corporation is not the person who or firm which has acted as auditor for the company, the appointment of that person or firm shall lapse upon the conversion in~o a cor- . poration. · · · · . . ·. _ . . . . .
(9) If a corporation is converted into a company in accordance 50 with the provisions of the Companies Act, the registration of the
founding statement of the corporation shall be cancelled simul- taneously with the registration of the memorandum and articles of association of the company in terms of that Act. · ·
PART IV
55 MEMBERSHIP
No.9285 25
'Act No. 69, 1984
28. A corporation may at its incorporation have one or more Numberofmem· members, but at no time shall the number of members exceed bers. · ten. · · ·
29. (1) Subject to the provisions of subsection (2) (b) and (cj, Requirements for 60 only natural persons may be members of a corporation and no membership.
juristic person shall directly or indirectly (whether through the instrumentality of a nominee or otherwise) hold a member's in· terest in a corporation. · · : . · · .. · : ·
(2) The following persons shall qualify for 'membership of a 65 corporation:
GOVERNMENT GAZETrE, 4 JULY 1984
CLOSE CORPORATIONS ACf,l984
(a) Any natural person entitled to a member's interest;. (b) a natural or juristic person, nomine officii, who is a
trustee of a testamentary trust entitled to a member's interest, provided that-
5 . (i) no juristic person is a beneficiary of such trust; and (ii) if the trustee is a juristic person, such juristic per-
son is not directly or indirectly controlled by any beneficiary of the trust; and
(c) a natural or juristic person, nomine officii, who, in the 10 case of a member who is insolvent, deceased, mentally
disordered or otherwise incapable or incompetent to manage his affairs, is a trustee of his insolvent estate or an administrator; executor or curator· in respect of such member or is otherwise a person who is his duly
15 appointed or authorized legal representative. (3) (a) The membership of any person qualified therefor in
terms of subsection (2) shall commence on the' date of the registration of a founding statement of the corpor- ation containing the particulars required by section 12
20 in regard to such person and his member's interest. (b) Where any person is to. become a member of a regis-
tered corporation the existing member or members of the corporation shall ensure that the requirements of section 15 (1) regarding· the lodging of an amended
25 founding statement with the Registrar are complied with:
(c) A trustee of an insolvent estate, administrator, ex- ecutor or curator, or other legal representative, re- ferred to in subsection (2) (c), in respect of any mem-
30 ber of a corporation,'who.is not obliged or who does not intend to tninsfer the interest of the member in the corporation in accordance with the provisions of this
· Act within 28 days of his assuming office to any other person, shall within that period, or any extended
35 period allowed by the Registrar on· application by him, request the existing member or members of the corpor- ation to lodge with the Registrar in accordance with section 15 (1) an amended founding statement desig- nating him, nomine officii, as representative of the
40 member of the corporation in question. · · . : (d) Where .the corporation has no other member, any such
representative himself shall, in the circumstances con- . templated in paragraph (c), act on behalf of the corpor- ation in accordance with the provisions of section 15
45 (1), read with the said paragraph (c). . . (e) The provisions of paragraphs (c) and (d) shall not af-
fect the power of such representative, as from the date of his : assuming office, and whether or not any such amended founding statement has been lodged, to rep-
50 resent the member concerned in all matters in which he himself as a member could have acted, until the inter- est of that member in the corporation has in accord- ance with the provisions of this Act been transferred to any other qualified person. ·
55 (4) A corporation is not concerned with the execution of any trust in respect of any member's interest in the corpc;>ration.
30. (1) The interest of any member in a corporation shall be a single interest expressed as a percentage. · ·
(2) Two or more persons shall not be joint holders of the same 60 member's interest in a corporation.
No.9285 27
Act No. 69, 1984
' j . , .
Nature of member's interest.
31. Each member of a corporation shall be issued with a certi- Certifica.te ofmem· · ficate, signed by or on behalf of ever}' member of that corpor- her's interest. .
ation, and stating the current percentage of such. member's ii:tter- est in the corporation. · · ·
65 ·.·. 32. (1) A minor who is a member of a corporation, other than Representation of · a minor whose guardian has lodged a written consent referred to members.
·.
GOVERNMENT GAZETfE, 4 JULY 1984
. CLOSE CORPORATIONS ACf, 1984
in section 47 (1) (a) (ii), shall be represented in the corporation by his guardian.
(2) A married woman, whether subject to the marital power of her husband or not, shall require no representation or assist-
S ance to act as a member of a corporation. (3) A member subject to any other legal disability shall be
represented in the corporation by his duly appointed or author- ized legal representative referred to in paragraph- (c) of subsec- tion (2) of section 29.
No. 9285 29
Ad No. 69, 1984
10 33. (1) A person becoming a member of a registered corpor- Acquisition of ation shall acquire his member's interest required for mem- member's interest bership-- . , . . . . by new member.
(a). from one or more of the existing members or his or their deceased or insolvent estates; or
15 (b) pursuant to a contribution made by such person to the corporation, in which case the percentage of his mem- ber's interest is determined by agreement between him and the existing members, and the percentages of the interests of the existing members in the corporation
20 . shall be reduced in accordance with the provisions of section 38 (b). . . . -
(2) The contribution referred to in subsection (1) (b) may con- sist of an amount of money, or of any property (whether corpo- real or incorporeal) of a value agreed upon· by the person con-
25 cerned and the existing members. · . ' ' - . ' .
34. (1) Notwithstanding any provision to the contrary in any Disposalofinterest association agreement or other agreement between members, a of insolvent mem- trustee of the insolvent estate of a member of a corporation ber. may, in the discharge of his duties, sell that member~s interest-
30 (a) to the corporation, if there are one or more members other than the insolvent member;
(b) to the members of the corporation other than the insol- vent member, in proportion to their members' interests or as they may otherwise agree upon; or
35 (c) subject to the provisions of subsection (2), to any other person who qualifies for membershipof a corporation in terms of section 29. . .
(2) If the corporation concerned has one or more members other than the insolvent, the following provisions shall apply to a
40 sale in terms of subsection (1) (c) of the insolvent member's in- terest: ·
(a) The trustee shall deliver to the corporation a written statement giving particulars of the name and address of the proposed purchaser, the purchase price and the
45 time and manner of payment thereof; (b) for a period of 28 days after the receipt by the corpor-
ation of the written statement the corporation or the members, in such proportions as they may agree upon, shall have the right, exercisable by written notice to the ·
50 trustee, to be substituted as purchasers of the whole, and not a part only, of the insolvent member's interest at the price and on the terms set out in the trustee's written statement; and . .
(c) if the insolvent member's interest is not purchased in 55 terms of paragraph (b), the sale referred to in the
trustee's written statement shall become effective and be implemented.
35. Subject to any other arrangement in an association. agree- Disposal of interest ment, an executor of the estate of a member of a corporation of deceased mem-
60 who is deceased shall, in the performance of his dutie~ ber. (a) cause the deceased member's interest in the corpor-
ation to be transferred to a person who qualifies for membership of a corporation in terms of section 29 and is entitled thereto as legatee or heir or under a redistri-
65 bution agreement, if the remaining member or mem- bers of the corporation (if any) consent to the transfer of the member's interest to such person; or
GOVERNMENT GAZETIE, 4 JULY 1984
5
10
CLOSE CORPORATIONS ACT, 1984
(b) if any consent referred to in paragraph (a) is not given within 28 days after it was requested by the executor, sell the deceased member's interest- (i) to the corporation, if there is any other member
or members than the deceased member; · (ii) to any other remaining member or members of the
corporation in proportion to the interests of those members in the corporation or as they may other- wise agree upon; or
(iii) to any other person who qualifies for membership of a corporation in terms of section 29; in which case the provisions of subsection (2) of section 34 shall mutatis mutandisapply in respect of any such sale.
No.9285 31
Ad No. 69, 1984
15 36. (1) On application by any membe( of a corporation a Cessa.tion of mem- Court may on any of the following grounds order that. any mem- bersh1p ~Y order of ber shall cease to be a member of the corporation:· · Court.
(a) Subject to the provisions of the association agreement (if any), that the member is permanently incapable, be-
20 cause of unsound mind or any other reason, of per- forming his part in the carrying on of the business of the corporation;
(b) that the member has been guilty of such conduct as taking into account the nature of the corporation's
25 business, is likely to have a prejudicial effect on the carrying on ofthe business; · · '·
(c) that the member so conducts himself in matters relating to the corporation's business that it is not reasonably practicable for the other member or members to carry
30 on the business of the corporation with him; or · (d) that circumstances have arisen which render it just and
equitable that such member should cease to be a mem- . · ber of the corporation: · .
Provided that such application to a Court on any ground men- 35 tioned in paragraph (a) or (d) may also be made by a member in
respect of whom the order shall apply. . · · · · · · ·. · (2) A Court granting an order in terms of subsection (1) may
make such further orders as it deems fit in regard t()-c'- . (a) the acquisition of the member's interest concerned by
40 the corporation or by members other than the member concerned; or
(b) the amounts (if any) to be paid in respect of the mem- ber's interest concerned or the claims against the cor- poration of that member, the manner and times of such
45 payments and the persons to whom they shall be made; or · · ·
(c) any other matter regarding the cessation · of mem- bership which the Court deems fit.
37. Every disposition by a member of a corporation of his in- Other disposi.tions 50 terest, or a portion thereof; in the corporation, other than a dis- of members' mter-
position provided for in section 34, 35 or 36, whether to the cor- ests. poration, any other member or any other person qualifying for membership in terms of section 29, shall be don~ · · : · ·
(a) in accordance with the association agreement (if any); 55 or ·
(b) with the consent of every other member of the corpor- ation: .
Provided that no member's interest shall be acquired by the cor- poration unless it has one or more other members.
60 38. The aggregate of the members' interests in a corporation expressed as a percentage shall at all times be one hundred per cent, and for that purpose- ·
(a) any transfer of the whole, or a portion, of a member's interest shall be effected by the cancellation or the re-
65 duction, as the case may be, of the interest of the mem- ber concerned and the allocation in the name of the transferee, if not already a member, of a member's in-
Maintenance of ag- gregate of mem- bers' interests.
GOVERNMENT GAZETIE, 4 JULY 1984
10 :
CLOSE CORPORATIONS ACI', 1984
terest of the percentage concerned, or the addition to the interest of an existing member of the percentage concerned; · ·
(b) when a person becomes a member of a registered cor- poration pursuant to a contribution made by him to the corporation, the percentage of his member's interest shall be agreed upon by him and the existing members, and the percentages of the interests of the existing members shall be reduced proportionally or as they may otherwise agree; and ·
(c) any member's interest acquired by the corporation shall be added to the respective interests of the other mem- bers in proportion to their existing interests or as they may otherwise agree. , · · ·
No.9285 33
Act No. 69, 1984
15 39. (1) Payment by a corporation in respect of its acquisition Payment by corpor• of a member's interest in the corporation shall be made only- !'tion for me~bers·
(a) with the previously obtained written· consent of every anterests acquired, member of the corporation, other than the member whose interest is acquired, for the specific payment;
20 · (b) if, after such payment is made, the corporation's assets, fairly valued, exceed all its liabilities; ·
(c) , if the corporation is able to pay its debts as they be- come due in the ordinary course of its business; and
·(d) if such payment will in the particular circumstances not 25 in fact render the corporation unable to pay its debts as
· · · they become due in the ordinary course of its business. (2) For the purposes of subsection (1) "payment" shall include
. the delivery or transfer of any property. ·
' 40. A corporation may. give financial · assistance (whether di- financial assistance 30 rectly or indirectly and whether by means of a loan, guarantee,. by corpo~ation !~
the provision of security or otherwise) for the purpose of, or in ~~fo~\~e~~;:!· connection with, any acquisition of a member's interest in that interests. corporation by any person, only- · ·
(a) with the previously obtained written consent of every 35 member of the corporation for the specific assistance;
(b) if, after such assistance is given, the corporation's as- sets, fairly valued, exceed all its liabilities;
(c) if the corporation is able to pay its debts as they be- come due in the ordinary course of its business; and
40 (d) if such assistance will in the particular circumstances not in fact render the corporation unable to pay its debts as they become due in · the ordinary course of its business. · · · · ·
41. (1) A .corporation shall not send to any person any busi- Publication of . 45 ness letter bearing a registered name of the corporation, unless names of members •.
the forenames (or the initials thereof) and surname of every member thereof is stated thereon. ·· ·
(2) Any corporation which contravenes any provision of sub~ section (1) shall be guilty of an offence. .
50 PARTY
INTERNAL RELATIONS
42. (1) Each member of a corporation shall stand in a fiduc- Fiduciaryp6sition ia:rx relationship to the corporation. · ' of members.
(2) Without prejudice to · the generality of the expression 55 "fiduciary relationship", the provisions of subsection (1) imply
that a member- ( a) shall in relation to the corporation act honestly and in
good faith, and in particular-
GOVERNMENT GAZETTE, 4 JULY 1984
CLOSE CORPORATIONS AC