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CLOSE CORPORATIONS TRANSITIONAL ARRANGEMENTS IN NEW COMPANIES BILL The New Companies Bill provides for the co-existence of the new Companies Act and the Close Corporations Act, 1984 with amendments to the latter to harmonise the laws as far as practicable to avoid regulatory arbitrage. The new Companies Act as the legislative framework for forming and maintaining small companies, which has drawn on the characteristics of the Close Corporations Act, is sufficiently streamlined and simplified as to render it unnecessary to retain the application of the Close Corporations Act for the formation of new corporations. However, it is recognised that existing close corporations should be free to retain their current status until such time as their members may determine that it is in their interest to convert to a company. Therefore, the Bill provides for the indefinite continued existence of the Close Corporations Act, but provides for the closing of that Act as an avenue for incorporation of new entities, or for the conversion of companies into close corporations, as of the effective date of new Companies Act. Basically it means that CIPRO will; " continue to maintain the Close Corporations register indefinitely as far as membership, addresses, Accounting Officer etc amendments are concerned, but will no longer register new Close Corporations as at the full implementation of the New Companies Act. " Not allow a Company to convert to a Close Corporation as at the effective date of the New Companies. Sincerely |
