Prescribed managerial requirements for a CC are easier than managing a company. The managerial and administrative requirements are less formal.

For this reason, the senior executives of a company may decide to convert their registered company into a CC. The procedures and documentation requirements are as follows:

• If they want to change the name, a CK7 form will be necessary, to reserve the new name (if the name stays the same, no reservation is necessary).
  • Submit the CK 7 form
  • CK 4 and CK 1 forms to be then lodged
  • Furnish a letter from the accounting officer consenting to act as such
  • Furnish a letter from the company auditor in terms of Section 27 (2) (B) of the Close Corporation Act
  • A fee of R100-00

A close corporation may have grown substantially and in order to expand even further, an injection of additional capital by way of shareholders may be envisaged.

Or, the CC may find itself competing with large companies (Pty’s) and believe that they too should become a Pty to “even the playing fields” in the eyes of their market / customers. Accordingly they decide to convert their CC to a registered company.

The procedures and documentation are as follows:

• If a name change is envisaged, a form CM5 must be completed, to reserve the name.
• Statements in terms of Section 29C (4) (a) (i) and (ii) of the companies Act in the form of:
  • all the documents as per registration of a company
  • the services of an attorney are thus advised.
  • CM1 (certificate of incorporation) must be endorsed. The Cm1 must have the registration number and the name of the converted CC.