Close Corporations – South Africa

Private Company ((Pty) Limited) and Close Corporation
Private Company ((Pty) Limited) and Close Corporation

Whilst it is no longer possible to form a new close corporation, it is still worth knowing the main features them. It is possible still to purchase a shelf close corporation, although availability of these will become screamingly more scarce, or you may find if you are buying an existing business its legal entity is that of a close corporation.

A close corporation has certain advantages and disadvantages over sole proprietorships.

To view a summary of comparisons please use the links below:

Close Corporations compared to Sole Proprietorships

Close Corporations compared to Private Limited Companies ((Pty) Ltd)

Close Corporations Key Features

  • a Close Corporation (cc) is a legal entity
  • Audited financial statements are not required for Close Corporations
  • Meetings are not compulsory and can be held on an ad hoc basis
  • Close Corporations (CCs) may become shareholders in other companies
  • All members may take part in management of the Close Corporations
  • The proprietor or member is not personally liable for the debts of a Close Corporations (CC)
  • The legal procedures for registration and administration of a Close Corporation are kept relatively simple

Members of Close Corporations (CC)

  • The members of Close Corporations (CC) are the registered “owners” and are listed as part of the registration process.
  • Any changes in respect of the members of the Close Corporations (CC) must be notified to the Close Corporation Registration Office in Pretoria.
  • Non South Africans may be members of a Close Corporations (CC), provided that their membership details are authorised by the Registration Office
  • A Close Corporation may have a minimum of one member or a maximum of 10 members.However there are no limitations in respect of the number of employees in a Close Corporation.
  • If a member of a Close Corporation (CC) is under 21, the registration document must be signed by a parent or guardian.


Can I Convert From a Close Corporation (Cc) To a Private Company Later On?

Yes. For example, 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 field” in the eyes of their market / customers. Accordingly, they decide to convert their CC to a registered company.

Some Advantages

  • Easy to establish and to operate
  • The life of the close corporation is perpetual
  • Members have limited liability
  • Transfer of ownership is easy
  • Fewer legal requirements than a private company
  • No need for audit


  • Members restricted to 10 natural persons
  • More legal requirements than sole proprietorship

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