Register a close corporation

Wednesday, June 30, 2010

Advantages of a Close Corporation

All forms of business ownerships have their advantages and disadvantages that one needs to take into consideration when forming your business. Weighing the advantages and disadvantages of a Close Corporation will be very important when deciding what form of ownership will be best for your business.

Advantages of a Registering a Close Corporation:

1.    The registration of a Close Corporation is a relatively simple, quick and affordable process as its not expensive, time consuming and has only a few regulations to adhere to.

2.    A CC doesn’t have as many legal requirements that a company has for example. Close corporations are not required to have annual financial statements audited and are not required to hold annual general meetings, making it easier to run than a company!

3.    The CC is regarded as a legal entity/person; this is an advantage because it means that the continuity of a CC is not linked to the status and life of the members.

4.    Members of the CC are exempted from normal income tax when income from the CC is distributed.

5.    Close Corporations may assist a member financially to acquire an interest in the corporation.

6.    A Close Corporation is normally able to access a greater amount of capital than a sole proprietor or small business as it’s viewed as a formal legal entity/person as mentioned in point No.3.

7.    Members of a CC have a limited liability for the debts of the CC except under certain exceptional circumstances. E.g. where a member acts irresponsibly.

8.    Making changes/amendments to the Founding Statement of a Close Corporation is easy and inexpensive.

9.    A CC has no board of directors like a company, management is therefore the responsibility of the members, as they are usually hands-on with the day to day running of the establishment.

10.    The owner’s interest in the CC does not need to be in proportion to their contributions (Capital). An example of this could be when one member contributes less capital because they have specific skills that are needed in the CC.


It’s highly recommended that you consider the ADVANTAGES and DISADVANTAGES of a Close Corporation before deciding on what form of business to establish.

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