Close Corporations Overview

What is a Close Corporation?

• A business form in South Africa since 1985.

• A type of partnership.

• A sole proprietorship.

• A non-profit organization.

What are the limitations of a Close Corporation?

• Must prepare financial statements per GAAP.

• Members are not liable for debts.

• Decision-making requires 50% member consent.

• Members can easily transfer ownership.

What are the accounting and disclosure requirements for a Close Corporation?

• Maintain proper books of account.

• Prepare financial statements at the end of the financial year.

• Both A and B.

• None of the above.

What are the duties of the accounting officer?

• Determine whether the annual financial statements agree with the accounting records.

• Report on the nature of any contravention of the Act.

• Both A and B.

• None of the above.

What is the tax position of a Close Corporation and its members?

• Members are treated as employees for tax purposes.

• Members are exempt from tax.

• Only the corporation pays tax.

• Members do not have to file tax returns.

What is required for the conversion of a company to a Close Corporation?

• All members must join.

• An application form must be signed.

• A financial statement must be included.

• All of the above.

What must be submitted during the conversion process?

• A Memorandum of Incorporation.

• A statement confirming the company’s paid-up capital.

• An accounting officer’s statement.

• All of the above.