The impact of the new South African Companies Act on more than a million close corporations. The beginning of the end?
23 November 2009, 18:30 - 19:30
Event Type:
Lecture
Speakers
PROFESSOR JOHAN HENNING,
Dean of the Faculty of Law, University of the Free State, South Africa
Description
The raison d’être of the South African Close Corporations Act 69 of 1984 is the provision of a simple, deregulated, decriminalized, inexpensive and flexible free standing limited liability vehicle for the single entrepreneur or small number of participants, to meet his/her or their reasonable needs and expectations without burdening him/her or them with legal requirements that would not be meaningful in the circumstances. The close corporation has served South Africa welll. From 1 January 1985 until the end of 2008 more than two million close corporations were registered compared to less than five hundred thousand companies of all forms and types. On the 12th of June 2006 1,276,157 close corporations were still active in South Africa.
The main impact of the new South African Companies Act 71 of 2008 on the South African close corporation may be summarized as follows:
First the proscription of new close corporations. This not only translates into the phasing out of close corporations, however gradual, but leaves small entrepreneurs with only one avenue for new incorporations and that is under the new Companies Act.
Second is the clearly discernible tendency to subject the close corporation to more and more onerous administrative duties and arrangements.. This is amply illustrated by the approach to supplant numerous arrangements of the Close Corporations Act by that of the new Companies Act, by repealing the first and incorporating large tracts of the latter by reference.
It is unfair to expect the close corporation to perform optimally in a legal milieu for which it was not designed and to encumber it by duties and obligations contrary to its very nature and fundamental design philosophy. However, optimal performance is most probably not what is expected officially of the current close corporation in the brave new dispensation.
This lecture is eligible for 1 CPD hour from the Solicitors Regulation Authority (ref: MM/IALS). CPD accreditation from the Bar Standards Board has been applied for. Those wishing to obtain CPD accreditation must register on arrival.
Venue : IALS
Institute of Advanced Legal Studies
Charles Clore House
17 Russell Square
London
WC1B 5DR
Related Events :
Company and Commercial Law
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