Frequently Asked Questions

ANSWER
Schools are governed by the SA Schools Act no 84 of 1996. In terms of section 43(1), a governing body of a public school must appoint a person registered as an Accountant and Auditor in terms of the Public Accountants and Auditors Act to audit the records and financial statements. 

However, if the audit is not reasonably practicable, the governing body may appoint another person to examine and report on the financial affairs of the school subject to that the person appointed must be qualified to act as an Accounting Officer in terms of section 60 of the Close Corporation Act and also be approved by a Member of the Executive Council.

It is important to note that any report issued should not refer to the Accounting Officer as the Auditor or Registered Auditor.

---

QUESTION
When is the new Companies Bill expected to come into force and what effect will it have on the future of Close Corporations?

ANSWER
Section 225 pf the Companies Bill states the Bill comes into operation on a date fixed by the State President by proclamation in the Government Gazette and the date may not be earlier than one year following the date on which the State President assented to the Act. The expected effective date is 1 June 2010.

The Companies Bill provides for two types of companies namely profit companies and non profit companies. A company is profit company if it is incorporated for the purpose of financial gain for its shareholders and it may be incorporated by more than one person. There is no maximum.

A non-profit company is the current section 21 companies

There are four types of profit companies: 

 

The Bill recognises that existing close corporations should be free to retain their current status and will not be obliged to convert to a company. The Bill therefore provides for the indefinite continued existence of close corporations.

 

If the members of a close corporation whishes to convert to company it can be done under the new Bill.

Close Corporations can still be registered until the new Companies Bill is enacted thereafter no new Close Corporations will be registered.

---

QUESTION
If it appears that a CC is insolvent, how and to whom must the Accounting Officer report this?

ANSWER
Section 62 (2) (b) (ii) of the Close Corporation Act places a duty on the Accounting Officer of a CC to submit a written report to that effect to the Registrar of Close Corporations that at the end of the financial year concerned the financial statements of the CC indicates that the CC’s liabilities exceed its assets.

This report is over and above the Accounting Officers report to the Members and it must contain the same information.

The Accounting Officer can qualify the report to the Registrar if he/she is of the opinion that the insolvency is of a technical nature and that it would not prevent the CC to continue business successfully.

Section 62 (4) also makes provision for the Accounting Officer to submit at any stage further reports to the Registrar should the situation change.

---

QUESTION
Can a non South African citizen become a member of a CC?

ANSWER
There are no restrictions on who could become a member of a CC.

Non-South African citizens who wants to register as a member of a CC in South Africa must submit a written statement and providing the following with the relevant CK1 or CK2: 

Take note that membership of a CC does not automatically qualify Non-South African citizens for residence, work or other immigration permits.

---

QUESTION
Can a CC hold interest in another CC?

ANSWER
No juristic person may hold a member’s interest in a Close Corporation.

The only exception is when such membership is held in case of a member who is:

 

by his/her