CC Registration and Close Corporation Information

Advantages of a Close Corporation (CC)

As with all forms of business ownership, there are advantages and disadvantages.

There are a number of advantages to registering a close corporation and knowing the advantages and disadvantages of a Close Corporation will be useful when deciding what form of ownership will be best for your business.

The advantages of a CC are:
  • Registering a Close Corporation (CC) is a simple and relatively affordable option. It is not expensive and there are only a few regulations.
  • A CC does not have any legal complications that a company has. For example, a CC is not required to have annual financial statements audited and a CC is not required to hold annual general meetings. This makes running a CC easier than a company.
  • 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.
  • Income distributed to the members of the CC is exempted from normal income tax.
  • A CC may give financial assistance to a member to acquire an interest in the corporation.
  • The amount of capital a CC is able to access is normally more than the average sole trader or small business.
  • Liability of members for debts is limited except under certain exceptional circumstances.
  • It is easy and inexpensive to change the Founding Statement of a Close Corporation.
  • There is no separate board of directors in a CC, management is the responsibility of the members.
  • 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.
As you can see from the above list, there are a number of advantages in starting or registering a Close Corporation (CC). In order for you to make an informed decision in deciding what form of ownership will suit your needs, it is recommended that you first consider the disadvantages of a Close Corporation. Only after considering both the advantages and disadvantages will you be able to make the right decision.
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