CC Registration and Close Corporation Information

Members of a Close Corporation (CC)

The owners of a Close Corporation (CC) are called members. A Close Corporation may have a minimum of one member and a maximum of ten members.

Only natural persons may be members of a Close Corporation, companies cannot be members.

Each member must be issued with a certificate that is signed by or on behalf of every member.

The certificate must state the member’s current percentage in the corporation.

Owners Equity in a CC

In a CC the owner’s equity of the business is equal to the member’s interest. The member’s interest can be explained as the percentage of the total capital invested in the Close Corporation. It is expressed as a percentage and all the members’ percentage interest should equal 100% when added up together.

The way that ownership or contributions are displayed in a CC is different compared to a partnership. For example: in a partnership, three partners might share the capital in a ratio of 1:2:3. In a Close Corporation, three members can have 40%, 25% and 35% interest in the business. In a CC each member holds a single interest. The interest cannot be jointly help by two or more persons. It is important to note that a members interest does not necessarily have to equal to his monetary (capital) contribution. 

Although it is subject to certain basic requirements, a CC has the option available to give financial assistance to a member in order to acquire an interest in the CC.

A member may acquire interest in the following ways:
  • Firstly the member makes an initial contribution
  • After incorporation a new member may acquire further interest by:
  • Purchasing the interest of an existing member or,
  • Make a contribution to the CC entitling him/her to a percentage interest, this will have to first be agreed to between him/her and the existing members.
Members can sell their interest in the Close Corporation, but the sale must be in accordance with the provisions and terms of the Founding Statement. The CC can also acquire a member’s interest and pay for it, and then the interest amount can either be added to the interest of the other members or whatever is agreed upon.

The members of the Close Corporation play an essential and vital part in the running, operation and ultimately the success of the CC. Members need to agreed to certain terms to be able to work as a team.

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