the new Companies Act has neither repealed the Close Corporations Act, 69 of 1984, nor abolished the institution of close corporations so that both the Companies Act and the Close Corporations Act will presently continue to exist concurrently. Close corporations will, however, be required to comply with the provisions of the Companies Act insofar as the Close Corporations Act has been amended by the provisions of Schedule 3 of the Companies Act. The intention, of course, is ultimately to see the complete phasing out of close corporations and, in addition, to facilitate the voluntary conversion of existing close corporations into companies. All changes to the particulars and/or membership of close corporations will continue to be effected in accordance with the provisions and requirements of the Close Corporations Act.
Existing close corporations, thus, have the choice of either continuing to operate and function in accordance with the provisions of the Close Corporations Act or to convert to a company and operate in accordance with the more flexible rules contained in the Companies Act.
The Companies Act directly impinges upon close corporations insofar as audit requirements, independent reviews and financial reporting standards are concerned. Close corporations are required to have a statutory audit when their ‘public interest score’ exceeds a certain amount.
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