How to convert a close corporation
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The Companies Act has made provisions for CCs to be converted into profit companies. This is a comprehensive step-by-step guide on the process.
Step 1: The application to convert a CC must be done on a COR18.1 form and must be submitted to the Companies and Intellectual Property Commission ("CIPC").
Step 2: Along with the COR18.1 form, the following supporting documents must be submitted using the name the company would use after conversion:
Written resolution/minutes of the meeting at which the decision to convert was taken
COR39 to appoint initial directors
Certified copies of the IDs of initial directors
Written statement in the form of a letter that the CC is not in liquidation/engaged in business rescue proceedings
A Form COR15.1A or COR15.1B or a unique MOI
Step 3: Ensure that the prescribed fee (this is the same as incorporating a new company) has been added to your CIPC customer balance.
Effect of conversion
All the members of the Close Corporation are entitled to become shareholders of the company (the shareholding equity in the company is not required to be in proportion to the members' interest in the Close Corporation) and it is not required that all members of the Close Corporation become directors of the company. The juristic person that existed as a close corporation before the conversion will continue to exist as the company and all assets, liabilities and rights and obligations of the CC vest in the company.
A “Member Resolution – Conversion of CC to PTY template can be downloaded from the InfoDocs template library, filled in, and submitted to the CIPC along with the rest of the required documents. InfoDocs offers two versions of the template – one with the option to appoint directors, and one without.
Once the conversion has been lodged with the CIPC, the converted company (with new registration number) can then be searched on InfoDocs and added to your profile. In this way, both companies (the old and the new) can remain on your portfolio for reference and administrative purposes. The option is also always there to export the old CC’s records, remove it from your portfolio, and then add it back again later if necessary. To remove a company from your profile, follow the steps here.
Reference: Guidance Note 7 of 2011: Conversion of Close Corporations to companies in terms of the Companies Act, 2008 (Act 71 of 2008)
The Companies Act has made provisions for CCs to be converted into profit companies. This is a comprehensive step-by-step guide on the process.
Step 1: The application to convert a CC must be done on a COR18.1 form and must be submitted to the Companies and Intellectual Property Commission ("CIPC").
Step 2: Along with the COR18.1 form, the following supporting documents must be submitted using the name the company would use after conversion:
Written resolution/minutes of the meeting at which the decision to convert was taken
COR39 to appoint initial directors
Certified copies of the IDs of initial directors
Written statement in the form of a letter that the CC is not in liquidation/engaged in business rescue proceedings
A Form COR15.1A or COR15.1B or a unique MOI
Step 3: Ensure that the prescribed fee (this is the same as incorporating a new company) has been added to your CIPC customer balance.
Effect of conversion
All the members of the Close Corporation are entitled to become shareholders of the company (the shareholding equity in the company is not required to be in proportion to the members' interest in the Close Corporation) and it is not required that all members of the Close Corporation become directors of the company. The juristic person that existed as a close corporation before the conversion will continue to exist as the company and all assets, liabilities and rights and obligations of the CC vest in the company.
While this process still has to be done through the CIPC, InfoDocs helps with your conversion in two ways:
A “Member Resolution – Conversion of CC to PTY template can be downloaded from the InfoDocs template library, filled in, and submitted to the CIPC along with the rest of the required documents. InfoDocs offers two versions of the template – one with the option to appoint directors, and one without.
Once the conversion has been lodged with the CIPC, the converted company (with new registration number) can then be searched on InfoDocs and added to your profile. In this way, both companies (the old and the new) can remain on your portfolio for reference and administrative purposes. The option is also always there to export the old CC’s records, remove it from your portfolio, and then add it back again later if necessary. To remove a company from your profile, follow the steps here.
Reference: Guidance Note 7 of 2011: Conversion of Close Corporations to companies in terms of the Companies Act, 2008 (Act 71 of 2008)
Updated on: 11/12/2024
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