When you are ready to take your close corporation (CC) to the next level, you might want to give serious thought to converting it to a private company, also knows as a (Pty) Ltd.
MANY BUSINESS OWNERS have successfully operated CCs for several years and while, as a legal entity, it supports organic growth (i.e. growth in revenue, product, infrastructure and resources), it presents serious limitations to strategic and inorganic growth. When the business is ready to move to the next level of transacting and deal-making, the legal and structural challenges posed by a CC may necessitate the conversion to a proprietary limited (hereinafter referred to as a PTY).
DOES YOUR CC SERVE YOUR STRATEGIC GROWTH PLANS?
Instead of directors and shareholders, CCs are comprised of members who typically are also responsible for the day-to-day operation and management of the business. With its less-complex regulations and simpler financial reporting requirements, operating as a CC may appeal to smaller, simpler or start-up businesses where the members would also form part of the business management. The members hold equity ownership and member contributions serve in the place of share capital.
This story is from the September - October 2017 edition of SA Franchise Warehouse.
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This story is from the September - October 2017 edition of SA Franchise Warehouse.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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Should You Convert Your CC To A (PTY) Ltd?
When you are ready to take your close corporation (CC) to the next level, you might want to give serious thought to converting it to a private company, also knows as a (Pty) Ltd.
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