What’s the difference between a company and a CC?
I could almost say none! But that is a gross over simplification.
However, there are some serious misperceptions out there, so let’s take a look at them –
Companies have to be audited, CCs don’t. Wrong. A company (and a CC) has to be audited if its Public Interest Score (PIS) is 350 or more. That translates to a turnover of say, R300m and a staff compliment of say, 50 people.
Companies have to have their Financial Statements reviewed, CCs don’t. Right, if their PIS is less than 350 (I’m simplifying a bit). But CCs need to have their Annual Financial Statements signed off by an Accounting Officer.
An owner managed company (shareholders = directors = shareholders) does not need to prepare Financial Statements. Right, provided their PIS is less than 350. And this is the big difference against a CC which MUST prepare Annual Financial Statements in accordance with the Close Corporations Act.
A company gives better protection to the shareholders than a CC. Right, but the difference is far less than it was before the new Companies Act became law.
CCs will be phased out. Wrong. At this stage there is no suggestion in the legislation that this will be the case.
You can’t form CCs now. Right. That is why we formed about 250 while we still could. We’ve got none left.
(Pty) Ltd carries more prestige than CC. Probably right – I’ve certainly heard that more than once and I’ve never heard someone say that a CC carries more prestige than a company.
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