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When the new Companies Act of 2008 was finally implemented a year later, we could no longer form Close Corporations. But should you convert?

The main reason that CCs fell away was that owner managed companies (and a CC is owner managed) became so similar to CCs that the latter became redundant.

The prinicipal changes were that an owner managed company:

1) Did not need an audit or an auditor

2) Did not need a company secretary

3) Did not need to draft formal financial statements.

Contrast these with a CC which:

1) Does not need an audit, but must have an Accounting Officer

2) Does not need a company secretary.

3) Must draft formal financial statements to International Financial Reporting Standards.

So it is actually less expensive to maintain a company than a CC, so it makes sense to convert.




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