The impact of South African company law reform on close corporations : selected issues and perspectives : enforcement and regulatory regime : part IV

The main impact of the new South African Companies Act 71 of 2008 on close corporations may be summarised as follows. First, new close corporations are proscribed, which not only translates into the phasing out of close corporations, however gradual, but leaves small entrepreneurs with only one avenue for new incorporations and that is under the new Companies Act. Second, there is the clearly discernible tendency to subject the close corporation to more and more onerous administrative duties and arrangements. This is amply illustrated by the approach to supplant numerous arrangements of the Close Corporations Act by that of the new Companies Act, by repealing the first and incorporating large tracts of the latter by reference. It is unfair to expect the close corporation to perform optimally in a legal milieu for which it was not designed and to encumber it with duties and obligations contrary to its very nature and fundamental design philosophy. However, it seems as if officially the last thing that is hoped for of the current close corporation in the new dispensation is that it performs optimally.