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Close Corporation (Advantages (Has separate legal (juristic) personality,…
Close Corporation
Advantages
Has separate legal (juristic) personality
Limited liability
Increased capital acquisition potential
Management is relatively simple
Enjoys continuity
Disadvantages
Membership is limited to 10
Juristic persons may not be members
No new cc may be registered
Certain CC are subject to stricter accountability
Characteristics of a partnership and a company
May have 1/more members but not more than 10
Advantage of being a legal (juristic) person that exists separately from its members
Juristic person may not be members of a close corporation
Members enjoy limited liability
Members own and control the close corporation
Capital acquisition potential is higher than that of a partnership
Members share management and control
Continued existence is not influenced by the withdrawal or entry of members.
Always ends in cc
Can also use loan capital
CC may not make any payments to members unless the solvency and liquidity tests are satisfied.
Sole registration document is called the founding statement
Member’s interest can be transferred to another individual
New members can also acquire a member’s interest directly by making a contribution