On 8 January 2006, the President assented to the Close Corporations Amendment Act, No.25 of 2005. This was published in Government Gazette no. 28390 on 11 January 2006.

The most important amendments were made to Sections 26(7), 29 and 60 of the Close Corporations Act, no 69 of 1984 (“the Act”).

Section 26(7)

Section 26(5) of the Act states that if a corporation is deregistered while having outstanding liabilities, the members (at the time of deregistration) of that corporation shall be jointly and severally liable for such liabilities.

Section 26(7) is amended to deal with the consequences of Section 26(5), where a corporation that was deregistered is subsequently reregistered. Section 26(7)(b) now makes provision that a member or any other person having a material interest, may apply to a court for any one or more of the following orders:

• An order that the legal liability incurred by a member in terms of Section 26(5) shall cease to exist;
• An order that the corporation whose registration has been restored shall become liable for any liabilities incurred by any member of the corporation in terms of Section 26(5);
• An order that the corporation whose registration has been restored shall compensate a member who lawfully paid a claim that arose as a consequence of Section 26(5);
• Any other order that the court on the basis of fairness deems appropriate.

Section 29

Section 29 of the Act now makes provision that a natural or juristic person in the capacity of a trustee of a trust inter vivos may be a member of a corporation, although the provisos that previously existed still apply. These provisos are:

• No juristic person shall directly or indirectly be a beneficiary of that trust;
• the member concerned shall, as between himself or herself and the corporation, personally have all the obligations and rights of a member;
• the corporation shall not be obliged to observe or have any obligation in respect of any provision of or affecting the trust or any agreement between the trust and the member concerned of the corporation; and
• if at any time the number of natural persons at that time entitled to receive any benefit from the trust shall, when added to the number of members of the corporation at that time, exceed 10, the provisions of, and exemption under, this subsection shall cease to apply and shall not again become applicable notwithstanding any diminution in the number of members or beneficiaries.

Section 60

Section 60 of the Act now makes provision that a corporation may appoint another corporation as accounting officer or any other firm where each partner in the firm is qualified to be appointed as accounting officer, provided that no limited liability will apply (if applicable) to the performance by the firm or the corporation as the case may be, of its duties in terms of section 62.

(Jaco Bekker)