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Close Corporations Act, 1984 (Act No. 69 of 1984)

Part VIII : Liability of Members and others for debts of Close Corporation

63. Joint liability for debts of corporation

 

Notwithstanding anything to the contrary contained in any provision of this Act, the following persons shall in the following circumstances together with a corporation be jointly and severally liable for the specified debts of the corporation:

(a) Where the name of the corporation is in any way used without the abbreviation as required by section 22(1), any member of the corporation who is responsible for, or who authorised or knowingly permits the omission of such abbreviation, shall be so liable to any person who enters into any transaction with the corporation from which a debt accrues for the corporation while that person, in consequence of such omission, is not aware that the person is dealing with a corporation;
(b) where any member fails to pay money or to deliver or transfer property to the corporation as required by section 24(4), that member shall be so liable for every debt of the corporation incurred from the date registration of the founding statement in which particulars of the contribution concerned are stated to the date of the actual payment, delivery or transfer of such money or property;
(c) [Section 63(c) deleted by section 15(c) of Act No. 26 of 1997]
(d) where a juristic person or a trustee of a trust inter vivos in that capacity purports to hold, whether directly or indirectly, a member's interest in the corporation in contravention of any provision of section 29, such juristic person or trustee of a trust inter vivos and any nominee referred to in that section shall, notwithstanding the invalidity of the holding of such interest, be so liable for every debt of the corporation incurred during the time the contravention continues;
(e) where the corporation makes a payment in respect of the acquisition of a member's interest in contravention of any provision of section 39, every person who is a member at the time of such payment and who is aware of the making of such payment, including a member or a former member who receives or who received such payment, shall be so liable for every debt of the corporation incurred prior to the making of such payment unless, in the case of a member who is so aware, he proves that he took all reasonable steps to prevent the payment;
(f) where the corporation gives financial assistance for the purpose of or in connection with any acquisition of a member's interest in contravention of any provision of section 40, every person who is a member at the time of the giving of such assistance and who is aware of the giving of such assistance, and the person who receives such assistance, shall be so liable for every debt of the corporation incurred prior to the giving of such assistance unless, in the case of a member who is so aware, he proves that he took all reasonable steps to prevent the payment;
(g) where a person takes part in the management of the business of the corporation while disqualified from doing so in terms of section 47(1)(b) or (c), that person shall be so liable for every debt of the corporation which it incurs as a result of his participation in the management of the corporation; and
(h) where the office of accounting officer of the corporation is vacant for a period of six months, any person who at any time during that period was a member and aware of the vacancy, and who at the expiration of that period is still a member, shall be so liable for every debt of the corporation incurred during such existence of the vacancy and for every such debt thereafter incurred while the vacancy continues and he still is a member.

 

 


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