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Companies Act, 2008 (Act No. 71 of 2008)

Schedule 2 : Conversion of Close Corporations to Companies

2. Effect of conversion on legal status

 

 

1) Every member of a close corporation converted under this Schedule is entitled to become a shareholder of the company resulting from that conversion, but the shares to be held in the company by the shareholders individually need not necessarily be in proportion to the members’ interests as stated in the founding statement of the close corporation concerned.

 

2) On the registration of a company converted from a close corporation—
a) the juristic person that existed as a close corporation before the conversion continues to exist as a juristic person, but in the form of a company;
b) all the assets, liabilities, rights and obligations of the close corporation vest in the company;
c) any legal proceedings instituted before the registration by or against the corporation, may be continued by or against the company, and any other thing done by or in respect of the close corporation, is deemed to have been done by or in respect of the company;
d) any enforcement measures that could have been commenced with respect to the close corporation in terms of the Close Corporations Act, 1984 (Act No. 69 of 1984), for conduct occurring before the date of registration, may be brought against the company on the same basis, as if the conversion had not occurred; and
e) any liability of a member of the corporation for the corporation’s debts, that had arisen in terms of the Close Corporations Act, 1984 (Act No. 69 of 1984), and existed immediately before the date of registration, survives the conversion and continues as a liability of that person, as if the conversion had not occurred.