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Close Corporations - Should Private Companies be Abolished in South Africa?

Spisto, Michael (2006) Close Corporations - Should Private Companies be Abolished in South Africa? Australian journal of corporate law, 20 (1). pp. 116-123. ISSN 1037-4124

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Abstract

In 1984 South Africa became the first country with a British company law system to effectively provide for the legal needs of the small businessman. The Close Corporations Act is one of the most remarkable and significant innovations in South African company law. Thus, since the close corporation has been introduced, a fundamental question arose as to whether this should result in the phasing out of the private company in South Africa. It can be argued that the boundaries between public and private companies in South Africa have become increasingly indistinct partly due to the creation of close corporations and partly because the present Companies Act, due to its voluminous nature and complexity, is difficult to apply and is out of touch with the needs of the country. Thus, the necessity for the continued rigid adherence to traditional statutory distinctions between private and public companies in South Africa should be seriously questioned. It would be advisable for South Africa to study the New Zealand corporate system. Although South Africa has the close corporation, which New Zealand does not have, the distinction between private and public companies in New Zealand was abolished. More than a decade has now passed and the abolition of these company types remains in New Zealand. In May 2004 the DTI issued for public comment a policy document to establish the approach that government intends taking to review company law in South Africa.

Item Type: Article
Uncontrolled Keywords: ResPubID10236, South African company law, British company law system, legal needs of small businessmen, Close Corporations Act, private companies in South Africa, New Zealand corporate system, private and public companies
Subjects: FOR Classification > 1801 Law
Faculty/School/Research Centre/Department > School of Law
Depositing User: VUIR
Date Deposited: 19 Aug 2011 05:50
Last Modified: 19 Aug 2011 05:50
URI: http://vuir.vu.edu.au/id/eprint/3089
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