Answer to Question #219249 in Law for QILA

Question #219249

Zingapi wishes to start her own catering business. Her friend Conty registered a close corporation in 2007 and wishes to sell the business. Zingapi is unsure whether she should register a company or buy Conty’s close corporation. Advise Zingapi of the advantages of the close corporation as a business form. (5)

Expert's answer

If you open your catering business as a close corporation you will enjoy the following benefits:

  • You will require fewer formalities than standard corporations.
  • The shareholders have a great degree of control over sales of shares to outsiders.
  • Liability protection for shareholders is strong.
  • Corporate liability protection requires the faithful observance of corporate formalities.
  • Fewer formalities means that the corporation is far less likely to misstep in following those formalities.

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