Term 2 - Summaries (Close Corporation)

Question 1

Characteristics of a CLOSE CORPORATION

Answer 1

*1 to 10 members
*Founding statement
*Name has a “CC” at the end
* Unlimited continuity
* Limited liability
* Company tax - 29%

Question 2

ADVANTAGES of a close corporation

Answer 2

+easy and cheap
+founding statement can be changed easily
+unlimited continuity
+limited liability
+no annual general meetings
+no auditing required

Question 3

DISADVANTAGES of a close corporation

Answer 3

-capital is limited
-members can be held liable if irresponsible
- banks require an audit (depending on the size of the business)
- conflict