CC vs Pty Ltd: Complete Comparison Guide 2025
Choosing between a Close Corporation (CC) and Private Company (Pty Ltd) is an important decision for South African entrepreneurs. This guide provides a comprehensive comparison.
Quick Comparison Overview
| Feature | Close Corporation (CC) | Private Company (Pty Ltd) |
|---|---|---|
| Formation | Cannot form new CCs since 2011 | Can still register |
| Members/Shareholders | 1-10 members | 1-50 shareholders |
| Legal Status | Separate legal entity | Separate legal entity |
| Liability | Limited | Limited |
| Management | Members manage | Directors manage |
| Compliance | Lower | Higher |
| Registration Cost | N/A (can't register new) | R125-R500 |
| Annual Costs | R250-R600 | R500-R2,000 |
| Best For | Existing CCs only | All new businesses |
Understanding the 2011 Change
CC Formation Closed
Key Facts:
- New Act (2008 Companies Act) implemented May 2011
- Cannot register new CCs since 1 May 2011
- Existing CCs can continue operating
- Existing CCs can convert to Pty Ltd (optional)
What This Means:
If you're starting a new business, you must register a Pty Ltd. CCs are only relevant if you own an existing CC.
Close Corporation (CC) Overview
What Is a CC?
A Close Corporation is a legal entity separate from its members, with limited liability protection. It's a simpler business structure designed for small businesses.
Key Features
Membership:
- 1-10 members maximum
- Members own interest (not shares)
- Expressed as percentage (e.g., 50% interest)
- Cannot transfer interest easily
Management:
- All members are managers by default
- Can appoint some members as managers
- No board of directors
- Less formal structure
Compliance:
- Annual returns to CIPC
- Financial statements (if turnover threshold exceeded)
- Simpler record-keeping
Advantages (for existing CCs):
- Lower compliance costs
- Simpler management structure
- Less formal meetings required
- Lower annual costs
- No requirement for company secretary (unless large)
Disadvantages:
- Cannot register new CCs
- Limited to 10 members
- Less attractive to investors
- Interest transfer complex
- Perceived as less professional
Private Company (Pty Ltd) Overview
What Is a Pty Ltd?
A private company is a separate legal entity owned by shareholders, managed by directors, with limited liability.
Key Features
Shareholders:
- 1-50 shareholders
- Own shares in the company
- Can transfer shares (subject to restrictions)
- Clear ownership structure
Management:
- Managed by board of directors
- Directors need not be shareholders
- Minimum 1 director required
- Formal governance structure
Compliance:
- Annual returns to CIPC
- Annual financial statements
- Audits (if exceeds public interest score threshold)
- Director meetings and resolutions
- Company secretary (if required)
Advantages:
- Can register new companies
- More professional image
- Easier to raise capital
- Shares transferable
- Attractive to investors
- Can grow to 50 shareholders
- Clearer management structure
Disadvantages:
- Higher compliance costs
- More formal requirements
- More complex management
- Higher annual costs
- More administrative burden
Detailed Comparison
Formation and Registration
CC:
- Cannot register new CCs since 2011
- Existing CCs: Registered with CK number
- Registration was simpler and faster
- Lower registration cost (historical)
Pty Ltd:
- Register online via CIPC e-Services
- Registration number format: 2023/123456/07
- Process takes 1-5 business days
- Registration cost: R125 (basic) to R500 (expedited)
Ownership Structure
CC:
- Members own "interest" (percentage)
- Example: Member A owns 60% interest, Member B owns 40%
- Interest calculated as contributions
- Transfer requires all members' consent
- No share certificates
Pty Ltd:
- Shareholders own shares
- Example: Shareholder A owns 60 shares, Shareholder B owns 40 shares
- Share value and number flexible
- Transfer easier (subject to MOI restrictions)
- Share certificates issued
Management and Control
CC:
- Members manage the CC
- Can appoint specific members as managers
- All members are managers unless otherwise stated
- Less formal decision-making
- No board meetings required (unless specified)
- Member resolutions
Pty Ltd:
- Directors manage the company
- Board of directors makes decisions
- Directors need not be shareholders
- Formal board meetings required
- Board resolutions required for major decisions
- Shareholder meetings for major changes
Compliance Requirements
CC:
Annual Returns:
- File annually with CIPC
- Deadline: 30 business days after anniversary
- Cost: R125
Financial Statements:
- Required if turnover exceeds threshold (R10 million for audits)
- Accounting records must be kept
- Less stringent than Pty Ltd
Record-Keeping:
- Register of members
- Accounting records
- Resolutions
- Foundation statement
Pty Ltd:
Annual Returns:
- File annually with CIPC
- Deadline: 30 business days after anniversary
- Cost: R125
Financial Statements:
- Annual financial statements required
- Audits if public interest score exceeds 100
- Financial records must be maintained
Meetings:
- Annual general meeting (if required by MOI)
- Board meetings as needed
- Minutes must be kept
Record-Keeping:
- Register of directors
- Register of shareholders
- Share certificates and register
- Minutes of meetings
- Resolutions
- Memorandum of Incorporation (MOI)
- Securities register
Costs Comparison
CC Registration (Historical - cannot register new):
- Registration: R150
- Professional fees (optional): R1,500 - R3,000
Pty Ltd Registration:
- DIY online: R125
- Name reservation: R50 (optional)
- Professional registration service: R1,500 - R5,000
Annual Costs:
CC:
- CIPC annual return: R125
- Accounting/bookkeeping: R500 - R5,000 per year
- Tax compliance: R1,000 - R5,000 per year
- Total: R1,625 - R10,125 per year
Pty Ltd:
- CIPC annual return: R125
- Accounting/bookkeeping: R1,000 - R10,000 per year
- Financial statements: R2,000 - R10,000 per year
- Tax compliance: R2,000 - R8,000 per year
- Audit (if required): R10,000 - R50,000 per year
- Company secretary (if required): R3,000 - R15,000 per year
- Total: R5,125 - R93,125 per year (with audit and secretary)
- Total without audit/secretary: R5,125 - R28,125 per year
Tax Treatment
Both CC and Pty Ltd:
- Taxed as separate legal entities
- Corporate tax rate: 27%
- Must register for income tax with SARS
- Must file annual tax returns
- VAT registration if turnover exceeds R1 million
- PAYE for employees
- No significant tax difference between structures
Liability Protection
Both CC and Pty Ltd:
- Limited liability for members/shareholders
- Personal assets protected (except in cases of fraud, reckless trading, or personal guarantees)
- Company/CC assets at risk, not personal assets
- Same level of protection
Fundraising and Investment
CC:
- Difficult to raise external investment
- Members contribute additional capital
- Interest structure less attractive to investors
- Banks may be hesitant
- No venture capital interest
Pty Ltd:
- Easier to attract investors
- Share structure familiar to investors
- Can issue different share classes
- More attractive to banks and lenders
- Venture capital and private equity compatible
- Clear exit strategies for investors
Selling or Transferring the Business
CC:
- Transfer of interest complex
- All members must consent
- Valuation required
- CK number doesn't change
- Less attractive to buyers
Pty Ltd:
- Share transfer straightforward
- Subject to MOI restrictions
- Clear valuation methods
- Registration number stays same
- More attractive to buyers
- Easier succession planning
Converting CC to Pty Ltd
Why Convert?
Reasons:
- Attract investors
- Professional image
- Growth plans
- Easier transfer/sale
- Clearer structure
Process:
- Board resolution (in CC) to convert
- Prepare Pty Ltd documents (MOI, director appointments, etc.)
- File conversion application with CIPC (CoR14.3)
- Pay conversion fee (R125)
- CIPC processes (1-5 business days)
- Receive new registration number (format: 2023/123456/07)
- Update all records (bank, SARS, contracts, etc.)
Costs:
- CIPC fee: R125
- Professional fees: R3,000 - R10,000 (optional)
Timeline: 1-3 weeks
Should You Convert?
Convert If:
- Planning to raise capital
- Want to attract investors
- Growing beyond 10 members
- Selling business in future
- Want more professional structure
Stay as CC If:
- Small, stable business
- No growth plans
- No external funding needed
- Prefer lower compliance costs
- Members happy with current structure
Which Structure is Best for You?
Choose Pty Ltd If:
- Starting a new business (only option)
- Plan to raise external investment
- Want to attract shareholders/partners
- Planning for growth and expansion
- Need professional image
- Want clear succession planning
- May need more than 10 owners
Keep CC If:
- Own existing CC with no growth plans
- Small, stable business
- Want lower compliance costs
- Happy with current 10-member limit
- No plans to sell or raise capital
- Prefer simpler structure
Frequently Asked Questions
Q: Can I still register a new CC?
A: No, new CCs cannot be registered since 1 May 2011. You must register a Pty Ltd.
Q: Should I convert my existing CC to Pty Ltd?
A: Only if you need to raise capital, grow beyond 10 members, or prefer the structure. Otherwise, keeping CC is fine.
Q: Is one cheaper than the other?
A: CCs have lower annual compliance costs, but can only be used if you already own one.
Q: Which is better for tax?
A: No difference. Both taxed at 27% corporate rate.
Q: Can a CC have shareholders?
A: No, CCs have members who own "interest" (percentage), not shares.
Q: Can I convert Pty Ltd to CC?
A: No, you cannot convert Pty Ltd to CC. CCs are being phased out.
Q: Which is more professional?
A: Pty Ltd is generally perceived as more professional and modern.
Conclusion
For new businesses, you must register as a Pty Ltd (only option). If you own an existing CC, you can continue operating as CC or convert to Pty Ltd depending on your business goals.
Key Takeaways:
- Cannot register new CCs since 2011
- Pty Ltd is the standard structure for new businesses
- Existing CCs can continue or convert to Pty Ltd
- Pty Ltd better for growth, investment, and professional image
- CCs have lower compliance costs but limited flexibility
- Both offer limited liability protection
- Both taxed the same (27%)
Action Steps:
Starting New Business:
- Register Pty Ltd via CIPC e-Services
- Prepare Memorandum of Incorporation
- Appoint directors
- Issue shares to shareholders
Owning Existing CC:
- Assess business goals
- Decide if conversion beneficial
- If converting, consult professional
- If keeping CC, ensure annual compliance
For registration guides, see our CIPC Company Registration Guide and CIPC Compliance Requirements.
