The GmbH and the close corporation within their respective legal contexts
provide alternative legal options for small and medium sized business entities,
giving them a simpler and less expensive legal form, thus satisfying the need for
flexibility while guaranteeing liability limitations and continuity.
While the maximum number of members in the GmbH is unlimited, the close
corporation is restricted to ten members. Membership in the GmbH is open to
natural and juristic persons alike. The close corporation is, generally speaking,
only open to natural persons.
Membership as such is expressed through shares in the GmbH and members'
interests in the close corporation. The transfer of a share and a memberâs
interest is allowed. The regulations for transfer and restrictions vary.
In both entities the members as such are the highest decision making organ.
Regarding organs, the GmbH is more formally structured and has, as mandatory
organs, the managing director and the shareholders' meeting. Such a strict distinction
is not embodied in the CCA; and while the GmbH-members must
appoint a managing director to represent the GmbH, the close corporation uses
the partnership principle of mutua praepositio. Each member of the close corporation
has the right to participate in the management of the affairs of the
corporation.
While for the GmbH articles of association are compulsory, in the close
corporation it is up to the members whether they conclude an association
agreement or refrain from doing so.
The applicable legislative measures provide differently for the protection of the
financial well-being of the entities. The GmbH as 'Kapitalgesellschaft' requires
strict compliance with specific obligations imposed by its members regarding
their share capital contribution, while for the close corporation various aspects of
liability and external relations are equally important. The innovative liability solution
found in the CCA is remarkable.
Concerning transparency of financial matters the close corporation requires the
position of an accounting officer, and through this achieves some kind of control
with regard to the financial matters, which are otherwise an internal affair of the
corporation. The GmbH is 'forced' to make its financial matters more transparent. Subject to
specific conditions, companies are required to have their financial results
audited and approved by a certified public accountant.
In the African context it is noteworthy that the principal objectives of the African
Union aim at accelerating political and socio-economic integration. Given the
success of the close corporation this legal form, a Societas Africaea, utilized for
smaller entrepreneurs, can play a role in achieving these goals.
The reform process initiated through the SA DTI must take into account that the
creation of wealth in South Africa is achieved by companies in which the close
corporation plays an important part. Necessary reforms must therefore be
pursued with precaution.
A possible one-Act approach for South African company law is to be viewed
critically as the differentiation between various types of enterprises should not
easily be put aside.
It will be interesting to see how the GmbH takes on the challenge of the new
legal forms within Germany and the competition with similar foreign business
forms now entering the German market as a consequence of the ECJâs recent
judgements and how the close corporation will develop within the context of a
company law in the process of reform. It is also of relevance for the South
African reform process to follow the developments in Britain. The close
corporation has been commented on positively not only within South Africa. The
recent discussion in the USA on the close corporation approach and its legal
structure is of relevance here.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ufs/oai:etd.uovs.ac.za:etd-12112007-135830 |
| Date | 11 December 2007 |
| Creators | Jaehne, Christoph |
| Contributors | Prof JJ Henning |
| Publisher | University of the Free State |
| Source Sets | South African National ETD Portal |
| Language | en-uk |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.uovs.ac.za//theses/available/etd-12112007-135830/restricted/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University Free State or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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