Close Corporation Act 26 of 1988

Type: Act or regulation
Category: BIPA act

Download Close Corporation Act 26 of 1988.pdf

The form is always available to download and submit on paper.

CLOSE CORPORATIONS ACT 26 OF 1988

[ASSENTED TO: DETAILS NOT KNOWN] [DATE OF COMMENCEMENT: 25 JULY 1994]

(Signed by the President)

as amended by

Close Corporation Amendment Act 8 of 1994

Married Persons Equality Act 1 of 1996

ACT

To provide for the formation, registration incorporation, management, control and

liquidation of close corporations; and for matters connected therewith.

ARRANGEMENT OF SECTIONS

1 Definitions

PART I

2 Formation and juristic personality of close corporations

PART II

ADMINISTRATION OF ACT

3 Registration Office and register

4 Registrar

5 Inspection and copies of documents in Registration Office

6 Payment of fees

7 Court having jurisdiction in respect of corporations

8 Security for costs in legal proceedings by corporations

9 Transmission of copies of Court orders to Registrar and Master

10 Regulations

11 Functions of standing advisory committee on company law in relation to

corporations

PART III

REGISTRATION DEREGISTRATION AND CONVERSION

12 Founding statement

13 Registration of founding statement

13A ......

14 Certificate of incorporation

15 Registration of amended founding statement

16 Keeping of copies of founding statement by corporations

17 No constructive notice of particulars in founding statement and other documents

18 Meaning of "name" in sections 19, 20 and 21

19 Undesirable names

20 Order to change name

21 Effect of change of name

22 Formal requirements as to names and registration numbers

22A Improper references to incorporation in terms of Act

23 Use and publication of names

24 Contributions by members

25 Postal address and registered office

26 Deregistration

27 Conversion of companies into corporations

PART IV

MEMBERSHIP

28 Number of members

29 Requirements for membership

30 Nature of member's interest

31 Certificate of member's interest

32 Representation of members

33 Acquisition of member's interest by new member

34 Disposal of interest of insolvent member

35 Disposal of interest of deceased member

36 Cessation of membership by order of Court

37 Other dispositions of members' interests

38 Maintenance of aggregate of members' interests

39 Payment by corporation for members' interests acquired

40 Financial assistance by corporation in respect of acquisition of members' interests

41 Publication of names of members

PART V

INTERNAL RELATIONS

42 Fiduciary position of members

43 Liabilities of members for negligence

44 Association agreements

45 No access to or constructive notice of association agreement

46 Variable rules regarding internal relations

47 Disqualified members regarding management of business of corporation

48 Meetings of members

49 Unfairly prejudicial conduct

50 Proceedings against fellow-members on behalf of corporation

51 Payments by corporation to members

52 Prohibition of loans and furnishing of security to members and others by

corporation

PART VI

EXTERNAL RELATIONS

53 Pre-incorporation contracts

54 Power of members to bind corporation

55 Application of sections 37 and 226 of Companies Act 1973

PART VII

ACCOUNTING AND DISCLOSURE

56 Accounting records

57 Financial year of corporation

58 Annual financial statements

59 Appointment of accounting officers

60 Qualifications of accounting officers

61 Right of access and remuneration of accounting officers

62 Duties of accounting officers

PART VIII

LIABILITY OF MEMBERS AND OTHERS FOR DEBTS OF CLOSE CORPORATION

63 Joint liability for debts of corporation

64 Liability for reckless or fraudulent carrying on of business of corporation

65 Powers of Court in case of abuse of separate juristic personality of corporation

PART IX

WINDING-UP

66 Application of Companies Act, 1973

67 Voluntary winding-up

68 Liquidation by Court

69 Circumstances under which corporation deemed unable to pay debts

70 Repayments by members

71 Repayment of salary or remuneration by members

72 Composition

73 Repayments, payments of damages and restoration of property by members and

others

74 Appointment of liquidator

75 Vacancies in office of liquidators

76 Refusal by taster to appoint nominated person as liquidator

77 Resignation and absence liquidator

78 First meeting of creditors and members

79 Report to creditor and members

80 Repayments by members or former members

81 Duties of liquidator regarding liability of members to creditors or corporation

PART X

PENALTIES AND GENERAL

82 Penalties

83 Short title and commencement

1 Definitions

In this Act, unless the context otherwise indicates-

"accounting records" in relation to a corporation, includes accounts, deeds, writings and

such other documents as may be prescribed;

"association agreement" in relation to any corporation or the members thereof, means an

association agreement which has been entered into in terms of section 44 by the members of

the corporation, including any such agreement which has been altered or added to as

contemplated in subsection (3) of section 49, or an agreement which has replaced it as

contemplated in that subsection;

"Cabinet" ......

[Definition of "Cabinet" deleted by sec 1(a) of Act 8 of 1994.]

"Companies Act" means the Companies Act, 1973 (Act 61 of 1973);

"company" means a company as defined in section 1(1) of the Companies Act;

"corporation" means a close corporation referred to in section 2(1) which has been

registered under Part III of this Act;

"Court" means a court having jurisdiction in terms of section 7;

[Definition of "court" substituted by sec 1(b) of Act 8 of 1994.]

"deregistration" in relation to a corporation, means the cancellation of the registration of

the corporation's founding statement; and "deregister" has a corresponding meaning;

"director" in relation to a company, means a director as defined in section 1(1) of the

Companies Act;

"foreign country" ......

[Definition of "foreign country" deleted by sec 1(c) of Act 8 of 1994.]

"foreign government" ......

[Definition of "foreign government" deleted sec 1(c) of Act 8 of 1994.]

"founding statement" in relation to a corporation, means the founding statement of the

corporation referred to in section 12 which has been registered in terms of section 13, and

also any amended founding statement in respect of that corporation registered in terms of

section 15(1) or (2);

"holding company" in relation to a company, means a holding company as defined in

section 1(1) of the Companies Act;

"Master" means the Master of the High Court of Namibia;

[Definition of "Master" substituted by sec 1(d) of Act 8 of 1994.]

"member" in relation to a corporation, means a person qualified for membership of a

corporation in terms of section 29 and designated as a member in a founding statement of the

corporation, including, subject to the provisions of this Act, a trustee, administrator, executor

or curator, or other legal representative, referred to in paragraph (c) of subsection (2) of

section 29, in respect of any such person who is insolvent, deceased, mentally disordered or

otherwise incapable or incompetent to manage his affairs, but excluding any such person who

has in terms of this Act ceased to be a member;

"member's interest" or "interest" in relation to a member of a corporation, means the

interest of the member in the corporation expressed in accordance with section 12(e) as a

percentage in the founding statement of the corporation;

"Minister" means the Minister of Trade and Industry, except in relation to any matter to

dealt with in the office of the Master in connection with the winding-up of a corporation, in

which case it means the Minister of Justice;

[Definition of "Minister" inserted by sec 1(e) of Act 8 of 1994.]

"officer" in relation to-

(a) a corporation, means any manager or secretary thereof, whether or not such manager

or secretary is also a member of the corporation;

(b) a company, means an officer as defined in section 1(1) of the Companies Act;

"prescribe" means prescribe by regulation; and "prescribed" has a corresponding

meaning;

"Registrar" means the Registrar of Close Corporations referred to in section 4;

"registration" in relation to-

(a) any corporation, means the registration of the founding statement of the corporation

referred to in section 12;

(b) the founding statement or any amended founding statement of a corporation, means

the registration thereof in terms of section 13 or section 15(1) or (2), as the case may

be;

which are specified in terms of this Act in a founding statement of the corporation,

means the specifying of particulars thereof in any such statement; and

(d) any other matter in connection with which any duty or power in relation to the

registration thereof is in terms of this Act imposed on or granted to the Registrar,

means the registration thereof by him in accordance with any applicable provision of

this Act; and "registered" has a corresponding meaning;

"Registration Office" means the Close Corporations Registration Office referred to in

section 3;

"regulation" means any regulation made under this Act;

"subsidiary" in relation to a company, means a subsidiary as defined in section 1(1) of

the Companies Act;

"Territory" ......

[Definition of "territory" deleted by sec 1(f) of Act 8 of 1994.]

"this Act" includes the regulations.

PART I (s 2)

2 Formation and juristic personality of close corporations

(1) Any one or more persons, not exceeding ten, who qualify for membership of a close

corporation in terms of this Act, may form a close corporation and secure its incorporation by

complying with the requirements of this Act in respect of the registration of its founding

statement referred to in section 12.

(2) A corporation formed in accordance with the provisions of this Act is on registration in

terms of those provisions a juristic person and continues, subject to the provisions of this Act,

to exist as a juristic person notwithstanding changes in its membership until it is in terms of

this Act deregistered or dissolved.

(3) Subject to the provisions of this Act, the members of a corporation shall not merely by

reason of their membership be liable for the liabilities or obligations of the corporation.

(4) A corporation shall have the capacity and powers of a natural person of full capacity in

so far as a juristic person is capable of having such capacity or of exercising such powers.

PART II

ADMINISTRATION OF ACT (ss 3-11)

3 Registration Office and register

(1) For the registration of corporations under this Act there shall be an office in Windhoek

called the Close Corporations Registration Office.

(2) Registers of names and registration numbers and such other matters concerning

corporations as may be prescribed, shall be kept in the Registration Office.

4 Registrar

(1) The Minister shall, subject to the laws governing the Public Service, appoint a

Registrar of Close Corporations, who shall-

(a) exercise the powers and perform the duties assigned to the Registrar by this Act; and

(b) subject to the directions of the Minister, be responsible for the administration of the

Registration Office.

[Subsec (1) amended by sec 2 of Act 8 of 1994.]

(2) The Minister may likewise appoint a Deputy Registrar and an Assistant Registrar, who

shall, subject to the control of the Registrar, exercise any power or perform any duty

conferred or imposed in terms of this Act on the Registrar, and whenever the Registrar is for

any reason unable to perform his functions the Deputy Registrar shall Act in his stead.

(3) The Registrar may delegate any of the powers and entrust any of the duties assigned to

him by this Act to any officer or employee in the Government Service.

5 Inspection and copies of documents in Registration Office

(1) Any person may, on payment of the prescribed fee (including an additional fee if any

document is not collected personally at the Registration Office)-

(a) inspect any document kept under this Act by the Registrar in respect of any

corporation; or

(b) obtain a certificate from the Registrar as to the contents or part of the contents of any

such document open to inspection; or

(2) ......

[Subsec (2) deleted by sec 3 of Act 8 of 1994.]

(3) If the Registrar is satisfied that any such inspection, certificate, copy or extract is

required for purposes of research by or under the control of an institution for higher

education, he may permit such inspection or furnish such certificate, copy or extract without

payment of fees.

6 Payment of fees

(1) The payment of any fee, additional fee or other money payable to the Registrar in terms

of this Act shall, subject to the provisions of subsection (3), be effected-

(a) by affixing revenue stamps to any document concerned, which stamps may be

cancelled by the Receiver of Revenue or the Registrar; or

(b) by impressing a stamp on any document concerned by means of a stamp approved by

the Secretary for Finance; or

(2) No document, form, return or notice in respect of which any fee is payable or any

payment is required to be done in terms of this Act, shall be complete unless proof of

payment of the required fee or other money has been lodged with the Registrar.

(3) For the purposes of subsection (1) the decision of the Registrar as to the manner in

which in any particular case, or category of cases determined by him, any fee, additional fee

or other money is in terms of this Act to be paid, shall be final.

(4) Any fees and other moneys payable in terms of this Act to the Registrar, shall be debts

due to the State recoverable by the Minister in any competent Court.

7 Court having jurisdiction in respect of corporations

(1) For the purposes of this Act the High Court of Namibia or, subject to subsection (2),

any magistrate's court within whose area of jurisdiction the registered office or main place of

business of a corporation is situate, shall have jurisdiction to entertain any matter in respect of

a corporation.

(2) Notwithstanding the provisions of subsection (1)-

(a) no magistrate's court shall entertain any matter with respect to the winding-up of a

corporation;

(b) a magistrate's court referred to in that subsection shall only have jurisdiction to deal

with a matter if it is otherwise, in accordance with the provisions of the Magistrate's

Courts Act, 1944 (Act 32 of 1944) relating to jurisdiction, within the competence of

the magistrate's court to entertain such a matter.

[Sec 7 substituted by sec 4 of Act 8 of 1994.]

8 Security for costs in legal proceedings by corporations

When a corporation in any legal proceedings is a plaintiff or applicant or brings a

counterclaim or counter application, the Court concerned may at any time during the

proceedings if it appears that there is reason to believe that the corporation or, if it is being

wound up, the liquidator thereof, will be unable to pay the costs of the defendant or

respondent, or the defendant or respondent in reconvention, if he is successful in his defence,

require security to be given for those costs, and may stay all proceedings till the security is

given.

9 Transmission of copies of Court orders to Registrar and Master

When a Court makes any order in terms of this Act in relation to any corporation, the

Registrar or clerk of the Court shall without delay by certified post transmit a copy of the

order to the Registrar and, if such order relates to the winding-up of any corporation, a copy

thereof to the Master as well.

10 Regulations

(1) The Minister may make regulations-

(a) providing for the conduct and administration of the Registration Office, and

prescribing the practice and procedure to be observed therein;

(b) prescribing the practice and procedure to be observed in the office of the Master in

connection with the winding-up of corporations;

Registration Office or the office of the Master by means of microfilm, microcard,

miniature photographic process or any other process deemed suitable by the

Minister;

(d) providing for the use for official purposes and the admissibility in evidence in any

proceedings, whether in a court of law or otherwise, of any reproduction

contemplated in paragraph (c);

(e) providing for the keeping and preservation of any records, or any reproductions

thereof contemplated in paragraph (c), in the Registration Office or the office of the

Master, the removal from such offices of such records or reproductions and the

preservation thereof in any other place, and prescribing the circumstances under

which such records or reproductions may be destroyed;

(f) prescribing how records required under this Act to be kept by a corporation may be

kept, and prescribing the circumstances under which such records may be destroyed;

(g) prescribing the procedure to be followed with respect to any matter in connection

with the winding-up of corporations;

(h) prescribing the form and the contents of any return, notice or document provided for

by this Act;

(i) prescribing when an additional copy or copies of documents to be lodged under this

Act shall require to be lodged and whether such additional copy or copies shall be in

the form of a copy or copies certified in a defined manner or shall be in duplicate

original form;

(j) with the concurrence of the Minister, prescribing the matters in respect of which fees

shall be payable, the persons by whom and to whom the fees shall be payable and the

tariff of such fees;

(k) providing for a table of fees, subject to taxation by the Master, which shall be

payable to a liquidator as remuneration;

(I) prescribing a tariff of remuneration payable to any person performing on behalf of a

liquidator any act relating to the winding-up of a corporation which the liquidator is

not required to perform personally, and prohibiting the charging or recovery of

remuneration at a higher tariff than the tariff so prescribed;

(m) providing for the appointment by the Registrar in specified circumstances of an

inspector to investigate the affairs of a corporation, for the powers of an inspector in

conducting any such investigation, for the duty of any member, officer, employee or

accounting officer of a corporation to make available books and documents in his

custody or under his control and to afford such assistance as an inspector may

require in connection with any such investigation; for reporting by an inspector to

the Registrar; for the making available by the Registrar of any such report to other

persons; for the admissibility of any such report as evidence in legal proceedings;

and for defraying the expenses of, and in connection with, any such investigation;

(n) as to any other matter required or permitted by this Act to be prescribed; and

(o) generally, as to any matter which it considers it necessary or expedient to prescribe

in order that the purposes of this Act may be achieved.

(2) Regulations made under subsection (1) may prescribe penalties for any contravention

thereof or failure to comply therewith, not exceeding a fine of N$2 000 or imprisonment for a

period of six months or both such fine and such imprisonment.

[Subsec (2) substituted by sec 5 of Act 8 of 1994.]

11 Functions of standing advisory committee on company law in relation to

corporations

(1) The standing advisory committee on company law that may be appointed in terms of

section 18 of the Companies Act, may from time to time make recommendations to the

Minister in regard to any amendments to this Act which may appear to it to be advisable, and

shall advise the Minister on any matter pertaining to this Act referred to it by the Minister.

(2) The standing advisory committee may constitute and maintain a standing

subcommittee for the purpose of considering and of advising it on such matters relating to

corporations as may be referred by it to the subcommittee.

(3) The provisions of-

(a) the Companies Act and regulations made thereunder in relation to standing

subcommittees of the standing advisory committee, and the members thereof, shall

apply in respect of the standing subcommittee referred to in subsection (2) as if that

subcommittee were constituted under subsection (4) of section 18 of the said Act;

and

(b) subsections (2) and (5) (in so far as they relate to the calling of persons to assist the

standing advisory committee) of the said section 18 shall apply in respect of the

standing advisory committee in the exercising by it of any power granted to it in

terms of subsection (1) of this section.

PART III

REGISTRATION DEREGISTRATION AND CONVERSION (ss 12-27)

12 Founding statement

(1) Any person qualified for membership in terms of section 29 or, subject to section 28,

any number of such persons who intend to form a corporation, shall draw up a founding

statement in the prescribed form in the official language of Namibia, which shall, subject to

the provisions of this Act, contain the following particulars:

(a) The full name of the corporation: Provided that a literal translation of that name into

any language other than the official language of Namibia, or a shortened form of that

name or such translation thereof, may in addition be given,

[Para (a) substituted by sec 6(b) of Act 8 of 1994.]

(b) the principal business to be carried on by the corporation;

(ii) the address (not being the number of a post office box) of the office of the

corporation referred to in section 25(1);

(d) the full name, residential address and identity number of each member or, if he or

she has no such number, the date of his or her birth;

[Para (d) substituted by sec 6(c) of Act 8 of 1994.]

(e) the size, expressed as a percentage, of each member's interest in the corporation;

(f) particulars of the contribution of each member to the corporation in accordance with

section 24(1), including-

(i) any amounts of money; and

(ii) a description, and statement of the fair value, of any property (whether corporeal

or incorporeal) or any service referred to in section 24(1);

(g) (i) the name and postal address of the person appointed as its accounting officer;

and

[Subpara (i) substituted by sec 6(d) of Act 8 of 1994.]

(ii) the date of the end of the financial year of the corporation.

[Subsec (1) amended by sec 6(a) of Act 8 of 1994.]

(2) The founding statement of a corporation shall be signed by every person who is to

become a member of the corporation upon its registration and each such person shall sign the

founding statement in the presence of at least one witness who shall attest the signature and

state his or her residential, business and postal address.

[Subsec (2) added by sec 6(e) of Act 8 of 1994.]

13 Registration of founding statement

(1) If a founding statement referred to in section 12 complying with the requirements of

this Act is lodged with the Registrar in triplicate in the manner prescribed, and if the business

to be carried on by the corporation is lawful, and provided the name of the corporation has

been approved, the Registrar shall upon payment of the prescribed fee register such statement

in his registers and shall give notice of the registration in the Gazette.

(2) Every corporation shall, for the benefit of the State Revenue Fund-

(a) annually, within the period after the commencement of its financial year and in the

manner as prescribed, pay the prescribed annual duty;

(b) in the event of late payment of the annual duty, pay, in addition to such duty, such

penalty as may be prescribed.

[Subsec (2) added by sec 7 of Act 8 of 1994.]

13A ......

[Sec 13A repealed by sec 8 of Act 8 of 1994.]

14 Certificate of incorporation

(1) Upon the registration of a founding statement the Registrar shall assign a registration

number to the corporation concerned and endorse under his hand on the statement a

certificate that the corporation is incorporated.

(2) A certificate of incorporation given by the Registrar in terms of subsection (1) or

section 27(4)(c), or a copy thereof, as the case may be, shall upon its mere production, in the

absence of proof of fraud or error, be conclusive evidence that all the requirements of this Act

in respect of registration of the corporation concerned and of matters precedent and incidental

thereto have been complied with, and that the corporation concerned is duly incorporated

under this Act.

15 Registration of amended founding statement

(1) If any change is made or occurs in respect of any matter of which particulars are stated

in a founding statement of a corporation in accordance with paragraph (b), (d) (other than in

relation to a member's residential address), (e) or (f) of section 12, the corporation shall,

subject to section 29(3)(c) and (d), within 28 days after such change-

(a) lodge with the Registrar for registration in his or her registers an amended founding

statement in triplicate, in the prescribed form, signed by every member of the

corporation and by any person who will become a member on such registration, and

which contains particulars and the date of the change; and

(b) pay the fee prescribed for the registration of an amended founding statement.

(2)(a) If any change is made or occurs in respect of any matter of which particulars are

stated in a founding statement in accordance with paragraph (a) or (g) of section 12, an

amended founding statement shall, in accordance with the requirements of subsection (1) be

lodged with the Registrar for registration.

(b) If any change is made or occurs in respect of a member's residential address or any

matter of which particulars are stated in a founding statement-

(i) in accordance with paragraph (c) of section 12, and the corporation has approved of

such change and the accounting officer so certifies in writing; or

(ii) in accordance with paragraph (g)(i) of section 12,

the corporation shall lodge with the Registrar for registration in his or her registers a

statement in the prescribed form, which may be signed by the accounting officer on behalf of

the members, and which, upon registration thereof, shall form part of the founding statement

or amended founding statement.

(3) Any change contemplated in-

(a) paragraph (a) or (b)(i) of subsection (2) shall take effect upon registration of the

statement in question in the relevant registers, or upon a later date mentioned in such

statement;

(b) paragraph (b)(ii) of subsection (2) shall take effect upon the date mentioned in the

statement in question.

(4) If, by an order of court in terms of section 49, an alteration or addition is made to a

founding statement, the provisions of subsection (1) in elation to the lodging of an amended

founding statement, shall mutatis mutandis apply in respect of such founding statement.

(5)(a) If a corporation fails to lodge an amended founding statement in accordance with the

provisions of subsection (1), (2) or (4), as the case may be, the registrar may on his or her

own initiatives or on application by any member or creditor of the corporation serve on the

members of the corporation, in accordance with section 25(2)(a), a reminder to make good

the default within 28 days of the date of the reminder.

(b) If the members concerned fail to comply with any such reminder, the registrar may, by

written notice so served, direct those members so served, to make good the default within 28

days of the date of the notice.

further written notice, so served on the members by registered post, impose on the members,

or any of them, a penalty not exceeding N$10 per day from the date upon which the reminder

referred to in paragraph (a) was sent.

(d) When the registrar has served the notice referred to in paragraph (c) on the members,

he or she may, after expiry of a period of 21 days from the date of that notice, forward a

certified copy thereof to the clerk of the magistrate's court in whose area of jurisdiction the

registered office of the corporation is situate, who shall record it, and thereupon such notice

shall have the effect of a civil judgment of that magistrate's court against every such member

for the amount of the penalty in question.

(e) On application by one or more of the members concerned, the court in question may

reduce or rescind the penalty, or exempt any such member or members from the effect of the

notice.

(6) An amended founding statement referred to in subsection (1)(a), (2)(a) or (4) and the

statement referred to in subsection (2)(b) shall be signed in the presence of at least one

witness who shall attest the signature and state his or her residential, business and postal

address.

[Sec 15 substituted by sec 9 of Act 8 of 1994.]

16 Keeping of copies of founding statement by corporations

(1) A corporation shall keep a copy of its founding statement and any proof of its

registration at the registered office of the corporation.

(2) A document referred to in subsection (1) shall during the business hours of the

corporation be open to inspection by any person upon payment to the corporation, in the case

of a person who is not a member of the corporation, of one rand or such lesser amount as the

corporation may determine.

(3) A member or officer of a corporation who refuses access for the purposes of an

inspection in terms of subsection (2) to a person entitled thereto, shall be guilty of an offence.

17 No constructive notice of particulars in founding statement and other documents

No person shall be deemed to have knowledge of any particulars merely because such

particulars are stated, or referred to, in any founding statement or other document regarding a

corporation registered by the Registrar or lodged with him, or which is kept at the registered

office of a corporation in accordance with the provisions of this Act.

18 Meaning of "name" in sections 19, 20 and 21

For the purpose of sections 19, 20 and 21 "name", in relation to a corporation, unless the

context otherwise indicates, means the full name of that corporation, or a literal translation of

that name into any language other than the official language in Namibia, or a shortened form

of that name or any such translation thereof, referred to in section 12(a).

[Sec 18 substituted by sec 10 of Act 8 of 1994.]

19 Undesirable names

(1) No founding statement of a corporation referred to in section 12 or an amended

founding statement which relates to a change of name referred to in section 15(2), shall be

registered if the name or changed named of the corporation, as the case may be, is in the

opinion of the Registrar undesirable.

(2) The Registrar may, on written application on the prescribed form and on payment of

the prescribed fee, reserve a name (approved by him or her) or literal translation into any

language other than official language in Namibia, of a name of a corporation or a shortened

form of the name or name so translated of a corporation, for a period of 60 days pending the

registration of a founding statement: Provided that when, at the convention of a company into

a corporation in terms of section 27, the name of the company is retained, no reservation of

such a name shall be necessary.

[Subsec 2 substituted by sec 11 of Act 8 of 1994.]

20 Order to change name

(1) If within a period of one year after the registration of a founding statement or an

amended founding statement of a corporation it appears to the Registrar that a name

mentioned in the founding statement or amended founding statement is undesirable, he shall

order the corporation concerned to change such name.

(2) Any interested person may-

(a) within a period of one year referred to in subsection (1), on payment of the

prescribed fee apply in writing to the Registrar for an order directing the corporation

to change its name on the ground of undesirability or that such name is calculated to

cause damage to the applicant; or

(b) within a period of two years after the registration of a founding statement apply to a

Court for an order directing the corporation to change its name on the ground of

undesirability or that such name is calculated to cause damage to the applicant, and

the Court may on such application make such order as it deems fit.

[Subsec (2) substituted by sec 12(a) of Act 8 of 1994.]

(3) The Registrar may, after application has been made in terms of paragraph (a) of

subsection (2), in writing order the corporation concerned to change its name if, in the

opinion of the Registrar, it is or has become undesirable.

(4) A corporation which fails within any period mentioned in an order under subsection (1)

or (3) to comply with any such order, shall be guilty of an offence.

(5) No provision of this Act shall be construed as affecting the rights of any person at

common law to bring an action against any corporation for passing off any business goods or

services as those of another person.

(6) Any person feeling aggrieved by any decision or order of the Registrar under this

section may, within one month after the date of such decision or order, apply to the High

Court of Namibia for relief, and the court may consider the merits of any such matter, receive

further evidence and make any order it deems fit.

(7) No prescribed fee mentioned in section 15(1) shall be payable in respect of the

registration of an amended founding statement by virtue of an order under subsection (3) of

this section.

[Subsecs (6) and (7) added by sec 12(b) of Act 8 of 1994.]

21 Effect of change of name

(1) A change in terms of this Act of a name of a corporation shall not effect any right or

obligation of the corporation or any legal proceedings instituted by or against the corporation,

and any legal proceedings that could have been continued or commenced by or against the

corporation prior to the change of name may, notwithstanding such change of name, after the

change be continued or commenced by or against the corporation, as the case may be.

(2) Upon the production by a corporation of a certified copy of a founding statement

reflecting a change of name of that corporation to any registrar or other officer charged with

the maintenance of a register under any law, and on compliance with all the requirements

pursuant to any such law as to the form of application (if any) and the payment of any

required fee, such registrar or other officer shall make in his register all such alterations as are

necessary by reason of the change of name in respect of the corporation.

22 Formal requirements as to names and registration numbers

(1) The abbreviation 'CC', in capital letters, shall be subjoined to the name used by a

corporation.

[Subsec (1) substituted by sec 13 of Act 8 of 1994.]

(2) A corporation shall refer to the registration number of the corporation on all prescribed

documents and correspondence sent by the corporation to the Registration Office.

(3) If a corporation is being wound up, the statement "In Liquidation" shall for the duration

of such winding-up be subjoined to the name of the corporation which it uses.

22A Improper references to incorporation in terms of Act

Any person carrying on a business under a name or title-

(a) to which the abbreviation 'CC' subjoined; or

(b) of which the words "close corporation" or any abbreviation thereof form part,

in any way which indicates incorporation as a close corporation in terms of this Act, while not

being so incorporated shall be guilty of an offence.

[Sec 22A inserted by sec 14 of Act 8 of 1994.]

23 Use and publication of names

(1) Every corporation-

(a) shall display its registered full name (or a registered literal translation thereof) and

registration number in a conspicuous position and in characters easily legible on the

outside of its registered office and every office or place in which its business is

carried on;

(b) shall have that name (or such translation thereof) and registration number mentioned

in legible characters in all notices and other official publications of the corporation,

and in all bills of exchange, promissory notes, endorsements, cheques and orders for

money, goods or services purporting to be signed by or on behalf of the corporation,

and all letters, delivery notes, invoices, receipts and letters of credit of the

corporation; and

[Paras (a) and (b) substituted by sec 15 of Act 8 of 1994.]

name or such literal translation thereof.

(2) If any member of, or any other person on behalf of, a corporation-

(a) issues or authorizes the issue of any such notice or official publication of the

corporation, or signs or authorizes to be signed on behalf of the corporation any such

bill of exchange, promissory note, endorsement, cheque or order for money, goods

or services; or

(b) issues or authorizes the issue of any such letter, advertisement, delivery note,

invoice, receipt or letter of credit of the corporation,

without the name of the corporation, or such registered literal translation thereof, and its

registration number being mentioned therein in accordance with subsection (1)(b), he shall be

guilty of an offence, and shall further be liable to the holder of the bill of exchange,

promissory note, cheque or order for money, goods or services for the amount thereof, unless

the amount is duly paid by the corporation.

(3) Any corporation which fails to comply with any provision of subsection (1) shall be

guilty of an offence.

24 Contributions by members

(1) Every person who is to become a member of a corporation upon its registration, shall

make to the corporation an initial contribution of money, of property (whether corporeal or

incorporeal), or of services rendered in connection with and for the purposes of the formation

and incorporation of the corporation, and particulars of such contribution shall be stated in the

founding statement of the corporation referred to in section 12, as required by paragraph (f) of

that section.

(2) The amount or value of the members' contributions, or of the contribution of any one or

more members, may from time to time by agreement among all the members-

(a) be increased by additional contributions of money or property (whether corporeal or

incorporeal) to the corporation by existing members or, in terms of section 33(1)(b),

by a person becoming a member of a registered corporation; or

(b) be reduced, provided that a reduction by way of a repayment to any member shall

comply with the provisions of section 51(1).

(3) Particulars of any increase or reduction of a member's contribution in terms of

subsection (2) shall be furnished in an amended founding statement referred to in section

15(1).

(4) Money or property referred to in subsection (1) or (2)(a) shall, in order to vest

ownership thereof in the corporation, be paid, delivered or transferred, as the case may be, to

the corporation within a period of ninety days-

(a) after the date of registration of the corporation in the case of an initial contribution

referred to in subsection (1); or

(b) after the date of the registration of an amended founding statement in connection

with any additional contribution referred to in subsection (2)(a).

(5) An undertaking by a member to make an initial or an additional contribution to a

corporation shall be enforceable by the corporation in legal proceedings.

25 Postal address and registered office

(1) Every corporation shall have in the territory a postal address and an office to which,

subject to subsection (2), all communications and notices to the corporation may be

addressed.

(2) Any-

(a) notice, order, communication or other document which is in terms of this Act

required or permitted to be served upon any corporation or member thereof, shall be

deemed to have been served if it has been delivered at the registered office, or has

been sent by certified or registered post to the registered office or postal address, of

the corporation; and

(b) process which is required to be served upon any corporation or member thereof

shall, subject to applicable provisions in respect of such service in any law, be

served by so delivering or sending it.

26 Deregistration

(1) If the Registrar has reasonable cause to believe that a corporation is not carrying on

business or is not in operation, he shall serve on the corporation at its postal address a letter

by certified post in which the corporation is notified thereof and informed that if he is not

within sixty days from the date of his letter informed in writing that the corporation is

carrying on business or is in operation, the corporation will, unless good cause is shown to the

contrary, be deregistered.

(2) After the expiration of the period of sixty days mentioned in a letter referred to in

subsection (1), or upon receipt from the corporation of a written statement signed by or on

behalf of every member to the effect that the corporation has ceased to carry on business and

has no assets or liabilities, the Registrar may, unless good cause to the contrary has been

shown by the corporation, deregister that corporation.

(3) Where a corporation has been deregistered, the Registrar shall give notice to that effect

in the Official Gazette, and the date of the publication of such notice shall be deemed to be

the date of deregistration.

(4) The deregistration of a corporation shall not affect any liability of a member of the

corporation to the corporation or to any other person, and such liability may be enforced as if

the corporation were not deregistered.

(5) If a corporation is deregistered while having outstanding liabilities, the persons who are

members of such corporation at the time of deregistration shall be jointly and severally liable

for such liabilities.

(6) The Registrar may on application by any interested person, if he is satisfied that a

corporation was at time of its deregistration carrying on business or was in operation, or that

it is otherwise just that the registration of the corporation be restored, and has complied with

the provisions of section 19(2), restore the said registration.

(7) The Registrar shall give notice of the restoration of the registration of a corporation in

the Gazette, and as from the date of such notice the corporation shall continue to exist and be

deemed to have continued in existence as from the date of deregistration as if it were not

deregistered.

27 Conversion of companies into corporations

(1) Any company having ten or fewer members all of whom qualify for membership of a

corporation in terms of section 29 of this Act, may be converted into a corporation, provided

that every member of the company becomes a member of the corporation.

(2) In respect of a conversion referred to subsection (1), there shall be lodged with the

Registrar-

(a) an application for conversion, in the prescribed form, signed by all the members of

the company, containing a statement that upon conversion the assets of the

corporation, fairly valued, will exceed its liabilities, and that after conversion the

corporation will be able to pay its debts as they become due in the ordinary course of

its business;

(b) a statement in writing by the auditor of the company that he has no reason to believe

that a material irregularity contemplated in subsection (3) of section 26 of the Public

Accountants' and Auditors' Act, 1951 (Act 51 of 1951), has taken place or is taking

place in relation to the company or, where steps have been taken in terms of that

subsection, that such steps and other proceedings in terms of the subsection have

been completed; and

subject to the proviso to section 19(2).

(3) For the purposes of the founding statement referred to in subsection (2)(c)-

(a) there shall, in regard to the requirements of section 12(f), be a statement of the

aggregate of the contributions of the members, which shall be for an amount not

greater than the excess of the fair value of the assets to be acquired by the

corporation over the liabilities to be assumed by the corporation by reason of the

conversion: Provided that the corporation may treat any portion of such excess not

reflected as members' contributions, as amounts which may be distributed to its

members;

(b) the members' interests stated in terms of section 12(e) need not necessarily be in

proportion to the number of shares in the company held by the respective members

at the time of the conversion.

(4) If the provisions of subsection (2) have been complied with, the Registrar shall, if he or

she is satisfied that the company concerned has complied materially with the requirement of

the Companies Act-

(a) register the founding statement in accordance with the provisions of section 13;

(b) satisfy himself that, simultaneously with such registration, the registration of the

memorandum and the articles of association of the company concerned is cancelled

in accordance with the provisions of the Companies Act;

section 14(1): Provided that such certificate shall state the fact that the corporation

has been converted from a company and shall mention the name and registration

number of the former company; and

(d) give notice in the Gazette of conversion.

(5)(a) On the registration of a corporation converted from a company, the assets, rights,

liabilities and obligations of the company shall vest in the corporation.

(b) Any legal proceedings instituted by or against the company before the registration may

be continued by or against the corporation, and any other thing done by or in respect of the

company shall be deemed to have been done by or in respect of the corporation.

(i) any liability of a director or officer of the company to the company on the ground of

breach of trust or negligence, or to any other person pursuant to any provision of the

Companies Act; or

(ii) any liability of the company, or of any other person, as surety.

(d) The juristic person which prior to the conversion of a company into a corporation

existed as a company, shall notwithstanding the conversion continue to exist as a juristic

person but in the form of a corporation.

[Subsec (4) amended and para (d) added by sec 16 of Act 8 of 1994.]

(6) The corporation shall forthwith after its conversion from a company, give notice in

writing of the conversion to all creditors of the company at the time of conversion, and to all

other parties to contracts or legal proceedings in which the company was involved at the time

of the conversion.

(7) Upon the production by a corporation which has been converted from a company of a

certified copy of its founding statement referred to in subsection (4)(a), to any registrar or

other officer charged with the maintenance of a register under any law, and on compliance

with all the requirements pursuant to any such law as to the form of application (if any) and

the payment of any required fee, such registrar or officer shall make in his register all such

alterations as are necessary by reason of the conversion of the company into a corporation:

Provided that no transfer or stamp duties shall be payable in respect of such alterations in

registers.

(8) If the accounting officer mentioned in the founding statement of a converted

corporation is not the person who or firm which has acted as auditor for the company, the

appointment of that person or firm shall lapse upon the conversion into a corporation.

(9) If a corporation is converted into a company in accordance with the provisions of the

Companies Act, the registration of the founding statement of the corporation shall be

cancelled simultaneously with the registration of the memorandum and articles of association

of the company in terms of that Act.

PART IV

MEMBERSHIP (ss 28-41)

28 Number of members

A corporation may at its incorporation have one or more members, but at no time shall the

number of members exceed ten.

29 Requirements for membership

(1) Subject to the provisions of subsection (2)(b) and (c), only natural persons may be

members of a corporation and no juristic person or trustee of a trustee inter vivos in that

capacity shall directly or indirectly (whether through the instrumentality of a nominee or

otherwise) hold a member's interest in a corporation.

[Subsec (1) substituted by sec 17 of Act 8 of 1994.]

(2) The following persons shall qualify for membership of a corporation:

(a) Any natural person entitled to a member's interest;

(b) a natural or juristic person, nomine officii, who is a trustee of a testamentary trust

entitled to a member's interest, provided that-

(i) no juristic person is a beneficiary of such trust; and

(ii) if the trustee is a juristic person, such juristic person is not directly or indirectly

controlled by any beneficiary of the trust; and

insolvent, deceased, mentally disordered or otherwise incapable or incompetent to

manage his affairs, is a trustee of his insolvent estate or an administrator, executor or

curator in respect of such member or is otherwise a person who is his duly appointed

or authorized legal representative.

(3)(a) The membership of any person qualified therefor in terms of subsection (2) shall

commence on the date of the registration of a founding statement of a corporation containing

the particulars required by section 12 in regard to such person and his member's interest.

(b) Where any person is to become a member of a registered corporation the existing

member or members of the corporation shall ensure that the requirements of section 15(1)

regarding the lodging of an amended founding statement with the Registrar are complied

with.

representative, referred to in subsection (2)(c), in respect of any member of a corporation,

who is not obliged or who does not intend to transfer the interest of the member in the

corporation in accordance with the provisions of this Act within twenty-eight days of his

assuming office to any other person, shall within that period or any extended period allowed

by the Registrar on application by him, request the existing member or members of the

corporation to lodge with the Registrar in accordance with section 15(1) an amended

founding statement designating him, nomine officii, as representative of the member of the

corporation in question.

(d) Where the corporation has no other member, any such representative himself shall, in

the circumstances contemplated in paragraph (c), act on behalf of the corporation in

accordance with the provisions of section 15(1), read with the said paragraph (c).

(e) The provisions of paragraphs (c) and (d) shall not affect the power of such

representative, as from the date of his assuming office, and whether or not any such amended

founding statement has been lodged, to represent the member concerned in all matters in

which he himself as a member could have acted, until the interest of that member in the

corporation has in accordance with the provisions of this Act been transferred to any other

qualified person.

(4) A corporation is not concerned with the execution of any trust in respect of any

member's interest in the corporation.

30 Nature of member's interest

(1) The interest of any member in a corporation shall be a single interest expressed as a

percentage.

(2) Two or more persons shall not be joint holders of the same member's interest in a

corporation.

31 Certificate of member's interest

Each member of a corporation shall be issued with a certificate, signed by or on behalf of

every member of that corporation, and stating the current percentage of such member's

interest in the corporation.

32 Representation of members

(1) A minor who is a member of a corporation, other than a minor whose guardian has

lodged a written consent referred to in section 47(1)(a)(ii), shall be represented in the

corporation by his guardian.

(2) ......

[Subsec (2) deleted by sec 37 of Act 1 of 1996.]

(3) A member subject to any other legal disability shall be represented in the corporation

by his duly appointed or authorized legal representative referred to in paragraph (c) of

subsection (2) of section 29.

33 Acquisition of member's interest by new member

(1) A person becoming a member of a registered corporation shall acquire his member's

interest required for membership-

(a) from one or more of the existing members or his or their deceased or insolvent

estates; or

(b) pursuant to a contribution made by such person to the corporation, in which case the

percentage of his member's interest is determined by agreement between him and the

existing members, and the percentages of the interest of the existing members in the

corporation shall be reduced in accordance with the provisions of section 38(b).

(2) The contribution referred to in subsection (1)(b) may consist of an amount of money, or

of any property (whether corporeal or incorporeal) of a value agreed upon by the person

concerned and the existing members.

34 Disposal of interest of insolvent member

(1) Notwithstanding any provision to the contrary in any association agreement or other

agreement between members, a trustee of the insolvent estate of a member of a corporation

may, in the discharge of his duties, sell that member's interest-

(a) to the corporation, if there are one or more members other than the insolvent

member;

(b) to the members of the corporation other than the insolvent member, in proportion to

their member's interests or as they may otherwise agree upon; or

membership of a corporation in terms of section 29.

(2) If the corporation concerned has one or more members other than the insolvent, the

following provisions shall apply to a sale in terms of subsection (1)(c) of the insolvent

member's interest:

(a) The trustee shall deliver to the corporation a written statement giving particulars of

the name and address of the proposed purchaser, the purchase price and the time and

manner of payment thereof;

(b) for a period of twenty-eight days after the receipt by the corporation of the written

statement the corporation or the members, in such proportions as they may agree

upon, shall have the right, exercisable by written notice to the trustee, to be

substituted as purchasers of the whole, and not a part only, of the insolvent member's

interest at the price and on the terms set out in the trustee's written statement; and

referred to in the trustee's written statement shall become effective and be

implemented.

35 Disposal of interest of deceased member

Subject to any other arrangement in an association agreement, an executor of the estate of

a member of a corporation who is deceased shall, in the performance of his duties-

(a) cause the deceased member's interest in the corporation to be transferred to a person

who qualifies for membership of a corporation in terms of section 29 and is entitled

thereto as legatee or heir or under a redistribution agreement, if the remaining

member or members of the corporation (if any) consent to the transfer of the

member's interest to such person; or

(b) if any consent referred to in paragraph (a) is not given within twenty-eight days after

it was requested by the executor, sell the deceased member's interest-

(i) to the corporation, if there is any other member or members than the deceased

member;

(ii) to any other remaining member or members of the corporation in proportion to

the interests of those members in the corporation or as they may otherwise agree

upon; or

(iii) to any other person who qualifies for membership of a corporation in terms of

section 29, in which case the provisions of subsection (2) of section 34 shall

mutatis mutandis apply in respect of any such sale.

36 Cessation of membership by order of Court

(1) On application by any member of a corporation a Court may on any of the following

grounds order that any member shall cease to be a member of the corporation:

(a) Subject to the provisions of the association agreement (if any), that the member is

permanently incapable, because of unsound mind or any other reason, of performing

his part in the carrying on of the business of the corporation;

(b) that the member has been guilty of such conduct as taking into account the nature of

the corporation's business, is likely to have a prejudicial effect on the carrying on of

the business;

that it is not reasonably practicable for the other member or members to carry on the

business of the corporation with him; or

(d) that circumstances have arisen which render it just and equitable that such member

should cease to be a member of the corporation:

Provided that such application to a Court on any ground mentioned in paragraph (a) or (d)

may also be made by a member in respect of whom the order shall apply.

(2) A Court granting an order in terms of subsection (1) may make such further orders as it

deems fit in regard to-

(a) the acquisition of the member's interest concerned by the corporation or by members

other than the member concerned; or

(b) the amounts (if any) to be paid in respect of the member's interest concerned or the

claims against the corporation of that member, the manner and times of such

payments and the persons to whom they shall be made; or

37 Other dispositions of members' interests

Subject to sections 34, 35 and 36, no member of the corporation shall dispose of his or her

interest in the corporation or a portion of such interest, unless such interest or portion is

disposed of-

(a) in accordance with the association agreement or the provisions of section 46(g); or

(b) with the consent of every other member of the corporation:

Provided that no member shall dispose of his or her interest to the corporation unless it has

one or more other members.

[Sec 37 substituted by sec 18 of Act 8 of 1994.]

38 Maintenance of aggregate of members' interests

The aggregate of the members' interests in a corporation expressed as a percentage shall at

all times be one hundred per cent, and for that purpose-

(a) any transfer of the whole, or a portion, of a member's interest shall be effected by the

cancellation or the reduction, as the case may be, of the interest of the member

concerned and the allocation in the name of the transferee, if not already a member,

of a member's interest of the percentage concerned, or the addition to the interest of

an existing member of the percentage concerned;

(b) when a person becomes a member of a registered corporation pursuant to a

contribution made by him to the corporation, the percentage of his member's interest

shall be agreed upon by him and the existing members, and the percentages of the

interests of the existing members shall be reduced proportionally or as they may

otherwise agree; and

interests of the other members in proportion to their existing interests or as they may

otherwise agree.

39 Payment by corporation for members' interests acquired

(1) Payment by a corporation in respect of its acquisition of a member's interest in the

corporation shall be made only-

(a) with the previously obtained written consent of every member of the corporation,

other than the member whose interest is acquired, for the specific payment;

(b) if, after such payment is made, the corporation's assets, fairly valued, exceed all its

liabilities;

of its business; and

(d) if such payment will in the particular circumstances not in fact render the

corporation unable to pay its debts as they become due in the ordinary course of its

business.

(2) For the purposes of subsection (1) "payment" shall include the delivery or transfer of

any property.

40 Financial assistance by corporation in respect of acquisition of members' interests

A corporation may give financial assistance (whether directly or indirectly and whether by

means of a loan, guarantee, the provision of security or otherwise) for the purpose of, or in

connection with, any acquisition of a member's interest in that corporation by any person,

only-

(a) with the previously obtained written consent of every member of the corporation for

the specific assistance;

(b) if, after such assistance is given, the corporation's assets, fairly valued, exceed all its

liabilities;

of its business; and

(d) if such assistance will in the particular circumstances not in fact render the

corporation unable to pay its debts as they become due in the ordinary course of its

business.

41 Publication of names of members

(1) A corporation shall not sent to any person any business letter bearing a registered name

of the corporation, unless the forenames (or the initials thereof) and surname of every

member thereof is stated thereon.

(2) Any corporation which contravenes any provision of subsection (1) shall be guilty of

an offence.

PART V

INTERNAL RELATIONS (ss 42-52)

42 Fiduciary position of members

(1) Each member of a corporation shall stand in a fiduciary relationship to the corporation.

(2) Without prejudice to the generality of the expression "fiduciary relationship", the

provisions of subsection (1) imply that a member-

(a) shall in relation to the corporation act honestly and in good faith, and in particular-

(i) shall exercise such powers as he may have to manage or represent the

corporation in the interest and for the benefit of the corporation; and

(ii) shall not act without or exceed the powers aforesaid; and

(b) shall avoid any material conflict between his own interests and those of the

corporation, and in particular-

(i) shall not derive any personal economic benefit to which he is not entitled by

reason of his membership of or service to the corporation from the corporation

or from any other person in circumstances where that benefit is obtained in

conflict with the interests of the corporation;

(ii) shall notify every other member, at the earliest opportunity practicable in the

circumstances, of the nature and extent of any direct or indirect material interest

which he may have in any contract of the corporation; and

(iii) shall not compete in any way with the corporation in its business activities.

(3)(a) A member of a corporation whose act or omission has breached any duty arising

from his fiduciary relationship shall be liable to the corporation for-

(i) any loss suffered as a result thereof by the corporation; or

(ii) any economic benefit derived by the member by reason thereof.

(b) Where a member fails to comply with the provisions of subparagraph (ii) of paragraph

(b) of subsection (2) and it becomes known to the corporation that the member has an interest

referred to in that subparagraph in any contract of the corporation, the contract in question

shall, at the option of the corporation, be voidable: Provided that where the corporation

chooses not to be bound a Court may on application by any interested person, if the Court is

of the opinion that in the circumstances it is fair to order that such contract shall nevertheless

be binding on the parties, give an order to that effect, and may make any further order in

respect thereof which it may deem fit.

(4) Except as regards his duty referred to in subsection 2(a)(i), any particular conduct of a

member shall not constitute a breach of a duty arising from his fiduciary relationship to the

corporation, if such conduct was preceded or followed by the written approval of all the

members where such members were or are cognisant of all the material facts.

43 Liabilities of members for negligence

(1) A member of a corporation shall be liable to the corporation for loss caused by his

failure in the carrying on of the business of the corporation to act with the degree of care and

skill that may reasonably be expected from a person of his knowledge and experience.

(2) Liability referred to in subsection (1) shall not be incurred if the relevant conduct was

preceded or followed by the written approval of all the members where such members were

or are cognisant of all the material facts.

44 Association agreements

(1) The members of a corporation having two or more members may at any time enter into

a written association agreement signed by or on behalf of each member, which regulates-

(a) any matter which in terms of this Act may be set out or agreed upon in an

association agreement; and

(b) any other matter relating to the internal relationship between the members, or the

members and the corporation, in a manner not inconsistent with the provisions of

this Act.

(2) A corporation shall keep any association agreement at the registered office of the

corporation where any member may inspect it and may make extracts therefrom or copies

thereof.

(3) Whether or not an association agreement exists, any other agreement, express or

implied, between all the members of a corporation on any matter that may be regulated by an

association agreement shall be valid, provided that such express or implied agreement

(a) is not inconsistent with any provision of an association agreement;

(b) does not affect any person other than the corporation or a member who is a party to

it; and

corporation.

(4) Subject to the provisions of this Act, an association agreement or an agreement referred

to in subsection (3) shall bind the corporation to every member in his capacity as a member of

that corporation and, in such capacity, every member to the corporation and to every other

member.

(5) A new member of a corporation shall be bound by an existing association agreement

between the other members as if he has signed it as a party thereto.

(6) Any amendment to, or the dissolution of, an association agreement shall be in writing

and signed by or on behalf of each member, including a new member referred to in subsection

(5).

45 No access to or constructive notice of association agreement

No person who is not a member of a corporation shall, except by virtue of a provision of

this Act, be entitled to inspect any association agreement in respect of that corporation, and

no person dealing with the corporation shall be deemed to have knowledge of any particular

thereof merely because it is stated or referred to therein, whether or not the agreement is in

accordance with section 44(2) kept at the registered office of the corporation.

46 Variable rules regarding internal relations

The following rules in respect of internal relations in a corporation shall apply in so far as

this Act or an association agreement in respect of the corporation does not provide otherwise:

(a) Every member shall be entitled to participate in the carrying on of the business of the

corporation;

(b) subject to the provisions of section 47, members shall have equal rights in regard to

the management of the business of the corporation and in regard to the power to

represent the corporation in the carrying on of its business: Provided that the consent

in writing of a member holding a member's interest of at least seventy-five per cent,

or of members holding together at least that percentage of the members' interest, in

the corporation, shall be required for-

(i) a change in the principal business carried on by the corporation;

(ii) a disposal of the whole, or substantially the whole, undertaking of the

corporation;

(iii) a disposal of all, or the greater portion of, the assets of the corporation; and

(iv) any acquisition or disposal of immovable property by the corporation;

shall be decided by majority vote at a meeting of members of the corporation;

(d) at any meeting of members of a corporation each member shall have the number of

votes that corresponds with the percentage of his interest in the corporation;

(e) a corporation shall indemnify every member in respect of expenditure incurred or to

be incurred by him-

(i) in the ordinary and proper conduct of the business of the corporation; and

(ii) in regard to anything done or to be done for the preservation of the business or

property of the corporation; and

(f) payments by a corporation to its members by reason only of their membership in

terms of section 51(1) shall be of such amounts and be effected at such times as the

members may from time to time agree upon, and such payments shall be made to

members in proportion to their respective interests in the corporation.

(g) Subject to section 37, if a member of a corporation desire to sell his or her interest in

the corporation, or a portion of such interest, he or she shall give a written notice of

his or her intention to sell to other members of the corporation, and state the price at

which he or she desires to sell such interest or portion, and-

(i) the members concerned, or the corporation, shall have an option to purchase

such interest or portion within a period of two months of the date of receipt of

the notice;

(ii) if more than one offer for such interest or portion is made, such interest or

portion shall be sold to the person concerned in equal percentages;

(iii) if the members of the corporation cannot agree on the selling price of such

interest or portion, the selling price shall be the true and fair value determined

by-

(aa) the accounting officer of the corporation, if so agreed thereto by all

members interested in the sale; or

(bb) failing such an agreement, a person registered as a public accountant and

auditor in terms of the Public Accountants' and Auditors' Act, 1951 (Act

51 of 1951) and designed by the President of the Institute of chartered

Accountants of Namibia; and

(iv) if none of the members of the corporation, or the corporation, offers to purchase

such interest or portion within the period referred to in subparagraph (i), or if

the corporation, or members of the corporation, offer to purchase only a portion

of such interest or portion, the member making the offer may sell the interest or

the unsold portion thereof, as the case may be, to any other person qualifying for

membership under section 29.

[Para (g) added by sec 19 of Act 8 of 1994.]

47 Disqualified members regarding management of business of corporation

(1) Notwithstanding any other provision of this Act or in any association agreement or any

other agreement between members to the contrary, the following persons shall be

disqualified, from taking part in the management of a corporation:

(a) Any person under legal disability, except-

(i) a married woman, whether subject to the marital power of her husband or not;

and

(ii) a minor who has attained at least the age of 18 years and whose guardian has

lodged with the corporation a written consent to the minor's participation in the

management of the business of the corporation;

(b) save under authority of a Court-

(i) an unrehabilitated insolvent;

(ii) any person removed from an office of trust on account of misconduct;

(iii) any person who has at any time been convicted in the territory or elsewhere of

theft, fraud, forgery or uttering a forged document, perjury, any offence under

any act preventing corruption, or any offence involving dishonesty or in

connection with the formation or management of a company or a corporation,

and has been sentenced therefor to imprisonment for at least six months without

the option of a fine; and

disqualifying him from being a director of a company.

[Subsec (1) amended by sec 20 of Act 8 of 1994.]

(2) Any person disqualified under the provisions of subsection (1)(b) or (c) who directly or

indirectly takes part in or is concerned with the management of the business of any

corporation, shall be guilty of an offence.

48 Meetings of members

(1) Any member of a corporation may by notice to every other member and every other

person entitled to attend a meeting of members, call a meeting of members for any purpose

disclosed in the notice.

(2) Unless an association agreement provides otherwise-

(a) a notice referred to in subsection (1) shall, as regards the date, time and venue of the

meeting, fix a reasonable date and time, and a venue which is reasonably suitable for

all persons entitled to attend the particular meeting;

(b) three-fourths of the members present in person at the meeting, shall constitute a

quorum; and

[Para (c) substituted by sec 21 of Act 8 of 1994.]

(3)(a) A corporation shall record a report of the proceedings at a meeting of its members

within fourteen days after the date on which the meeting was held in a minute book which

shall be kept at the registered office of the corporation.

(b) A resolution in writing, signed by all the members and entered into the minute book,

shall be as valid and effective as if it were passed at a meeting of the members duly convened

and held.

49 Unfairly prejudicial conduct

(1) Any member of a corporation who alleges that any particular act or omission of the

corporation or of one or more other members is unfairly prejudicial, unjust or inequitable to

him, or to some members including him, or that the affairs of the corporation are being

conducted in a manner unfairly prejudicial, unjust or inequitable to him, or to some members

including him, may make an application to a Court for an order under this section.

(2) If on any such application it appears to the Court that the particular act or omission is

unfairly prejudicial, unjust or inequitable as contemplated in subsection (1), or that the

corporation's affairs are being conducted as so contemplated, and if the Court considers it just

and equitable, the Court may with a view to settling the dispute make such order as it thinks

fit, whether for regulating the future conduct of the affairs of the corporation or for the

purchase of the interest of any member of the corporation by other members thereof or by the

corporation.

(3) When an order under this section makes any alteration or addition to the relevant

founding statement or association agreement, or replaces any association agreement, the

alteration or addition or replacement shall have effect as if it were duly made by agreement of

the members concerned.

(4) A copy of an order made under this section which-

(a) alters or adds to a founding statement shall within twenty-eight days of the making

thereof be lodged by the corporation with the Registrar for registration;

(b) alters or adds to or replaces any association agreement, shall be kept by the

corporation at its registered office where any member of the corporation may inspect

it.

(5) Any corporation which fails to comply with any provision of subsection (4) shall be

guilty of an offence.

50 Proceedings against fellow-members on behalf of corporation

(1) Where a member or a former member of a corporation is liable to the corporation-

(a) to make an initial contribution or any additional contribution contemplated in

subsection (1) and (2)(a), respectively, of section 24; or

(b) on account of-

(i) the breach of a duty arising from his fiduciary relationship to the corporation in

terms of section 42; or

(ii) negligence in terms of section 43,

any other member of the corporation may institute proceedings in respect of any such liability

on behalf of the corporation against such member or former member after notifying all other

members of the corporation of his intention to do so.

(2) After the institution of such proceedings by a member the leave of the Court concerned

shall be required for a withdrawal of the proceedings or for any settlement of the claim, and

the Court may in connection with such withdrawal or settlement make such orders as it may

deem fit.

(3) If a Court in any particular case finds that the proceedings, if unsuccessful, have been

instituted without prima facie grounds, it may order the member who has instituted them on

behalf of the corporation, himself to pay the costs of the corporation and of the defendant in

question in such manner as the Court may determine.

51 Payments by corporation to members

(1) Any payment by a corporation to any member by reason only of his membership, may

be made only-

(a) if, after such payment is made, the corporation's assets, fairly valued, exceed all its

liabilities;

(b) if the corporation is able to pay its debts as they become due in the ordinary course

of its business; and

corporation unable to pay its debts as they become due in the ordinary course of its

business.

(2) A member shall be liable to a corporation for any payment received contrary to any

provision of subsection (1).

(3) For the purposes of this section-

(a) without prejudice to the generality of the expression "payment by a corporation to

any member by reason only of his membership", that expression-

(i) shall include a distribution, or a repayment of any contribution, or part thereof,

to a member;

(ii) shall exclude any payment to a member in his capacity as a creditor of the

relevant corporation and, in particular, a payment as remuneration for services

rendered as an employee or officer of the corporation, a repayment of a loan or

of interest thereon or a payment of rental; and

(b) "payment" shall include the delivery or transfer of any property.

52 Prohibition of loans and furnishing of security to members and others by

corporation

(1) A corporation shall not, directly or indirectly, make a loan-

(a) to any of its members;

(b) to any other corporation in which one or more of its members together hold more

than a fifty per cent interest; or

more members of the corporation,

and shall not provide any security to any person in connection with any obligation of any such

member, or other corporation, company or other juristic person.

(2) The provisions of subsection (1) shall not apply in respect of the making of any

particular loan or the provision of any particular security with the express previously obtained

consent in writing of all the members of a corporation.

(3) Any member of a corporation who authorizes or permits or is a party to the making of

any loan or the provision of any security contrary to any provision of this section-

(a) shall be liable to indemnify the corporation and any other person who had no actual

knowledge of the contravention against any loss directly resulting from the invalidity

of such loan or security; and

(b) shall be guilty of an offence.

(4) For the purposes of this section-

(a) "loan" includes-

(i) a loan of any property; and

(ii) any credit extended by a corporation where the debt concerned is not payable or

is not being paid in accordance with normal business practice in respect of the

payment of debts of the same kind;

(b) one or more members of a corporation shall only be deemed to control a company or

other juristic person as contemplated in subsection (1)(c), if the circumstances

envisaged in section 226(1A)(b) of the Companies Act in relation to a director or

manager or his nominee, or directors or managers or their nominees, referred to in

that section, and a company or body corporate, are present in respect of any such

member or his nominee, or such members or their nominees, and any such company

or other juristic person; and

PART VI

EXTERNAL RELATIONS (ss 53-55)

53 Pre-incorporation contracts

(1) Any contract in writing entered into by a person professing to act as an agent or a

trustee for a corporation not yet formed, may after its incorporation be ratified or adopted by

such corporation as if the corporation had been duly incorporated at the time when the

contract was entered into.

(2) The ratification or adoption by a corporation referred to in subsection (1) shall be in the

form of a consent in writing of all the members of the corporation, given within a time

specified in the contract or, if no time is specified, within a reasonable time after

incorporation.

54 Power of members to bind corporation

(1) Subject to the provisions of this section, any member of a corporation shall in relation

to a person who is not a member and is dealing with the corporation, be an agent of the

corporation for the purposes of the business of the corporation stated in its founding

statement or actually being carried on by it.

(2) Any act of a member shall bind corporation, if-

(a) such act is expressly or impliedly authorized by the corporation, or is subsequently

ratified by it; or

(b) such act is performed for the carrying on, in the usual way, of business of the kind

stated in a founding statement of the corporation or actually being carried on by the

corporation at the time of the performance of the act, unless the member so acting

has in fact no power to act for the corporation in the particular matter and the person

with whom he deals has, or ought reasonably to have, knowledge of the fact that the

member has no such power.

(3) Where any act of a member of a corporation is performed for a purpose apparently not

connected with the ordinary course of the business of the corporation stated in its founding

statement or actually being carried on by it at the time of the performance of the act, the

corporation shall not be bound by such act, unless it has in fact been authorized or is ratified

as contemplated in subsection (2)(a) by the corporation.

(4) Where any association agreement restricts the power of any member to represent a

corporation, or where any member is disqualified under section 47 from participating in the

management of the business of a corporation, no act in contravention of the restriction or

performed by such disqualified person shall be binding on the corporation with respect to any

person who has, or ought reasonably to have, knowledge of such restriction or

disqualification.

(5) Where the consent in writing of a member or members of a corporation is in any

particular case required in terms of the proviso to section 46(b), no act in contravention of

such requirement shall be binding on the corporation with respect to any person who has, or

ought reasonably to have, knowledge of the fact that the particular act is performed in

contravention of such requirement.

55 Application of sections 37 and 226 of Companies Act 1973

(1) If the relationship between any company and any corporation is such that the

corporation, if it were a company, would be a holding company of such company, the

provisions of section 37 of the Companies Act regarding-

(a) the employment of funds of a company in a loan to; or

(b) the provision of any security by a company to another person in connection with an

obligation of,

its holding company, or a company which is a subsidiary of that holding company but is not a

subsidiary of itself, shall mutatis mutandis apply in relation to any such employment of funds

or provision of security by any such company in respect of any such corporation and in

respect of any company which would be a subsidiary of the corporation were it a company,

but which is not a subsidiary of the first-mentioned company.

(2) In the application in terms of subsection (1) of the provisions of subsection (3)(b) of

the said section 37 of the Companies Act any reference therein to a director or officer, or a

former director or officer, of a holding company, shall be construed as a reference to any

member or officer, or former member or officer, of a corporation envisaged in subsection (1).

(3) If the relationship between any company and any corporation is as envisaged in

subsection (1), the provisions of section 226 of the Companies Act regarding the making by a

company of any loan to, or the provision of security by a company to another person in

connection with any obligation of-

(a) any director or manager of the company's holding company or of another company

which is a subsidiary of its holding company; or

(b) another company or another juristic person controlled by one or more directors or

managers of the company's holding company or of a company which is a subsidiary

of its holding company, shall mutatis mutandis apply in relation to any such loan or

provision of security by any such company in respect of-

[Para (b) substituted by sec 22(a) of Act 8 of 1994.]

(i) any member or officer of any such corporation, or any director or officer of

another company which would be a subsidiary of any such corporation were the

corporation a company; and

(ii) another company or another juristic person controlled by one or more members

of any such corporation, or by one or more directors or managers of a company

which would be a subsidiary of the corporation were it a company.

[Subpara (ii) substituted by 22(b) of Act 8 of 1994.]

(4) In the application in terms of subsection (3) of the provisions of subsection (5) of the

said section 226 of the Companies Act any reference therein to any director or officer of a

holding company, shall be construed as a reference to any member or officer of a corporation

envisaged in subsection (1).

PART VII

ACCOUNTING AND DISCLOSURE (ss 56-62)

56 Accounting records

(1) A corporation shall keep in the official language of Namibia such accounting records

as are necessary fairly to represent the state of affairs and business of the corporation, and to

explain the transaction and financial position of the business of the corporation, including-

(a) records showing its assets and liabilities, members' contributions, undrawn profits,

revaluations of fixed assets and amounts of loans to and from members;

(b) a register of fixed assets showing in respective thereof the respective dates of any

acquisition and the cost thereof, depreciation (if any) and where any asset has been

revalued, the date of the revaluation and the revalued amount thereof, the respective

dates of any disposals and the consideration received in respect thereof: Provided

that in the case of corporation which has been converted from a company in terms of

section 27, the existing fixed asset register of the company shall be deemed to be

such a register in respect of the corporation, and such particulars therein shall be

deemed to apply in respect of it;

[Para (b) substituted by sec 23(b) of Act 8 of 1994.]

sufficient details to enable the nature of the transactions and, except in the case of

cash sales, the names of the parties to the transactions to be identified;

(d) records of all goods purchased and sold on credit, and services received and rendered

on credit, in sufficient detail to enable the nature of those goods or services and the

parties to the transactions to be identified;

(e) statements of the annual stocktaking, and records to enable the value of stock at the

end of the financial year to be determined; and

(f) vouchers supporting entries in the accounting records.

[Subsec (1) amended by sec 23(a) of Act 8 of 1994.]

(2) The accounting records relating to-

(a) contributions by members;

(b) loans to and from members; and

shall contain sufficient detail of individual transactions to enable the nature and purpose

thereof to be clearly identified.

(3) The accounting records referred to in subsection (1) shall be kept in such a manner as

to provide adequate precautions against falsification and to facilitate the discovery of any

falsification.

(4) The accounting records shall be kept at the place or places of business or at the

registered office of the corporation and shall, wherever kept, be open at all reasonable times

for inspection by any member.

(5)(a) Any corporation which fails to comply with any provision of any of the preceding

subsections of this section, and every member thereof who is a party to such failure or who

fails to take all reasonable steps to secure compliance by the corporation with any such

provision, shall be guilty of an offence.

(b) In any proceedings against any member of a corporation in respect of an offence

consisting of a failure to take reasonable steps to secure compliance by a corporation with any

provision referred to in paragraph (a), it shall be a defence if it is proved that the accused had

reasonable grounds for believing and did believe that a competent and reliable person was

charged with the duty of seeing that any such provision was complied with, and that such

person was in a position to discharge that duty, and that the accused had no reason to believe

that such person had in any way failed to discharge that duty.

57 Financial year of corporation

(1) The financial year of a corporation shall be its annual accounting period, which shall,

subject to subsections (2), (3) and (4), be not less than 12 months and end on the date stated

in its founding statement in accordance with paragraph (g)(ii) of section 12.

(2) The date referred to in subsection (1) may, subject to section 15(2), be changed by the

corporation-

(a) to a date being not more than six months earlier; or

(b) to a date being not more than six months later,

but any such change shall not be made more than once in a financial year, and, in the case of a

change contemplated in paragraph (b), the prescribed additional amount in respect of the

annual duty shall be payable for any period by which the financial year is extended.

(3) The first financial year of a corporation shall commence on the date of its registration

and shall end on the date referred to in subsection (1) occuring not less than 3 nor more than

15 months after the date of registration: Provided that the first financial year of a corporation

converted from a company in terms of section 27, shall end on the date on which the financial

year of the company would have ended had it not been so converted.

(4) The financial year of a corporation, which has in terms of subsection (2) changed the

date referred to in subsection (1), shall commence at the end of the previous financial year

and shall end on the date, as changed, occuring not less than 3 nor more than 18 months after

the end of that previous financial year.

[Sec 57 substituted by sec 24 of Act 8 of 1994.]

58 Annual financial statements

(1) The members of the corporation shall within nine months after the end of every

financial year of the corporation cause financial statements in respect of that financial year to

be prepared in the official language of Namibia.

[Subsec (1) substituted by sec 25(a) of Act 8 of 1994.]

(2) The financial statements of a corporation-

(a) shall consist of-

(i) a balance sheet and any notes thereon; and

(ii) an income statement or any similar financial statement where such form is

appropriate, and any notes thereon;

(b) shall in conformity with generally accepted accounting practice, appropriate to the

business of the corporation, fairly present the state of affairs of the corporation as at

the end of the financial year concerned, and the results of its operations for that year;

contributions by members, undrawn profits, revaluations of fixed assets and amounts

of loans to or from members, and the movements in these amounts during the year;

(d) shall be in agreement with the accounting records, which shall be summarised in

such a form that-

(i) compliance with the provisions of this subsection is made possible; and

(ii) an accounting officer is enabled to report to the corporation in terms of section

62(1)(c) without it being necessary to refer to any subsidiary accounting records

and vouchers supporting the entries in the accounting records: Provided that

nothing contained in this paragraph shall be construed as preventing an

accounting officer, if he deems it necessary, from inspecting such subsidiary

accounting records and vouchers; and

(e) shall contain the report of the accounting officer referred to in section 62(1)(c).

(3) The annual financial statements shall be approved and signed by member holding

member's interest of at least 51 per cent, or members together holding the members' interest

of at least 51 per cent, in the corporation.

[Subsec (3) substituted by sec 25(b) of Act 8 1994.]

(4)(a) Any member of a corporation who fails to take all reasonable steps to comply or to

secure compliance with any provision of this section, shall be guilty of an offence.

(b) In any proceedings against any member of a corporation under paragraph (a) the

defence referred to in section 56(5)(b) shall be available to him.

59 Appointment of accounting officers

(1) Every corporation shall, subject to section 60, appoint an accounting officer who has in

writing consented thereto.

[Subsec (1) substituted by sec 26(a) of Act 8 of 1994.]

(2) The appointment of the first accounting officer of a corporation referred to in section

12(g)(i) shall take effect on the date of the registration of the corporation.

(3) If a vacancy occurs in the office of an accounting officer, whether as a result of

removal, resignation or otherwise, the corporation shall within 14 days appoint another

accounting officer and comply with the provisions of subsection (2) of section 15: Provided

that the provisions of subsection (5) of the said section 15 shall apply where the said

subsection (2) of that section has not so been complied with, whether or not an appointment

of such other accounting officer has been made.

[Subsec (3) substituted by sec 26(b) of Act 8 of 1994.]

(4) A corporation shall inform its accounting officer in writing of his removal from office.

(5)(a) An accounting officer shall on resignation or removal from office forthwith inform

every member of the corporation thereof in writing, and shall send a copy of the letter to the

last known address of the registered office of the corporation and shall in addition forthwith

by certified post inform the Registrar-

(i) that he or she has resigned or been removed from office;

(ii) of the date of his or her resignation or removal from office;

(iii) of the date up to which he or she performed his or her duties;

(iv) of any matters with respect to the financial affairs of the corporation of which he or

she was aware, at the time of his or her resignation or removal, which were in

contravention of the provisions of this Act.

[Para (a) substituted by sec 26(c) of Act 8 of 1994.]

(b) If an accounting officer who has been removed from office is of the opinion that he

was removed for improper reasons, he shall forthwith by certified post inform the Registrar

thereof, and shall send a copy of the letter to every member.

60 Qualifications of accounting officers

(1) No person shall be qualified for appointment as an accounting officer of a corporation,

unless he is a member of a recognized profession which-

(a) as a condition for membership, requires its members to have passed examinations in

accounting and related fields of study which in the opinion of the Minister would

qualify such members to perform the duties of an accounting officer under this Act;

(b) has the power to exclude from membership those persons found guilty of negligence

in the performance of their duties or of conduct which is discreditable to their

profession; and

(2) The Minister may from time to time publish by notice in the Gazette the names of

those professions whose members are qualified to perform the duties of an accounting officer

in terms of this Act.

(3) A member or employee of a corporation, and a firm whose partner or employee is a

member or employee of a corporation, shall not qualify for appointment as an accounting

officer of such corporation unless all the members consent in writing to such appointment.

(4) A firm may be appointed as an accounting officer of a corporation, provided that each

partner in the firm is qualified to be so appointed.

61 Right of access and remuneration of accounting officers

(1) An accounting officer of a corporation shall at all times have a right of access to the

accounting records and all the books and documents of the corporation, and to require from

members such information and explanations as he considers necessary for the performance of

his duties as an accounting officer.

(2) The remuneration of an accounting officer shall be determined by agreement with the

corporation.

62 Duties of accounting officers

(1) The accounting officer of a corporation shall, not later than three months after

completion of the annual financial statements-

(a) subject to the provisions of section 58(2)(d), determine whether the annual financial

statements are in agreement with the accounting records of the corporation;

(b) review the appropriateness of the accounting policies represented to the accounting

officer as having been applied in the preparation of the annual financial statements;

and

[Para (b) substituted by sec 27(a) of Act 8 of 1994.]

(2) (a) If during the performance of his duties an accounting officer becomes aware of any

contravention of a provision of this Act, he shall describe the nature of such contravention in

this report.

(b) Where an accounting officer is a member or employee of a corporation, or is a firm of

which a partner or employee is a member or employee of the corporation, his report shall

state that fact.

(3) If an accounting officer of a corporation-

(a) at any time knows, or has reason to believe, that the corporation is not carrying on

business or is not in operation and has no intention of resuming operations in the

foreseeable future; or

(b) during the performance of his duties finds-

(i) that any change, during a relevant financial year, in respect of any particulars

mentioned in the relevant founding statement has not been registered;

(ii) that the annual financial statements indicate that as at the end of the financial

year concerned the corporation's liabilities exceed its assets; or

(iii) that the annual financial statements incorrectly indicate that as at the end of the

financial year concerned the assets of the corporation exceed its liabilities, or

has reason to believe that such an incorrect indication is given,

he shall forthwith by certified post report accordingly to the Registrar.

(4) If an accounting officer of a corporation has in accordance with subsection (3)(b)(ii) or

(iii) reported to the registrar that-

(a) the annual financial statements of the corporation concerned indicate that as at the

end of the financial year the corporation's liabilities exceed its assets;

(b) the annual financial statements incorrectly indicate that as at the end of the financial

concerned the assets of the corporation exceed its liabilities; or

and he or she finds than any subsequent financial statements of the corporation concerned

indicate that the situation has changed or has been rectified and that assets concerned then

exceed liabilities or that they no longer incorrectly indicate that the assets exceed the

liabilities or that he or she no longer has reason to believe that such an incorrect indication is

given, as the case may be, he or she shall report to the registrar accordingly.

[Subsec (4) added by sec 27(b) of Act 8 of 1994.]

PART VIII

LIABILITY OF MEMBERS AND OTHERS FOR DEBTS OF CLOSE

CORPORATION (ss 63-65)

63 Joint liability for debts of corporation

Notwithstanding anything to the contrary contained in any provision of this Act, the

following persons shall in the following circumstances together with a corporation be jointly

and severally liable for the specified debts of the corporation:

(a) Where the name of the corporation is in any way used without the abbreviation 'CC'

as required by section 22(1), any member of the corporation who is responsible for,

or who authorized or knowingly permits the omission of such abbreviation, shall be

so liable to any person who enters into any transaction with the corporation from

which a debt accrues for the corporation while he or she, in consequence of such

omission, as not aware that he or she is dealing with a corporation;

[Para (a) substituted by sec 28(a) of Act 8 of 1994.]

(b) where any member fails to pay money or to deliver or transfer property to the

corporation as required by section 24(4), he shall be so liable for every debt of the

corporation incurred from its registration to the date of the actual payment, delivery

or transfer of such money or property;

section 28 for a period of six months, every such member shall be so liable for every

debt of the corporation incurred while the number of members so exceeded or

continues to exceed such maximum;

(d) where a juristic person or a trustee of a trust inter vivos in that capacity purport to

hold, whether directly or indirectly, a member's in the corporation in contravention

of any provision of section 29, such juristic person or trustee of a trust inter vivos

and any nominee referred to in that section shall, notwithstanding the invalidity of

the holding of such interest, be so liable for every debt of the corporation incurred

during the time the contravention continues;

[Para (d) substituted by sec 28(b) of Act 8 of 1994.]

(e) where the corporation makes a payment in respect of the acquisition of a member's

interest in contravention of any provision of section 39, every person who is a

member at the time of such payment and who is aware of the making of such

payment, including a member or a former member who receives or who received

such payment, shall be so liable for every debt of the corporation incurred prior to

the making of such payment unless, in the case of a member who is so aware, he

proves that he took all reasonable steps to prevent the payment;

(f) where the corporation gives financial assistance for the purpose of or in connection

with any acquisition of a member's interest in contravention of any provision of

section 40, every person who is a member at the time of the giving of such

assistance, and who is aware of the giving of such assistance, and the person who

receives such assistance, shall be so liable for every debt of the corporation incurred

prior to the giving of such assistance unless, in the case of a member who is so

aware, he proves that he took all reasonable steps to prevent the payment;

(g) where a person takes part in the management of the business of the corporation

while disqualified from doing so in terms of section 47(1)(b) or (c), that person shall

be so liable for every debt of the corporation which it incurs as a result of his

participation in the management of the corporation; and

(h) where the office of accounting officer of the corporation is vacant for a period of six

months, any person who at any time during that period was a member and aware of

the vacancy, and who at the expiration of that period is still a member, shall be so

liable for every debt of the corporation incurred during such existence of the vacancy

and for every such debt thereafter incurred while the vacancy continues and he still

is a member.

64 Liability for reckless or fraudulent carrying on of business of corporation

(1) If it at any time appears that any business of a corporation was or is being carried on

recklessly, with gross negligence or with intent to defraud any person or for any fraudulent

purpose, a Court may on the application of the Master, or any creditor, member or liquidator

of the corporation, declare that any person who was knowingly a party to the carrying on of

the business in any such manner, shall be personally liable for all or any of such debts or

other liabilities of the corporation as the Court may direct, and the Court may give such

further orders as it considers proper for the purpose of giving effect to the declaration and

enforcing that liability.

(2) Without prejudice to any other criminal liability incurred where any business of a

corporation is carried on in any manner contemplated in subsection (1), every person who is

knowingly a party to the carrying on of the business in any such manner, shall be guilty of an

offence.

65 Powers of Court in case of abuse of separate juristic personality of corporation

Whenever a Court on application by an interested person, or in any proceedings in which a

corporation is involved, finds that the incorporation of, or any use of, that corporation,

constitutes a gross abuse of the juristic personality of the corporation as a separate entity, the

Court may declare that the corporation is to be deemed not to be a juristic person in respect of

such rights, obligations or liabilities of the corporation, or of such member or members

thereof, or of such other person or persons, as are specified in the declaration, and the Court

may give such further order or orders as it may deem fit in order to give effect to such

declaration.

PART IX

WINDING-UP (ss 66-81)

66 Application of Companies Act, 1973

(1) The provisions of the Companies Act which relate to the winding-up of a company,

including the regulations made thereunder, (except sections 337, 338, 344, 345, 346(2),

347(3), 349, 364, 365(2), 367 to 370, inclusive 377, 387, 389, 390, 395 to 399, inclusive,

400(1)(b), 401, 402, 417, 418, 419(4), 421, 423 and 424), shall apply mutatis mutandis and in

so far as they can be applied to the liquidation of a corporation in respect of any matter not

specifically provided for in this Part or in any other provision of this Act.

(2) For the purposes of subsection (1)-

(a) any reference in a relevant provision of the Companies Act, and in any provision of

the Insolvency Act, 1936 (Act 24 of 1936), made applicable by any such provision-

(i) to a company, shall be construed as a reference to a corporation;

(ii) to a share in a company, shall be construed as a reference to a member's interest

in a corporation;

(iii) to a member, director, shareholder or contributory of a company, shall be

construed as a reference to a member of a corporation;

(iv) to an auditor of a company, shall be construed as a reference to an accounting

officer of a corporation;

(v) to an officer or a secretary of a company, shall be construed as a reference to a

manager or a secretary who is an officer of a corporation;

(vi) to a registered office of a company, shall be construed as a reference to a

registered office of a corporation;

(vii) to a memorandum or articles of association of a company, shall be construed as

a reference to a founding statement and an association agreement of a

corporation, respectively;

(viii) to the Registrar of Companies, shall be construed as a reference to the Registrar;

(ix) to the Companies Act or the regulations made thereunder, or to any provision

thereof, shall be construed as including a reference to this Act or the regulations

made thereunder, or to any corresponding provision thereof, as the case may be;

(x) to an insolvent estate, shall be construed as a reference to a corporation;

(xi) to a provisional liquidator of a company, or to a liquidator of a company or a

trustee of an insolvent estate, shall be construed as a reference to a provisional

liquidator and to a liquidator of a corporation, respectively;

(xii) to the sheriff, shall be construed as including a reference to a messenger of a

magistrate's court;

(xiii) to the Registrar of the Court, shall be construed as including a reference to a

clerk of a magistrate's court; and

(xiv) to a Court, shall be construed as a reference to a Court having jurisdiction under

this Act;

(b) a reference to a special resolution-

(i) referred to in sections 340(2), 350(1), 351(1), 352, 356(2), 357(3) and (4),

359(1), 362(1) and 363(1) of the Companies Act, shall be construed as a

reference to a written resolution for the voluntary winding-up of a corporation in

terms of section 67 of this Act; and

(ii) referred to in section 422(1)(b) of the Companies Act, shall be construed as a

reference to a written resolution signed by or on behalf of all the members of a

corporation; and

(b) of section 358 of the Companies Act;

(d) where any other action or proceeding is being or about to be instituted against the

company in any court in the territory, apply to such court for an order restraining

further proceedings in the action or proceeding.

67 Voluntary winding-up

(1) A corporation may be wound up voluntarily if all its members so resolve at a meeting

of members called for the purpose of considering the winding-up of the corporation, and sign

a written resolution that the corporation be wound up voluntarily by members or creditors, as

the case may be.

(2) A copy of the written resolution, in duplicate in the prescribed form, shall be lodged

within twenty-eight days after the date of the passing of the resolution, together with the

prescribed fee, with the Registrar, who shall register such resolution if it complies with the

provisions of subsection (1).

(3) If such copy of the written resolution is not so registered by the Registrar within ninety

days from the date of the passing of the resolution, the resolution shall lapse and be void.

(4) A resolution in terms of this section shall not take effect until it has been registered by

the Registrar.

68 Liquidation by Court

A corporation may be wound up by a Court, if-

(a) members having more than one half of the total number of votes of members, have

so resolved at a meeting of members called for the purpose of considering the

winding-up of the corporation, and have signed a written resolution that the

corporation be wound up by a Court;

(b) the corporation has not commenced its business within a year from its registration,

or has suspended its business for a whole year;

(d) it appears on application to the Court that it is just and equitable that the corporation

be wound up.

69 Circumstances under which corporation deemed unable to pay debts

(1) For the purposes of section 68(c) a corporation shall be deemed to be unable to pay its

debts, if-

(a) a creditor, by cession or otherwise, to whom the corporation is indebted in a sum of

not less than two hundred rand then due has served on the corporation, by delivering

it at its registered office, a demand requiring the corporation to pay the sum so due,

and the corporation has for twenty-one days thereafter neglected to pay the sum or to

secure or compound for it to the reasonable satisfaction of the creditor; or

(b) any process issued on a judgement, decree or order of any court in favour of a

creditor of the corporation is returned by a sheriff, or a messenger of a magistrate's

court, with an endorsement that he has not found sufficient disposable property to

satisfy the judgement, decree or order, or that any disposable property found did not

upon sale satisfy such process; or

debts.

(2) In determining for the purposes of subsection (1) whether a corporation is unable to

pay its debts, the Court shall also take into account the contingent and prospective liabilities

of the corporation.

70 Repayments by members

(1) Subject to the provisions of this section, no member of a corporation shall in the

winding-up of the corporation be liable for the repayment of any payment made by the

corporation to him by reason only of his membership, if such payment complies with the

requirements of section 51(1).

(2) In the winding-up of a corporation unable to pay its debts, any such payment made to a

member by reason only of his membership within a period of two years before the

commencement of the winding-up of the corporation, shall be repaid to the corporation by the

member, unless such member can prove that-

(a) after such payment was made, the corporation's assets, fairly valued, exceeded all its

liabilities; and

(b) such payment was made while the corporation was able to pay its debts as they

become due in the ordinary course of its business; and

unable to pay its debts as the became due in the ordinary course of its business.

(3) A person who has ceased to be a member of the corporation concerned within the said

period of two years, shall also be liable for any repayment provided for in subsection (2) if,

and to the extent that, repayments by present members, together with all other available

assets, are insufficient for paying all the debts of the corporation.

(4) A certificate given by the Master as to the amount payable by any member or former

member in terms of subsection (2) or (3) to the corporation, may be forwarded by the

liquidator to the clerk of the magistrate's court in whose area of jurisdiction the registered

office of the corporation is situated, who shall record it, and thereupon such notice shall have

the effect of a civil judgement of that magistrate's court against the member or former

member concerned.

(5) The court in question may, on application by a member or former member referred to

in subsection (3), make any order that it deems fit in regard to any certificate referred to in

subsection (4).

71 Repayment of salary or remuneration by members

(1) If a corporation being wound up is unable to pay its debts, and

(a) any direct or indirect payment of a salary or other remuneration was made by the

corporation within a period of two years before the commencement of its

winding-up to a member in his capacity as an officer or employee of the corporation;

and

(b) such payment was, in the opinion of the Master, not bona fide or reasonable in the

circumstances,

the Master shall direct that such payment, or such part thereof as he may determine, be repaid

by such member to the corporation.

(2) A person who has within a period of two years referred to in subsection (1)(a) ceased

to be a member of a corporation referred to in that subsection may, under the circumstances

referred to therein, be directed by the Master to make a repayment provided for in subsection

(1), if, and to the extent that, any such repayments by present members are, together with all

other available assets, insufficient for paying all the debts of the corporation.

(3) The provisions of subsections (4) and (5) of section 70 shall mutatis mutandis apply in

respect of any repayment to a corporation in terms of subsection (1) or (2).

72 Composition

(1) In the winding-up of a corporation unable to pay its debts, the members of the

corporation may at any time after the first meeting of creditors submit to the liquidator a

written offer of composition, signed by the members holding more than fifty per cent of

members' interests in the corporation.

(2)(a) The provisions of sections 119, 120, 123 and 124(1) and (5) of the Insolvency Act,

1936 (Act 24 of 1936), shall mutatis mutandis apply in respect of the procedure and effect of

any such composition, and the liquidator's functions thereunder.

(b) For the purposes of paragraph (a), any reference in any provision referred to therein-

(i) to an insolvent or insolvent estate, shall be construed as a reference to the

corporation concerned;

(ii) to a trustee shall be construed as a reference to the liquidator of the corporation

concerned; and

(iii) to the rehabilitation of an insolvent, shall be construed as a reference to the setting

aside of the winding-up of the corporation concerned.

73 Repayments, payments of damages and restoration of property by members and

others

(1) Where in the course of the winding-up of a corporation it appears that any person who

has taken part in the formation of the corporation, or any former or present member, officer or

accounting officer of the corporation has misapplied or retained or become liable or

accountable for any money or property of the corporation, or has been guilty of any breach of

trust in relation to the corporation, a Court may, on the application of the Master or of the

liquidator or of any creditor or member of the corporation, inquire into the conduct of such

person, member, officer or accounting officer and may order him to repay or restore the

money or property, or any part thereof, with interest at such rate as the Court considers just,

or to contribute such sum to the assets of the corporation by way of compensation or damages

in respect of the misapplication, retention or breach of trust, as the Court considers just.

(2) The provisions of subsection (1) shall apply in respect of any person, member, officer

or accounting officer referred to therein, notwithstanding the fact that such person may also

be criminally responsible in respect of any conduct contemplated therein.

74 Appointment of liquidator

(1) For the purposes of conducting the proceedings in a winding-up of a corporation, the

Master shall appoint a suitable natural person as liquidator.

(2) The Master shall make an appointment as soon as is practicable after a provisional

winding-up order has been made, or a copy of a resolution for the voluntary winding-up has

been registered in terms of section 67(2).

(3) When the Master in the case of a voluntary winding-up by members makes an

appointment, he shall take into consideration any further resolution at a meeting of members

nominating a person as liquidator.

(4) In the case of a creditors' voluntary winding-up and a winding-up by the Court, the

Master shall, subject to the provisions of section 76, if a person is nominated as co-liquidator

at the first meeting of creditors, appoint such person as co-liquidator as soon as he has given

security to the satisfaction of the Master for the proper performance of his duties.

75 Vacancies in office of liquidators

(1) When a vacancy occurs in the office of a liquidator of a corporation, the Master may-

(a) where the vacancy occurs in the office of a liquidator nominated by members or

creditors, direct any remaining liquidator to convene a meeting of creditors or

members, as the case may be, to nominate a liquidator to fill the vacancy;

(b) in a case other than a case contemplated in paragraph (a), if he is of opinion that any

remaining liquidator will be able to complete the winding-up, dispense with the

appointment of a liquidator to fill the vacancy, and direct the remaining liquidator to

complete the winding-up; or

(2) The provisions of the Companies Act relating to the nomination or appointment of a

liquidator, as applied by section 66 of this Act, and of this Act, shall apply to the nomination

or appointment of a liquidator to fill a vacancy in the office of liquidator.

76 Refusal by taster to appoint nominated person as liquidator

(1) If a person who has been nominated as liquidator by any meeting of creditors or of

members of a corporation was not properly nominated, or is disqualified from being

nominated or appointed as liquidator pursuant to section 372 or 373 of the Companies Act, as

applied by section 66 of this Act, or has failed to give within a period of twenty-one days as

from the date upon which he was notified that the Master had accepted his nomination or

within such further period as the Master may allow, the security mentioned in section 375(1)

of the Companies Act, as so applied, or, if in the opinion of the Master the person nominated

as liquidator should not be appointed as liquidator of the corporation concerned, the Master

shall give notice in writing to the person so nominated that he declines to accept his

nomination or to appoint him as liquidator, and shall in such notice state his reasons for

declining to accept his nomination or to appoint him: Provided that if the Master declines to

accept the nomination for appointment as liquidator because he is of the opinion that the

person nominated should not be appointed as liquidator, it shall be sufficient if the Master

states in that notice, as such reason, that he is of the opinion that the person nominated should

not be appointed as liquidator of the corporation concerned.

(2)(a) When the Master has so declined to accept the nomination of any person or to

appoint him as liquidator, or when the Minister has under section 371(3) of the Companies

Act, as applied by section 66 of this Act, set aside the appointment of a liquidator, the Master

shall convene a meeting of creditors or members, as the case may be, of the corporation

concerned for the purpose of nominating another person for appointment as liquidator.

(b) In the notice convening any said meeting the Master shall state that he has declined to

accept the nomination for appointment as liquidator of the person previously nominated, or to

appoint the person so nominated and, subject to the proviso to subsection (1), the reasons

therefor, or that the appointment of the person previously appointed as liquidator has so been

set aside by the Minister, as the case may be, and that the meetings are convened for the

purpose of nominating another person for appointment as liquidator.

company was previously proved and admitted.

(d) Any meeting referred to in paragraph (a) shall be deemed to be a continuation of the

relevant first meeting of creditors or of members, or of any such meeting referred to in section

75, as the case may be.

(3) If the Master again so declines for any reason mentioned in subsection (1) to accept the

nomination for appointment as liquidator by any meeting referred to in subsection (2), or to

appoint a person so nominated-

(a) he shall act in accordance with the provisions of subsection (1); and

(b) if the person so nominated as sole liquidator has not or if all the persons so

nominated have not been appointed by him, he shall appoint as liquidator or

liquidators of the corporation concerned any other person or persons not disqualified

from being liquidator of that corporation.

77 Resignation and absence liquidator

(1) At the request of a liquidator the Master may relieve him of his office upon such

conditions as the Master may think fit.

(2) The liquidator shall not be absent from the territory for a period exceeding sixty days,

unless-

(a) the Master has before his departure from the territory granted him permission in

writing to be absent; and

(b) he complies with such conditions as the Master may think fit to impose.

(3) Every liquidator who is relieved of his office by the Master, or who is permitted to

absent himself for a period exceeding sixty days from the territory, shall give notice thereof in

the Gazette.

78 First meeting of creditors and members

(1) A liquidator shall as soon as may be and, except with the consent of the Master, not

later than one month after a final winding-up order has been made by a Court or a resolution

of the creditors' voluntary winding-up has been registered-

(a) summon a meeting of the creditors of the corporation for the purpose of-

(i) considering the statement as to the affairs of the corporation lodged with the

Master;

(ii) the proving of claims against the corporation;

(iii) deciding whether a co-liquidator should be appointed and, if so, nominating a

person for appointment; and

(iv) receiving or obtaining, in a winding-up by the Court or a creditors' voluntary

winding-up, directions or authorization in respect of any matter regarding the

liquidation; and

(b) summon a meeting of members of the corporation for the purpose of-

(i) considering the said statement as to the affairs of the corporation, unless the

meeting of members when passing a resolution for the voluntary winding-up of

the corporation has already considered the said statement; and

(ii) receiving or obtaining directions or authorization in respect of any matter

regarding the liquidation.

(2)(a) The provisions of the law relating to insolvency in respect of voting, the manner of

voting and voting by an agent at meetings of creditors, shall apply mutatis mutandis in respect

of any meeting referred to in this section: Provided that in a winding-up by the Court a

member or former member of a corporation shall have no voting right in respect of the

nomination of a liquidator based on his loan account with the corporation or claims for arrear

salary, travelling expenses or allowances due by the corporation, or claims paid by such

member or former member on behalf of the corporation.

(b) The provisions of paragraph (a) shall mutatis mutandis apply in respect of a person to

whom a right contemplated in that paragraph has been ceded.

79 Report to creditor and members

Except in the case of a members' voluntary winding-up, a liquidator shall, as soon as

practicable and, except with the consent of the Master, not later than three months after the

date of his appointment, submit to a general meeting of creditors and members of the

corporation concerned a report as to the following matters:

(a) The estimated amounts of the corporation's assets and liabilities;

(b) if the corporation has failed, the causes of the failure;

section 400(2) of the Companies Act, as applied by section 66 of this Act;

(d) whether or not any member or former member appears to be liable-

(i) to the corporation on the ground of breach of trust or negligence;

(ii) to make repayments to the corporation in terms of section 70(2) or (3) or section

71(1) or (2);

(iii) to either a creditor of the corporation or the corporation itself, as the case may

be, by virtue of any provision of Part VIII of this Act;

(e) any legal proceedings by or against the corporation which may have been pending at

the date of the commencement of the winding-up, or which may have been or may

be instituted;

(f) whether or not further enquiry is in his opinion desirable in regard to any matter

relating to the formation or failure of the corporation or the conduct of its business;

(g) whether or not the corporation has kept the accounting records required by section

56 and, if not, in what respects the requirements of that section have not been

complied with;

(h) the progress and prospects in respect of the winding-up; and

(i) any other matter which he may consider fit, or in connection with which he may

require the directions of the creditors.

80 Repayments by members or former members

The liquidator of the corporation unable to pay its debts-

(a) shall ascertain whether members or former members of the corporation are liable in

terms of section 70(2) or (3) to make repayments;

(b) shall ascertain whether circumstances justify and approach to the Master for a

direction that members or former members of the corporation make repayments in

terms of section 71(1) or (2);

(d) may, in the event of the death of such member or former member liable for or

directed to make a repayment, or of the insolvency of his estate, claim the amount

due from the estate concerned.

81 Duties of liquidator regarding liability of members to creditors or corporation

(1) The liquidator of a corporation unable to pay its debts shall ascertain whether, on the

facts reasonably available to him, there is reason to believe that any member or former

member of the corporation, or any other person, has by virtue of any provision of Part VIII of

this Act incurred any liability to a creditor of the corporation or to the corporation itself, as

the case may be.

(2) If the liquidator finds that there is such reason in respect of any creditor who has

proved a claim, he shall in writing inform such creditor accordingly, and if the creditor

recovers the amount of his claim or part thereof from such member or former member, or

from such other person, the liquidator shall take such recovery into account in determining

the dividend payable to the creditor.

(3) In particular the liquidator shall determine whether an application to the Court in terms

of section 64(1) is justified and avisable.

PART X

PENALTIES AND GENERAL (ss 82-83)

82 Penalties

(1) Any corporation or a member or officer of a corporation or any other person convicted

of any offence in terms of this Act, shall be liable to be sentenced, in the case of an offence

referred to-

(a) in section 52, 56 or 64, to a fine not exceeding N$8 000 or imprisonment for a

period not exceeding two years, or to both such fine and such imprisonment;

(b) in section 58, to a fine not exceeding N$4 000 or imprisonment for a period not

exceeding one year, or to both such fine and such imprisonment;

period not exceeding six months, or to both such fine and such imprisonment; and

(d) in section 16, 41 or 49, to a fine not exceeding N$1 000 or imprisonment for a

period not exceeding three months, or to both such fine and such imprisonment.

[Paras (a), (b), (c) and (d) substituted by sec 29 of Act 8 of 1994.]

(2) The Court convicting any such corporation, member, officer or person for failure to

perform any act required to be performed by it or him under this Act, may, in addition to any

penalty which the Court imposes, order such corporation, member, officer or person to

perform such act within such period as the Court may determine.

(3) Any person who, in respect of any offence under any provision of the Companies Act,

or of the Insolvency Act, 1936 (Act 24 of 1936), which is made applicable by any provision

of this Act, is convicted of any such offence under any such provision as so applied, shall be

liable to be sentenced to the penalties which are imposed in respect of any such offence by

any applicable provision of the said Companies Act or Insolvency Act, as the case may be.

83 Short title and commencement

This Act shall be called the Close Corporations and Act, 1988, and shall come into

operation on a date fixed by the Administrator-General by proclamation in the Gazette.