oa De Rebus - How trustworthy is a trading trust? : feature
When the close corporation structure was phased out, the reason given by the Department of Trade and Industry was that it was 'necessary to move away from the largely artificial separation between the different business forms [closed corporations and companies], to recognise only one formal business vehicle and to provide for a simple, easy company formation process' ('South African company law for the 21st century - guidelines for corporate law reform' GenN 1183 GG 26493/23-6-2004). The extent to which the new Companies Act 71 of 2008 provides for a cheaper, simpler incorporation process for small companies is, however, debatable. Those looking for alternatives may instead consider a trading trust. This was referred to by the court in Nieuwoudt and Another NNO v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA) as 'a newer type of trust' that has comparatively recently come into our law with the rise in popularity of the trust as an estate planning tool.
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