Rising liquidations: Are South Africa's close corporations in crisis?
Close corporations form the backbone of South Africa’s small business landscape and are particularly vulnerable to economic shocks.
Image: Ron | IOL
South Africa recorded a rise in liquidations in June, with the latest data from Statistics South Africa showing that the total number of businesses that closed their doors increased by 7.4% compared to the same month last year.
According to the report, 130 liquidations were registered in June 2025, up from 121 in June 2024. The number of company liquidations increased by eight cases over the period while close corporation liquidations rose by one.
While the month-on-month rise signals renewed pressure on businesses, the second quarter of 2025 painted a more moderate picture, with liquidations up by only 1.6% compared to the second quarter of 2024. Over the first half of the year, the trend remained slightly downward, with liquidations falling by 0.8% when compared with the same period in 2024.
Statistics South Africa’s data shows that close corporations, which are mostly smaller businesses, remain under strain across several key industries. Trade, catering and accommodation accounted for the highest number of liquidations in June, with 19 businesses closing down, nearly all of them voluntarily. The financing, insurance, real estate and business services sector followed closely, with 17 liquidations, again dominated by voluntary closures.
Construction and manufacturing, two sectors often seen as barometers of broader economic health, saw five and three liquidations respectively. Smaller numbers were recorded in community, social and personal services as well as in unclassified industries. Agriculture, mining and utilities saw no closures at all during the month.
The data highlights that the majority of liquidations are voluntary, not compulsory, suggesting that many owners are choosing to wind up their businesses rather than being forced into liquidation by creditors. This may point to entrepreneurs cutting their losses early, particularly in sectors where operating margins have been squeezed by weak demand and rising costs.
Although June’s figures are concerning, the broader trend over the first half of the year is less severe, which could indicate that the spike may be temporary rather than the start of a sustained upward trajectory in business failures. However, the concentration of closures in trade, hospitality and financial services does underline the fragility of some of South Africa’s most important small business sectors.
Close corporations form the backbone of South Africa’s small business landscape and are particularly vulnerable to economic shocks. If the June uptick proves to be more than a one-off, it could have wider consequences for employment, local supply chains and confidence in the small business sector.