FAQ
Companies FAQ
What are the types of companies that can be registered in terms of the New Companies Act 71, 2008?
- Private company (Pty) Ltd
- Public company (Ltd)
- State-owned company (SOC)
- External company
- Personal liability company (Inc)
- Non-profit company (NPC)
What is a private company?
Private companies are comparable to companies of the same status under the Companies Act, 1973 and are characterised by the following:
- They are subject to fewer disclosure and transparency requirements.
- A private company will still be prohibited from offering its shares to the public and the transferability of its shares will be restricted, but it may now have more than 50 shareholders.
- The name of a private company must end with the expression “Proprietary Limited” or its abbreviation “(Pty) Ltd”.
- The board of a private company must comprise at least one director, or any other minimum number as stipulated in its MOI. Each incorporator is a first director of the company.
What is a public company?
Public companies are comparable to companies of the same status under the Companies Act, 1973. They are characterised by the following:
- Their MOI permits them to offer shares to the public but restricts limits or negates their right of preemption.
- The name of a public company must end with the word “Limited” or its abbreviation, “Ltd”.
- A public company must have at least three directors.
What is a state-owned company (SOC)?
State-owned companies were often incorporated or registered under the Companies Act, 1973 but were not recognised in that Act as requiring separate legislative treatment in respect of certain matters to avoid conflict or overlap with other legislation specifically applicable to them, and not to companies. An SOC is either a company defined as a “state-owned enterprise” in the Public Finance Management Act 1 of 1999 or is owned by a municipality as contemplated in the Municipal Systems Act 32 of 2000 and is otherwise similar to an enterprise as referred to above. The name of a state-owned company must end with the expression “SOE Ltd”.
What is an external company?
An external company is a foreign company that is carrying on business or non-profit activities within the Republic. It must register with the Companies and Intellectual Property Commission (CIPC) within 20 business days after it first begins to conduct activities within the Republic as an external non-profit company (NPC) or as an external company.
What is a non-profit company?
A non-Profit Company is a company that is incorporated for a public benefit or other object as required by Item 1(1) of Schedule 1 of the Companies Act. Its income and property are not distributable to its incorporators, members, directors, officers or persons related to any of them, except as reasonable compensation for service rendered. Three (3) persons and 3 directors may form an NPC.
- They are incorporated for a “public benefit purpose”.
- Income and property may not be distributed to the incorporators, members, directors or officers of a non-profit company, except for reasonable compensation for services rendered by them.
- The name of a non-profit company will end with “NPC”.
- A minimum of three persons, called incorporators, must complete and sign the MOI.
- A minimum of three directors must be appointed.
- All of a non-profit company’s assets and income must be used to advance its stated objectives, as set out in its MOI.
- Non-profit companies are subject to a varied application of the Act, as set out in section 10.
A special set out fundamental rules for non-profit companies is set out in Schedule 1 of the Companies Act, 2008. According to these rules, the objects of non-profit companies remain subject to the current principles. Furthermore, on their dissolution, non-profit companies are restricted in terms of the distribution of any residual assets. These special rules also include various other matters unique to non-profit companies.
What is a personal liability company?
A personal liability company is comparable to companies contemplated in section 53(b) of the Companies Act, 1973. Its name must end with the word “Incorporated” it meets the criteria for a private company, and its MOI provides that the directors and past directors are jointly and severally liable, together with the company, for any debts and liabilities of the company that were contracted during their respective terms of office.
Close Corporations FAQ
Can I register a new close corporation (CC)?
No, after the implementation of the new Companies Act (Act 71 of 2008) no new CC can be registered and no conversions from Companies to CC’s will be allowed. However, the existing CC’s will be maintained, and we are still able to assist our clients with shelf CCs.
How do I change the name of my CC?
The said amendments can be made upon lodgement of a CK2 form. All the proposed amendments will have to be reflected on the CK2 form, we at KBM Secretarial will assist you with this.
How do I go about making amendments to the existing founding statement of a close corporation (i.e. members, accounting officers, financial interest, financial year end, addresses etc)?
The said amendments can be made upon lodgement of a CK2 form. All the proposed amendments will have to be reflected on the CK2 form, we at KBM Secretarial will assist you with this.
Can a trading name also be reflected on close corporation forms?
No, a trading name should not be reflected on the close corporation forms. The Close Corporations Act stipulates that the registered name and number, as allocated by the CIPC, must always be used.
Can all members of a close corporation be foreigners?
Yes, as long as the registered address of the close corporation and that of the accounting officer is in South Africa. Also important: If no identity document has been issued, a member or a foreign national should provide the following, stating:
- Date of birth, (also to be filled in on the form in place of the identity number)
- Reason why no identity documents can be supplied/which nationality they belong to.
- Expired passports are not accepted.
Can a close corporation or a company be a member of a close corporation?
No, only a natural person or an inter vivos trust/testamentary trust can become a member.
Who qualifies to act as an accounting officer of a close corporation?
The person should be a member of one of the following Accounting and Auditing professions (see section 60 of the Close Corporations Act 69 of 1984):
- The South African Institute of Chartered Accountants (SAICA)
- Auditors registered in terms of the provisions of the Auditing Profession Act, 2005(CA)
- The Southern African Institute of Chartered Secretaries and Administrators (ICSA)
- The Chartered Institute of Management Accountants (CIMA)
- The South African Institute of Professional Accountants (SAIPA)
- The IAC who have obtained the Diploma in Accountancy (IAC)
- The Association of Chartered Certified Accountants (ACCA)
- The Chartered Institute of Business Management (MCIBM)
- The South African Institute of Business Accountants (SAIBA)
- The South African Institute of Government Auditors (SAIGA)
How can a member be removed from a close corporation?
A court order will have to be obtained against the member who has to be removed in terms of section 36 of the CC Act.ofit companies.
Can a minor be a member of a close corporation?
Yes, if his parent or guardian consent to it. A minor is a person younger than 18 years. Consent is given on the CK2 form. The guardian signs on behalf of or with the minor but the details of the minor are recorded. The guardian should also indicate below his signature his full names and relationship to the minor.