Companies

G.P.MVUBU

A company is a legal entity which is

incorporated in terms of the Companies Act (71 of 2008), (which is also known as “the Act”.It is an entity which exists individualistically of its own, the shareholders. The company as an entity is not physically observable, but the community is alert of the existence of the company. The company partakes in legal intercourse by means of governing bodies.

Definition

In 2005 the South African corporate law

reform progamme was introduced by the department of Trade and Industry and resulted in short-term amendments to the Companies Act (71 of 2008) which was signed by the President and promulgated in the Government Gazette (No 32121) on 8 April 2009. The new Companies Act together with the Regulations of 2011 came into effect on 01 May 2011

The company act (71 of 2008)

The purpose of the act

The purpose of the Companies Act

(71 of 2008)

To promote compliance with the Bill of Rights

To promote development of the

South African economy

To encourage the effecient and responsible managenent of companies

To promote innovation and investment in South African

markets

Non-profit company is a

That is incorporated for public benefit, or whose object is related to cultural or social activities or communal or group;

Whose income and assets are applied to advance its stated objects in the memorandum of incorporation; and

Which might not , directly or indirectly , handover any of its assets or pay any of its income to its members or directors (except as reasonable remuneration for services rendered )

According to the companies act (71 of 2008) two types of companies may be formed and

incorporated, namely profit and non-profit companies

A profit company is a company for the purpose of financial gain for its shareholders and can compromise the following four types of companies: A state-owned company is a company that: Falls within the meaning of a state-owned enterprise in

terms of the Public Finance Management Act; or It is owned by the government A private company It is not state-owned; and Through its Memorandum of Incorporation

Profit companies

A public company A public company is a profit making

company that is not a state-owned company, a private company or a personal liability company.

It is a company that is permitted to sell its registered securities to the general public. Also referred to as a "publicly-traded company."

A personal liability company

this is a company that meets the criteria for a private company (its Memorandum of Incorporation prohibits the offering of its securities to the public and also restricts the transfer thereof);and

stipulates in the Memorandum of Incorporation (MOI) that it is a personal liability company

The directors and the past directors are liable for the company’s debts.

Profit companies cont.…

Type of company Name mist end with

Personal liability company

Incorporated or Inc.

Private company Proprietary Limited or (Pty)Ltd

Public company Limited

State-owned company SOC Ltd

Non-profit company NPC

Company names

•A company name must compromise words in any of the official languages•A company’s name must depend on the type of company, end with:

Registration of companies

One or more persons may incorporate a profit company, by: Completing and each signing , in person or by proxy , the

Memorandum of Incorporation ;and Filling a note of incorporation (NOI) The Commission for Companies and Intellectual Property will

assign the company a registration certificate to the company. The registration certificate is conclusive evidence that all requirements for incorporation have been complied with and that the company is incorporated.

If the name of the company stated in the NOI is already in use, the Commission will register the company under its registration number as the interim name.

Incorporation and registration

The Memorandum of Incorporation

The Memorandum of Incorporation can be in a standard format or it can be in any format unique to the company.

The memorandum of Incorporation may

include provisions dealing with matters the Act does not address, or alter alterable provisions;

Impose a higher standard or more onerous provisions than required by the unalterable provisions;

not include provisions tha negate ,limit or or alter the effect of unalterable provisions

Any provision of the MOI that is not consistence with the

Act is void.The board of a company may make, amend or repeal rules

to the governance of the company, which are not addressed in the Act, by publishing a copy of the rules

required by the MOI and filling a copy of the rules with the Commission

The MOI and ant rules of the company, are binding

between:

The MOI,and any rules of the

company, are binding between ;

The company and its members of the audit

committe

The company and its shareholder

The shareholders

The company and its directors

A court order; The board ,regarding changes made to the

company’s shares (changing the authorized shares and their rights)

By a special resolution

The MOI can be amended by:

No action of the company is void because the MOI limited or such action, or because the directors had no authority to authorize the

action. The aforementioned does not apply to legal proceedings between the company and its

shareholder, directors, and officers. A person who conducts a business with a company ,except for a director, officer or

shareholder is entitled to presume the company’s action complied with the Act, its MOI and the rules of the company , unless the person knew or in all fairness should have known of any

neglect by the company to comply.A person is not, solely by reason of being a shareholder or director, liable for any of the

liability or obligation of the company, except to the extent provided for in the Act or the MOI.

The nature of the company and its name; the authorized share capital; the issuing of debenture; shareholders meeting; Directors and officers.

A MOI inter alia deals with:

Companies Act (71 of 2008) Marx, Van der Watt and Bourne (2012) Dynamic

Auditing, Chapter 2, Tenth Edition (Durban LexisNexis) Delport P (2011) The new Companies Act Manual

Including Close Corporations and Partnerships, Second Edition (Durban LexisNexis).

REFEREENCES