There are different Types of Companies that can be registered.

The Two main types of companies that may be incorporated under the Act, are

A) NON-PROFIT Companies and,
B) PROFIT Companies

A) NON-PROFIT Companies (NPC) :
•A company incorporated for public benefit or other object relating to one or more cultural or social activities, or communal or group interests; and
•The income and property of which are not distributable to its incorporators, members, directors, officers or persons related to any of them.

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.
•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.

B) PROFIT Companies may be incorporated under the following types:

•Private Companies
•Public Companies
•Personal Liability Companies
•State Owned Companies


1) Private Companies (Pty) Ltd - What is a Private Company?

The name of a private company must end with the expression “Proprietary Limited” or its abbreviation “(Pty) Ltd”.

A Private Company is a separate legal entity distinct from its shareholders. A private company is liable for its debts and creditors cannot sue the shareholders for the payment of these debts. . A private company are no longer limited to 50 members as was the case under the current Companies Act. Other companies and CCs can hold shares in a company, which is an advantage over a CC, which cannot have a company as a member. There is a slight advantage to writing (Pty) Ltd after your company's name because it will be perceived to have a more stable and established image.

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

Private companies under the new Act are prohibited to offer securities to the public and the transferability of their shares are also restricted.

But there are many disadvantages, like e.g. the structure of a private company is more complex than a CC, because it must have separate ownership and management. The shareholders own it and the board of directors manages it.

The decision making process is complex because there are prescribed general meetings, notice periods and formalities for the passing of resolutions. The law & new act requires a company to audit its books once a year by a registered Auditor or Accountant. This can run into thousands of rands every year, depending on the size of the company.

The law strictly governs the conduct and duties of company directors and officers. For example, not keeping minutes of board meetings or not holding an annual general meeting is illegal. If you are going to register a company, make sure that you are aware of all the legal requirements that must be complied with.

2) Public Companies (Ltd) - What is a Public Company?

A Public company under the new Act, only requires one member for incorporation compared to the 7 members under the current companies Act.

A Public Company is a company that wishes to raise capital from the public and shares are easily transferable. Many public companies are listed on the Stock Securities Exchange where their shares are traded in large volumes every week day. They are called listed companies.

Examples include the following Sasol, Anglo America , Old Mutual, Pick and Pay and Richemont.
Many foreign-owned or multinational companies also operate in South Africa these include Shell, Microsoft , Siemens and BMW.

Personal Liability Companies (Inc) - What is a personal liability company?

The directors and past directors (where applicable) of such companies are jointly and severally liable together with the company for any debts and liabilities arising during their periods of office.

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.

A personal liability company must meet the criteria for a private company, and its Memorandum of Incorporation should state that it is a personal liability company. If a company is a personal liability company the directors and past directors are jointly and severally liable, together with the company, for any debts and liabilities of the company as are or were contracted during their respective periods of office (clause 19(3)). The board of a personal liability company must comprise at least one director. As is the case with a private company, a personal liability company is not required to comply with the extended accountability requirements set out in Chapter 3, except to the extent that the company’s Memorandum of Incorporation provides otherwise.

3) State-Owned Companies (SOC Ltd) What is a State owned company?

A State owned company is either a company defined as a “state-owned enterprise” in the Public Finance Management Act 1 of 1999 or a company owned by a municipality. The majority of the provisions of a public company will apply to state-owned companies as well.

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 1of 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”

4) Foreign and External Companies

A foreign company is a company incorporated outside of South Africa , irrespective of whether it is a profit or non-profit company or carrying on business in South Africa or not. A foreign company is prohibited from offering securities to the South African public unless it follows the specific provisions of the companies Act, relating to offers to the public.

A foreign company is required to register as en “external company” with the CIPC if it conducts or intends to conduct business in South Africa. The Companies Act in terms of Sect 23 lists a series of activities which will be regarded as conducting business. This list is much broader than the provision in the 1973 Companies Act relating to a “place of business” in South Africa.

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