this is just a a short introduction on companiesT

1. G.P.MVUBU

2. Definition

 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.

3. The company act (71 of 2008)

 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

4. The purpose of the act


5. According to the companies act (71 of 2008) two types
of companies may be formed and incorporated, namely
profit and non-profit companies

 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 )

6. 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

7.  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."

8. Profit companies cont.…

 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.

9. 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:
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

10. Registration of companies


11. Incorporation and registration

 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.

12. 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.

13. 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

14. 
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

15. The MOI and ant rules of the
company, are binding between:


16. The MOI can be amended by:

 A court order;
 The board ,regarding changes made to the
company’s shares (changing the authorized shares
and their rights)
 By a special resolution

17. 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.

18. A MOI inter alia deals with:

 The nature of the company and its name;
 the authorized share capital;
 the issuing of debenture;
 shareholders meeting;
 Directors and officers.

19. REFEREENCES

 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).