The Companies Act Decoded for Financial Managers!
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Find out all your rights, responsibilities and obligations before you find yourself on the wrong side of the law.
for more information.
Know the two company categories in SA to name your company correctly during registration
The Practical Accountancy Loose Leaf Service
explains that the two types of companies in SA are:
#1: Non-profit companies
, for example, your local tennis club.
#2: Profit companies
, for example Edgars, Pick 'n Pay, Tiger Brands, and
What you need to know is profit companies divide into four groups:
Private Company – The Companies Act says that private companies have to have 'Proprietary Limited or (Pty) Ltd' after their name. If you run this type of company, you can't offer shares to the public or transfer shares in a way that your Memorandum of Incorporation (MOI) doesn't allow.
Public Company – A public company must have 'Limited or Ltd' after its name. It can be listed or unlisted on the JSE. Examples include SABMiller and Anglo Gold Ashanti.
Personal Liability Company – This is a form of private company that professionals like doctors, auditors or lawyers use. In this company, directors are jointly and severally liable for any company debts. The company must have 'Incorporated or Inc.' after its name.
State Owned Company – These are companies the government owns. They serve a specific government or public purpose. Examples include Johannesburg Water, Telkom, etc. State owned companies must have 'SOC Ltd' after their names.
When it comes to non-profit companies, here's what you need to know
Non-profit companies have to have NPC behind their names.
They're for a public benefit in that they help communities. If they make any profit, they put it back into the company, rather than distributing it to shareholders.
When it comes to tax, non-profit companies get preferential treatment.
On its website, SARS explains that the preferential tax treatment for non-profit companies isn't automatic. Your company must first meet the requirements set out in the Income Tax Act.
And then apply to its Tax Exemption Unit for exemption from tax.
The bottom line: The way you name your company must comply with the Companies Act. Now that you know the categories companies in SA fall into, name your company correctly when you register it so you can avoid SARS penalties.
PS: For more information on company registration
, check out the Practical Accountancy Loose Leaf Service.