The Companies Act provides for 2 types of companies, namely –
- non-profit companies (the previous Section 21 companies); and
- profit companies, namely, private companies, personal liability companies, public companies and state-owned companies.
A non-profit company has a comparable status to a non-profit company under the old Companies Act, and
- is incorporated for a public benefit purpose or other object as required by Item 1(1) of Schedule 1 of the new Companies Act;
- its income and property may not be distributed to its incorporators, members, directors, officers or persons related to any of them, except as reasonable compensation for services rendered by them;
- the name of a non-profit company ends with “NPC”;
- to form a non-profit company, a minimum of 3 directos must be appointed and must complete and sign the Memorandum of Incorporation (MoI);
- its assets and income must be used to advance its stated objectives in its MoI;
- it is subject to the provisions of Section 10 and the fundamental rules set out in Schedule 1 of the new Companies Act;
- upon dissolution it is restricted in terms of the distribution of any residual assets.
A private company has the same status as a private company under the old Companies Act, and –
- is subject to fewer disclosure and transparency requirements;
- will be prohibited from offering its shares to the public and the transferability of its shares will be restricted;
- may have an unlimited number of shareholders;
- each incorporator is a first director of the company;
- it ends with “Proprietary Limited”, or its abbreviation “(Pty) Ltd”;
- its board of directors must comprise at least one director, or any other minimum number as stipulated in its MoI.
A personal liability company has the same status as a personal liability company formed in terms of Section 53(b) of the old Companies Act, and –
- its name ends with “Incorporated”;
- it shares the same criteria as a private company;
- its MoI provides that the directors and past directors are jointly and severally liable with the company for any debts and liabilities of the company that were contracted during each director’s respective term of office.
A public company has the same status as a public company formed under the old Companies Act, and –
- its MoI permits it to offer shares to the public;
- but restricts limits or negates its right of pre-emption;
- its name ends with “Limited”, or its abbreviation, “Ltd”;
- it must have at least 3 directors.
A state-owned company was often incorporated or registered under the old Companies Act, and –
- is either defined as a “state-owned enterprise” in the Public Finance Management Act 1 of 1999, or is owned by a municipality as per the Municipal Systems Act 32 of 2000;
- is similar to a private company;
- its name ends with “SOE Ltd”.