Chapter 3 - Types of Company Flashcards
Name two types of company
- Profit companies
- Non-profit companies
Name four types of entities that qualify as profit companies
- Public companies
- State-owned enterprises
- Personal liability companies
- Private companies
What is a domesticated company?
A foreign company whose registration has been transferred to South Africa. It is required to register with CIPC within 20 days after it begins to conduct business or non-profit activities in South Africa.
What is an external company?
A foreign company carrying on business or non-profit activities in South Africa. It must have at least one office in South Africa.
What is a non-profit company?
A company is incorporated for a public benefit or object other than financial gain for its shareholders. It must be formed by at least three persons, who will be the company’s first directors. It does not have to have members, and if these companies have members, some members may enjoy voting rights while others may not. The property and income are not distributed to its incorporators, members, directors, officers, or anyone related to any of them. Upon liquidation, income and assets must be paid over to another non-profit company, voluntary association, or trust with a a similar purpose.
What is a profit company?
A company incorporated for the purpose of financial gain for its shareholders. It can be incorporated by one or more persons, and there is no limit to the number of shareholders that it may have.
What is a state-owned company?
It is a company registered in terms of the Companies Act and is either listed as a public entity in Schedule 2 or 3 of the Public Finance Management Act or is owned by a municipality. It is obliged to appoint a company secretary, and it is obliged to appoint an audit committee.
What is a public company?
A profit company that can issue its shares to the public and whose shares can be listed on the JSE. its shares may be offered to the public and are freely transferrable. The company can be listed on JSE Limited. It can be formed by one person. It must have at least three directors. It is obliged to hold annual general meetings. It is obliged to appoint an auditor. It is obliged to appoint a company secretary.
It is obliged to appoint an audit committee.
What is a private company?
A profit company that prohibits the issue of shares to the public and restricts the transfer of shares in its Memorandum of Corporation. Private companies are no longer limited to 50 shareholders. It an be formed by one person, and it must have it least one director.
What is a personal liability company?
A profit company in which the directors and previous directors are held personally liable for the contractual debts of the company. It must meet the criteria for a private company. It is mainly used by professional associations. Its MOI must state that it is a personal liability company. The directors are jointly and severally liable, along with the company, for debts and liabilities contracted during their office term. It must be formed by one person. It must have at least one director. The doctrine of constructive notice applies in terms of Section 19(5) of the Companies Act.
What is a company secretary?
The person who is the chief administrative officer of the company.
What is the commission
CIPC, a juristic person that functions as an organ of state with which companies must be registered.
What are securities?
Tradable financial assets.
