Chapter 4 - Registration of Companies

Question 1

What is a Memorandum of Incorporation?

Answer 1

The sole registration document of a company. it sets out the rights, duties, and responsibilities of shareholders, directors, and others within the company in relation to the company and other matters. Provisions in the MoI may be amended from time to time.

Question 2

What is a Notice of Incorporation?

Answer 2

The document filed with CIPC together with the MoI in order to show the company’s intention to register as a business

Question 3

What is an Alterable provision?

Answer 3

A provision of the Companies Act in which it is expressly contemplated that its effect on a particular company may be negated, restricted, or limited in terms of the company’s MoI.

Question 4

What is an Unalterable Provision?

Answer 4

A provision that may not be altered in substance in the MoI, except to impose a higher standard, greater restriction, longer period of time, or any similar, more onerous requirement than contained in an unalterable provision of the Companies Act.

Question 5

What is a Registration Certificate?

Answer 5

The document issued by the Commission when all formalities for registration are in order.

Question 6

What are company rules?

Answer 6

Rules that may be adopted by the board of directors after the incorporation of a company that enjoys the same legal status as the MoI.

Question 7

How does the Companies Act as per section 7(b) promote the development of the South African economy?

Answer 7

Through:

1. the creation of flexibility in the formation and maintenance of companies.
2. simplicity in the formation and maintenance of companies.
3. the encouragement of corporate efficiency.
4. the encouragement of transparency.
5. the predictable regulation of companies.

Question 8

What information is contained in the Notice of Incorporation?

Answer 8

1. Type of company
2. Incorporation date
3. Financial year-end
4. Registration address (main office)
5. Number of directors
6. Company name

Question 9

In what circumstances may the NoI be rejected by the Commission?

Answer 9

1. If it has not been completed in full.
2. If it has not been properly completed.

Question 10

In what circumstances must the NoI be rejected by the Commission?

Answer 10

1. If the initial number of directors is less than the prescribed minimum number.
2. Where, as a result of a director’s disqualification, the initial number of directors becomes less than the prescribed minimum number.

Question 11

What are the roles of the Commission after the NoI has been filed?

Answer 11

The Commission:
1. assigns a unique number to the corporation.

2. enters prescribed information regarding the company in the Companies Register.
3. Issues and delivers a registration certificate to the company if all the other requirements have been complied with.

Question 12

What information is contained in the Memorandum of Incorporation?

Answer 12

1. Details of the incorporators
2. The number of directors and alternate directors.
3. The share capital (maximum issued)
4. The content of the Memorandum of Incorporation.

Question 13

What are alterable provisions as per the Companies Act?

Answer 13

1. A company enjoys all the legal powers and capacity of an individual, except to the extent that a juristic person is incapable of exercising any such powers.
2. Private, non-profit, and incorporated companies may elect to comply with the extended accountability requirements of Chapter 3.
3. Shares within the same class have the same rights, limitations, and terms , unless the MoI provides otherwise.
4. The MoI may exclude the right of first refusal of current shareholders of a company in respect of shares issued by the company.
5. The MoI may forbid the board to render financial assistance to parties wanting to acquire shares in the company.
6. The MoI may provide for longer minimum notice periods for meetings.
7. Electronic notice and electronic participation in meetings are allowed unless the MoI prohibits it.
8. Companies may determine a higher number of minimum directors than that prescribed by the Companies Act.

Question 14

What is the legal status of the MoI?

Answer 14

The MoI and the rules are binding:

1. between the company and each shareholder
2. between and among the shareholders of the company.
3. between the company and each director or prescribed officer of the company.
4. between the company and any other person serving the company as a member of a committee.

Question 15

How can a Moi be amended?

Answer 15

1. In compliance with a court order
2. By the board in terms of section
   36(3) and (4).
3. By a special resolution of the shareholders.
4. In terms of the procedure set out in the company’s MoI.

Question 16

How can a MoI be Altered?

Answer 16

1. A notice of alteration must be published in accordance with the MoI and the rules.
2. A notice of alteration must be filed
3. A filing fee must be paid.