Formation of the Company Flashcards
What are the criteria for company names?
- may consist of words in any language
- symbols and punctuation marks are also allowed
- registration number can be the name of profit companies
- ‘RF’ must immediately follow the name of a company if its MoI contains any restrictive conditions
- private companies must end with ‘(Pty) Ltd’
- a personal liability company must end with ‘Inc’
- a public company must end with ‘Ltd’
- a state-owned company must end with ‘SOC Ltd’
- a non-profit company must end with ‘NPC’
Why are there restrictions on company names?
There are three reasons for restrictions on company names:
1) to protect owners and intellectual property
2) to protect the public from misleading names (no passing off or association)
3) to prohibit hateful or offensive names
How is a company name registered?
The Companies Commission will add any necessities omitted and create an interim name should your choice be invalid. This can stand or be altered by an amended NoI. Public companies may be issued with a compliance order, because they cannot have their registration number as their name. Where a name is confusingly similar, the Commission may ask that you prove grounds on which you have an interest in a particular company name. The Companies Tribunal deals with any names deemed to be offensive.
How can one change a company name?
Effected by special resolution in terms of Section 16. The same criteria apply. A change in the name does not effect legal proceedings.
Can a name be reserved?
A name may be reserved for later use either for a new company or for an amendment to an existing company. The Commission will reserve a name, so long as it is not already in use or reserved by another party, for a period of six months, and on good cause shown, for additional periods of 60 business days at a time. Reservations may also be transferred. Name squatting is not allowed, and abuse of this mechanism will not be tolerated. Defensive names are also permitted.
What must companies do with their names?
Companies are required to produce their name and registration on demand, and they are mandated to not deviate from their prescribed name and number.
What is the MOI?
Sets out the rights and duties of its shareholders. It is the sole governing document of the company. It contains certain unalterable provisions. These are designed to protect creditors and others dealing with the company. They can be made more onerous. Alterable provisions may be altered, or even restricted.
What does the MOI typically contain?
- ability to create rules
- meetings procedures
- composition of the board of directors
- compensation and indemnification of directors
What are restrictive conditions?
The MOI may prohibit the amendment of any of its particular provisions. Attention must be drawn to the prohibitions in the NOI. Hence, third parties are deemed to have been aware of the restrictive conditions. If ‘RF’ does not appear after the companies name however, then the third party may invoke the doctrine of constructive notice and have their contract enforced.
How are amendments to the MOI made?
May be amended at any time by means of a special resolution proposed either by the board of directors or by shareholders holding at least 10% of the voting rights. The MOI may stipulate different requirements. The motion may be adopted at a meeting, or by consideration, to be voted on in writing within 20 business days after receiving the resolution. It must be supported by 75% of the voting rights, or any other margin stipulated by the MOI. There must be a 10% margin between the special resolution and an ordinary resolution on any matter [s65]. A company must submit a Notice of Amendment as well as a required fee.
What is the correction of a patent error?
Where there is a patent error, the board of directors or an individual authorised to do so may publish a Notice of Alteration without seeking approval from shareholders.
What is the situation concerning translations?
A true and accurate translation of the MoI may be submitted, accompanied with a sworn statement of accuracy.
What is the situation concerning consolidations?
At any time or if required. Sworn statement by director, attorney or notary that true, accurate and complete up to date of statement.
Which version of the MOI prevails?
The original MOI prevails over translations and consolidations.
What are the rules of a company?
The MOI of a company takes precedence over its rules. A rule takes effect 10 days after it has been filed with the Commission. A rule must be ratified by an ordinary resolution at the next meeting. It is binding even if rejected in future. If rejected, no substantially similar rule may be made for 12 months. This is to prevent the abuse of the interim period.
