Paper 3: Business enterprises (companies, trusts and partnerships) Flashcards
List the forms of profit companies that can be formed and incorporated in terms of the Companies Act
(1) state owned
(2) private
(3) personal liability
(4) public company
what types of companies can be incorporated under the companies act?
profit companies - soe, priv, pers liab, pub
non- profit company (incorporated for public benefit or other object), similar to the s21 company
Mr A, who is shortly going overseas, wishes to incorporate a private company with a specific name which company is to take transfer of a business stand which is currently registered in his own name.
- list the documents which he must sign in order for you to incorporate a private company with CIPC?
- application to reserve a name COR 9.1
- Notice of incorporation COR 14.1
- Memorandum of Incorporation
- Power of Attorney
Mr A, has been out of the country for a year, wishes to incorporate a private company with a specific name which company is to take transfer of a business stand which is currently registered in his own name. - what other documents beside the CIPC documents must be lodged with CIPC?
- certified identity copy of applicant
- certified identity copy of incorporators and directors
- power of attorney
Mr A, who is shortly going overseas, wishes to incorporate a private company with a specific name which company is to take transfer of a business stand which is currently registered in his own name. You explain to Mr A, that he can now sign the deed of sale relating to the stand as Seller and also as trustee for a company to be incorporated, as purchaser. What steps would be required thereafter to arrive at a valid deed of sale?
Within 3 months after the date on which the company was incorporated, the board of directors of the company must ratify the pre-incorporation contract.
If the board of directors has neither ratified nor rejected the agreement within 3 months from the date of incorporation, the company will be regarded as having ratified the agreement.
Mr A wishes to enter into a deed of sale on behalf of a company not yet incorporated (as purchaser).Describe the purchaser.
Peter Peterson ("Petersen")
in my capacity as trustee for a company about to be formed (the "Purchaser")Mr A wishes to enter into a deed of sale on behalf of a company not yet incorporated (as purchaser). Draft a clause dealing with failure of such company to ratify the agreement.
Failure of ABC (Pty) Ltd to ratify agreement
If, within 21 (twenty-one) days from the date of signature of this agreement, the buyer has not yet been incorporated, or having been incorporated has failed for any reason to adopt this agreement, then Peterson will be deemed to be the buyer in terms of the agreement.
Mr X enquires whether he can sign on behalf of a trust or company which does not exist yet - explain at which stage a proposed trustee will be able to act on behalf of a trust?
It is not possible to sign for a trust still to be established. After the trust is created, the trustee must first receive letters of authority/ appointment to act.
Mr X enquires whether he can sign on behalf of a trust or company which does not exist yet, draft a clause that would protect the seller if he should agree that the purchaser may sign on behalf of a private company not yet incorporated?
If, within three months from the date of incorporation of the company, the buyer has not been incorporated, or having been incorporated has failed for any reason to adopt this agreement, then A will personally be deemed to be the buyer in terms of the agreement.
Mrs A has been advised by her accountant to create a trust for the benefit of her minor children. Explain how a trust is established or created?
An inter vivos trust is created by the founder executing a trust deed before a notary public.
Mrs A has been advised by her accountant to create a trust for the benefit of her minor children. Which parties must be identified as being involved in the trust?
The trust deed should identify the founder, the trustees and the beneficiaries (in respect of income and capital), the parties may overlap.
Where and how is a trust formally registered and what are the required documents?
A trust must be registered with the Master of the High Court in the area in which the founder resides:
(1) Trust deed in duplicate
(2) the prescribed fee
(3) Security by the trustee or exemption by the Master
(4) Acceptance of the Trust by the trustee
(5) consent to act of an auditor
(6) name of bank where the trust will operate its account
(7) name and address of persons who will keep records of the trust
where and how does one register for a private for-profit company
Registered in terms of the Companies Act, 71 of 2008
- by one or more persons (s 13(1))
- by completing and signing a notice of incorporation (s13 , rule 14) in the prescribed form (COR 14.1)
- lodging this with CIPC
- together with an MOI (s13 (2)(b), Rule 15)
In the form of forms - COR 151(A) or 151(B) or any unique form of compliance with s15
why could it be beneficial to conduct business as a juristic person rather than as a sole proprietor or partnership?
The benefits of conducting a business in corporate form rather than as a sole proprietor or partnership, are:
(1) continuity (survives death of individuals)
(2) avoiding personal liability
(3) sound regulatory and governance system
(4) possible tax benefits
(5) beneficial in avoiding sequestration
what are the essential matters on which parties must agree in order to create a valid partnership?
The purpose must be to conduct business, in order to earn/ generate profits, each partner must contribute to the partnership and share in the profits and losses.
