Private company Flashcards
Name of private company
The company’s name ends with letters (PTY) Ltd.
Number of owners of private company
Minimum of one shareholder required and no limit to the number of shareholders
Management of private company
Managed at least by one competent highly skilled director
Capacity of private company
There’s no limit to the number of shareholders, it can lead to expansion
Legal requirements of private company
Register with the registrar of companies by setting memorandum of incorporation (MOI)
Liability of private company
Shareholders have limited liability and only lose their initial capital invested if the business goes bankrupt
Legal personality of private company
The business has a legal personality
Continuity of private company
Unlimted continuity
Capital of private company
Capital raised by issuing shares to its shareholders. Investors then earn profits from shares
Profit sharing of private company
Profits are shared in the form of dividends in proportion to the number of shares held
Taxation of private company
Pay tax on the profits of the business and declared dividends of shareholders
Advantages of private company
Limited liability
Legal personality and continuity
No AMG necessary
Disadvantages of private company
Complex establishment process
Can only rely on capital contributed from shareholders
Subject to double taxation
