topic 6: incorporation of companies Flashcards
(49 cards)
1
Q
principle?
A
- formation of a company is a right, not a privilege
2
Q
Reflected in 2008 Act?
A
minimal reguirements and formalities for formation of company
eg purposes
3
Q
S1 definition
incorporator?
A
person who incorporated the company
(founder)
4
Q
incorporator for profit company?
A
- only one person
or - organ of state
5
Q
incorporator of non-profit company?
A
- 3/ more persons acting in concert
- organ of state
or - legal person
6
Q
incorporator must?
A
- sign MOI
- automatically serve as first director until sufficient directors appointed/ elected
7
Q
procedure for incorporation?
A
- complete & sign MOI
- file Notice of Incorporation with copy of MOI
- pay prescribed fee
- incorporation of foreign company which becomes domesticated company: more or less same procedure
8
Q
S1 definition
notice of incorporation?
A
means the notice to be filed in terms of section 13 (1), by which the incorporation of a company inform the Commission of the incorporation of that company, for the purpose of having it registered
9
Q
NOI
Purpose?
A
to inform Commission of Incorporation of company for the purpose of having it registered
10
Q
NOI
certain prescribed information required by Act?
A
- company name
- initial directors
- registered office
- date of financial year end
11
Q
NOI
optional information (sec 85(4))?
A
company may file a notice of appointment as part of NOI
12
Q
NOI
Item 7?
A
If MOI contains S 15 (2)(b) or (c) provision ie restrictive conditions, then NOI must (s 13 (3)):
- contain prominent statement drawing attention to provision’s location in MOI
13
Q
After filing NOI, commission can?
A
Accept and register company, or reject and refuse to register the company
14
Q
Commission must reject NOI if?
A
- Sec 13 (4)(b)
- initial directors are less than prescribed
- commission reasonably believes that initial directors set out in NOI are disqualified and remaining directors are less than prescribed
15
Q
commission has discretion to reject NOI?
A
- if anything filed with it is incomplete/ improperly completed (sec 13 (4)(a))
- sec 6 (8): provision if substantially correct, can accept application
16
Q
registration of company after acceptance of NOI Commission must?
A
- sec 14 (1)
- assigning unique registration number to company
- entering prescribed information on company register
- endorse NOI & copy of MOI
- issue registration certificate and delivered to company (date = NB: date a company acquires juristic personality)
17
Q
registration certificate?
A
- conclusive evidence that (sec 14 (4))
- all requirements for incorporation of company have been complied with and company incorporated in terms of Act from date stated on certificate - registration of incorporation: a company acquires separate juristic personality (sec 19 (1))
18
Q
name of company?
A
- incorporators must bear in mind requirements for company name as set out in sec 11
- reason: name in NOI
19
Q
name of company
requirements?
A
- may be registration number of profit company, followed by (South Africa)
- must end with appropraite expression as in sec 11(3)(c)
- may consist of one or more words in any language together with letters, numbers, punctuation marks, certain symbols/ () used in a pair
- name may not be same as sec 11(2)(a) or confusingly similar to sec 11(2)(b)
- name may not falsely imply/ suggest/ mislead that company is sec 11 (2)(c)
- name may not include a word, expression/ symbol that constitutes sec 11(2)(d)
20
Q
name of company
passing off?
A
- in addition to act
- name must not constitute “passing off” (common law rule, may be able to register name but still prohibited from using due to passing off)
- person represents business is that of another/ that it is associated wiht the business of another ie false representation likely to induce a person to believe that goods/ services are those of another
21
Q
name of company
test for passing off?
A
- is there reasonable likelihood that the members of the public will be confused into believing that the business is that of or associated with the other?
- will it cause damages to an existing company?
22
Q
name of company
procedure (sec 14(2))?
A
principle: unacceptable name does not delay process of registration
- application to Tribunal within 3 months form receipt of notice (sec 160 (2))
- Act provides for review of Tribunal’s decision by court
- commission issues amended registration certificate and changes company’s name register
23
Q
name of company procedure
name not end with appropriate expression?
A
commission may insert it
24
Q
name of company procedure
name same as other company, but uses registration number as company number?
A
company invited to file amended notice (if acceptable name - new name entered in company register and amended registration certificatte issued)
25
# name of company procedure
name confusingly similar to name, trademark, mark or word or name implies non-existent association?
- commission orders applicant by written notice to serve copy to any person, because that person has an interest in the use of the name
- person receiving copy may apply to Companies Tribunal for determination and order whether name satisfies requirements of the Act
26
# name of company procedure
name unacceptable?
- commission refers application to SA Human Rights Commission
- SA HRC may apply to Tribunal for determination
27
# name of company procedures
company may change name?
- by amending MOI
- usaully by way of special resolution at shareholders meeting
- file Notice of Amendment
28
# name of companies
name reservation?
company may choose to reserve name for later use (sec 12 (1) - (8))
- resevation is optional
- applies to a newly formed company or existing company
- same requirements for names apply
- endures for 6 months and can be extended
- may be transferred, however, abuse not tolerated
29
# name of company
defensive names?
- company may also register defensive name (sec 12 (9) and (10))
- purpose: to prevent another company from using name
- company must show direct and material interest iro name
- endures for 2 years and may be renewed for further 2 years
30
# name of company
use of names (sec 32)?
- company must provide on demand to any person its full registered names or registration number
- prohibited from misstating name or registration number in manner that it would mislead or deceive
- person may not use company name or registration number in manner giving impression that person is acting on behalf of company (when person is unauthorised)
- company must have its name and registration number stated in legible characters in all notices and official publication
- company name must be reflected on share certificates (sec 51)
31
content of MOI?
- MOI = company's founding document
- every provision of MOI must be consistent with Act (sec 15(1)(a))
- void in so far as inconsistent/ contravenes Act (sec 15 (1)(b) - sec 6 (1))
- shareholders can enforce their rights ito MOI
- distinguish between alterable vs unalterable provisions
- certain provisions in MOI are compulsory
- company's MOI may be prescribed form and form unique to company
32
# MOI
alterable?
provision which expressly contemplates that "its effect on particular company may be negated, restricted, limited, quialified, extended/ otherwise altered in substance or effect by that company's MOI"
33
# MOI
unalterable?
provision "that doesn't expressly contemplate that its effect on any particular company may be negated, restricted, limited, quilified, extended/ otherwise altered in substance or effect by that company's MOI or rules"
34
# MOI
unalterable provisions?
- madatory provisions to be included in MOI and cannot be altered
- MOI may not contain provisions that negated, restricted, limited, quilified, extends the substance or effect of an unaltereable provisions
- may have more onerous requirements in MOI than required by Act
35
# MOI
alterable provisions
- set of rules which company can adopt or amend
- default rules
- usually rule will apply unless company alters it in MOI
36
MOI may also include?
- restrictive conditions applicable to company and additional requirements for amendment of condition
- provision prohibiting the amendment of any particular provision of MOI
37
if MOI includes sec 11(3)(b) provision?
2 requirements:
- name ends with (RF) - ring fencing: is intended to warn outsiders dealing with the company that there are special conditions contained in the memo which they should check
- NOI: promenet statement drawing attention to and refer to place in MOI
38
meaning of restrictive condition?
2008 Act: company has all of the legal powers and capacity of an individual, except to the extent that a juristic person is incapable of exercising any such power/ capacity or the company's MOI provides otherwise
- if power/ capacity dealing with company is limited = restrictive condition
39
if MOI includes sec 15 (2)(b)/ (c) provision?
any person dealing with company is regarded as having knowledge of provision if two conditions met (sec 19 (5)(a))
40
sec 19 (1)(b)?
from the date and time that the incorporation of a company is registered, as stated in its registration certificate, the company has all of the legal powers and capacity of an individual, except to the extent that a juristic person is incapable of exercising any such power
41
# MOI
amendment?
- MOI usually aended by special resolution
- special resolution must be proposed by board of directors or shareholders holding at least 10% of voting rights that may be exercised on the matter
- MOI may provide for other requirements/ may prohibit amendment
- NPC with no members: board of directors may amend MOI
- after amendment the company must file NOA and pay prescribed fee
42
MOI may also be amended by?
- court order: no special resolution required, only resolution by board of directors
43
board of directors in limited circumstances?
- authorised share capital and classification of shares as provided for in Act
- patent errors
- NPC with no members
44
# MOI
when does amendment take effect?
sec 16 (9) - later of:
- filing NOA with commission
- date set out in NOA
45
# MOI
remedies for shareholders who are prejudiced?
- if amendment has oppressive or unfairly prejudicial consequences/ unfairly disregards the interests of shareholders/ directors
- application to court
- if class rights of issued shares are amended: shareholder that was prejudiced may force company to buy back shares
46
# MOI
access?
- filed at Commission: any person may inspect on paymnet of prescribed fee
- copy of MOI at registered office of company
47
rules of the company (sec 15(3)-(5a))?
- board my make rules relating to the governance of teh company, unless MOI provides otherwise
- only iro matters not addressed in Act or MOI
- must be consistenet with Act and MOI
- may not be used to alter alterable provision of Act - can only be done in MOI
- board of directors publish rules
- file eith Commission
- if ratified: permanently binding
- if not ratified: lapses but acts of board still valid
48
shareholder agreements?
- act recognises shareholder agreements
- shareholders may enter into any agreement with each other concerning any matter relating to the company
- must be consistent with Act and MOI
- void to extent of inconsstency
49
status of MOI and rules?
MOI and rules binding between:
- company and every shareholder
- among shareholders
- company and every director, prescribed officer and member of committee of board of directors
- ie no outside apllication
