Type of companies

Question 1

Discuss a private company?

Answer 1

A Profit Company is a private company if it is not a state-owned company; and its Memorandum of Incorporation prohibits it from offering any of its securities to the public; and restricts the transferability of its securities;
Section 1 of the Companies Act, reads
“private company” means a profit company that (a) is not a public, personal liability, or state-owned company; and [Para. (a) substituted by s. 1 of Act 3/2011] (b) satisfies the criteria set out in section 8(2)(b);
Min Director: 1

Question 2

Discuss Public Company?

Answer 2

Is a profit company, other than a private, personal liability or state owned company. E.g.
• Coca Cola Ltd

Shares are offered to the Public
The transferability of shares is not restricted (i.e. Its shares are freely transferable)
Can be a listed (e.g. on JSE) or unlisted company.
Members not liable for debts of the business (The concept of limited liability means that shareholders, in their capacity as such, are legally liable for the debts incurred by the company in ordinary circumstances.)
It must lodge financial statements with Registrar of Companies
The MOI must include provisions to the effect that shares may offered to the public and that the transferability of shares is not restricted.
Minimum 7 members.
No restriction as to the maximum number of shareholders
Minimum 3 directors

Question 3

Discuss Personal liability company ?

Answer 3

A Profit Company is a personal liability company if it meets the criteria for a private company; and its Memorandum of Incorporation states that it is a personal liability company. A personal liability company is mainly used by professional associations e.g. attorneys, accountants, engineers and doctors.
Incorporated” or “Inc”
The members invest the money in the business
Directors and past directors of the company are jointly and severally liable, together with the company, for debts and liabilities incurred by the company during their respective terms of office.
Note: If the company has already paid its debts, it has no recourse to the directors or past directors to reimburse the company.
The MOI must state that it is a personal liability company and include the special feature of the liability of directors.
No restriction as to the maximum number of shareholders
Min 1 director

Question 4

Discuss NPO

Answer 4

Not for profit companies are incorporated for a public benefit, the income and property of which are not distributable to its incorporators, members, directors, officers or persons related to any of them. The Act defines a non-profit company as follow:
Section 1 of the Companies Act, reads
“Section 1 Definitions “non-profit company” means a company-(a) incorporated for a public benefit or other object as required by item 1(1) of Schedule 1; and (b) the income and property of which are not distributable to its incorporators, members, directors, officers or persons related to any of them except to the extent permitted by item 1(3) of Schedule 1”

NPC”
It is incorporated for a public benefit or other object as required by item 1(1) of Schedule 1 and the income and property are not distributable to its incorporators, members, directors, officers or persons related to any of them except to the extent permitted by item 1(3) of Schedule 1
The MOI may provide for the company to have members
The MOI must have at least one object of public benefit.
Not required to have members, unless required by the MOI

Minimum 3 directors

Question 5

What is personal liability?

Answer 5

the fact of a person, rather than a company or organization, being legally responsible for something:
Under certain conditions, trustees can take out insurance against personal liability.