Week 5 - Corporate Formation & Dissolution Flashcards
what happens when a company is ring-fenced?
has restrictive MOI provisions and this gives outsiders constructive notice thereof
would an external / foreign company be required to register as a company in SA?
- foreign company carrying out business in SA – compelled to register with CIPC within 20 days after it begins conduct
- if party to employment contract in SA or has pattern of activities in SA over 6months = plans to continually engage in bus in SA
which provisions is a share block company subject to?
Companies Act
Share Block Control Act
what is a share block scheme?
a scheme ito which a share confers a right to / an int in the use of immovable property to the holder
purpose of a profit company?
financial gain
characteristics of a nonprofit?
- at least one of its obj must be public benefit or cultural/social activities
- may acquire and hold shares
- no financial benefit or profit except for public benefit, remuneration or compensation for expenses incurred when furthering objectives
composition of a nonprofit?
- min 3 directors
- no SH, only members (not entitled to assets)
- doesn’t need to have members, can be run solely by BoD
what must be in a private company’s MOI?
- prohibiting offering shares to public
- restricts share transfers (no secondary market)
what happens when transferring shares in a private comp?
- board must approve transfer, OR
- you must first offer them to existing SH and if they decline, you can sell (protects control of company)
what are the characteristics of PLC?
- same MOI as private company
- directors are jointly and severally liable for debts which arise during term of office (contract debts)
what are the SOC characteristics?
- owned and controlled by municipality or national executive or falls under Public Finance Mgmt Act
- provide g/s and are financed by taxes, levies
what is the NOI?
document filed with CIPC to inform them of the inc of a particular company so that it can be registered
information contained in the NOI?
- incorporator details
- directors
- RF provisions
- office addy
- details of secretary, auditor, members
- fin y/e of company
- proposed name
what’s in the MOI?
- rights duties resp of SH, directors, etc in relation to company
- key features of company
how many ppl to incorporate?
- 1 for profit (may be organ of state)
- 3 for NPC (may be JP, org of state)
what will the business file with CIPC when wanting to inc?
NOI, prescribed fee, a copy of the MOI
prescribed forms for MOI?
long and short
- so that legal expertise and knowledge is not needed for designing an MOI unique to company
long form?
detailed provisions which can be customized
what does the CIPC do when it receives the NOI?
- assign unique reg number w company
- determine if name is compliant with laws
- if no probs, enter info into comp register
- endorse the NOI and MOI copy with it
- issue reg certificate to be delivered to company
requirements for words in name?
- each word must be expressed using the alphabet that is commonly used for writing in any official SA language
- numbers = words or numerals (Arabic, Roman)
- dates must be in words or Arabic numerals
if words not in a language that is one of the official SA languages?
must either have certified translation of words or declare that words represent a TM the company is legally allowed to use
if NOI fails to meet name requirements?
CIPC will still register them using its registration number and providing it a unique identity that will enable it to function as a JP
failing to include name with suffix?
can be considered abuse of sep leg personality and can render directors personally liable in certain cases
prohibited names?
- confusingly similar to another
- confusingly similar to name that has been defensively registered
- name which another person holds IP rights ito of Bus Names Act, TM Act or Merch Marks Act
the comapny name may not falsely imply suggest as would reasonably mislead a person to believe incorrectly that the company is?
- assosicated w another person
- is an org of state
- owned managed conducted by a person with a specific educational designation
- enjoys patronage of gov/head of state
offensive symbols in name?
- war propaganda
- violence incitement
- advocacy of hate
- incitement of harm
how can a name be reserved?
- file an application, pay prescribed fee
- reserve with CIPC, meet requirements
- may expire after 6 months and can be renewed at 60 days at a time (with adequate reason)
can a reservation be transferred?
- yes, only while it is reserved, subject to fees; file notice of transfer
- will need to provide evidence of direct interest in the name
defensive reservation?
- may be done to prevent the name from being used by another company while preparing for corporaton, or with a view to change existing name. must be reserved with intention to use, not sell.
- can also be registered not reserved
- two years and extensions by two years
- will need to provide evidence of direct interest in the name
commission MAY reject NOI if?
incomplete, not properly completed
comm MUST reject if?
- fewer directors than required
- reasonably believes the directors are disqualified and remaining are too few
if name has no abbr?
company will alter the name
if same name as other comp / name is reserved?
use reg no as interim name and invite comp to file amended MOI
if name confuses/misleads?
- notify persons affected
- refer to tribunal
if name incites violence?
refer to human rights comm
choose to refer to tribunal
what is a promoter?
helps with pre-inc contracts and enters into them on behalf of the business. undertakes to form a comp with ref to a given project and to set comp going.
when is promoter liable?
- if comp not inc
- if comp rej
which section regulates pre-inc contracts?
section 21
section requirements for PIC?
- PIC must be in writing
- entered into pre-inc
- between 3P and promoter on behalf of comp
- intends for comp to be bound when it exists
- comp only bound by raitification (has 3 months post inc to reject/rat; if neither = deemed rat)
which Comp act for winding up comps?
solvent = 2008 insolvent = 1973
definition of insolvent countries?
can’t pay its debts within 3 weeks of demand or failing to satisfy warrant of execution
how can the winding up be voluntarily initiated?
- special resolution
- security to master for pmt of debts within 12 months of commencement of winding up
- consent from master to dispense with security
how the liquidator works?
- master appoints
- creditors may nom, but master can decline and remove if not satisfactory
- oversses process and will draw up accounts to ensure cred are paid
- entitled to reasonable rem.
who can court order a wind up?
- comp = resolution and asks court (voluntary)
- business rescue practitioiner = can’t rescue bus
- creditor = jsut and equitable to windup
- directors/SH = deadlock in mgmt / just+equ
- SH = fraud, illegal actions
