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2022 - Company Law > Week 5 - Corporate Formation & Dissolution > Flashcards

Week 5 - Corporate Formation & Dissolution Flashcards

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1
Q

what happens when a company is ring-fenced?

A

has restrictive MOI provisions and this gives outsiders constructive notice thereof

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2
Q

would an external / foreign company be required to register as a company in SA?

A
  • 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
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3
Q

which provisions is a share block company subject to?

A

Companies Act

Share Block Control Act

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4
Q

what is a share block scheme?

A

a scheme ito which a share confers a right to / an int in the use of immovable property to the holder

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5
Q

purpose of a profit company?

A

financial gain

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6
Q

characteristics of a nonprofit?

A
  • 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
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7
Q

composition of a nonprofit?

A
  • min 3 directors
  • no SH, only members (not entitled to assets)
  • doesn’t need to have members, can be run solely by BoD
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8
Q

what must be in a private company’s MOI?

A
  • prohibiting offering shares to public

- restricts share transfers (no secondary market)

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9
Q

what happens when transferring shares in a private comp?

A
  • board must approve transfer, OR

- you must first offer them to existing SH and if they decline, you can sell (protects control of company)

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10
Q

what are the characteristics of PLC?

A
  • same MOI as private company

- directors are jointly and severally liable for debts which arise during term of office (contract debts)

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11
Q

what are the SOC characteristics?

A
  • owned and controlled by municipality or national executive or falls under Public Finance Mgmt Act
  • provide g/s and are financed by taxes, levies
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12
Q

what is the NOI?

A

document filed with CIPC to inform them of the inc of a particular company so that it can be registered

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13
Q

information contained in the NOI?

A
  • incorporator details
  • directors
  • RF provisions
  • office addy
  • details of secretary, auditor, members
  • fin y/e of company
  • proposed name
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14
Q

what’s in the MOI?

A
  • rights duties resp of SH, directors, etc in relation to company
  • key features of company
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15
Q

how many ppl to incorporate?

A
  • 1 for profit (may be organ of state)

- 3 for NPC (may be JP, org of state)

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16
Q

what will the business file with CIPC when wanting to inc?

A

NOI, prescribed fee, a copy of the MOI

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17
Q

prescribed forms for MOI?

A

long and short

- so that legal expertise and knowledge is not needed for designing an MOI unique to company

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18
Q

long form?

A

detailed provisions which can be customized

19
Q

what does the CIPC do when it receives the NOI?

A
  • 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
20
Q

requirements for words in name?

A
  • 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
21
Q

if words not in a language that is one of the official SA languages?

A

must either have certified translation of words or declare that words represent a TM the company is legally allowed to use

22
Q

if NOI fails to meet name requirements?

A

CIPC will still register them using its registration number and providing it a unique identity that will enable it to function as a JP

23
Q

failing to include name with suffix?

A

can be considered abuse of sep leg personality and can render directors personally liable in certain cases

24
Q

prohibited names?

A
  • 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
25
Q

the comapny name may not falsely imply suggest as would reasonably mislead a person to believe incorrectly that the company is?

A
  • 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
26
Q

offensive symbols in name?

A
  • war propaganda
  • violence incitement
  • advocacy of hate
  • incitement of harm
27
Q

how can a name be reserved?

A
  • 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)
28
Q

can a reservation be transferred?

A
  • yes, only while it is reserved, subject to fees; file notice of transfer
  • will need to provide evidence of direct interest in the name
29
Q

defensive reservation?

A
  • 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
30
Q

commission MAY reject NOI if?

A

incomplete, not properly completed

31
Q

comm MUST reject if?

A
  • fewer directors than required

- reasonably believes the directors are disqualified and remaining are too few

32
Q

if name has no abbr?

A

company will alter the name

33
Q

if same name as other comp / name is reserved?

A

use reg no as interim name and invite comp to file amended MOI

34
Q

if name confuses/misleads?

A
  • notify persons affected

- refer to tribunal

35
Q

if name incites violence?

A

refer to human rights comm

choose to refer to tribunal

36
Q

what is a promoter?

A

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.

37
Q

when is promoter liable?

A
  • if comp not inc

- if comp rej

38
Q

which section regulates pre-inc contracts?

A

section 21

39
Q

section requirements for PIC?

A
  • 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)
40
Q

which Comp act for winding up comps?

A 
solvent = 2008
insolvent = 1973
41
Q

definition of insolvent countries?

A

can’t pay its debts within 3 weeks of demand or failing to satisfy warrant of execution

42
Q

how can the winding up be voluntarily initiated?

A
  • special resolution
  • security to master for pmt of debts within 12 months of commencement of winding up
  • consent from master to dispense with security
43
Q

how the liquidator works?

A
  • 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.
44
Q

who can court order a wind up?

A
  • 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

2022 - Company Law (13 decks)

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