Summaries
Summaries
Companies Act
Mokgomotsi’s Simplified Note + Exam Approach
, AUDITING NOTES
LEGISLATION (THE COMPANIES ACT)
NB: This Documents is drafted focusing only the Sections you need to know according to
the SECOND SEMESTER 2025 WORK-PROGRAMME and not the SLIDES, therefore note
that some Sections can be on the Slides but not on the Work-programme, also its advisable
to make use of the TEXTBOOK when studying for reference.
What is companies ACT: Companies act is a law, which all registered with the CPIC must
comply with.
Objectives of the Act (How we are going Goal of the Act (What we want to achieve)
to achieve goals)
1. Encourage entrepreneurship 1. Simplification
2. Promoting Innovation 2. Flexibility
3. Promote efficiency 3. Corporate efficiency
4. Encourage transparency 4. Transparency
5. Predictable Regulation
FOUNDATION SECTIONS: - 6 SECTIONS
This are the section I think are necessary for understanding what the companies act
is all about:
SECTION 4: SOLVENCY AND LIQUIDITY
- The assets of the company fairly valued equal or exceed the liabilities of the
company fairly valued.
- It appears that the company will be able to pays its debts as they become due
in ordinary course of business, for 12 months from when the distribution is
made.
What is?
Solvency – in simple terms solvency means having enough money or assets to pay
off all your debts.
Liquidity – in simple terms Liquidity refers to how quickly and easily you can turn
your assets into cash without losing value.
NB: You need to a question to understand how this is applicable.
, SECTION 8: CATEGORIES OF COMPANIES ACT
Two types of Companies Act:
1. Profit company – Incorporated for financial gain for its shareholders.
2. Non-profit company – Incorporated for public benefits.
Profit Companies Non-profit companies
1. State owned company 1. NPO’s
2. Private company
- Private company because of its
MOI, which prohibits it from
offering securities
- restricts transferability of its
shares]
3. Personal liabilities company
4. Public company
Personal liability company:
- Must meet criteria for (pty)ltd
- Must stated in MOI its Personal liability company.
- Must be stated in the MOI that directors and past directors are jointly liable
with company’s debts and liabilities.
Public Company – A company that is not a state-owned company and private
company.
According to Section 11(3)(c) companies must have names that end with appropriate
expression or abbreviations:
1. State-owned company SOC
2. Public company Ltd
3. Private company (Pty)ltd
4. Non-profit company NPO
5. Personal liability company INC
Summaries
Companies Act
Mokgomotsi’s Simplified Note + Exam Approach
, AUDITING NOTES
LEGISLATION (THE COMPANIES ACT)
NB: This Documents is drafted focusing only the Sections you need to know according to
the SECOND SEMESTER 2025 WORK-PROGRAMME and not the SLIDES, therefore note
that some Sections can be on the Slides but not on the Work-programme, also its advisable
to make use of the TEXTBOOK when studying for reference.
What is companies ACT: Companies act is a law, which all registered with the CPIC must
comply with.
Objectives of the Act (How we are going Goal of the Act (What we want to achieve)
to achieve goals)
1. Encourage entrepreneurship 1. Simplification
2. Promoting Innovation 2. Flexibility
3. Promote efficiency 3. Corporate efficiency
4. Encourage transparency 4. Transparency
5. Predictable Regulation
FOUNDATION SECTIONS: - 6 SECTIONS
This are the section I think are necessary for understanding what the companies act
is all about:
SECTION 4: SOLVENCY AND LIQUIDITY
- The assets of the company fairly valued equal or exceed the liabilities of the
company fairly valued.
- It appears that the company will be able to pays its debts as they become due
in ordinary course of business, for 12 months from when the distribution is
made.
What is?
Solvency – in simple terms solvency means having enough money or assets to pay
off all your debts.
Liquidity – in simple terms Liquidity refers to how quickly and easily you can turn
your assets into cash without losing value.
NB: You need to a question to understand how this is applicable.
, SECTION 8: CATEGORIES OF COMPANIES ACT
Two types of Companies Act:
1. Profit company – Incorporated for financial gain for its shareholders.
2. Non-profit company – Incorporated for public benefits.
Profit Companies Non-profit companies
1. State owned company 1. NPO’s
2. Private company
- Private company because of its
MOI, which prohibits it from
offering securities
- restricts transferability of its
shares]
3. Personal liabilities company
4. Public company
Personal liability company:
- Must meet criteria for (pty)ltd
- Must stated in MOI its Personal liability company.
- Must be stated in the MOI that directors and past directors are jointly liable
with company’s debts and liabilities.
Public Company – A company that is not a state-owned company and private
company.
According to Section 11(3)(c) companies must have names that end with appropriate
expression or abbreviations:
1. State-owned company SOC
2. Public company Ltd
3. Private company (Pty)ltd
4. Non-profit company NPO
5. Personal liability company INC
