TOPIC 2 – COMPANIES
BACKROUND
• 1926 (Act 46 of 1926)
• First companies act after Union of SA 1910
• English Law (Companies Act 1908) (Transvaal Act)
• Van Wyk de Vries commission
• Consolidate & restructure
• 1973 (Act 61 of 1973)
• Still in operation
• Amended from time to time
• 2008
• Department of Trade & Industry (DTI): guidelines on reform
• SA Company law for 21st Century – Guidelines for Corporate Law reform
• 2008
• Companies Act 71 of 2008
• Approved but not in effect
• 2010
• Draft amendments: to correct obvious mistakes
• 1 May 2011: Companies Act 71 of 2008 comes into effect and finally published
Why have new Act?
• Purpose: comply, promote bill of rights in the constitution through the application of this
legislation; Simplify business form and make it more accessible to more people, However the
act still remains quite complicated.
• Bring Company legislation in line with Constitution
• Modernization of companies act to take cognizance of international developments
Need for simplification (promotes economy: encourages entrepreneurship, brings about simplicity
and transparency. Promotes innovation and investment)
• Important consequences of 2008 Act
• In principle: 1973 act repealed in entirety
• Some parts retained from 1973
• Close Corporations (CC):
• No new CC’s formed
• Conversion possible
• Act would be simple enough to choose to make companies their chosen
business form hence why no new CC can be created from 2011, but can
convert company to CC
• Common law
• Still exists
• Helps with interpretation
• If the Act is silent, common law will apply
, 2008 Companies Act: Administration
• Companies and Intellectual Property Commission (the “Commission”) or CIPC
• Responsible for registration on companies
• Memorandum of Incorporation all companies is accessible to them
• Function include, inter alia:
• Registration of companies
• Keeping of certain information regarding companies
• Receiving complaints regarding contraventions of Act and investigation
thereof
• If complaint is valid, commission may issue a compliance notice
• Not given effect to: Commission may approach court for administrative fine
2008 Companies Act: Administration
Companies Tribunal (the “Tribunal”)
o Dual purpose
o To promote Alternative Dispute Resolution (ADR) :forum other than civil
courts are used; alternative dispute resolution concerning companies before
parties approach court
o To review orders of the Commission if necessary
WHAT IS A COMPANY?
• Generally speaking
• A company is an association of persons with juristic personality, which is
incorporated in terms of the Companies Act (or its predecessor) and who work
together with the object of gain.
• Has juristic personality: as the company has juristic personality this means it exists
independently from its members. Make own decisions, with help of the board which
serve as its representatives.
• Also certain registration requirements for a company, has to be incorporation in
terms of applicable registration.
• Must have object of gain and individual have to work together.
• BUT:
• Company with only one shareholder is possible
• Non-profit company is also possible
• Companies Act 2008
• Juristic person incorporated in terms of Act or predecessor
• Juristic person is only imposed once company is incorporated
COMPANIES VS BUSINESS ENTITIES
o Closed Corporation (CC)
o Juristic person
o but no distinction between management and capital investors
o Sole proprietor & partnership
o No juristic personality
o No distinction between management and capital investors
BACKROUND
• 1926 (Act 46 of 1926)
• First companies act after Union of SA 1910
• English Law (Companies Act 1908) (Transvaal Act)
• Van Wyk de Vries commission
• Consolidate & restructure
• 1973 (Act 61 of 1973)
• Still in operation
• Amended from time to time
• 2008
• Department of Trade & Industry (DTI): guidelines on reform
• SA Company law for 21st Century – Guidelines for Corporate Law reform
• 2008
• Companies Act 71 of 2008
• Approved but not in effect
• 2010
• Draft amendments: to correct obvious mistakes
• 1 May 2011: Companies Act 71 of 2008 comes into effect and finally published
Why have new Act?
• Purpose: comply, promote bill of rights in the constitution through the application of this
legislation; Simplify business form and make it more accessible to more people, However the
act still remains quite complicated.
• Bring Company legislation in line with Constitution
• Modernization of companies act to take cognizance of international developments
Need for simplification (promotes economy: encourages entrepreneurship, brings about simplicity
and transparency. Promotes innovation and investment)
• Important consequences of 2008 Act
• In principle: 1973 act repealed in entirety
• Some parts retained from 1973
• Close Corporations (CC):
• No new CC’s formed
• Conversion possible
• Act would be simple enough to choose to make companies their chosen
business form hence why no new CC can be created from 2011, but can
convert company to CC
• Common law
• Still exists
• Helps with interpretation
• If the Act is silent, common law will apply
, 2008 Companies Act: Administration
• Companies and Intellectual Property Commission (the “Commission”) or CIPC
• Responsible for registration on companies
• Memorandum of Incorporation all companies is accessible to them
• Function include, inter alia:
• Registration of companies
• Keeping of certain information regarding companies
• Receiving complaints regarding contraventions of Act and investigation
thereof
• If complaint is valid, commission may issue a compliance notice
• Not given effect to: Commission may approach court for administrative fine
2008 Companies Act: Administration
Companies Tribunal (the “Tribunal”)
o Dual purpose
o To promote Alternative Dispute Resolution (ADR) :forum other than civil
courts are used; alternative dispute resolution concerning companies before
parties approach court
o To review orders of the Commission if necessary
WHAT IS A COMPANY?
• Generally speaking
• A company is an association of persons with juristic personality, which is
incorporated in terms of the Companies Act (or its predecessor) and who work
together with the object of gain.
• Has juristic personality: as the company has juristic personality this means it exists
independently from its members. Make own decisions, with help of the board which
serve as its representatives.
• Also certain registration requirements for a company, has to be incorporation in
terms of applicable registration.
• Must have object of gain and individual have to work together.
• BUT:
• Company with only one shareholder is possible
• Non-profit company is also possible
• Companies Act 2008
• Juristic person incorporated in terms of Act or predecessor
• Juristic person is only imposed once company is incorporated
COMPANIES VS BUSINESS ENTITIES
o Closed Corporation (CC)
o Juristic person
o but no distinction between management and capital investors
o Sole proprietor & partnership
o No juristic personality
o No distinction between management and capital investors
