Business
Enterprise
Law
Important note:
These study notes have been compiled
personally based on the module outline
for the 2023 academic year and are
merely a summary of the work. They
may include additional content or omit
certain information relevant to other
academic years. Additionally, please be
aware that the document may contain
some errors and spelling mistakes. It is
important to note that these notes are
intended to serve as a supplementary
aid for certain topics and should not
replace the use of textbooks or other
primary study materials. Students are
strongly encouraged to consult their
prescribed academic sources for
accurate and comprehensive
information regarding the module.
, Learning Unit 1
Company types:
• Sole proprietorship.
• Partnership.
• Trust.
• Closed corporation.
• Company.
Sole proprietorship:
• Simplest form.
• Person carries out business under own name.
• Easily set up and managed.
• Person can be sued and their personal assets are at risk.
Partnership:
• Simple form.
• Not a separate legal entity.
• Assets of partners may be subject to claim.
• Partners are jointly and severally liable for debts.
• No perpetual succession.
Trust:
• Complex laws that regulate trusts.
Close corporation:
• Perpetual succession.
• Separate legal entity.
Company:
• Perpetual succession.
• Investors contribute capital in return for shares.
• Separate legal entity.
• Shareholders have protection if business is being sued.
,Factors to be considered when deciding on a business entity:
• Number of people involved.
• The extent of their involvement.
• Capital requirement to commence business.
• Source of capital.
• Requirement of clients and customers.
• Strategic objectives.
General information:
• A company or a closed corporation is not required to trade or open business.
• Most important consideration = tax.
• Tax rates are different for individuals and businesses.
• Companies Act recognises different company types.
• Income Tax Act recognises different companies for tax purposes and
treatments.
Types of companies:
Types.
Non-
Profit. External.
profit.
Public.
State
owned.
Personally
liable.
Private.
Public company:
• Suffix – Ltd.
• Shares are offered to the public and are freely transferrable.
• Can be listed on stock exchange.
• Recognition is sourced in MOI.
, State-owned company:
• Suffix – SOC.
• Profit company which is either listed as a public entity in Schedule 2 or 3 of
the Public Finance Management Act or is owned by a municipality.
• Juristic person under the ownership and control of the national executive.
• Principle business of SOC is that it provides goods or services in accordance
with ordinary business principles and is fully or substantially financed from
sources other than the National Revenue Fund or by way of tax, levy or other
statutory money.
Personal liability company:
• Suffix – INC.
• Used by professional associations (such as medical practitioners) who want to
exploit the advantages of corporate personality such as perpetual succession.
• MOI states the personal liability of the company.
• Directors are jointly and severally liable together with company for contractual
debts and liabilities.
• MedX Randburg (Pty) Ltd v Branfield:
o Even though the directors of a personal liability company are jointly and
severally liable for the contractual debts of the company, if a third party
agrees at the time the debt was incurred not to take legal action
against any director personally, that agreement is enforceable provided
that it can be shown that such an agreement exists.
• Ola v Negota SSH (Gauteng) Inc:
o To hold a director of an Inc personally liable, a plaintiff must establish
that the plaintiff is a creditor of the Inc and that the relationship was
contractual.
Private company:
• Suffix – (Pty) Ltd.
• MOI prohibits the offering of shares to the public and restricts the
transferability of shares.
• No restrictions on shareholders.
• For a profit company to qualify as a profit company its MOI must restrict the
transferability of its shares.
• Smuts v Booyens; Markplaas (Edms) Bpk v Booyens:
o The restricted transferability of a company’s shares is an essential
attribute of a private company and a shareholder’s right to transfer
shares must be restricted by the company’s MOI.
Enterprise
Law
Important note:
These study notes have been compiled
personally based on the module outline
for the 2023 academic year and are
merely a summary of the work. They
may include additional content or omit
certain information relevant to other
academic years. Additionally, please be
aware that the document may contain
some errors and spelling mistakes. It is
important to note that these notes are
intended to serve as a supplementary
aid for certain topics and should not
replace the use of textbooks or other
primary study materials. Students are
strongly encouraged to consult their
prescribed academic sources for
accurate and comprehensive
information regarding the module.
, Learning Unit 1
Company types:
• Sole proprietorship.
• Partnership.
• Trust.
• Closed corporation.
• Company.
Sole proprietorship:
• Simplest form.
• Person carries out business under own name.
• Easily set up and managed.
• Person can be sued and their personal assets are at risk.
Partnership:
• Simple form.
• Not a separate legal entity.
• Assets of partners may be subject to claim.
• Partners are jointly and severally liable for debts.
• No perpetual succession.
Trust:
• Complex laws that regulate trusts.
Close corporation:
• Perpetual succession.
• Separate legal entity.
Company:
• Perpetual succession.
• Investors contribute capital in return for shares.
• Separate legal entity.
• Shareholders have protection if business is being sued.
,Factors to be considered when deciding on a business entity:
• Number of people involved.
• The extent of their involvement.
• Capital requirement to commence business.
• Source of capital.
• Requirement of clients and customers.
• Strategic objectives.
General information:
• A company or a closed corporation is not required to trade or open business.
• Most important consideration = tax.
• Tax rates are different for individuals and businesses.
• Companies Act recognises different company types.
• Income Tax Act recognises different companies for tax purposes and
treatments.
Types of companies:
Types.
Non-
Profit. External.
profit.
Public.
State
owned.
Personally
liable.
Private.
Public company:
• Suffix – Ltd.
• Shares are offered to the public and are freely transferrable.
• Can be listed on stock exchange.
• Recognition is sourced in MOI.
, State-owned company:
• Suffix – SOC.
• Profit company which is either listed as a public entity in Schedule 2 or 3 of
the Public Finance Management Act or is owned by a municipality.
• Juristic person under the ownership and control of the national executive.
• Principle business of SOC is that it provides goods or services in accordance
with ordinary business principles and is fully or substantially financed from
sources other than the National Revenue Fund or by way of tax, levy or other
statutory money.
Personal liability company:
• Suffix – INC.
• Used by professional associations (such as medical practitioners) who want to
exploit the advantages of corporate personality such as perpetual succession.
• MOI states the personal liability of the company.
• Directors are jointly and severally liable together with company for contractual
debts and liabilities.
• MedX Randburg (Pty) Ltd v Branfield:
o Even though the directors of a personal liability company are jointly and
severally liable for the contractual debts of the company, if a third party
agrees at the time the debt was incurred not to take legal action
against any director personally, that agreement is enforceable provided
that it can be shown that such an agreement exists.
• Ola v Negota SSH (Gauteng) Inc:
o To hold a director of an Inc personally liable, a plaintiff must establish
that the plaintiff is a creditor of the Inc and that the relationship was
contractual.
Private company:
• Suffix – (Pty) Ltd.
• MOI prohibits the offering of shares to the public and restricts the
transferability of shares.
• No restrictions on shareholders.
• For a profit company to qualify as a profit company its MOI must restrict the
transferability of its shares.
• Smuts v Booyens; Markplaas (Edms) Bpk v Booyens:
o The restricted transferability of a company’s shares is an essential
attribute of a private company and a shareholder’s right to transfer
shares must be restricted by the company’s MOI.
