The process of registering a new company can be a daunting task for inexperienced or small business owners, and navigating through the extensive process could become overwhelming and rather confusing. The process although time-consuming is advantageous and is well worth the time to get in right the first time, advantages include – business name protection, tax deductions, financial assistance and increasing your staff capacity. A registered company is automatically registered as a taxpayer.
The registration process:
The Companies and Intellectual Property Commission (CIPC) was formed as a replacement to The Companies and Intellectual Property Registration Office (CIPRO) in May 2011. The Act stipulates that no new close corporations (CC) may be registered, but those registered under the CIPC Act prior to 1 May could continue to operate as close corporations.
The Companies Act is categorised by non-profit and profit companies, under which all other companies are sub-categorised.
The types of business entities:
A company incorporated for public benefit or cultural, social, communal or group interests. The income generated and property is not distributable to its incorporated, members, directors, officers or persons related to any of them.
A company with the primary goal of making money, without any restrictions on the transferability of their shares:
- do not prohibit offers to the public – larger public companies
- prohibit offers to the public – smaller private companies
Profit companies can be found in the form of a personal liability company, a state-owned company, a public company and a private company.
Personal liability companies
A personal liability company ends with the word incorporated, as directors and past directors are jointly liable with the company for any debts and liabilities arising during their office periods.
State-owned companies are completely owned by a municipality and must end with the expression SOE Ltd.
A public company is one that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange. It has more than 50 shareholders and requires only one member for incorporation.
A private company is similar to previous close corporations, however, private companies include fewer disclosure and transparency requirements. Private companies no longer are limited to 50 shareholders and with a board that must comprise of at least one director. The name of a private company must end with the expression Proprietary Limited or (Pty) Ltd.
Registering for tax
All new businesses are required to register with SARS to obtain an income tax reference number. This registration needs to be done within 60 days after starting operations by completing an IT77 form which is available at SARS offices or the SARS website.
All new business owners need to complete Notice of Incorporation (CoR 14.1) and Memorandum of Incorporation (CoR 15.1 A-E) forms, which can be found on the CIPC’s website.
Memorandum of Incorporation
The Memorandum of Incorporation (MoI) contains the following info:
- Details of incorporators
- Number of directors or alternate directors
- Share capital (maximum issued)
Notice of Incorporation
The Notice of Incorporation, which is lodged with the MoI contains the following information:
- Type of company
- Incorporation date
- Financial year-end
- Registered address
- Number of directors
- Company name
- The reserved name and reservation number
- List of four names to be check by the Commission
There are various forms that require completion if you are registering a private company:
Standard private company – CoR 15.1A form
Customised private company – Cor 15.1B form
Along with the following supporting documents:
- Certified ID copies of all indicated initial directors and incorporators
- Certified ID copy of applicant if not the same as one of the indicated initial directors or incorporators
- If an incorporator is a juristic person, a power of attorney is required for the representative authorised to incorporate the company and sign all related documents
- If another person incorporates the company and signs all related documents on behalf of any of the incorporators and initial directors, a power of attorney and certified ID copy of the person is required
- If a name was reserved before filing of incorporation documents, a valid name reservation document is necessary
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