Five types of company registrations are allowed for in South Africa, but they can basically be broken down to two: a company set to make a profit or a non-profit organisation.
The profit company is a business entity registered with the purpose of growth of income for its shareholders. One or more incorporators are needed to form a profit company. Four types of profit companies can be distinguished. The first, and one which we discuss in this article, is a private company, also known as a Pty Company. To operate such a company, you need to have a Pty Company registration performed at CIPC. The second type is a public company, the third is a sole proprietor, and the fourth is a partnership. A non-profit organisation is a company that does not operate with the focus on income increase or growth for its shareholders.
More About Pty Companies
The Pty Company registration has replaced the old Close Corporation (CC) registration. To operate as a private company, the company is not available to the public. In addition, the securities of the company cannot be transferred, as such an action is prohibited in the Memorandum of Incorporation (MoI). To register a Pty Company, you need at least one incorporator and to manage the company you need at least one director.
One benefit of the Pty Company is that you do not have to register an audit committee, auditor or company secretary. In addition, the entity’s financial statements need not be audited. What is important is to understand that the financial statements must still be reviewed by an independent party. Though the company may not be available to the public, the shareholders can issue new company shares.
Whether you want to operate a small, medium or large business, you can register a Pty Company. Keep in mind that directors involved in any wrongful or illegal actions can be held accountable. The Pty Company is the most used format of legal business entities in the country. Shareholders are limited to a maximum of 50.
You will want to register a Pty Company if you want to separate the business income and liabilities from personal income and liabilities. As such, your bank account is separate from the business bank account. The business is a legal entity, which must have a Memorandum of Incorporation (MoI).
To register a Pty Company, you first need to reserve a name with CIPC. The registration can be done in person at one of the self-service terminals in the major cities of South Africa, via email, or through the online portal of the CIPC. However, though it may seem like a straightforward process, it takes time and you need to understand how to complete the forms such as the MoI.
The best option is to call upon the services of a tax and accounting service provider to handle the registration on your behalf. In this way, you avoid pitfalls, have expert guidance at hand, and can focus on getting the business off the ground rather than struggling with the administrative details associated with Pty Company registration.
For more information on PTY company registration, call our team today.