Companies Act No 71 of 2008 - Types Of Companies
Few people are aware of the fact that the Companies Act of 1953 has been replaced by a new Companies Act, called Act 71 of 2008 (www.gov.za/documents). The new Act has brought in some radical departures from the old Act, one of which is the types of companies that can be formed and these can be divided into two groups, namely Profit Companies and Non-Profit Companies:
Under Profit Companies there are four types
While there is not much new about this, the new Act does bring in the concept of a new type of company, namely a personal liability company. While certain acts such as the Attorneys Act allowed for such a construction as a company that has personal liability, this type of company did not exist under the old Companies Act. Instead, one would look at an enterprise such as a sole proprietor or even a partnership for the members to be personally liable. While there were circumstances where directors of companies could be personally liable, those situations are not the topic of discussion here, suffice to say that there was no such type of company in the previous act.
While the new Act is still a minefield that needs to be explored carefully, it has created this new type of company, but one has to question why anyone would want to create such a company where one could create one that limits your personal liability. Only time will probably tell how this construction will work in reality.
One type of legal person that is not catered for is the Close Corporation (probably the most popular form of legal person at the moment). Under the new act, that is expected to come into effect around July 2010, there will be no such entity as a Close Corporation and one will have to register one of the company forms mentioned above.
The Act will recognize the existence of existing Close Corporations and will not change their legal status or operation, but it does provide for converting a Close Corporation into a Private Company.
With all the uncertainty surrounding the new Act, if you are thinking of going into business it might be worth your while registering a Close Corporation, before the new Act comes into effect.
Of course, if you are uncertain about any of the stipulations of the new Act, don't hesitate to contact your attorneys.
Adrian Naudé
Naudes Attorneys
Few people are aware of the fact that the Companies Act of 1953 has been replaced by a new Companies Act, called Act 71 of 2008 (www.gov.za/documents). The new Act has brought in some radical departures from the old Act, one of which is the types of companies that can be formed and these can be divided into two groups, namely Profit Companies and Non-Profit Companies:
Under Profit Companies there are four types
While there is not much new about this, the new Act does bring in the concept of a new type of company, namely a personal liability company. While certain acts such as the Attorneys Act allowed for such a construction as a company that has personal liability, this type of company did not exist under the old Companies Act. Instead, one would look at an enterprise such as a sole proprietor or even a partnership for the members to be personally liable. While there were circumstances where directors of companies could be personally liable, those situations are not the topic of discussion here, suffice to say that there was no such type of company in the previous act.
While the new Act is still a minefield that needs to be explored carefully, it has created this new type of company, but one has to question why anyone would want to create such a company where one could create one that limits your personal liability. Only time will probably tell how this construction will work in reality.
One type of legal person that is not catered for is the Close Corporation (probably the most popular form of legal person at the moment). Under the new act, that is expected to come into effect around July 2010, there will be no such entity as a Close Corporation and one will have to register one of the company forms mentioned above.
The Act will recognize the existence of existing Close Corporations and will not change their legal status or operation, but it does provide for converting a Close Corporation into a Private Company.
With all the uncertainty surrounding the new Act, if you are thinking of going into business it might be worth your while registering a Close Corporation, before the new Act comes into effect.
Of course, if you are uncertain about any of the stipulations of the new Act, don't hesitate to contact your attorneys.
Adrian Naudé
Naudes Attorneys
| ˇ | State-Owned Companies |
| ˇ | Private Companies |
| ˇ | Personal Liability Companies |
| ˇ | Public Companies |