The more you know when registering your company, the more likely you will avoid any potential pitfalls along the way. This small course has been designed so that you can know a little bit more about the myriad of terms out there and gain some understanding about what a company is all about before you register one. Also this course will explain how SwiftReg has tried to simplify the process by removing some of the styles of registration out of the way.
An incorporator is the person or company forming a new company. To simplify the registration process we at SwiftReg only cater for natural persons being incorporators. Furthermore we make all the directors of the company the incorporators and for simplicity sake do not ever refer to this terminology. On completion of the company registration we issue the share certificates to the shareholders. The directors therefore = the incorporators.
The shareholders of a company are the people who invest money in a company by purchasing the shares. They appoint the directors to run the company for them, meaning the directors manage the company while the shareholders own the company. The shareholders can therefore “fire” the directors, if they do not do a proper job. However, the shareholders can be and frequently are also directors of the company. There can never be no directors appointed on a company. We also allocate the entire share capital when forming new companies meaning we don’t authorize unallocated shares.
There is difference between executive and non-executive directors.
It is interesting to note that in terms of the liability a shareholder can only lose the amount of money they paid for the shares I.E. shares value can never be less then zero, while the directors may be held personally liable and lose more.
The Memorandum of Incorporation or (MOI) is the document which set out the rules between the directors and the shareholders of the company. CIPC has introduced a standard or default MOI to make company registrations easier and cheaper. These standard forms are known as the short form and cost R175. If you would like to change or customises any of the standard MOI rules it is called a long form and costs R475. Due to the increase in the cost and the complexities of the long forms we at Swiftreg do not offer this service.
We therefore only use the 15.1 A (Short Form) for (Pty) Ltd and 15.1C (Short Form) for non-profit companies. The short form does have one very controversial point which is the directors can issue more shares without the shareholders approval.
Incorporations can only use the long form and we therefore do not offer this service.
Auditors are highly qualified chartered accountants known as CA’s. These accountants are very expensive and for this reason most companies don’t want to be audited. Fortunately, only very large companies are required to be audited. In order to determine which company requires an audit a points system is used. This is calculated as follows:
1 Point for each employee
1 Point for each R1m turnover
1 Point for each R1m unsecured debt
1 Point for each individual shareholder
If the total of all the points add up to more than 350 points the company must be audited. If the points are between 150 and 300 then the company is subject to an independent review. Most companies fall below 150 points and therefore do not require an audit.
To change directors on companies a CoR 39 form must be completed. This is a relative cumbersome process, and usually takes about 2 days for CIPC to complete the process. Step one is to You have to apply for a password to unlock the company online and then scan and email certain signed documents to CIPC. They will then unlock the company and we can then process the changes.
Note: When a new director is appointed the effective date is when the directors minute the changes and not when CIPC process the changes.