Companies A2

• Incorporation


  The process of forming a new company
• Quite often, a company will not be obtained through incorporation by the business owners, but purchased off the shelf
• Procedure for incorporation


  1. Incorporator completes and signs MOI

  2. Incorporator files notice of incorporation, copy of MOI, and pays fee

  3. Companies Commission assigns registration number, completes company register, endorses documents, issues registration certificate
• Incorporator


  A person who incorporated the company, as defined in section 1 of the Companies Act
• One or more persons or an organ of state may incorporate a profit company, and an organ of state, a juristic person, or three or more persons acting in concert may incorporate a non-profit company
• Memorandum of Incorporation (MOI)


  The document that sets out the rights, duties and responsibilities of shareholders, directors and others within and in relation to a company, and other matters as contemplated in section 15 of the Companies Act
• The incorporators must file the notice of incorporation, copy of the MOI, and pay the prescribed fee
• Information included in the notice of incorporation

  • Type of company (profit or non-profit)
  • Incorporation date
  • Financial year end
  • Registered address/main office
  • Number of directors
  • Company name(s)
  • Reserved name and reservation number
  • List of 4 names to be checked
  • Reference to RF companies
• If the company's MOI includes any provision contemplated in section 15(2)(b) or (c), the notice of incorporation must include a prominent statement drawing attention to each such provision and its location in the MOI
• Registration certificate


  Evidence of the incorporation and registration of the company
• The registration certificate is conclusive evidence that all the requirements for incorporation have been complied with and the company is incorporated as of the date and time stated in the certificate
• Consequences of juristic personality


  • From the date and time of incorporation, the company is a juristic person with all the legal powers and capacity of an individual, except to the extent that a juristic person is incapable of exercising such power or the company's MOI provides otherwise
• Memorandum of Incorporation (MOI)


  The founding document/constitution of the company that regulates the affairs of the company
• The 1973 Companies Act divided the constitution into the memorandum of association and the articles of association, while the current Act has a single MOI
• Matters generally dealt with in the MOI

  • Powers of the company
  • Amendment of the MOI
  • Ability to create company rules
  • Shares
  • Shareholders, meetings and procedure
  • Composition of the board of directors
  • Board meetings
  • Authority and power of the board
• Unalterable provisions


  Provisions of the Companies Act that cannot be negated, restricted, limited, qualified, extended or otherwise altered in substance or effect by the company's MOI
• Unalterable provisions are intended to protect the interests of shareholders and creditors
• Alterable provisions


  Provisions of the Companies Act where its effect on a particular company may be negated, restricted, limited, qualified, extended or otherwise altered in substance or effect by the company's MOI
• The MOI may contain restrictive conditions applicable to the company, and prohibit the amendment of any particular provision of the MOI
• If the company's MOI includes any provisions contemplated in section 15(2)(b) or (c), the company name must be immediately followed by the expression "(RF)"
• Third parties dealing with the company are deemed to have knowledge of the provisions in the MOI that are contemplated in section 15(2)(b) or (c)
• Doctrine of constructive notice

  Under the previous 1973 Companies Act, third parties were deemed to have read and be aware of the contents of the company's memorandum and articles of association
• The current Companies Act aims to move away from the doctrine of constructive notice
• Forms of the MOI


  • Prescribed (standard) form
  • Unique form created by the company
• Amending the MOI


  1. By special resolution of shareholders (75% majority)

  2. By court order

  3. By directors in respect of authorised shares
• Rules of the company


  Rules made by the company's board of directors relating to the governance of the company in respect of matters not addressed in the Act or the MOI
• The 1973 Companies Act did not include provisions for company rules, which were instead included in the articles of association
• Amendment that changes the name of the company

  Takes effect on the date set out in the amended registration certificate issued by the Commission in terms of subsection (8), read with section 14(1)(b)(iii)
• Amendment in any other case

  Takes effect on the later of the date and time at which the Notice of Amendment is filed, or the date set out in the Notice of Amendment
• Rules of the company

  Any rules made by a company as contemplated in s15(3) to (5) of the Companies Act
• Board of directors making, amending or repealing rules


  1. Publishing a copy of those rules, in any manner required or permitted by the Memorandum of Incorporation, or the rules of the company

  2. Filing a copy of those rules
• Rules made by the board

  • They are binding on the company, shareholders and directors
  • They address issues not directly addressed in the Companies Act and Memorandum of Incorporation
  • They must be consistent with the Companies Act and Memorandum of Incorporation
• There is no model for the rules
• The rules are binding on shareholders
• The rules must be published so that shareholders can become familiar with them and act accordingly
• Certain governance may be addressed in the rules rather than the Memorandum of Incorporation
• The Memorandum of Incorporation takes precedence over the rules
• The rules may not be used to alter alterable provisions, only a special resolution can be used to alter alterable provisions
• Rules taking effect


  The later of 10 business days after the rule is filed, or the date specified in the rule
• Rules being binding


  • On an interim basis from the time they take effect until they are put to a vote at the next general shareholders meeting
  • On a permanent basis only if they have been ratified by an ordinary resolution at the meeting