TYPES OF COMPANIES & INCORPORATION THEREOF

Question 1

What are the two broad categories of companies under the Companies Act 71 of 2008?

Answer 1

Profit companies and non-profit companies

Question 2

Define a non-profit company.

Answer 2

A company incorporated for a public benefit or cultural/social activities, where income is not distributable to incorporators or members, except for reasonable remuneration or expense reimbursement.

Question 3

What must a non-profit company’s memorandum of incorporation (MOI) include?

Answer 3

At least one object for the company and a statement regarding the application of its assets and income to advance its objects.

Question 4

True or False: A non-profit company is prohibited from making a profit.

Answer 4

False

Question 5

What is the minimum number of directors required for a non-profit company?

Answer 5

Three directors

Question 6

How must the name of a non-profit company end?

Answer 6

NPC

Question 7

What is a profit company?

Answer 7

A company incorporated for the purpose of financial gain for its shareholders.

Question 8

List the four kinds of profit companies.

Answer 8

• State-owned company
• Private company
• Personal liability company
• Public company

Question 9

What must the name of a state-owned company end with?

Answer 9

SOC Ltd

Question 10

What is a private company?

Answer 10

A company not classified as public, personal liability, or state-owned, which prohibits offering its securities to the public.

Question 11

Fill in the blank: A personal liability company must have a memorandum of incorporation that states it is a _______.

Answer 11

personal liability company

Question 12

What is the liability structure for directors of a personal liability company?

Answer 12

Directors are jointly and severally liable for debts incurred during their tenure.

Question 13

What is the minimum number of directors required for a public company?

Answer 13

Three directors

Question 14

What must the name of a public company end with?

Answer 14

Limited or Ltd

Question 15

What is a domesticated company?

Answer 15

A foreign company whose registration has been transferred to South Africa.

Question 16

What is required for a company to transfer its registration to South Africa?

Answer 16

• Compliance with laws of the initial jurisdiction
• Approval from shareholders
• Majority of assets and shareholders in South Africa
• Majority of directors being South African citizens
• Company must not be registered elsewhere post-transfer

Question 17

What defines an external company?

Answer 17

A foreign company conducting business or non-profit activities within South Africa.

Question 18

What document must be filed to incorporate a company?

Answer 18

Memorandum of Incorporation (MOI)

Question 19

What is the purpose of the Notice of Incorporation?

Answer 19

To accompany the MOI and provide information about the company to the Companies Commission.

Question 20

What is required for the registration of a company?

Answer 20

• Unique registration number
• Prescribed information in the companies’ register
• Endorsement of the Notice of Incorporation
• Issuance of a registration certificate

Question 21

What serves as conclusive evidence that a company has been properly incorporated?

Answer 21

Registration certificate

Question 22

What must a company maintain continuously in South Africa?

Answer 22

At least one registered office

Question 23

True or False: The name of a company must be unique and not confusingly similar to another company’s name.

Answer 23

True

Question 24

What must follow the name of a company if its MOI has restrictive conditions?

Answer 24

RF

Question 25

What is required for a company to change its registered office?

Answer 25

File a notice of change of registered office

Question 26

What is the significance of the phrase 'confusingly similar' in company naming?

Answer 26

It refers to a name that could cause public confusion regarding business identity or association with another company.

Question 27

What is the name of the overseas company involved in the case?

Answer 27

Polaris Capital Inc ## Footnote The company was incorporated overseas.

Question 28

What is the name of the South African incorporated company?

Answer 28

Polaris Capital (Pty) Ltd ## Footnote The company raised an objection regarding the name similarity.

Question 29

Which authority upheld the objection regarding the company names?

Answer 29

CIPC ## Footnote The Companies and Intellectual Property Commission found the names confusingly similar.

Question 30

What does 'confusingly similar' refer to in this context?

Answer 30

Names that are identical and engage in the same activities ## Footnote This can lead to public confusion about the companies.

Question 31

What legal principle is involved when a name could result in a likelihood of confusion with another business?

Answer 31

Passing off ## Footnote This principle evaluates the potential for consumer confusion.

Question 32

What does the court do when a company name is deemed undesirable?

Answer 32

Renders the name undesirable ## Footnote This is based on the likelihood of confusion with another business.

Question 33

What is the purpose of reserving a company name?

Answer 33

To use at a later stage ## Footnote This can be for a newly incorporated company or an amendment to an existing name.

Question 34

Is the reservation of a company name mandatory or optional?

Answer 34

Optional or voluntary ## Footnote Companies may choose to reserve a name for future use.

Question 35

Under which section can a company name be reserved?

Answer 35

Section 12 (1) ## Footnote This section outlines the conditions for reserving a name.

Question 36

What must a name requested for reservation not be?

Answer 36

Already reserved or registered ## Footnote This is specified in Section 12 (2).

Question 37

How long does a reserved name endure?

Answer 37

Six months ## Footnote The period may be extended if good cause is shown.

Question 38

What must companies include in their official publications according to Section 32 (4)?

Answer 38

Their name and registration number ## Footnote This includes all letters, invoices, and business documents.

Question 39

What constitutes an offence under Section 32 (5)?

Answer 39

Failure to state the name and registration number correctly ## Footnote Misleading or deceptive representation is prohibited.

Question 40

What is an offence related to unauthorized use of a company name?

Answer 40

Using the name or registration number to misrepresent authority ## Footnote This is detailed in Section 32 (3).

Question 41

Fill in the blank: Passing off occurs when the use of a name could result in a reasonable likelihood that the business is _______.

Answer 41

[connected with another business] ## Footnote This legal concept aims to protect businesses from misleading representations.