Types of CompaniesCorporate Law

State owned companyAll provisions of Act that apply to public

companies also apply to State owned company

Ends with SOCMinister may make exceptions

Non Profit CompanyDefinition:

A company that is incorporated for public benefit, or, an object relating to one or more cultural or social activities, or communal or group interests, and

The income must not be distributed to its incorporators, members, directors, officers or persons related to them

Ends with NPC‘formed by at least 3 personsWith or without membersWith or without voting rights

The Public Company

Section 1 of the Companies Act 2008 defines a public company as:A profit company that is not a state owned

company, nor a private company, nor a personal liability company

Characteristics of public company

Raise share capital from the publicMust appoint a company secretary, audit

committee & independent auditorMust have an annual audit

Difference between public and private companyMOI of a private company must restrict

transfer of shares and prohibit it from offering shares to the public

Public company may offer shares to public & no restriction of transfer of shares

Public company – Limited or LTDPrivate company – Proprietary Limited or

(Pty) LTDPublic company – minimum 3 directors while

only 1 director required for private company

Difference between public and private companyMore onerous rules of disclosure,

transparency & accountability on a public company

Public company must have AGM – no longer necessary for private company

Public company – annual audit

Personal Liability CompanySame as private company but MOI states it is

a personal liability companyEnds with Incorporated or INCUsed mainly by accountants, stockbrokers,

auditors etcGives advantage of perpetual successionMinimum of 1 directorAuditor required only if MOI says soDirectors personally liable for debts of

company incurred during their term

`Legal consequences of separate legal personalityLimited liabilityPerpetual successionProperty & assets of company belong to the

companyProfits of the company belong to the companyDebts & liabilities of company belong to the

companyShareholders have no right to manage the

companyShareholders have no rights to transact for

companyCompany can sue & be sued in its own nameCompany may contract with its shareholders

Lifting or piercing the corporate veilPiercing the corporate veil

Court disregards the separate personality of the company and treats the company liabilities as liabilities of the shareholders or directors

Lifting the corporate veilThe Court takes into account who the

shareholders and directors are (without necessarily ignoring the separate identity of the company)