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Learning Objectives

1. Analysing the Rules Pertaining to a Company by:• Comprehending the legal nature of a Company• Interpreting the formation of a Company• Comprehending the types of Companies• Comprehending Company communication,

officers and capital• Interpreting the advantages and disadvantages

of a Company• Examining accounting and taxation

requirements of a Company• Examining the limitations of the Act and the

Banking requirements of a Company

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Criteria

1. Analyse the Rules Pertaining to a Company

• Define a Company• Describe a Company as a legal entity• Describe the formation of a Company• Define the Memorandum of Association• List the contents of the Memorandum of

Association• Define the Articles of Association• List the contents of the Articles of Association• Define share capital

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Criteria (Continued)

1. Analyse the Rules Pertaining to a Company

• Differentiate between a Public Company with share capital and a Private Company with share capital

• List the criteria for a Company Limited by Guarantee

• List the criteria for a Section 21 Company

• List the responsibilities of a Company Secretary

• Define the role of a Director of a Company

• List the obligations of a Director of a Company

• List the individuals who may not be appointed as a Director of a Company

• Describe the capital of a Private Company

• Describe the capital of a Public Company

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Criteria (Continued)

1. Analyse the Rules Pertaining to a Company• List the advantages of a Company• List the disadvantages of a Company• List the contents of the annual financial statements of a

Company• Describe the taxation of a Company• Describe the liability of the Members of a Company • Describe the powers of a Company if they have accepted

Section 34 and Schedule 2 of the Act without amendments

• Describe the relationship between:• A Holding Company• A Subsidiary Company• A Co-subsidiary• A Sub-subsidiary

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Criteria (Continued)

1. Analyse the Rules Pertaining to a Company

• Describe Section 37 of the Act

• Describe the prohibition of Section 38 of the Act

• List the implications of Section 38 for the Bank

• Describe the purpose of Section 226 of the Act

• List the transactions which are in terms of Section 226 of the Act:

• Absolutely prohibited

• Conditionally permissible

• Unconditionally permissible

• Judge the contractual capacity of a Company

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Company as a Legal Entity

• A registered Company is a separate legal entity

• A Company can enter into contracts in its own name

• A Company can acquire rights and duties in its own name, for example acquire assets, conclude contracts, sue and be sued

• The Company Estate is assessed separately from the estates of the individual Members

• Changes in the Membership of a Company does not affect its continued existence

• Shares in a Company is transferable

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Formation of a Company

• Seven or more persons may form a Public Company

• One person may form a Private Company or a Company limited by guarantee

• A Company may only commence business when the Registrar has issued a Certificate to Commence Business

• The Constitution of a Company has to be registered, comprises of:• The Memorandum of Association• The Articles of Association

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Types of Companies

There are 2 types of Companies, namely:• Companies with a share capital• Companies without share capital

Companies with a share capital could either be a:• A Public Company, or• A Private Company

Companies without share capital could either be a:• Company Limited by Guarantee• Section 21 Company

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Accounting records

The Companies Act requires a Company to prepare Annual Financial Statements. These must include:

• A Balance Sheet• An Income Statement• A Director’s Report• An Auditor’s Report• A Cash Flow Statement• A Change in Equity Statement• Relevant Notes

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Public Company

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Private Company

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Limitations of the Companies Act

Transactions have to be allowable in terms of the Act

Important Sections of the Act are:• Section 37• Section 38• Section 226

The above Sections deal with Holding and Subsidiary Companies