Types of profit companies and the basics of setting up a company in South Africa

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company in South Africa

Article was written by Stef de Gouveia, Candidate Attorney, checked Ashley Butler, Associate and released by Keane Robertson, Senior Partner at Schindlers Attorneys.

4 August 2021


Before registering a company, one needs to consider what type of entity is required. In South Africa, the Companies Act 71 of 2008 (the “Act”) provides that no new close corporations may be incorporated, however those close corporations already existing at the time the Act came into effect (on 1 May 2011) may continue to exist indefinitely.

The Act provides for two main types of companies, namely profit and non-profit companies, where profit companies can be further categorised as follow”

  1. Personal Liability Companies;

2. State-owned Companies;

3. Public Companies; and

4. Private Companies.

A profit company’s main objective is to create financial growth for the shareholders and it is important to note the distinguishing features that differentiate profit companies.

Personal liability companies exist where the directors as well as past directors are jointly liable with the company for any debts and liabilities arising during their periods in office. The company name ends with the word ‘incorporated’.

State-owned companies or state-owned enterprises refer to companies that are owned by the government. Most often, these companies are created in order to partake in commercial activities on the government’s behalf. They can be either wholly or partially owned by government and their names must end with the expression ‘SOE Ltd’.

The definition of a public company has remained largely unchanged. A public company is a company that may offer its shares to the public, but under strict regulatory laws. In South Africa, only public companies may be listed on the Johannesburg Stock Exchange. Public companies must be audited and must produce audited financial statements which are tabled with their shareholders annually. Public companies are required to have a minimum of three directors and their names must end with suffix “Limited”.

Lastly, private companies are similar to previously known close corporations. Private companies must have at least one director and one incorporator. The director and incorporator may be the same person and although the word “person” includes a juristic person in the Act, a director is required to be a natural person. This means that a legal entity or a trust may be an incorporator of a new company. A private company is prohibited from offering its securities to the public and the transferability of its securities is restricted. Furthermore, a private company’s name must end with the expression ‘Proprietary Limited’ or ‘(Pty) Ltd’.


In order to register a company, certain documentation is required to be submitted to the Companies and Intellectual Property Commission (the “CIPC”). Incorporators are required to apply for a name reservation as well as lodge a Notice of Incorporation and a Memorandum of Incorporation (‘MOI”) along with other supporting documentation to the CIPC, which forms are available for download from the CIPC’s website.

According to the CIPC, and in terms of the Companies Act, 2008, a company may be registered with or without a company name. A company that is registered without a reserved name will still get a registration number, which will automatically become the company’s name. A company can transact with a trading (business) name or may apply to add a reserved name at a later stage. In the case of the latter, the company will need to first reserve a name and then apply for a name change.

A company’s MOI is the primary governing document of the company. It is binding between the shareholders inter se (if there are more than one) as well as between the company, its shareholders and any of its directors. The Act defines a company’s MOI as the document that “sets out rights, duties and responsibilities of shareholders, directors and others within and in relation to a company, and other matters as contemplated in section 15.” Section 15 of the Act refers to the MOI, Shareholders’ Agreements and Rules of the Company in more detail.

Shareholders in a Company may conclude a separate Shareholders’ Agreement which regulates various matters which may arise between the shareholders themselves, or the shareholders and the company, however a Shareholders’ Agreement is always subordinate to the Companies Act and a company’s MOI and therefore any Shareholders’ Agreement is invalid to the extent that it contravenes or contradicts the Companies Act or MOI.

In addition to the MOI, a Notice of Incorporation also needs to be lodged and submitted to the CIPC. The Notice of Incorporation will contain the specific details of the company, such as:

  1. type of company;
  2. incorporation date;
  3. financial year-end;
  4. registered address;
  5. number of directors;
  6. company name;
  7. whether the company name will be the registration number; and
  8. the reserved name and reservation number.

Supporting Documents

To register a private company, one will also complete either a CoR 15.1A (for a standard private company) or a CoR 15.1B (for a customised private company) as well as a CoR 14.1. The supporting documents required include:

  1. certified identity document copies for all indicated initial directors and incorporators;
  2. a power of attorney for the representative authorised to incorporate the company and sign all related documents if an incorporator is a juristic person or if a person is incorporating a company and signing documents on behalf of another natural person; and
  3. a valid name reservation document if a name was reserved before filing of incorporation documents.

According to the CIPC website, a company registration may vary between R125.00 and R475 (R125 for a private company, R475 for a non-profit company registered without members). In terms of time periods, a name reservation can take between 7-21 days to be completed (depending on the volume of the number of reservations), however thereafter a company certificate can be registered within 3-5 working days if all the required documentation has been completed correctly and submitted timeously.


Understanding the different types of companies in South Africa and how to register a company.

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