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
OH 22
Criteria
1. Analyse the Rules Pertaining to a Company
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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
OH 23
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
OH 24
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
OH 25
• A Sub-subsidiary
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
OH 26
Company as a Legal Entity
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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
OH 27
Formation of a Company
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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
OH 28
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
OH 29
Accounting records
The Companies Act requires a Company to prepare
Annual Financial Statements. These must include:
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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
OH 30
Public Company
OH 31
Private Company
OH 32
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
OH 33