Business Registrations simplified

Despite some amount of complexity in the process of business registrations, particularly for inexperienced entrepreneurs or small enterprise owners, there are distinct advantages to registering one’s entity. These advantages include name protection, income tax advantages, improved access to funding, as well as access to human capital.

The registration landscape in South Africa went through a significant process of change on 1 May 2011 when The Companies and Intellectual Property Registration Office (CIPRO) was replaced by the Companies and Intellectual Property Commission (CIPC) under the then legislated New Companies Act. This Act changed the manner in which enterprise owners would complete new business registrations as of that date.

In addition to this, under the new Act, a name reservation is no longer required prior to registering a business. If the proposed name is rejected at registration, the company would still be registered as the registration number then becomes the company name upon incorporation, until such time as an appropriate name has been reserved.

New registrations now have the choice of 5 different classifications. These classifications are as follows:

• Non-profit companies: These are entities created for public benefit or for objectives relating to one (or more) cultural or social objectives, or communal or group interests.
• Profit companies: These entities have a primary objective of creating profit for their shareholders.
• Personal liability companies: Ending with “incorporated”, the present and past directors of such entities are jointly liable for all debts and liabilities of the entity that arise during their period in office. Such entities are common in professional practices, such as a practice of medical professionals.
• Public companies: Such entities have publicly held shares in issue and such shares are traded through a stock exchange, such as the Johannesburg Stock Exchange. The entity has more than 50 shareholders and members of the public may hold shares in the company.
• Private companies: Similar to CC’s discussed earlier, these entities now include the words “Proprietary Limited” or (Pty) Ltd. There is no limitation or minimum requirement in the number of shareholders, but the Board has to comprise at least one director.