Complying with Changes in Legislation

Reservation of name and defensive names (Section 12)

A person may reserve one or more names to be used at a later time, either for a newly incorporated company, or as an amendment to the name of an existing company, by filing an application together with the prescribed fee.

A name reservation continues for a period of six months from the date of the application, and may be extended by the Commission, for a period of 60 business days at a time.

Any person may apply to the Commission to:

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  Register any name as a defensive name for a period of two years; or
  
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  Renew, for a period of two years, the registration of a name as a defensive name, in respect of which he or she has a direct and material interest.
  

Right to incorporate company (Section 13)

One or more persons may incorporate a profit company, or three or more persons may incorporate a non-profit company, by:

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  Completing, and each signing in person or by proxy, a MOI; and
  
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  Filing a Notice of Incorporation accompanied by a copy of the MOI.

  If the MOI includes any special provisions, the Notice of Incorporation must include a prominent statement drawing attention to each such provision, and its location in the MOI.

  
  

The Commission may reject a Notice of Incorporation if the notice:

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  Is incomplete, or improperly completed; and
  
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  The initial directors of the company are fewer than required or are disqualified to serve as a director.
  

Registration of company (Section 14)

 The Commission must:

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  Assign to the company a unique registration number;
  
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  Enter the prescribed information in the companies register;
  
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  Issue and deliver to the company a registration certificate.
  

 Memorandum of Incorporation, shareholder agreements and rules of company (Section 15)

 Each provision of the MOI:

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  Must be consistent with this Act; and
  
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  Is void to the extent that it contravenes, or is inconsistent with, this Act.
  

The MOI of any company may:

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  Include any provision dealing with a matter that this Act does not address;
  
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  Altering the effect of any alterable provision of this Act;
  
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  Contain any special conditions applicable to the company, and any requirement for the amendment of any such condition;
  
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  Prohibit the amendment of any particular provision of the MOI.
  

The board may make, amend or repeal any necessary or incidental rules relating to the governance of the company in respect of matters that are not addressed in this Act or the MOI by publishing and filing a copy of the rules.

The rules take effect on a date that is the later of:

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  20 business days after the rule is published; or
  
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  The date specified in the rule; and
  
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  Is binding:
  
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    on an interim basis from the time it takes effect until it is put to a vote at the next general shareholders meeting; and
    
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    on a permanent basis only if it has been ratified by an ordinary resolution.
    

If a rule that has been published is not subsequently ratified, the company’s board may not make a substantially similar rule within the ensuing 12 months, unless it has been approved in advance by ordinary resolution at a shareholders meeting.

The MOI, and any rules of the company, are binding:

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  Between the company and each shareholder;
  
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  Between or among the shareholders of the company; and
  
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  Between the company and;
  
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    Each director or prescribed officer of the company; or
    
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    Any other person serving the company as a member of the audit committee or as a member of a committee of the board, in the exercise of their respective functions within the company.
    

Amending Memorandum of Incorporation (Section 16)

The MOI may be amended:

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  In compliance with a court order;
  
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  If a special resolution to amend it is proposed by:
  
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    the board; or
    
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    shareholders entitled to exercise at least 10% of the voting rights; and
    
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  It is adopted at a shareholders meeting.
  

Legal status of companies (Section 19)

A person is not, solely by reason of being an incorporator, shareholder or director, liable for any liabilities or obligations of the company, except to the extent that this Act or the MOI provides otherwise.

If a company is a personal liability company the directors and past directors are jointly and severally liable, together with the company, for any debts and liabilities of the company as are or were contracted during their respective periods of office.

A person must not be regarded as having received notice or knowledge of the contents of any document relating to a company merely because the document:

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  Has been filed; or
  
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  Is accessible for inspection at an office of the company.
  

A person must be regarded as having received notice and knowledge of any provision of a MOI, if the company’s Notice of Incorporation or a Notice of Amendment has drawn attention to the provision.

Validity of company actions (Section 20)

 

If a MOI limits, restricts or qualifies the purposes, powers or activities of that company no action of the company is void by reason only that:

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  The action was prohibited by that limitation, restriction or qualification; or
  
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  As a consequence of that limitation, restriction or qualification, the directors had no authority to authorise the action by the company; and
  
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    in any legal proceeding, other than proceedings between:
    
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       the company and its shareholders, directors or prescribed officers; or
      
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      the shareholders and directors or prescribed officers of the company;
      
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    no person may rely on such limitation, restriction or qualification to assert that an action is void.
    

If the MOI limits, restricts or qualifies the purposes, powers or activities of that company, or limits the authority of the directors to perform an act on behalf of the company, the shareholders, by special resolution, may ratify any action by the company or the directors that is inconsistent with any such limit, restriction or qualification.

An action may not be ratified if it is in contravention of this Act.

One or more shareholders, directors or prescribed officers of a company, or a trade union representing employees of the company, may take proceedings to restrain the company from doing anything inconsistent with this Act.

Each shareholder of a company has a claim for damages against any person who fraudulently or due to gross negligence causes the company to do anything inconsistent with this Act, or a limitation, restriction or qualification unless that action has been ratified by the shareholders.

A person dealing with a company in good faith, other than a director, prescribed officer or shareholder of the company, is entitled to presume that the company, in making any decision in the exercise of its powers, has complied with all of the formal and procedural requirements in terms of this Act, its MOI and any rules of the company unless, the person knew or reasonably ought to have known of any failure by the company to comply with any such requirement.