In terms of the Companies Act, 2008, a company may be registered with or without a company name. When a company is registered without a reserved name, its registration number automatically becomes the company name. This is the quickest way to register a company.
Such a company may transact with a trading (business) name, or may apply to add a reserved name at a later stage. In this case, the company will need to first reserve a name and then apply for a name change, which constitutes a change to its Memorandum of Incorporation (MOI) (refer to Maintain a Business).
If your initial name reservation application is not approved, you will need to apply for new names. You may apply for between 1 and 4 names during each application process. Each name reservation application costs R50. A company registration may vary between R125 and R475 (R125 for a private company, R475 for a non-profit company registered without members).
There are five types of companies that you can register. If you wish to run a franchise business, you would register a private company. If you wish to register a church, you would register a non-profit company. A private school could be registered as a private company or non-profit company, depending on its objectives. An association of professionals such as lawyers, doctors, civil engineers etc, may be registered as a personal liability company.
All companies (including external companies) and close corporations are required by law to lodge their annual returns with CIPC within a certain period of time every year.
An annual return is a statutory return in terms of the Companies and Close Corporations Acts and therefore MUST be complied with.
Failure to do so will result in the Commission assuming that the company and/or close corporation is not doing business or is not intending on doing business in the near future.
Non-compliance with annual returns may lead to deregistration, which has the effect that the juristic personality is withdrawn and the company or close corporation ceases to exist.
- Companies have 30 business days from the date that the entity become due to file annual returns before it is in non-compliance with the Companies Act
- Close Corporations have from the first day of its anniversary month up until the thereafter to file Annual returns before it is non-compliance with the Close Corporations Act
- Annual returns can only be filed electronically.
- Always use your customer code to transact with CIPC.
Memorandum of Incorporation
The most important document governing a company is the Memorandum of Incorporation (MOI). The MOI sets out the rules governing the conduct of the company, as specified by its owners. The Companies Act imposes certain specific requirements on the content of a Memorandum of Incorporation, as necessary to protect the interests of shareholders in the company, and provides for a number of default company rules / alterable provisions, which companies may accept or alter as they wish as long as it is in line with the Companies Act.
Alterable provisions within the Companies Act 2008:
- A company has all the legal powers and capacity of an individual, except to the extent that
- A juristic person is incapable of exercising any such powers, or having any such capacity; or
- The company’s MOI provides otherwise (e.g. the MOI may state that no director may contract on behalf of the company in his/her own capacity).
- Private, non-profit and incorporated companies may elect to comply with the extended accountability requirements of Chapter 3 of the Act (Sect 34(2));
- Shares within the same class has the same rights, limitations and terms, unless the MOI provides otherwise (Sect 37(1));
- MOI may exclude the right of first refusal of current shareholders of a private company in respect of shares issued by the company (Sect 39(3);
- MOI may forbid the board to render financial assistance to parties wanting to acquire shares in the company (Sect 45(2);
- MOI may provide for longer minimum notice periods for meetings;
- Electronic notice and electronic participation in meetings are allowed unless MOI prohibits it (Sect 63(2);
- Companies may determine a higher number of minimum directors than what the Act prescribes (Sect 66(2).
Unalterable provisions are provisions of the Act which the company may not change, such as directors’ duties and responsibilities and enhanced accountability requirements for public and state owned companies. In instances where the MOI is in conflict with the Act, the Companies Act will prevail. In addition, the Act allows for companies to add provisions to address matters applicable to that company, not addressed in the Act itself, but all provisions of the MOI must be consistent with the Act. The Memorandum of Incorporation contains the following information:
- Detail of Incorporators
- Number of directors and alternate directors
- Share capital (maximum issued)
- Content of MOI
An income tax is a tax imposed on individuals or entities (taxpayers) that varies with their respective income or profits (taxable income). Many jurisdictions refer to income tax on business entities as companies tax or corporate tax. Partnerships generally are not taxed; rather, the partners are taxed on their share of partnership items. Tax may be imposed by both a country and subdivisions. Most jurisdictions exempt locally organized charitable organizations from tax.
Income tax generally is computed as the product of a tax rate times taxable income. The tax rate may increase as taxable income increases (referred to as graduated or progressive rates). Taxation rates may vary by type or characteristics of the taxpayer. Capital gains may be taxed at different rates than other income. Credits of various sorts may be allowed that reduce tax. Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income.
Taxable income of taxpayers resident in the jurisdiction is generally total income less income producing expenses and other deductions. Generally, only net gain from sale of property, including goods held for sale, is included in income. Income of a corporation’s shareholders usually includes distributions of profits from the corporation. Deductions typically include all income producing or business expenses including an allowance for recovery of costs of business assets. Many jurisdictions allow notional deductions for individuals, and may allow deduction of some personal expenses. Most jurisdictions either do not tax income earned outside the jurisdiction or allow a credit for taxes paid to other jurisdictions on such income. Nonresidents are taxed only on certain types of income from sources within the jurisdictions, with few exceptions.
Most jurisdictions require self-assessment of the tax and require payers of some types of income to withhold tax from those payments. Advance payments of tax by taxpayers may be required. Taxpayers not timely paying tax owed are generally subject to significant penalties, which may include jail for individuals or revocation of an entity’s legal existence.
It is mandatory for a business to register for VAT if the total value of taxable supplies made in any consecutive twelve month period exceeded or is likely to exceed R1 million. The business must complete a VAT 101 – Application for Registration form and submit it to the local SARS branch within 21 days from date of exceeding R1 million.
A business may also choose to register voluntarily for VAT if the value of taxable supplies made or to be made is less than R1 million, but has exceeded R50 000 in the past period of 12 months.
TAX Clearance Certificates
A tax clearance certificate (TCC) is a document issued by SARS confirming that the applicant’s tax affairs are in order.
TCCs are required for tender applications, to reflect “good standing”, for foreign investment, and for emigration purposes.
The Tax Administration Act, which came into effect on 1 October 2012, contains requirements and time frames for the issue of tax clearance certificates. SARS has also issued guidelines in this regard.
TCCs pertaining to tenders and “good standing” are of particular importance for many of our clients since these TCCs are often required by businesses in order to bid for a tender or render a particular service. Following is a brief overview of the application process and requirements relating to these two types of TCC.
In any application for a TCC, for whatever purpose, the reason for the application must be properly stated. The TCC is only valid for one year from the date of issue, provided the taxpayer remains compliant with SARS requirements. The proviso confirms that SARS is entitled to withdraw a TCC at any time if it was issued in error or if it was obtained on the basis of fraud, misrepresentation or non-disclosure of material facts.
Customers can apply for a BB-BEE certificate at the CIPC Self Service Terminals while registering a business, or when filing Annual Returns.
For a business with a turnover of less than R10 million, a BB-BEE certificate is not required. Customers can complete an Affidavit, signed by an Commissioner of Oaths, and hand it instead of the BB-BEE certificate. Once the Affidavit has been stamped by a Commissioner of Oaths, the Affidavit serves as a BEE certificate as no other verification is required for Exempted Micro Enterprises.
What is the Register of Contractors?
The Register of Contractors (RoC) is a macro risk management tool to support clients to better procure for infrastructure. It applies to all contractors wishing to do work in the public sector. The RoC categorizes and grades contractors according to financial and works capability to carry out construction projects. Grades range from 1 to 9. The Construction Industry Development (CID) Regulations of 2004, as amended, bind public sector clients to only award construction contracts to cidb registered contractors.
Who must register?
- Any contractor can register on the cidb RoC.
- Subcontractors do not yet need to register.
- Joint ventures (JV) do not need to register. All partners to a JV must however, must be individually registered in their own right. Their combined grading may be determined using the cidb Joint Venture Calculator
- Home builders are regulated by the National Home Building Council (NHBRC). They are therefore exempted from the Register of Contractors.
- Labour only contractors are exempted from registration with the cidb.
How to register
To register, contractors must select and complete either the Grade 1 or Grade 2 to 9 application form as applicable. The contractor may only carry out work in the class of works they are registered in, and up to the maximum value of work permissible in their registered grading level. Each class of works must therefore be individually and separately applied for.
COIDA Letter of Good Standing
COIDA Registration is a requirement for ALL employers. The “Compensation for Occupational Injuries and Diseases Act” or “COID Act” states that all South African persons (individuals / companies) who employ one or more employees, in connection with their business / farming activities, organisation / association / trust are under the scrutiny of the COID Act. Employees will be covered for injuries whilst on duty.
If an employer is registered with the Compensation Fund as per section 80 of the COID Act, he / she can apply for a Letter of Good Standing from the Compensation Fund. This letter states that there is no outstanding claims / debt on his / her Compensation Fund record.
- Company Registration Documents (lost yours?) (need to register a Company?)
- You need to be registered with the Compensation Fund – we need your CF Registration Number (not registered?)
The annual fees payable at the Compensation Fund needs to be up to date & successfully submitted. In case your fees are not up to date, we will send you the information you need to settle your account with the Compensation Fund before we can continue with the Letter of Good standing. Note that if you have an outstanding fee, the COMPENSATION FUND will charge you these fees additional to the services that we offer.
SHEQ Policy Manual
SHEQ is an acronym for Safety, Health, Environment and Quality, generally used regarding workplace SHEQ management.
SHEQ is a technical field that applies several disciplines for continuous improvement of occupational Safety, Health, Environment and Quality factors that impact on any organisation. This is accomplished by developing processes, or ways of doing work, that moves programs though a structured cycle similar to the “plan-do-check-act” or PDCA cycle.
Although the management of Safety, Health, Environment and Quality was often treated as independent functions within organizations, many now look at ways to integrate legacy management systems as a way to uniformly manage.
ISO, the International Organization for Standardization, is an independent, non-governmental organization, the members of which are the standards organizations of the 163 member countries.
It is the world’s largest developer of voluntary international standards and facilitates world trade by providing common standards between nations.
Over twenty thousand standards have been set covering everything from manufactured products and technology to food safety, agriculture and healthcare.
Use of the standards aids in the creation of products and services that are safe, reliable and of good quality. The standards help businesses increase productivity while minimizing errors and waste.
By enabling products from different markets to be directly compared, they facilitate companies in entering new markets and assist in the development of global trade on a fair basis. The standards also serve to safeguard consumers and the end-users of products and services, ensuring that certified products conform to the minimum standards set internationally.
In modern business practice, a letter of credit (LC) also known as a Documentary Credit, is a written commitment by a bank issued after a request by an importer (foreign buyer) that payment will be made to the beneficiary (exporter) provided that the terms and conditions stated in the LC been met, as evidenced by the presentation of specified documents.
A letter of credit is a method of payment that is an important part of international trade. They are particularly useful where the buyer and seller may not know each other personally and are separated by distance, differing laws in each country and different trading customs. It is generally considered that Letters of Credit offer a good balance of security between the buyer and the seller, because both the buyer and seller rely upon the security of banks and the banking system to ensure that payment is received and goods are provided. In a Letter of Credit transaction the goods are consigned to the order of the issuing bank, meaning that the bank will not release control of the goods until the buyer has either paid or undertaken to pay the bank for the documents.
In the event that the buyer is unable to make payment on the purchase, the seller may make a demand for payment on the bank. The bank will examine the beneficiary’s demand and if it complies with the terms of the letter of credit, will honor the demand. Most letters of credit are governed by rules promulgated by the International Chamber of Commerce known as Uniform Customs and Practice for Documentary Credits. The current version, UCP600, became effective July 1, 2007. Banks will typically require collateral from the purchaser for issuing a letter of credit and will charge a fee which is often a percentage of the amount covered by the letter of credit.
Employment Equity Reporting
Every designated employer is required to design and implement an employment Equity plan. The purpose of the employment Equity plan is to enable the employer “to achieve reasonable progress towards employment Equity”, to assist in eliminating unfair discrimination in the workplace, and to achieve equitable representation of employees from designated groups by means of affirmative action measures.
An employment Equity plan therefore must clearly set out the steps that the employer plans to follow to achieve these objectives. In order to assist employers, the Department of Labour published a Code of Good Practice on the Preparation, Implementation and Monitoring of Employment Equity Plans. The Department of Labour also published a user guide to the employment Equity act, detailing 10 steps to preparing and implementing an employment Equity plan. Every employer should be in possession of at least these two documents – the Code of Good Practice and the User Guide.
There is no rigid format for an employment Equity plan, and the act allows employers to customise the plan to suit their own needs. Employment Equity and affirmative action applies to all designated employers and their employees, particularly those employees from designated groups. Designated employers are employers who employee 50 or more employees, employers who employ less than 50 employees but whose annual turnover exceeds or equals the amounts in schedule 4 of the EEA, or an employer who has been declared a designated employer in terms of a collective agreement.
Certain state organs are excluded, such as the National Defence Force, the National Intelligence Agency and the South African Secret Service. Designated groups are Africans, Coloureds, and Indians, woman of all races, and people with disabilities. All employers who have 50 or more employees on the date on which reports were due are required to report, and all employers who have 150 or more employees on the date on which reports were due are required to comply with the reporting requirements for larger employers.
Chapter 3 of the employment Equity act requires that employers take certain affirmative action measures to achieve employment Equity.
- Employers must consult with the unions and employees in order to make sure that the plan is accepted by everybody and to allow all parties to have fair input
- Employers must analyse all employment policies, practices and procedures, and prepare a profile of their workforce in order to identify any problems relating to employment Equity
- Employers must prepare and implement an employment Equity plan, setting out the affirmative action measures they intend taking to achieve the employment Equity goals.
- Employers must report to the Department of Labour on the implementation of the plan in order for the department to monitor their compliance.
- Employers must display a summary of the provisions of the act in all languages relevant to their workplace. The summaries are available from the government printer and certain offices of the Department of Labour.
In the implementation of EE, we are concerned with a number of documents. These are the Code of Good Practice on the Implementation of Employment Equity Plans, the Employment Equity Act itself, the Regulations under the Employment Equity Act, and the user guide published by the Department of Labour. The Code of Good Practice on the Implementation of Employment Equity Plans is not law. It has been published as a guide to employers, and it does give some valuable tips and information. Despite not being law, the Code must be taken into account.
Workplace Skills Plan
A workplace skills plan (WSP) is a strategic document that articulates how the employer is going to address the training and development needs in the workplace.
Each employer must appoint a registered skills development facilitator who, with his skills development committee (SDC) will spearhead the process of developing your company’s WSP.
The easiest way of doing this is to perform a skills audit, which essentially consists of documenting which skills you have in your business and determining which skills you still need.
There are a number of ways in which you can conduct a skills audit in your organisation, three of these being a:
- Panel audit;
- Consultant audit; and
- One-on-one audit.
Panel audit: The panel, in a panel audit, is made up of managers, subject matter experts and HR experts. The audit is completed through discussion and is possibly the fairest method of completing an audit because it provides a well-rounded view of a particular company’s skills.
Consultant audit: During this type of audit, external consultants assess the skills in your company by interviewing both managers and employees.
One-on-one audit: This type of skills audit is similar to a performance appraisal where the person is rated against a pre-defined skills matrix and not his or her job description.
Determine which skills you want to develop
In this step, you need to look at your company’s strategic development priorities and determine what the skills are which will allow you to fulfill these priorities.
Once you’ve done this, look at how best you can inject your organisation with the skills you require. For example, would it be best to send the employees you want to upskill on a specific course or would upskilling these employees merely consist of their line managers transferring the