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OH 22

Learning Objectives. 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

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OH 22

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  1. Learning Objectives • 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

  2. Criteria • Analyse the Rules Pertaining to a Company • 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

  3. Criteria (Continued) • 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

  4. Criteria (Continued) • 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 • A Sub-subsidiary OH 25

  5. Criteria (Continued) • 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

  6. Company as a Legal Entity • 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

  7. Formation of a Company • 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

  8. 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

  9. Accounting records • The Companies Act requires a Company to prepare Annual Financial Statements. These must include: • 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

  10. Public Company OH 31

  11. Private Company OH 32

  12. 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

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