Monthly Archives: December 2016

An Introduction: MOI & Shareholders Agreement

1. Memorandum of Incorporation

The Memorandum of Incorporation (“MOI”) is the founding document of company which, in conjunction with the Companies Act, 2008 (Act No. 71 of 2008) (“Act”), regulates the governance and affairs of a company. It sets out rights, duties and responsibilities of shareholders, directors and others within and in relation to a company, and other matters dealt with in section 15 of the Act.

Section 15 of the Act, amongst others, provides for deviation from the standard provisions set out in the Act and permits the MOI to –

  • deal with a matter that the Act does not address;
  • alter the effect of any alterable provision of the Act (i.e. a provision that may be negated, restricted, limited, qualified, extended or otherwise altered in substance or effect);
  • impose on the company a higher standard, greater restriction, longer period of time or any similarly more onerous requirement, than would otherwise apply to the company in terms of an unalterable provision of the Act (i.e. a provision that may not be negated, restricted, limited, qualified, extended or otherwise altered in substance or effect).

It is important to note that the MOI is a public document, which is filed with the Companies and Intellectual Property Commission (“CIPC”). Any person can, subject to payment of the prescribed fee, obtain a copy of a company’s MOI from CIPC. Confidential company matters are therefore best dealt with in the Shareholders Agreement (a private document) and not in the MOI.

  1. Shareholders Agreement

In terms of section 15(7) of the Act, the shareholders of a company may enter into any agreement, with one another concerning any matter relating to the company (namely a Shareholders Agreement), provided that such agreement must be consistent with the Act and the company’s MOI.

Any provision of a Shareholders Agreement that is inconsistent with the Act or the company’s MOI is void to the extent of the inconsistency, it is therefore important to carefully align a Shareholders Agreement to ensure its validity and enforceability.

Unlike the MOI, a Shareholders Agreement is not filed with CIPC and is not available to the general public. It is a private document which, among others, regulates the confidential affairs of the company, such as funding, voting, deemed offers, forced sales, come along, tag along, deadlock and other significant issues.

  1. Summary

In order to ensure good governance, transparency and accountability a company should definitely have a properly drafted MOI and Shareholders Agreement. A company’s MOI and Shareholders Agreement must further be aligned with one another and the Act, falling which it could have negative and / or unintended consequences.

It is essential to consult a qualified commercial attorney to assist with the preparation a customized MOI and Shareholders Agreement, to ensure statutory compliance and to limit potential disputes between stakeholders.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

How to register a new company

The basic steps to register a company under the Companies Act of 2008 at the Companies and Intellectual Property Commission (CIPC) involves certain forms and supporting documentation that must be lodged and the accompanied fees paid.

The steps

The first step in registering a new company is optional. A CoR9.1 form must be completed and lodged with the CIPC in order to reserve a name for the company to be registered. However, the Act does make provision for a company to be registered without a name. The company registration number will then be the name of the company until such time as the company properly registers a name. A certified copy of the identity document of the applicant must be submitted as supporting documentation with this form and a filing fee is payable.

The next step is to complete and lodge the CoR14.1 Notice of Incorporation form together with the CoR15.1 Memorandum of Incorporation.

The Notice of Incorporation specifically contains information regarding the type of company to be registered, the incorporation date, financial year end, registered address, number of directors and the company name if applicable. A certified copy of the identity document of the applicant must be submitted as supporting documentation and a filing fee is payable. A CoR14.1A form contains specific information about the directors of the company who will be appointed at registration, and this form must be lodged together with the Cor14.1. Certified copies of the identity documents of all directors to be appointed must be submitted as supporting documentation. An optional form CoR14.1D may be lodged together with the CoR14.1, which indicates any company appointments to be registered with the CIPC, such as a company secretary or auditor.

The Memorandum of Incorporation is probably the most important document when registering a company, since the provisions contained herein will govern the company. It can be short and simple, or long and extremely technical, depending on what type of company is being registered. In this regard, it is best to seek professional advice. The supporting documentation and filing fees applicable will depend on what type of Memorandum of Incorporation is being registered.

If an auditor or company secretary is appointed at registration as contained in the CoR14.1D, a CoR44 form must also be completed and submitted. No filing fee is payable for this form. An original acceptance letter and certified copy of the identity document of the auditor or company secretary must be submitted as supporting documentation.

The CoR21.1 Notice of Registered Address must be completed with the particulars of the registered address of the company. Again a certified copy of the identity document of the applicant must be submitted as supporting documentation, but no filing fee is payable.

Once all the necessary forms and supporting documentation has been submitted and applicable fees paid, the CIPC will issue a Registration Certificate form CoR14.3 if it is satisfied that all provisions in the Act has been satisfied.

Any changes to the information placed on record at the CIPC at the original registration of the company, must be registered without delay and on the proper forms and possible payment of applicable filing fees.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)