Forms of Business Ownership and Characteristics

Close Corporations (CC)

  • Maximum of 1010 members.

  • Members can be held personally liable for losses if found to be negligent.

  • All members must agree to the transfer of a member's interest.

  • Every member acts as an agent of the CC, binding the entity by their actions.

  • Most CCs face double taxation on income and dividends.

Private Company ((Pty) Ltd)

  • Name ends in '(Proprietary) Limited' or '(Pty) Ltd'.

  • Requires a minimum of 11 director and 11 shareholder; no limit on maximum shareholders.

  • Shares are privately held and cannot be offered to the public.

  • Ownership is dictated by a Memorandum of Incorporation.

  • Liability is limited to the number of shares held, though directors can be liable for reckless or fraudulent business under the Companies Act (No. 71 of 2008).

  • Annual financial statements are required but need not be audited or independently reviewed to be filed with the commission.

Personal Liability Company (INC)

  • Name ends with 'INC'.

  • Primarily used by associations like lawyers and accountants.

  • Directors and previous directors are jointly and personally liable for the debts of the business.

  • Requires a minimum of 11 director on the board.

Public Company (Ltd)

  • Name ends in 'Ltd'.

  • Shares are freely transferable and traded on the Johannesburg Stock Exchange (JSE).

  • Requires a minimum of 33 directors and 33 shareholders.

  • Must issue a prospectus to invite public investment.

  • Compulsory to hold an Annual General Meeting (AGM) and publish audited financial statements following Generally Accepted Accounting Principles (GAAP).

State-Owned Company (SOC)

  • Name ends in 'SOC'.

  • Financed and managed by the government to provide essential services and eliminate exploitation.

  • Requires a minimum of 33 directors and 11 or more shareholders.

  • Must hold an AGM and have financial statements audited.

  • Directors face personal liability for reckless or fraudulent activities.

Non-Profit Company (NPC)

  • Name ends in 'NPC'.

  • Organised for public or social benefit, not for profit.

  • Requires a minimum of 33 directors and has no share capital or dividends.

  • Qualifying NPCs can obtain tax-exempt status, and donations may be tax-deductible.

  • All surpluses must be cycled back into the organization's primary objective.

Co-operatives

  • Name ends in 'Co-operative Limited'.

  • Minimum of 55 members and 33 directors required.

  • Operates on a democratic structure where each member has 11 vote regardless of shares held.

  • Registration is required with the Registrar of Co-operatives Societies.

  • Focused on mutual assistance, service to members, and pooling resources for common goals.