Registering a company might seem like an administrative headache but it’s an important step in the birth of your new venture, and one that can have a significant impact to the future of your business.
The first step is to decide what type of business you want your company to be, an important consideration that will be influenced by the nature of the business and the goals you hope to achieve. This means the business is a separate legal entity so your personal liabilities are limited. Registration is relatively uncomplicated and registration costs are low. However, there can be no more than 10 directors, and all members have to be individual persons.
The private company (Pty Ltd) on the other hand allows for a maximum of 50 shareholders. The shareholders also have limited personal liability unless they can be shown to have acted in a willfully negligent manner. The registration process is more complicated and costly.
In both cases you will need to register through the Companies and Intellectual Property Registration Office (CIPRO). This can be done on your behalf by an attorney or agent. Alternatively, you can register as a customer on CIPRO (this requires paying a fee) and manage the process yourself. However, failing to submit the correct forms in the correct way can lead to lengthy delays so make sure you know what you are doing, or enlist the services of a professional agent.
The first thing they will need to do is reserve a company name on your behalf. Think carefully about the choice of name and check on the CIPRO website first to see that the name you have in mind is not yet taken (www.cipro.co.za, scroll down on the left hand panel to Name Search). If there is another company by the same or closely similar name operating in your industry, you will in all likelihood not be granted permission to use that name.
To reserve a name, your agent can use a CK7 form or CM5 form for CC and private company respectively, or do it online (the latter has a faster turnaround time). To save time-consuming back-and-forth should you not be granted your first choice of name, include around four possible names on your application. Once the name has been approved, it is valid for three months, during which time you will need to incorporate your company.
Once your name has been approved your agent will need to lodge the various documents with CIPRO for registration. For a CC this is the CK1 form (founding statement). Private companies need to follow a more complicated process and submit the CM22 form, Notice of Registered Office and Postal Address of Company, (in duplicate); the CM29 form regarding the contents of the register of directors, auditors and officers; the CM46 which is the application for certificate to commence business; and the CM47 form which is the statement by each of the directors regarding the adequacy or inadequacy of share capital.
Both the CC and private company need to open a bank account, register for PAYE, income tax, VAT (if applicable), UIF and COIDA (Compensation for Occupational Injuries and Diseases Act).