South Africa
Corporate Guide

What are the different types of companies that can be incorporated in South Africa?

• Private companies
• Personal liability companies
• Public companies
• Non-profit companies
• State-owned companies

Companies can be incorporated either as profit companies (being private companies, personal liability companies, public companies, or state-owned companies) or as non-profit companies. 

A private company (suffix: (Pty) Ltd)

This is a company whose memorandum of incorporation (MOI): (i) restricts the transferability of company securities (usually achieved by imposing pre-emptive rights in the MOI), and (ii) prohibits the offering of securities to the public. A private company can be incorporated by one or more incorporators and must have at least one director. There are no restrictions on the number of shareholders a private company may have. 

A personal liability company (suffix: Inc.)

A company that meets the criteria of a private company and whose MOI provides that it is a personal liability company. This type of company is generally used by professional associations such as attorneys, engineers and stockbrokers who wish to utilise some of the advantages of separate legal personality, such as perpetual succession, while still abiding by any professional rules which may require personal liability. Directors of the personal liability company are jointly and severally liable to the company for all contractual debts and liabilities incurred when they held their positions. A personal liability company can be incorporated by one or more incorporators and must have at least one director.

Public companies (suffix: Ltd)

These are companies whose securities are freely transferable and may be offered to the public. A public company can be incorporated by one or more incorporators and must have at least three directors (although, practically, more directors may be required in light of the various committees required to be constituted by a public company). Only public companies may be listed on the stock exchange. 

Non-profit companies (suffix: NPC)

Non-profit companies are companies: (i) that are incorporated for public benefit or an object relating to one or more cultural or social activities, or communal or group interests; and (ii) whose income and property are not distributable to their incorporators, members, directors, officers, or persons related to any of them (subject to certain exceptions). A non-profit company may be incorporated by at least three incorporators and must have at least three directors. An organ of the state or juristic person may also incorporate a non-profit company. Non-profit companies may be incorporated with or without members. 

State-owned companies (suffix: SOC)

These are companies that are either: (i) listed as public entities in Schedule 2 or 3 of the Public Finance Management Act 1 of 1999 (which can include either national or provincial government public entities, which are directly or indirectly controlled by the state); or (ii) owned by a municipality and are otherwise similar to an enterprise referred to in (i). In most instances, provisions pertaining to public companies apply to state-owned companies as well. 

Finally, it should be noted that where a company that is incorporated in a jurisdiction outside of South Africa carries on business or non-profit activities (as the case may be) within South Africa, that company must register as an external company in terms of the Act within 20 business days of commencing such activities in South Africa. Importantly, an external company is merely a branch of the foreign company, and no separate legal personality exists in terms of the external company. As such, an external company is treated differently from other company types in terms of the Act, with only certain specific sections extending to it. An external company can be registered either as an external profit company or an external non-profit company (the latter applying if, within the foreign jurisdiction in which it is incorporated, it meets the legislative or definitional requirements that are comparable to the legislative or definitional requirements of a non-profit company incorporated under the Act).