“I have been approved to open up a small franchise business. The franchisor however requires that I run the franchise business in a private company and not in my personal name. Where must I start with setting up a company?”

Setting up a company can be a relatively quick exercise, especially if you have done your homework well. To help you, I now list the main steps you need to follow to register a private company.

The first step is to get a name for your company. Most names are acceptable, although you should not try and impersonate another business or use a name that has already been taken or one that is immoral or offensive. The Companies Act also requires that the name of a private company always end with the expression “Proprietary Limited” or its abbreviation, “(Pty) Ltd”.

Your chosen company name must then be approved and reserved at the Companies and Intellectual Property Commission (CIPC) with them informing you once your name has been reserved. The name will remain reserved for a period of six months during which period you can apply for the registration of your company.

The Companies Act determines that a private company must have a minimum of one director and incorporator, which may be the same person and can also include a juristic person such as another company or trust. In your case, you would probably be both the incorporator and the director of your new company.

The incorporator must initiate registration by completing and submitting to CIPC the following:

• A Notice of Incorporation form CoR14.1 which contains the name and identity number of the incorporator and all the information of the company such as the company’s registered office address, number of directors, date of financial year end, etc.
• An Initial Directors form CoR14.1A which will contain all the information for each of the initial directors of the company, such as the director name, identity number, residential and postal address, etc.
• A Company Appointments form CoR14.1D which contains the information of the company’s auditor and/or company secretary – this form is not mandatory for company registration and should only be completed if an auditor or company secretary is appointed.
• A Memorandum of Incorporation (MOI) form CoR15.1A which is the standard MOI template provided by CIPC which can be used. One can however submit your own custom MOI which better addresses your own preferences and requirements for the running of the company.
• A Confirmation Notice of Name Reservation form CoR9.4 which was obtained when the company name was approved and reserved by CIPC.
• Certified identity copies of the incorporator and director(s).

After the application has been submitted and processed by CIPC, they will issue you with your company’s Registration Certificate CoR14.3 which confirms important information such as the company’s name, registration number, date of registration, date of financial year end, registered address, list of directors etc. The company will also be a juristic person from the date of incorporation as stated in Registration Certificate and will be able to do business as a company from that date.

You should note that a company is required to file annual returns with CIPC as of the anniversary date of its incorporation which will include the paying of prescribed fees determined on a sliding scale based on your company’s annual turnover.

Although setting up a company can be a relatively quick exercise, complexity can arise for example when establishing a custom MOI or shareholders agreement (if the company has more than one shareholder) etc. It is accordingly advisable to consult your attorney to obtain the necessary advice and ensure that your company is set up correctly to address your particular business needs.

Written by Maureen Odendaal, Associate, Phatshoane Henney Attorneys: Commercial Department