PTY registration

A private company must end with the words (Pty) Ltd or with (Proprietary) limited. A private company has a separate legal personality and is accountable for its own debts. The shareholders choose the board of directors. The company may carry on independently and the change in shareholders has no influence on continuity.

The business pays income tax at a company rate. Shareholders do not pay income tax on dividends received. In a private company change may only occur with a special resolution of all shareholders. Shares of a private company may be sold with the permission of the other shareholders. The voting rights of a private company is determined by the number and kind of shares held.

The Information needed to register a new Private Company:

  • Four name Proposals for the Company
  • ID copies of all the directors
  • Residential and Postal addresses of all the directors
  • The Company’s registered or postal address
  • Contact details of all the directors

The Advantages of a Private Company

  • Limited liability, if the company should be liquidated, the shareholders only lose the amount of money they have invested in the company. They do not lose any personal possessions
  • Unlimited continuity, the company will continue to exist even if the present shareholders should leave and new shareholders join the company
  • The existing shareholders have control over who may join them as shareholders
  • A private company in the past may have up to 50 shareholders which was now amended, and currently there is no limit on shareholders, and can therefore raise large amounts of share capital
  • A private company is subjected to fewer legal restrictions than a public company. Thus having more privacy in the running of the business
  • A private company may begin a business once it has received the certificate of incorporation
  • A private company is a good form of ownership for those business people with innovative ideas and skills, but with a limited amount of capital
  • A private company does not need to publish financial statements. It is a useful form of ownership if privacy is required

Disadvantages of a Private Company

  • The shares of a private company are not freely transferable. Shares cannot be converted into cash as rapidly and simply as possible and also may not be listed on stock exchange
  • Shares of a private company may not be accessible to the broad public. The source of capital is limited to what the current shareholders can contribute and therefore growth may be held back
  • The formation and management of a private company was more difficult and complex than a close corporation, but this was amended in the new companies act.