EXPLANATORY NOTES FOR THE CUSTOMISED MEMORANDUM OF INCORPORATION FOR SETTING UP A NEW SMME PRIVATE COMPANY (SMALL BUSINESS)

This customised MOI is for use when you require to set up a NEW SMME private company and may be used where the smme private company to be incorporated has any number of shareholders and any number of directors, for example, it can be used in the following scenarios:

  • many shareholders and many directors;
  • one shareholder and many directors;
  • many shareholders and one director;
  • one shareholder and one director;
  • situations where all shareholders are also directors.

The SMME PRIVATE COMPANY MOI has been drafted for use by parties wanting to incorporate a small, medium or micro private company that has any number of shareholders and any number of directors. It is focused around the protection of shareholder rights.

(Please note that the short standard CIPC MOI may adversely impact on shareholders’ rights. We caution against parties using this document. For more information, please read this article.)

This SMME PRIVATE COMPANY MOI (small businesses) also:

  • does not contain ring-fencing provisions, as it does not allow for any restrictions or prohibitions to a company’s MOI;
  • restricts the transferability of securities;
  • prohibits the company from offering its securities to the public;

To incorporate your company, please visit the CIPC website. Register as a customer here. Reserve your company name. Register your company by using the incorporation forms. REMEMBER you will not use either of the standard MOIs, if you are using the one you have purchased off this site.

For your convenience, we have drafted a shareholders’ agreement that is compatible with the SMME PRIVATE COMPANY MOI. It is available for purchase here.

The cost of this MOI includes VAT. This is really good value for money. You receive a custom MOI that protects shareholders’ rights. There are no substantive drafting changes that you need to make, and with the benefit of this site you learn more about the MOI and why it is so important. Typically entities setting up a company for you, may charge you around R850 and will use the short standard CIPC MOI (Form Cor. 15.1.A). Again, we caution against this and reiterate that you should read this article.

By incorporating your own company, you:

  • get to engage with each clause of the MOI and understand the implications thereof;
  • get to know what must and must not be in your shareholders’ agreement; remember in terms of the new Companies Act, the MOI CANNOT be amended by a shareholders’ agreement and should the latter conflict with the MOI, it will be void to the extent of the conflict;
  • ensure that you hold your company’s legal affairs in your own hands; as a small business owner it is imperative for you to understand the legal and regulatory framework that impacts your business to the best of your ability; why not start with your MOI and shareholders’ agreement;
  • get to engage and register with CIPC; it is best- as a small business owner- to start engaging with CIPC as soon as you are able to and to understand the workings of CIPC. This will help you when it comes to registering annual returns and handling the company secretarial and governance work related to your small business; it really is best to start sooner rather than later.

Should you wish to have your company incorporated by a party that operates in this area, we exhort you to please ensure that the party handling the incorporation on your behalf is a suitably qualified legal practitioner. SITL Legal is able to incorporate any type of company for you should you so desire. Please e-mail info@sitllegal.co.za in this regard.

We’ll continue making informative articles and elearning available around the MOI and shareholders’ agreement so that you can apprise yourself of the workings of these documents and how they could/should be amended as your business grows.

Constructive feedback is always welcome; please use the contact form on this site to e-mail us.

For more information on MOIs, shareholder agreements and the setting up of companies, purchasing shelf companies etc., please visit www.sitlbusiness.co.za

Kindly note that should you require that the above document be prepared for you and lodged with CIPC, then please visit http://www.sitllegal.co.za/virtual-legal-consulting.html for a substantive quote.