BUSINESS ENTERPRISES IN SOUTH AFRICA
Before you start your business, you need to decide what type of business enterprise you wish to form. In South Africa, business entities are regulated (amongst others) by the Companies Act, 2008. In terms of the Companies Act, there are 4 different types or forms of business entities which can be formed.
The 4 types of business entities which can be formed are:
1. A Sole Proprietorship;
2. A Partnership;
3. A Trust; and
4. A Company.
For the purposes of this Article, we have only discussed a private company (Pty) Limited, being the most common form of business entity. The forms of companies are a public company and a non-profit company.
| Sole Proprietorship | PARTNERSHIP | TRUST | COMPANY |
|---|---|---|---|
|
1 person |
2-20 partners |
At least 1 Donor, 1 Trustee & 1 Beneficiary |
1-unlimited |
|
No Registration Requirements |
Formed by agreement between the partners. No registration requirements |
Formed by a Trust Deed. The Trust must be registered at the Masters Office |
Formed by registration at CIPC |
|
Not a Juristic Person |
Not a Juristic Person |
Not a Juristic Person |
Is a Juristic Person |
|
No Directors |
Partnership can appoint managing partners |
Trustees Manage the Trust |
At least 1 Directors |
|
Owner is personally liable for the debts of the business |
General Rule: Partners are equally liable for the profits & losses of the business |
General Rule: The Trust is liable for the debts of the Trust |
General Rule: The Company and not the shareholders are liable for the debts of the business |
|
No perpetual succession: If the owner dies, the business terminates |
General Rule: No perpetual succession: If a partner dies, the partnership terminates |
General Rule: Perpetual succession: Depending on the Trust Deed, if a donor dies, the Trust continues |
General Rule: Perpetual Succession: If a shareholder dies, the company continues to exist |
