[1] A company is a business organisation which earns income by the production or sale of goods or services.
This entry also covers rules by which partnerships and trusts are governed in South Africa, together with (albeit in less detail) cooperatives and sole proprietorships.
If, on the other hand, an unincorporated business should go bankrupt, its owners, who do not enjoy such separation, will be liable for its debts.
The fact that a person is a shareholder of Pick n Pay does not entitle him to go along to one of its branches and leave it with an unpaid-for basket of groceries in his possession.
Until 1844, there was no comprehensive legislation governing companies, so that they had to be incorporated by a specific Act of Parliament, or by the granting of a royal charter in Europe.
The next major South African legislation in this area was the Companies Act[5] of 1973, which remained in force until 31 April 2011.
Changes in society, and in the way the international community expects businesses to operate, also demanded the introduction of new concepts like stakeholder rights and corporate governance.
The 1973 Act was seen as unnecessarily rigid; a more business-friendly approach was demanded, which would encourage entrepreneurship and thereby economic and employment growth.
The income and property of an NPC are not distributable to its incorporators, members, directors, officers or persons related to any of these people (except to the extent permitted by item 1(3) of Schedule 1).
It may raise capital from the general public, and its shareholders enjoy free transferability of shares and interests in the company.
What constitutes "carrying on business" was radically altered by the insertion of section 23(2A) with the first Amendment Bill.
There are, with close corporations, no strict rules relating to the maintenance of capital, and they also enjoy flexibility in the arrangement of their internal relationships.
It entitles him to a pro rata share in the aggregate of the members' interests, as well as to participate in a distribution of the profits and, on liquidation, the remaining assets after all creditors have been paid.
Members must act honestly and in good faith, and exercise their powers to manage or represent the close corporation in its best interests and for its benefit.
[21] If there is a breach of these duties, the member will be liable to the close corporation for any loss suffered or benefit derived.
In Robinson v Randfontein Estates Gold Mining,[22] the Appellate Division refused to recognise the separate legal personality of a subsidiary where Robinson had attempted to use it as a device for evading the fiduciary duties he owed to the holding company as director.
In Cohen v Segal,[23] the court held that a dividend may not be declared which has the effect of diverting a portion of the corpus of the company (or close corporation) to the shareholders.
The degree of care and skill required is that which may reasonably be expected from a person of the particular member's knowledge and experience.
Cohabiting couples, partners in crime and attorneys supply examples of the word's common usage.
In a legal and commercial sense, "partnership" refers to an association of two or more persons who carry on as co-owners of a business for profit.
[26] A cooperative is an autonomous association of persons united voluntarily to meet their common economic and social needs and aspirations through a jointly-owned enterprise, democratically controlled, and organised and operated on co-operative principles.
[27] A trust exists whenever someone is bound to hold and administer property on behalf of another, and not for the benefit of the holder.