In the last blog article, we mentioned that the registration and ongoing operation of your company is regulated by the Companies Act. The following points, of the recently amended Companies Act and your small business, are important to note:
A (Pty) Ltd is owned by its shareholders; these can be individuals or other companies. The company is headed by its managing director, not necessarily by its shareholder(s). He or she reports to the board of directors.
The assets of a (Pty) Ltd are separate from those of the shareholders. The personal assets of the directors/shareholders cannot be attached by creditors, unless they have signed personal sureties or infringements of the Companies Act can be proven.
Previously, it was mandatory for every single (Pty) Ltd to have audits performed on their annual financial statements, but the later version of the Companies Act, states that this is no longer compulsory. On Wednesday 20 April 2011, the DTI issued a media release confirming that the new Companies Act, Act No 71 of 2008, was signed by the President, and that the new Companies Act will come into effect on 1 May 2011. It was at this time that “The Public Interest Score” was introduced. The public interest score of a company determines the financial reporting standards that the company must adopt based on the number of shareholders and employees, the rand value of its annual sales and amount of outstanding debt. This measure then defines whether a business is classified as small, medium or large enterprise. Small enterprises can have their financial statements independently reviewed instead of audited.
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