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Requirements for a section 21 or not for profit company

How can I form a Section 21 Company?

There are some legal requirements needed to be adhered to in order to form a Section 21 Company.

They are as follows:

  • There must be at least 7 members and at least 2 directors
  • In order to register a section 21 company your organization must:
    • Be established for a lawful objective
    • Have as its main objective the promotion of religion; the arts; science; education; charity; social activity or a communal or group interest
    • Only use its income and property to promote the main objective
    • Not distribute its money or property to the members or staff unless they are being paid for work they have done
    • Appoint official auditors
    • Keep financial and accounting records
    • Hold an annual general meeting
    • When the company is dissolved; its assets must be transferred to another organization with a similar purpose
  • The proposed Section 21 company must reserve a name under which it will be registered
  • The proposed section 21 company must have the services of an auditor (to be registered as such with CIPRO)
  • The proposed section 21 company must have a registered physical address – not just a post box
  • Section 21 companies are governed by the Companies Act 61 of 1973 as amended 2005 and compliance is required

How do I register a Section 21 Company?

  • Register online as a customer with CIPRO so that you can register your Section 21 or register through an existing customer e.g. ask your accountant to register for you.
  • Deposit R50 into client’s customer code and fill in an Application for Reservation of Name or Translated Form or Shortened Form or Defensive Name, CM5 form.
  • Go to CIPRO and fill in the following forms:
  • For manual submissions, provide certified copies of the green bar-coded identity document; certified copies of passports and in the case of refugees or asylum seekers – a certified copy of valid prescribed documentation. Where there is more than one member involved in the case of a close corporation or company, all members should still provide certified copies thereof including the person who will be lodging on behalf of others.
  • Pay the prescribed fee: R350 plus R15 ( CM51 ).