The main types of business entities in South Africa are sole proprietorships, partnerships, private companies, personal liability companies, public companies, non-profit companies, and trusts. Companies are formed under the Companies Act 71 of 2008 and registered with the CIPC.
The common business structures
- Sole proprietorship: one owner, no separate legal entity, personal liability for debts
- Partnership: two or more people trading together under a partnership agreement
- Private company, (Pty) Ltd: separate legal entity, shares not offered to the public
- Personal liability company, Inc.: directors are jointly liable for company debts; often used by professional firms
- Public company, Ltd: may offer shares to the public
- Non-profit company, NPC: for public benefit or social purposes
- Business trust: registered with the Master of the High Court
Close corporations (CCs) can no longer be registered, but existing CCs may continue to trade.
The right structure depends on liability, tax, the number of owners, and future plans. Owners of a company should also have a shareholders' agreement setting out how decisions are made and what happens if someone leaves.
Need help with this? See Commercial & Contract Law.
This answer is general information about South African law and does not create an attorney and client relationship. Please speak to the firm about your specific matter.