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Description

8 March 2012

Introduction
The new Companies Act 71 of 2008 (the Act) came into operation on 1 May 2012 and had inter alia a huge impact on the description of Companies in deeds and documents, lodged at a deeds registry for registration.

Names of companies
A company name must, in terms of section 11(3)(c) of the Act, irrespective of its form or language, end with one of the following expressions, as appropriate for the category of the particular company:

  • The word “Incorporated” or its abbreviation “Inc.” in the case of a personal liability company;
  • the expression “Proprietary Limited” or its abbreviation, “(Pty) Ltd.”, in the case of a private company;
  • the word “Limited” or its abbreviation, “Ltd.”, in the case of a public company;
  • the expression “SOC Ltd.”, in the case of a state owned company;
  • the expression “NPC”, in the case of a non profit company.

Both Afrikaans and English suffixes are catered for in the Act, as they are set out in the English and Afrikaans text of the Act. Therefore, as was the case under Act No 61 of 1973, either English of Afrikaans suffixes may be used, irrespective of the language in which the name of the company appears.

The relevant expressions in Afrikaans are as follows (section 11(3)):

  • the word “Geïnkorporeer” or its abbreviation “Geïnk.”, in the case of a personal liability company;
  • the expression “Eiendoms Beperk” or its abbreviation “(Edms.) Bpk.”, in the case of a private company;
  • the word “Beperk” or its abbreviation “Bpk.”, in the case of a public company;
  • the expression “MSB Bpk.” in the case of a state owned company;
  • the expression “MSW” in the case of a non profit company.

 

Section 11(3) of the Act provides that:

if the name of a profit company is the company’s registration number, that number must be immediately followed by the expression “(South Africa)” for example:

(in the case of a private company)

2011/000123/07 (South Africa) Proprietary Limited
Registration number 2011/000123/07 

Or

2011/000123/07 (South Africa) (Pty) Ltd
Registration number 2011/000123/07

(in the case of a public company)

2011/000456/06 (South Africa) Limited
Registration number 2011/000456/06

Or

2011/000123/06 (South Africa) Ltd
Registration number 2011/000456/06

 

If the company’s Memorandum of Incorporation includes any provision contemplated in section 15(2)(b) or (c) restricting or prohibiting the amendment of any particular provision of the Memorandum, the name must be immediately followed by the expression “(RF)” for example:

(in the case of a private company)

Blue Mountain Proprietary Limited (RF)
Registration number: 2011/000678/07

Blue Mountain (Pty) Ltd (RF)
Registration number: 2011/000678/07

(in the case of a public company)

Black Water Limited (RF)
Registration number: 2011/000678/06

Black Water Ltd (RF)
Registration number: 2011/000678/06

(where the name of the RF company is also its registration number)

2011/000123/07 (South Africa) Proprietary Limited (RF)
Registration Number: 2011/000123/07 

 

State owned companies and non profit companies
Irrespective of when the company was incorporated, such companies must have the suffixes "SOC" or "NPC" respectively, attached to its name, for example:

Woodhill Home Owners’ Association (NPC)
Registration Number 2010/000001/21

Or

Eskom (SOC) LTD
Registration Number 1958/000002/06

 Note: A non profit company loses the suffixes (Pty) Ltd and it is replaced with (NPC), irrespective of when such company was registered.

Conditional clause
Where a company’s name appears in a condition of title, such as servitude rights, restrictive or other conditions, it will not be necessary to change the name when the conditions are brought forward into a new deed. It will also not be necessary to update the title deed to reflect the new name of the company. However, where there is a condition in a title deed indicating that consent (for e.g. transfer of that property) is required from a company that has changed its name, such consent must reflect both the new and former name of the company.

Continuation of pre-existing companies
In terms of item 2(1) of Schedule 5 of the Act, every pre existing company that was immediately before the coming into operation of the Act ("general effective date") –

  1. incorporated or registered in terms of the Companies Act, 1973 (Act No. 61 of 1973); or
  2. recognized as an “existing company” in terms of the Companies Act, 1973 (Act No. 61 of 1973),

continues to exist as a company, as if it had been incorporated and registered in terms of this Act, with the same name and registration number previously assigned to it, subject to item 4 which, inter alia, deals with amendments to a company’s “Memorandum of Incorporation and Rules”.

Despite section 11 of the Act, a pre existing company –

  1. Whose name, immediately before the coming into operation of the Act (‘the effective date), satisfied the requirements of section 49 of the previous Act, is not required to change its name to comply with section 11(3)(c) solely on the ground that any part of its name was in an official language other than English; and
  2. may continue to use a translated name that, immediately before the effective date, was registered and otherwise met the requirements of section 50(2) of the previous Act (see item 2(2) of Schedule 5 of the Act).

The effect of the above mentioned is that:

  1. a pre existing company need not to amend its name in instances where such company’s name has complied with the criteria as referred to in Items 2(1) and 2(2) of Schedule 5 to the Act;
  2. a pre existing company may continue to use a translated name if such name was registered before the coming into operation of the Act and has met the requirements of section 50(2) of the previous Act. Note: This does not apply to State Owned Companies and Non Profit Companies.

Liquidation of companies
The Act (transitional arrangements) only refers to companies where the liquidation procedure was initiated while Act 61 of 1973 was in operation. Therefore, the words “in liquidation” or “in voluntary liquidation” must still be added to the description of a company that is in liquidation or in voluntary liquidation after 1 May 2011.

The following descriptions must be followed:

Type Citation Explanation
“in liquidation” 

ABC (Pty) Ltd (in liquidation)
Registration number 2011/000123/07

Before or after 1 May 2011
 “in voluntary liquidation”

ABC (Pty) Ltd (in voluntary liquidation)
Registration number 2011/000123/07 

Before or after 1 May 2011 
 “under judicial management”

ABC (Pty) Ltd (under judicial management)
Registration number 2011/000123/07

If placed under judicial management before 1 May 2011

Practice regarding business rescue proceedings
Section 155 of the Act deals with a compromise between a company and its creditors irrespective of whether or not it is financially distressed as defined in section 128(1)(f), unless it is engaged in business rescue proceedings in terms of Chapter 6.

Proof of the appointment of a business rescue practitioner, as referred to in section 129 of the Act, must be lodged where business rescue proceedings are applicable.

The power of attorney to pass transfer, must read along the following lines:

Jan van der Merwe, in my capacity as business rescue practitioner of ABC (Pty) Ltd., Registration number: 2008/049786/07,

duly appointed by the board of directors on …………………………….. in terms of * section 129(3)(b) of the Companies Act 71 of 2008 / court order in terms of section 131(5) of the Companies Act) 71 of 2008,

as will appear from Notice of Appointment of business rescue practitioner filed with the CIPC on ……..

*Delete whichever is inapplicable 

  • The vesting clause of a deed must not make reference to the fact that the company is under business rescue proceedings.

External and foreign companies
 “External company”, in terms of section 1 of the Act, "means a foreign company that is carrying on business, or non profit activities, as the case may be, within the Republic, subject to section 23(2)".

An external company must register with the Commission to conduct business or non profit activities, as the case may be, within the Republic as an external non profit company or as an external profit company (section 23(1)).

A foreign company must, for the purposes of section 23(1) and the definition of “external company”, be regarded as “conducting business, or non profit activities, as the case may be, within the Republic” if that foreign company –

  1. is a party to one or more employment contracts within the Republic, or
  2. subject to subsection (2A), is engaging in a course of conduct, or has engaged in a course or pattern of activities within the Republic over a period of at least six months, such as would lead a person to reasonably conclude that the company intended to continually engage in business or non profit activities within the Republic (section 23(2)).

When applying section 23(2)(b), a foreign company must not be regarded as “conducting business activities, or non profit activities, as the case may be, within the Republic” solely on the ground that the foreign company is or has engaged in one or more of the activities referred to in the said section.

It is uncertain, in terms of section 23(2) read with section 23(2A), whether a foreign company can acquire immovable property or be a mortgagee without being registered as an external company. Registrars’ Conference Resolution 47 of 2011, therefore, provides that a foreign company can acquire property or act as mortgagee, provided the conveyancer provides the registrar of deeds with documentary evidence (for example an auditors certificate or affidavit from a director of such foreign company) to the effect that the company need not register as an external company, in terms of section 23(2) of the Act.

The following descriptions of an external company (a foreign company that has been registered in South Africa) are acceptable:

(in the case of a private company)

Blue Mountain Proprietary Limited
Registration number: 2011/000678/10
(Incorporated in Australia)

Or

Blue Mountain (Pty) Ltd
Registration number: 2011/000678/10
(Incorporated in Australia)

(in the case of a public company)

Blue Mountain Limited
Registration number: 2011/000678/10
(Incorporated in Australia)

Or

Blue Mountain Ltd
Registration number : 2011/000678/10
(Incorporated in Australia)

(where the name of the external company is a foreign registration number)

15789456 (Canada)
Registration number: 2011/000678/10 

A company that does not need to register as an external company in South Africa, must be described by referring to its name and registration number as reflected on its registration certificate or similar document.

Change of name of a company
The Act places no burden on the registrar of deeds to endorse deeds and documents regarding a change of name of a company.

A change of name of a company (affected after 1 May 2011 in terms of the provisions of the Act) must now be recorded in deeds and documents in terms of section 93 of the Deeds Registries Act, 1937 (Act 47 of 1937). A section 93 application must be lodged together with proof of the change of name of a company in the form of an amended registration certificate issued in terms of section 14 or section 16 of the Act.

The provisions of section 93(1)(a) that provides for consent of any person that may be affected by a registration of a change of name, and section 93(1)(b) that provides for the lodgement of any operative deeds in which the applicant’s old name appears as a party thereto other than as transferor or cedent, need not be complied with. In this instance, a caveat must be noted to the effect that all the relevant title deeds must be endorsed to indicate the change of name.

Where a company’s name appears in a condition of title, such as servitude rights, restrictive or other conditions, it will not be necessary to change the name when the conditions are brought forward into a new deed. It will also not be necessary to update the title deed to reflect the new name of the company. However, where there is a condition in a title deed indicating that consent (for e.g. transfer of that property) is required from a company that has changed its name, such consent must reflect both the new and former name of the company. Where a mortgagee company has changed its name (once or several times) it will not be necessary to endorse the bonds to indicate the change in name when such bonds are lodged for cancellation. However, the consent to cancellation must refer to all changes of the name. The status quo remains regarding the endorsement of deeds and documents to reflect a change of name of a company, affected prior to 1 May 2011 in terms of the repealed Companies Act 61 of 1973.

Conversion of close corporations to companies

Upon conversion of a close corporation to a company, the Commissioner must “enable the Registrar of Deeds to effect the necessary changes resulting from conversions and name changes.” (Schedule 2, Item 1(4)(c)).

Although the Act is silent on the lodgement of an application and the relevant title deed/s, the endorsement of a title deed to reflect a conversion of a company must be given effect to only when an application in terms of section 3(1)(v) of Act 47 of 1937, together with proof of the conversion and the relevant title deed/s, have been lodged.

Relevant deed/s must be endorsed along the following lines:

Endorsement in terms of section 3(1)(v) of Act 47 of 1937
The within close corporation has been converted, in terms of the provisions of the Companies Act, 2008 (Act 71 of 2008) into a *…………………...... company and is now known as **…………………………….......................... (registration number …………………...)

. ……………………………………..

………………………………………

Date                                                                                                                      Registrar of Deeds

* Insert type of company

** Insert name of company 

Conversion  (applied for before 1 May 2011) of company to a close corporation
The Act does not provide for the conversion of a company into a close corporation. However, any conversion of a company to a close corporation, applied for in terms of section 27 of Act 69 of 1984 and filed with the Registrar of Companies before 1 May 2011 and not fully addressed at that time, must be concluded by such Registrar in terms of Act 69 of 1984 (Schedule 5, Item 3(2)). Although registered under the provisions of Act 69 of 1984, such company shall be regarded as a pre existing company for all purposes of the Act (Schedule 5, Item 3(3)).

Allen West
Deeds Training
Pretoria

Reader Comments: 7
Nadine 01/07/2013:

If a HOA is mentioned in a mortgage bond, should it read as follow: (Which one is most applicable to the Deeds Office?) 1. Woodhill Home Owners’ Association (NPC) Registration Number 2010/000001/21 (NPC in brackets and registration number included?) or 2. Woodhill Home Owners’ Association NPC Registration Number 2010/000001/21 (NPC without brackets and with registration number inlcuded? or 3. Woodhill Home Owners’ Association NPC (NPC without the brackets and also description without registration number?) PLEASE CLARIFY? Regards Nadine

Allen West 04/07/2013:

The choice is yours.

Rubena 11/09/2013:

If a CC has changed its name, what type of endorsement is done on the title deed to reflect the name change?  Does this endorsement need to be done if the property is being sold to a third party? 

Allen West 12/09/2013:

The endorsement is peremptory. You have to submit proof of the change of name, without the production of an application in a separate cover, and the Registrar will endorse the deeds accordingly.

LIZELLE 16/09/2013:

Thank you for the informative article. Please correct me if I am wrong. According to the article, the name of the HOA in the conditions of title need NOT be changed to the following when the conditions are brought forward into the new deed: From: "WATERKLOOF HOME OWNERS ASSOCIATION (Association Incorporated under Section 21)" To: WATERKLOOF HOME OWNERS ASSOCIATION (NPC). It is only necessary to indicate the name change above/correct suffix in the consent to transfer provided by the HOA??

Allen West 19/09/2013:

Lizelle You are correct

Stefani 07/09/2016:

Thanks, Alan. This was very informative. My deeds were recently rejected on a similar SANRAL matter (SOC entity). The deeds office will accept the change in the SOC part, but requires proof that my registration number changed from /06 to /30. I can't find any CIPC notice to this effect. Any ideas as to how I can prove this?

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