If you want to set up a company, knowing the different types of companies is important. Different company types have different benefits, responsibilities, and functions.
In South Africa, there are five different types of companies: private companies, personal liability companies, public companies, non-profit companies and state-owned companies.
Types of companies in South Africa
A private company has a name ending in (Pty) Ltd – Proprietary Limited. It is for profit, does not offer shares to the public, and restricts the transfer of its shares. It is by far the most common type of company. Private companies include owner-managed, single-shareholder and single-director companies. It is often used by people who in the past would have registered a Close Corporation (CC), because you cannot register a CC anymore. Most CC’s will want to convert to a private company.
A personal liability company has a name ending in PLC – Personal Liability Company. It is for profit and similar to a private company. The difference is that the directors of PLC’s are personally responsible for the debts of the company. Professionals, like attorneys and accountants, sometimes register this type of company. An example is the old s53(b) company.
A public company has a name ending in Ltd – Limited. It is for profit and is listed on an exchange. It must be audited and has stricter rules than the other types of companies.
A non-profit company is for the public benefit and can have members or no members. This includes NGOs, charities, and homeowners associations. An example is the old section 21 company. If you are not in it for the money, this is for you.
A state-owned company is owned by the state. An example is a municipality.