Introduction
In addition to the Companies and Other Business Entities Act (Chapter 24:31), (“the COBE Act” or “the Act”) one needs to be familiar with the Statutory Instrument 46 of 2020 on Companies and Other Business Entities (Pre – Formation and Post – Formation Formalities) Regulations, 2020 (“the regulations”) to understand pre-formation steps and post- formation formalities for private companies. This is quite important in business.
Pre-formation steps
This is covered in section 10, Pre-Formation Steps, of the regulations. The key steps are summarised hereunder.
- A person seeking to form a private company shall ascertain whether a name is available for registration by submitting form CR2, a Name search, with the prescribed fee.
- When the Registrar decides to accept or reject the proposed name, he or she issues the applicant with form CV4.
- If the proposed name has been approved and form CV4 issued by the Registrar the applicant must within 30 days of receiving such notice submit in duplicate the Memorandum and Articles of Association of the private company and two copies of CR5 (“Registered office address”) and form CR6 (“List of directors and secretaries”) together with the prescribed fees.
- The Registrar then issues to a successful applicant a certificate of incorporation.
Post formation formalities
This is covered in section 11 of the regulations to the COBE Act. The key formalities are summarised below.
Annual return
A private company must submit an annual return within 21 days after the date of its anniversary.
Subsequent changes
According to section 11(2) of the COBE regulations when a company intends to:
- Change its address the company secretary must file a notice of change of address in form CR5 (“Registered office address”).
- Change the list of its directors and secretaries, the company secretary must file such notice in form CR6 (“List of directors and secretaries”).
- Change its name, the company secretary must file such in form CR7 (“Notice of change of company name”) and CR8 (“Special Resolution”) together with proof of advert.
- Amend or substitute its Memorandum and Articles of Association, the company secretary must file such notice in form CR8 (“Special Resolution”).
- Vary its share capital, the company secretary must file such notice of variation in form CR9 (“Notice of conversion, consolidation and split of share capital”) accompanied by form CR8 (“Special Resolution”).
- Increase its share capital the company secretary must file such notice in form CR10 (“Notice of increase of share capital”) and CR8 (“Special Resolution”).
- Allot shares, the company secretary must file such notice of allotment of shares in form CR11 (“Return of allotment”).
- Change of address at which the branch register of members is kept or any change in that place the company secretary must file such notice of change in address in form CR13 (“Branch register of members”).
- Convert the company from private company to private business corporation (“PBC”), the company secretary must file such notice in form CR15 (“Conversion of company to PBC”).
Further formalities
- For a nominee shareholder holding at least 20% of shares the company secretary shall transmit particulars of the beneficial owner of such shares through form CR16 (“Declaration of beneficial ownership”). Any changes to a nominee shareholder including shareholding in the private company should be notified through form CR16.
- When a company has held an annual general meeting (“AGM”) in terms of section 167 of the COBE Act, the company secretary must file a declaration of such meeting in form CR17 (“Declaration that an annual general meeting has been held”).
Conclusion
The above pre formation and post formation formalities are important to know as they have to be complied with in business. It is reiterated that when considering company law one has to read the COBE Act, the COBE regulations and the company’s Articles of Association to ensure compliance.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Profile
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, chartered accountant, insolvency practitioner, registered tax accountant and advises on deal and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He writes in his personal capacity. He can be contacted on +263 772 246 900 or gohofisi@gmail.com
