17.1 PROFIT COMPANIES
A profit company is a private company if it is not state owned and its MOI prohibits the offer of securities to the public and restricts the transferability of its shares. This is in terms of s 1 read together with s 8(3)(b).
The core characteristic is that the shares or securities may not be offered to the public and there is a restriction on the transferability of shares. Essentially this is the fundamental difference between a private company and a public company.
A private company under the new 2008 Act is very close to a private company under the 1973 Act except that the restriction of 50 shareholders in a private company has now been abolished. This is the interest of flexibility in an organization and the fact that the number of shareholders really does not bear any correlation as to the true nature and size of the company.
The restriction on the transferability of the shares has now being widened in the new Act.
A profit company’s main goal is for financial gain for its shareholders.
The accountability of the company really depends on its size and one has to look at the regulations as to when a company requires an audit or needs to appoint a secretary.