5.9 SHORT FORM MOI DOES NOT DEAL WITH PAR VALUE SHARES
The short form MOI as published on the CIPC website does not indicate that shares are par value shares as it only indicates no par value shares. The problem here is that many firms wanting to upgrade the MOI submitted the standard short form without taking into consideration the conversion procedures in regard to Regulation 31. This meant that the MOI which mentioned no par value shares never went through a conversion of shares in terms of Regulation 31. The short Form MOI as it stands is really aimed at the formation of new companies and should not be used for pre-existing companies with par value shares. In this case, it would be necessary to make a modification of the MOI in regard to its shares.
Regulation 31 sets out the procedure to convert from Par Value to No Par Value Shares. All pre-existing companies who have Par Value Shares who filed a short form MOI did not realise that their shares have been listed incorrectly as No Par Value. In order to rectify this, it is recommended that one just changes the respective clause to deal with par value shares rather than going through the whole conversion of the share capital class in terms of Regulation 31 as a much easier step. Both steps involve a special resolution, but by keeping the par value shares you only have to file the special resolution with the CIPC and not SARS. Only if you increase the authorised shares that you need to run the conversion procedure in terms of Regulation 31.