Forms of ownership:

Sole Trader Partnership Close Corporation Private Company Personal Liability Public Company State Owned Non-Profit Co-Operation
Company Company Company
Name of the ‘Cooperative Limited’
Name of Name ends with (Pty) Must end with the Name ends with Ltd Name ends with the
No requirements No requirements Must end with “CC” company must end must appear at the end
business Ltd letters INC or Limited letters SOC Ltd
with NPC / NPO of its name
3 or more directors
Owner of 1-unlimited 1-unlimited 1-unlimited With or without Minimum 5 members
One person 2-20 partners 1-10 members and 1 or more
business shareholders shareholders shareholders members required
shareholders
Owned by the
Board consists of at
Partners share government
least 3 directors and
Can make quick responsibilities Board of directors Shareholders vote for Members own and
Members share can be well managed
Management decision without and they are all Director Director appointed by the most competent manage the business
responsibility as it requires a
consulting others involved in shareholders directors and they together
minimum of 3 of
decision-making are appointed to
more directors
manage the company
Transfer of the Raises capital by More shareholders
Expansion is No limit to the To create mutual benefits
Easy to control interest of a No limit to the number issuing shares to the Raises capital by may join the
possible because number of for the members and
Capacity because it is a member must be of shareholders, it can public and borrowing issuing shares to the company, as they
more partners join shareholders, it can allow the members to
small business approved by all lead to expansion capital by issuing a public contribute positively
partnership lead to expansion work tighter as a team
other members debenture to society
Register with the
No legal
Register with the Register of Register with the
formalities to start, Audit of financial In the MOI it must be
No legal and Register of Companies by Register of Must draw up a
Legal only written statements / stated that it is a Register with Registrar of
administrative Companies by setting setting MOI Companies by setting Memorandum of
requirements partnership regular annual company with Co-Operatives
formalities Memorandum of Prospectus issued Memorandum of Incorporation
agreement is general meetings personal liability
Incorporation to public to raise Incorporation
required
capital
Partners have Shareholders have
Members have
unlimited liability limited liability.
limited liability, The business as a The business as a
and are jointly and Directors are liable
Liability Unlimited liability unless the CC has legal person (limited Unlimited liability legal person (limited Limited liability Limited liability
separately liable for any loss
6 months or longer liability) liability)
for the debts of the experienced by the
than ten members
personality company
Not a legal entity, Legal personality and are
Legal No legal
all in personal Legal personality Legal personality Legal personality Legal personality Legal personality Legal personality allowed to own land and
Personality personality
capacity open bank accounts

Continuity No continuity No continuity Unlimited continuity Unlimited continuity Unlimited continuity Unlimited continuity Unlimited continuity Unlimited continuity Unlimited continuity

Submit application at Register with the

Paperwork to Partnership Founding
Trading license Register with CIPC Register with CIPC Register with CIPC Register with CIPC a provincial social Registrar of
complete Agreement Statement
development office Cooperatives Societies
Partners
Owner (borrowed Members Shares sold privately Shares sold privately Shares sold publicly Access to long-term Limited to the number of
Capital contribute or Funded by donations
or own) contribute to shareholders to shareholders to shareholders capital members
borrow
Shareholders receive
Shareholders receive Profit must be used
According to In proportion to the a dividend in
a dividend in Shareholders Profits are shared in for the primary Shared equally amongst
Profit sharing Owner partnership interest of the proportion to the
proportion to the receive a dividend the form of dividends purpose of the members
agreement member of the CC number of shares
number of shares held company
held
Partners taxed on Business taxed on On the profits of the On the profits of the Tax on profits of the Pay tac on the profits Taxed as a legal entity
Tax on profits plus
part of their profit profits business and business and declared business and of the business and Granted tax-exempt and the income of the
Taxes income tax on
plus personal Members taxed on declared dividends of dividends of declared dividends declared dividends of status company is separate to
personal income
income salary shareholders shareholders of shareholders shareholders that of the members
 Sole Trader Partnership Close Corporation Private Company Personal Liability Public Company State Owned Non-Profit Co-Operation
Company Company Company
A It is very easy to The cost of forming a Any change in the It is easy to raise It is easy to raise It is open to the Profits may be used to The company is a Access to resources and
D form. partnership is not CC will have no capital because there capital because there public. finance other state legal personality. funding
V The owner will expensive and it is effect on the CC and are many are many Anyone can invest in departments The is continuity. Decision making is by a
A very easy to form. it can continue to shareholders. shareholders. a public company, Donors receive tax
receive all profits. Offer essential services group
N More capital is exist. The private company The private company regardless of the deductions.
T The owner can available to run or The CC is a legal is a legal entity. is a legal entity. amount of money. which may not be Each member has an
A manage the expand the business. entity. The shareholders will Shareholders can join It is easy to raise offered by the private equal share in the
G business as they The workload can be The members not be responsible for or leave the company capital by issuing sector business.
E wish. spread among the cannot be held its debts. without being affected. shares to the public. Prices are kept Can appoint its own
S It is easy to partners. Partners responsible for the Shareholders can Shareholders may reasonable/Create management.
maintain personal can share their debts of the join or leave the freely sell their sound competition with Members have limited
knowledge or skills. business, company without shares.
contact with your the private sector to liability
The success of the being affected.
customers business does not lie make services The decisions are
because the with one person. affordable to more democratic and fair
business is small. citizens. Members are motivated
Quick decision- Wasteful duplication of because they are working
making. services is eliminated for themselves
Planning can be Can gain extra capital by
coordinated through asking its members to buy
central control. shares.
Generates income to Have continuity of
finance social existence
programmes. Resources of many people
Jobs are created for all are pooled together to
skills levels. achieve common
objectives
Profits are shared equally
amongst members.
D If the owner Limited life – a Every member is an Private companies Cannot be listed on It is very costly to May result to poor Not allowed to pay Decisions are often difficult
I becomes ill or partnership ends with agent for the CC, cannot be listed the JSE. form a Public management as bonuses to members. to reach and time
S dies, the business the death, retirement they can act on its companies. Complex Company. government is not Must keep financial consuming.
A will come to an or insolvency of any behalf and can Complex establishment There is hardly any always as efficient as and accounting
Difficult to grow.
D end. of the partners. participate in its establishment process. personal contact the private sector. records.
V The owner might Unlimited liability – management. process. Can only rely on between the Inefficiency due to the Very few promotion
A find it difficult to the partners are An irresponsible Can only rely on capital contributed by shareholders and the size of the business positions for staff.
N raise enough liable in the personal member can cause capital contributed by shareholders. customers. Often rely on It can be difficult to get a
T capital to run or capacity for any loss to the CC. shareholders. Unlimited liability. Complex government subsidies loan because their main
A expand the debts of the It the business establishment A lack of incentive for objective is not always to
G business. partnership. wants to expand, it process. employees to perform if make a profit.
E Because the Each partner acts as can run into Certain information there is no absence of
The success of
S owner is the only an agent for the problems because must be published other motivator such as
one responsible business. of the restriction of under the law. productivity bonuses. cooperatives depends on
for the business, The partnership is members. Government can lose the support of the
they will have to bound by the actions It is only allowed to money through the members.
work long hours. of the partners. have 10 members. business. Shares are not freely
If the business is Decisions must be Banks require a Losses must be met by transferable
insolvent, the approved by all financial audit for the tax payer. All members have one
owner will be partners. loans. Shares are not freely
vote regardless of the
responsible for all tradable making it
the debts. difficult to raise capital. number of shares held.
There is no SOC must follow strict
continuity and no regulations for
legal entity. operations to raise
capital.
Financial statements
must be audited.