Summary Financial Accounting of Companies (Grd 12)
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Course
Accounting
Institution
12th Grade
Financial Accounting of Companies: concepts relating to companies, types of companies, differences between private and public companies, the board and its roles, management, the AGM, social and ethics committee and shareholders.
Financial Accounting
Legal Entity
A company that has legal capacity to enter into agreements or contracts, assume
obligations, incur and pay debts, sue and be sued in its own right and be held liable
Advantages of a company
for its actions.
Limited liability
A person’s financial liability is limited to the amount invested in the company. The
investor is not personally responsible for the debts of the company.
Continuity
Directors, managers and employees only acts as agents of the company. If they
leave, retire or die, the company remains in existence.
Jural Acts
Enter into legal agreements and assume legal rights and obligations.
Companies Act 71 of 2008
Aims to simplify the procedure for forming companies and reduce the cost of forming
and running a company.
Registrar of Companies
Appointed by the minister of finance. Administers the companies act and issues the
registration certificate.
Types of companies
• Private company – (Pty)Ltd.
• Public company – Ltd.
• Personal liability company – Inc.
• State owned company – SOC
• Non-profit company – NPC
Difference between a public and private company
Public Private
Name ending – Ltd. Name ending – (Pty)Ltd.
Minimum of three directors Minimum of one director
The public can freely buy shares. The public is not invited to buy shares.
Memorandum of incorporation (MOI)
A document which sets out the rights, duties and responsibilities of shareholders,
directors and others within relation to a company.
Notice of Incorporation (NOI)
A formal announcement to the public, indicating the formation of a new legal entity.
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