Private Company ((Pty) Limited)

Advantages of a Private Company ((Pty) limited)

• Life span is perpetual
• Shareholders have limited liability
• Act imposes personal liability on directors who are knowingly part of the carrying on of the business in a reckless or fraudulent manner
• Ease of transfer of ownership
• Easier to raise capital
• Efficiency of management
• Adaptable to both small and large businesses
• Not required to file their annual financial statements with the Registrar of Companies, thus, they are not available to the general public

Disadvantages of a Private Company ((Pty) limited)

• Subject to many legal requirements
• Difficult and expensive to establish compared to Close Corporations and Sole Proprietorship
• A Private Company ((Pty) limited) must have at least one and no more than fifty shareholders
• A Private Company ((Pty) limited) must have at least one director
• A Private Company ((Pty) limited) articles must restrict the right to transfer its shares, and prohibit any offer to the public for the subscription of any shares or debentures of the company.
  A Private Company ((Pty) limited) cannot, therefore, be listed on the stock exchange.
  A private company cannot issue share warrants or bearer shares.
• The quorum for a meeting is two shareholders for a Private Company ((Pty) limited) (except in the case of a one-person company), unless the articles provide otherwise
• The voting rights of shareholders of a Private Company ((Pty) limited) must be determined by the articles or as set out in a shareholders agreement
• A Private Company ((Pty) limited) has its annual financial statements audited

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