Question 1

What is included in a custom Memorandum of Incorporation?

Accepted Answer

A custom MOI drafted by AirCounsel includes all mandatory provisions required by the Companies Act 71 of 2008, plus tailored alterable provisions specific to your company. This includes: (1) Company name, registration number, and incorporation date; (2) Authorised share capital, including different classes of shares with their respective rights, preferences, and limitations; (3) Issue, transfer, and transmission of shares provisions; (4) Shareholders' meetings procedures, quorum requirements, and voting thresholds; (5) Board composition, appointment, removal, and powers of directors; (6) Financial year-end and record-keeping requirements; (7) Distributions and dividend policies; (8) Amendment procedures for the MOI itself; (9) Any special provisions you require such as pre-emptive rights, tag-along and drag-along rights, or specific reserved matters requiring special resolutions. The document is comprehensively drafted to govern all internal affairs of your company while remaining CIPC-compliant.

Question 2

How does it relate to and fit in with a Shareholders Agreement?

Accepted Answer

Since May 2011, with the enactment of the new Companies Act (2008) the position changed, somewhat. The Memorandum of Incorporation, as read with the Act, became the supreme governing document for all private companies with the effect that shareholders agreements which were inconsistent with the Memorandum of Incorporation of the company were void, to the extent of their inconsistency. We also offer [Shareholders Agreements](/southafrica/southafrica-custom-shareholders-agreement) if you need both documents.

Question 3

Do I get a standard Memorandum of Incorporation when registering a company?

Accepted Answer

Yes, all companies receive a standard MOI on registering their company, but which MOI only sets out the very basics of what an MOI should contain. A custom MOI allows you to take advantage of the alterable provisions in the Companies Act to better suit your company's needs.

Question 4

When is a custom Memorandum of Incorporation necessary?

Accepted Answer

Where a company wishes to take advantage of these alterable provisions, a custom Memorandum of Incorporation is necessary. Although a public document, since the Memorandum of Incorporation is filed with the CIPC after being adopted by special resolution, the Memorandum of Incorporation is the perfect place to regulate all aspects of the company, and to the greatest extent possible, to minimise the regulatory burden on a company.

Question 5

What are alterable and unalterable provisions in the Companies Act?

Accepted Answer

The Companies Act 71 of 2008 contains both alterable and unalterable provisions. Unalterable provisions are mandatory rules that apply to all companies regardless of what the MOI states – these cannot be changed or excluded. Alterable provisions, on the other hand, are default rules that apply unless the MOI specifically states otherwise. Examples of alterable provisions include: voting thresholds for ordinary and special resolutions, quorum requirements for meetings, the number of directors required, restrictions on the powers of directors, pre-emptive rights when issuing new shares, and procedures for removing directors. A custom MOI allows you to modify these alterable provisions to suit your company's specific needs and shareholder arrangements.

Question 6

Can an MOI be amended after it has been adopted?

Accepted Answer

Yes, an MOI can be amended after adoption, but the process requires compliance with the Companies Act. Generally, amendments require a special resolution passed by shareholders holding at least 75% of the voting rights exercised on the resolution (unless your MOI specifies a higher threshold). After the special resolution is passed, the amended MOI must be filed with the CIPC within 10 business days. Certain amendments may also require the approval of specific classes of shareholders if their rights are affected. It's important to note that some provisions in your MOI may specify different or additional requirements for amendments, which is why careful drafting of amendment clauses in your original MOI is crucial.

Question 7

How is the MOI filed with CIPC and what are the requirements?

Accepted Answer

Once your custom MOI is finalised and adopted by special resolution of the shareholders, it must be filed with the Companies and Intellectual Property Commission (CIPC) within 10 business days. The filing is done electronically through the CIPC e-Services portal and requires: (1) A certified copy of the special resolution adopting the new MOI; (2) The new MOI in the prescribed format; (3) Payment of the prescribed filing fee. AirCounsel delivers your MOI in the correct format for CIPC filing. We can also assist with the filing process as an additional service if required. Once filed and accepted, the new MOI becomes effective and the CIPC will issue confirmation of the amendment.

Question 8

What happens if my MOI conflicts with the Companies Act?

Accepted Answer

If any provision in your MOI conflicts with an unalterable provision of the Companies Act, that provision in your MOI is void to the extent of the conflict – the Act will prevail. This is why it's essential to have your MOI drafted by an experienced corporate attorney who understands which provisions can and cannot be modified. For alterable provisions, your MOI takes precedence over the default position in the Act. Our attorneys ensure your custom MOI only modifies alterable provisions and remains fully compliant with all mandatory requirements, protecting your company from unenforceable provisions.

Question 9

Can I have different classes of shares with different rights in my MOI?

Accepted Answer

Yes, one of the key advantages of a custom MOI is the ability to create multiple classes of shares with different rights, preferences, and limitations. Common share classes include: (1) Ordinary shares with standard voting and dividend rights; (2) Preference shares with preferential dividend rights but limited or no voting rights; (3) 'A' and 'B' class shares with different voting weights; (4) Non-voting shares for passive investors; (5) Redeemable shares that can be bought back by the company. Each class can have different rights regarding voting, dividends, participation in surplus assets on winding up, conversion rights, and redemption terms. This flexibility is particularly useful for family businesses, investor arrangements, or employee share schemes. Our questionnaire will ask about your share structure requirements so we can draft appropriate provisions.

Question 10

How long does delivery take?

Accepted Answer

Standard turnaround is 3 business days from when we receive your completed questionnaire. If you need your MOI sooner, we offer an Express Delivery option which guarantees delivery within 1 business day. You can select Express Delivery as an add-on during checkout.

Question 11

What if I need changes to my MOI?

Accepted Answer

Your order includes 2 rounds of revisions at no additional cost, which must be requested within 1 week of receiving your draft. This ensures you have ample opportunity to review the document and request any adjustments. Additional revision rounds beyond this can be arranged at a nominal fee.

Question 12

Who will draft my Memorandum of Incorporation?

Accepted Answer

Your MOI will be prepared by a qualified South African attorney with a minimum of 12 years of post-qualification experience in corporate law. Our attorney has extensive experience drafting MOIs for various company structures and industries.

Question 13

What information will I need to provide?

Accepted Answer

After purchase, you'll receive a detailed questionnaire asking about your company details, share structure and classes, director powers and restrictions, meeting procedures, voting thresholds, and any specific provisions you wish to include.

Question 14

Will my MOI comply with the Companies Act?

Accepted Answer

Yes. Your Memorandum of Incorporation will be drafted to comply with the Companies Act 71 of 2008 and all CIPC requirements. Our attorney ensures all mandatory provisions are included and alterable provisions are customised according to your needs.

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