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Thread: CIPC, SARS, Share certificates, CM15 - Return of allotment of shares

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    CIPC, SARS, Share certificates, CM15 - Return of allotment of shares

    Good day.

    I've registered a company with the CIPC and received back from them all the neccessary documentation (Registration Certificate, certified Memorandum of Incorporation, etc) the point is, the company is registered. It has two directors (my brother and I). We now want to allocate the authorised shares among the two of us (51% and 49%).

    Do we have to register anything with the CIPC, I understand that with the old CIPRO we would have to lodge the CM15 form, what do we do now? Is it enough to just draw up and maintain a share register, allocate shares among ourselves and issue share certificates all without disclosing anything to either SARS or CIPC?

    Please help.

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    the company(as per the memorandum of incorporation) is authorised to issue 10 000 shares (at most)

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    I have exactly the same question, can anyone help here?

    My logic tells me that when it is a private company, it does not need to be recorded at CIPC, but that you need to keep a register and issue shares for record purposes should there be any disputes or enquiries?

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    Here are the necessary steps to comply with section 40:

    The directors, at an ordinary meeting where the notice may be waived if they are both present, must resolve what the consideration is. In other words determine a price.

    They must then resolve if there is a payment agreement or not, and if so what the terms are.

    Once the terms have been met, the company may issue the shares and record the subscription in the registers.

    The Act puts it this way:
    “40. (1) The board of a company may issue authorised shares only—
    (a) for adequate consideration to the company, as determined by the board;
    (b) in terms of conversion rights associated with previously issued securities of
    the company; or
    (c) as a capitalisation share as contemplated in section 47.
    (2) Before a company issues any particular shares, the board must determine the consideration for which, and the terms on which, those shares will be issued.
    (3) A determination by the board of a company in terms of subsection (2) as to the adequacy of consideration for any shares may not be challenged on any basis other than in terms of section 76, read with section 77(2).
    (4) Subject to subsections (5) to (7), when a company has received the consideration approved by its board for the issuance of any shares—
    (a) those shares are fully paid; and
    (b) the company must issue those shares and cause the name of the holder to be entered on the company’s securities register in accordance with Part E of this Chapter.

    Do not skip on the formalities or it will haunt you down the road.

    I assume this company is incorporated under the new Act? If so the shares have no par or nominal value. They are simply shares at whatever the board decides and the company receives. The balance sheet reflects this as stated capital and there will never be a share premium.

    You do not need to advise anyone about the shares so issued, just do it right.

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    Thanks a lot Clive.

    As far as the issuing of the share certificates go, is there a prescribed format?

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    sample cert.pdf Here is an example

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    Quote Originally Posted by CLIVE-TRIANGLE View Post
    Here are the necessary steps to comply with section 40:

    The directors, at an ordinary meeting where the notice may be waived if they are both present, must resolve what the consideration is. In other words determine a price.

    They must then resolve if there is a payment agreement or not, and if so what the terms are.

    Once the terms have been met, the company may issue the shares and record the subscription in the registers.

    The Act puts it this way:
    “40. (1) The board of a company may issue authorised shares only—
    (a) for adequate consideration to the company, as determined by the board;
    (b) in terms of conversion rights associated with previously issued securities of
    the company; or
    (c) as a capitalisation share as contemplated in section 47.
    (2) Before a company issues any particular shares, the board must determine the consideration for which, and the terms on which, those shares will be issued.
    (3) A determination by the board of a company in terms of subsection (2) as to the adequacy of consideration for any shares may not be challenged on any basis other than in terms of section 76, read with section 77(2).
    (4) Subject to subsections (5) to (7), when a company has received the consideration approved by its board for the issuance of any shares—
    (a) those shares are fully paid; and
    (b) the company must issue those shares and cause the name of the holder to be entered on the company’s securities register in accordance with Part E of this Chapter.

    Do not skip on the formalities or it will haunt you down the road.

    I assume this company is incorporated under the new Act? If so the shares have no par or nominal value. They are simply shares at whatever the board decides and the company receives. The balance sheet reflects this as stated capital and there will never be a share premium.

    You do not need to advise anyone about the shares so issued, just do it right.
    Thank you Clive,

    I have a question too -

    I have a client who submitted in the old act a CM15 for the allotment of shares, but they did not state the premium and have in their financial statements worked on a premium from 2007. Can it be corrected at this late stage? seeing that CIPC do not accept CM15's anymore?

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    I've just been through this process, I got my accountant to do it and keep records in our secretarial file, all we did was pass a resolution, no CIPC needed.

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    Well, seeing how it is an old company with Articles and Memorandum; those still apply and a special resolution would be required. But CIPC only register resolutions in terms of the new act, and share premiums are not regulated by the new act.

    Conversion of pre-existing companies to MOI in terms of the new Act is something many are ignoring, but it solves the problem because the share premium is simply absorbed by stated capital, because par value shares would no longer exist.

    Another reason to convert to MOI is pre-existing companies are actually still required to be audited , so it is worthwhile to endure the pain.

    Regarding the allotments; I would not worry about the CM15, just treat it right in the AFS.
    Last edited by CLIVE-TRIANGLE; 28-Oct-14 at 01:43 PM. Reason: Didn't answer the question

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    Thank you for the information guys.
    I have a question.
    1.who is supposed to sign the share certificate if the company only has one director and has no appointed secretary?
    2.In the company registration certificate this director appears to have 0% shares in the company and a co tribution of R0.Does he ignores that and go ahead issuing a share certificate and alllocate all 1000 shares as stated in the MOI to himself?

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