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Thread: When a company trades in something different to their principal business

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    When a company trades in something different to their principal business

    The company docs for one of my clients shows principal business as "Education". The company now leases out student acomodation and the main source of revenue is rental income from the student accomodation letting.

    Does the company need to change its principal business activity at CIPC or not? Are there any legal/ sars implications?

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    I would wait for confirmation from others, but I've never found these trade categories to be of great importance.

    I would simply ensure that the correct main activity is chosen when submitting the annual tax return. CIPC I'm not sure about.

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    Site Caretaker Dave A's Avatar
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    Whenever I've set up a company, I've always added "and related activities" to the scope.

    On the importance of the scope being accurate - persons (natural and juristic) are entitled to rely on these disclosures. If it is inaccurate, all it takes for the brown stuff to start flying is for a person to come up with a reason as to why the misrepresentation has prejudiced them.

    The higher the public interest score, the more likely this transgression might prove to be material. But that said, don't underestimate the significance that might be attached to it by creditors even in the smallest of business entity - especially in the event of a default!

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