Transcript Document

NON-PROFIT
ORGANISATIONS IN SOUTH
AFRICA
Introduction
• Recognised under South African Law for more than a
century
• Role in society has now become very important
• Diverse in their activities and cover many fields of interest
(e.g. the promotion of charity, religion, health, science,
literature, education, social welfare, wildlife protection, the
arts, sports, community interests and interests of workers
and professions
• Decision on whether or not to incorporate
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Benefits
of incorporation
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Possibility to be tax exempt
ability to legally solicit funds
separate juristic personality
limited personal liability for its members
continued corporate existence beyond the
involvement of its founder members
• increased public recognition.
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Incorporation under the
Companies Act, 1973
• Two types of companies - a company having a share
capital and a company limited by guarantee
• An NPO registers under section 21 as an
“incorporated association not for gain”
• At least seven subscribers required
• Main object must be the promotion of religion, arts,
sciences, education, charity, recreation, or any other
cultural or social activity or communal or group interest
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Incorporation (continued)
• It must apply its profits or other income in
promoting that main object
• It must prohibit the payment of any dividend to its
members
• In order to comply its memorandum must contain both
these conditions as well as a provision that upon its
winding up, deregistration or dissolution, the remaining
assets of the association after the satisfaction of all its
liabilities shall be given or transferred to some other
association or institution having objects similar to its main
object
• Deemed to be public companies & may not convert
• New Companies Act, 2008, will change position marginally
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Additional or Alternative Registration :
Nonprofit Organisations Act, 1997
• NPO’s may also voluntarily register under the
Nonprofit Organisations Act, 1997
• The following organisations can apply for registration:
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Non- Governmental Organisations;
Community Based Organisations;
Faith Based Organisations;
Organisations that have registered as Section 21 Companies under
the Companies Act, 1973;
– Trusts that have registered with Master of the High Court under the
Trust Property Control Act, 1988; and
– Any other Voluntary Association that is not-for-profit.
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Additional or Alternative Registration:
Purpose
• Creating an enabling environment for NPO’s to flourish;
• Establishing an administrative and regulatory framework
within which NPO’s can conduct their affairs;
• Setting and maintaining adequate standards of governance,
accountability and transparency;
• Creating an environment within which the public may have
access to information concerning registered NPO’s.
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Additional or Alternative Registration:
Benefits
• The improvement of the credibility of the sector as NPOs
account to a public office;
• Bringing non profit organisations into a formal system;
• Assistance in finding ways of getting benefits like tax
incentives and funding opportunities.
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Regulatory environment for NPO’s
• Companies Act, 1973:
Minimal intervention and duties relate only to maintenance
of basic prescribed company information, filing of annual
financial statements and annual returns.
• Nonprofit Organisations Act, 1997
This Act is aimed solely at NPO’s and regulation mainly
takes the form of –
– disclosure of financial statements
– lodgement of detailed annual reports containing
prescribed information
– adherence to prescribed Codes of good practice
issued by DSD (NPO Directorate)
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Inspections
• No inspections under the Companies Act although the
power is there
• Nonprofit Organisations Act, 1997, specifically aimed
at regulating NPO’s through DSD and intervention by
the dti would not likely take place
• No site visits are done by the dti
• Under new Companies Act powers of investigation
are hugely extended and position would in
collaboration with DSD be reviewed
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Registration of Foreign NPO’s
in South Africa
• Foreign NPO’s are obliged to register under the
Companies Act as external companies as soon as
they have established a place of business in SA
• Alternatively, a branch of a company or other association
of persons, incorporated outside the Republic or having its
head office in a foreign country, may incorporate a branch
in SA under section 21A of the Companies Act
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Dissolution of NPO’s and liability
of members/directors
• The winding up of all NPO’s that have juristic
personality is done under the provisions of the
Companies Act under supervision of the Master of
the High Court.
• The liability of members and directors of a section 21
company is limited to the extent of the guarantee
provided for in the memorandum.
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Statistical information
• There are currently 9737 registered section 21 companies
in SA
• Not all are active but failure to submit annual returns in
time eliminates the dead wood
• No difficulties are experienced with the registration
process and it is dealt with as just another new company
application. There is no screening process regarding the
proposed activities of the NPO
• The current average turn-around time for registration is 5
days
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Public access to register of
section 21 companies.
The register of companies kept under the Companies
Act is open to inspection by any person. It is also
available on the CIPRO website, www.cipro.co.za at
no cost. Please note that only limited information is
available free of charge and that further information,
e.g. copies of memorandum, directors’ information,
etc. may be obtained at a fee.
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Companies Act, 2008
• Comprehensive company law review started 2004
• Bill passed in 2008 and will become operative during 2010
• New provisions will contain basic principle of NPO’s but
minor legislative changes will take place:
– Objects must now be promoting public benefit or cultural, social,
communal or group interests
– Three or founder members will be required
– Expression NPC (Non Profit Company) to form part of name
– Board to have minimum of 3 directors
– Foreign non profit companies may register as external non
profit companies
– Schedule 1 of Act deals with NPC’s
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Thank you
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