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Understanding the Companies Act

Business Law10 CardsCreated 28 days ago

This flashcard deck covers key concepts and regulations from the Companies Act, including company categories, solvency tests, and company records management.

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What is the purpose of the Companies Act?

The Companies Act provides rules and regulations for the incorporation, registration, organization, and management of companies.

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Key Terms

Term
Definition
What is the purpose of the Companies Act?
The Companies Act provides rules and regulations for the incorporation, registration, organization, and management of companies.
What are the two main categories of companies under the Companies Act?
Non-profit Companies (NPC) and Profit Companies.
What is a solvency and liquidity test?
A test to ensure a company can pay its debts as they become due and that the fair value of its assets is greater than its liabilities.
What must be included in a company's financial statements according to the Companies Act?
They must present fairly the state of affairs, show assets, liabilities, equity, income, expenses, and disclose the date and accounting period.
What are the requirements for company records under the Companies Act?
Records must be kept in written form, accessible, and retained for at least 7 years or as long as the company exists.
What actions are prohibited under the reckless trading section of the Companies Act?
Carrying on business recklessly, with gross negligence, or with intent to defraud.

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Understanding the Companies Act
TermDefinition
What is the purpose of the Companies Act?
The Companies Act provides rules and regulations for the incorporation, registration, organization, and management of companies.
What are the two main categories of companies under the Companies Act?
Non-profit Companies (NPC) and Profit Companies.
What is a solvency and liquidity test?
A test to ensure a company can pay its debts as they become due and that the fair value of its assets is greater than its liabilities.
What must be included in a company's financial statements according to the Companies Act?
They must present fairly the state of affairs, show assets, liabilities, equity, income, expenses, and disclose the date and accounting period.
What are the requirements for company records under the Companies Act?
Records must be kept in written form, accessible, and retained for at least 7 years or as long as the company exists.
What actions are prohibited under the reckless trading section of the Companies Act?
Carrying on business recklessly, with gross negligence, or with intent to defraud.
What is a Memorandum of Incorporation (MOI)?
A document setting out the rights, duties, and responsibilities of shareholders, directors, and others within the company.
What is required for a company to change its financial year?
The board may change it once a year, and the new year-end must be later than the date the notice is filed.
What is the role of the Companies and Intellectual Property Commission (CIPC)?
The CIPC manages company registrations and ensures compliance with the Companies Act.
What is the consequence of providing false financial statements under the Companies Act?
Any person involved in the preparation, approval, or dissemination of false statements is guilty of an offence.