About this module
Company Law teaches how businesses are organised and run under South African law, with a focus on companies under the Companies Act 71 of 2008: separate legal personality and when it can be disregarded, forming a company, its capacity and who may bind it, shares and distributions, shareholders' meetings and remedies, directors' appointment, duties and liability, fundamental transactions, and how companies end. Educational tool, not legal advice. All law is South African.
Level: usually second or third year (LLB, or BCom Law). Prior knowledge: Module 3 (Law of Contract) and Module 8 (Specific Contracts), especially agency. Module 15 (Insolvency Law) covers business rescue and the winding-up of insolvent companies.
How this guide teaches. Each chapter starts with a problem, gives the big picture, teaches the rules with case boxes (the legal issue, what the court held, and why it matters), lists common mistakes, sums up in short, and ends with practice questions, flashcards and a quiz. Cases are taught by the legal issue they decide, not by their facts.
Common cases and how they are checked
| Chapter | Case | Legal issue | Status (28 October 2026) |
|---|---|---|---|
| CO2 Legal personality | Cape Pacific Ltd v Lubner Controlling Investments [1995] ZASCA 53; 1995 (4) SA 790 (A) | When may a court disregard a company's separate personality at common law? | Read on SAFLII |
| CO2 Legal personality | Ex parte Gore NO [2013] ZAWCHC 21; 2013 (3) SA 382 (WCC) | How does s 20(9) of the Companies Act relate to the common law on piercing? | Read on SAFLII |
| CO6 Shareholders | Mbethe v United Manganese of Kalahari [2017] ZASCA 67; 2017 (6) SA 409 (SCA) | What must an applicant prove to obtain leave for a derivative action? | Read on SAFLII |
| CO7 Directors' duties | Phillips v Fieldstone Africa [2003] ZASCA 137; 2004 (3) SA 465 (SCA) | How strict is the fiduciary duty not to make a secret profit or take an opportunity? | Read on SAFLII |
| CO8 Directors' liability | Gihwala v Grancy Property Ltd [2016] ZASCA 35; 2017 (2) SA 337 (SCA) | Is the delinquency provision in s 162 constitutional? | SAFLII page unavailable; read the SCA's media summary |
Module blueprint
| Chapter | Question it answers | Outcome |
|---|---|---|
| CO1 Business forms | What forms can a business take? | LCO1 |
| CO2 Legal personality | What does separate personality mean, and when is it disregarded? | LCO2 |
| CO3 Types of companies and formation | How is a company formed, and what is the MOI? | LCO3 |
| CO4 Capacity and representation | Who can bind the company, and what if limits are ignored? | LCO4 |
| CO5 Shares, capital and distributions | How are shares issued and when may money flow to shareholders? | LCO5 |
| CO6 Shareholders: meetings and remedies | How do shareholders decide and protect themselves? | LCO6 |
| CO7 Directors: the board and duties | How are directors appointed, and what duties do they owe? | LCO7 |
| CO8 Directors: liability and delinquency | When are directors liable, and when can they be barred? | LCO8 |
| CO9 Fundamental transactions | How are major disposals, mergers and schemes approved? | LCO9 |
| CO10 The end of a company and accountability | How does a company end, and what transparency is required? | LCO10 |
CO1: Business forms
Problem. Two friends start a catering business. One wants a partnership "to keep things simple"; the other wants a company "so that we are not personally liable". What is the difference?
The big picture. A business can be run as a sole proprietorship, a partnership, a business trust, a close corporation or a company. The key differences are legal personality, liability of the owners, formalities and regulation.
CO1.1 The main forms
- Sole proprietorship: the owner and business are the same person; the owner is personally liable for all debts.
- Partnership: a contract between two or more persons who each contribute something, to carry on a business for their joint benefit with the object of making a profit. A partnership is not a juristic person; partners are ultimately liable for its debts (usually after the partnership's assets have been excussed, and jointly and severally after dissolution).
- Business trust: governed by the Trust Property Control Act 57 of 1988; trustees hold property for beneficiaries; not a juristic person, though treated as one for some purposes.
- Close corporation: under the Close Corporations Act 69 of 1984. No new close corporations may be registered since 1 May 2011, but existing ones continue and may convert to companies.
- Company: a juristic person registered under the Companies Act 71 of 2008; shareholders are generally not liable for its debts.
Back to the problem. In a partnership, the friends are ultimately personally liable for the business's debts. A company is a separate juristic person, and the shareholders are not liable for its debts merely because they are shareholders, but it brings more formalities and regulation.
In short. Sole proprietorship, partnership (not a juristic person; partners ultimately liable), business trust, close corporation (no new ones since 2011), company (juristic person; limited liability).
Common mistakes
- Calling a partnership a juristic person.
- Thinking new close corporations can still be registered.
CO1 practice
- Can a new close corporation be registered today? Answer: no; none since 1 May 2011, though existing ones continue.
Flashcards
| Front | Back |
|---|---|
| Partnership | Contract to carry on business jointly for profit; not a juristic person |
| Partners' liability | Ultimately personally liable for partnership debts |
| Close Corporations Act | Act 69 of 1984; no new CCs since 1 May 2011 |
| Companies Act | Act 71 of 2008; in force 1 May 2011 |
| Shareholders' liability | Not liable for company debts merely as shareholders |
Quiz
- Which business form is a juristic person? (a) partnership (b) company (c) sole proprietorship. Answer: (b).