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Memorandum of Incorporation (MOI)
Written by Roy Bregman (Bregmans Attorneys)
Directors of pre-incorporated companies (registered before the new companies act came into effect on 1 May 2011) should know that the company has two years to harmonise its existing memorandum and articles of association with what is now known as its memorandum of incorporation (MOI). If it fails to do so, CIPC (the Companies and Intellectual Property Commission) can issue a compliance notice and, failing compliance, will raise an extremely hefty fine.
A pre-incorporated company under the Companies Act of 1973 continues to exist as though it has been registered in terms of the new Companies Act, having the same name and registration number assigned to it (schedule 5(2)). Within 2 years from 1 May 2011 (being 1 May 2013), an existing company, without charge, must amend its MOI, and change its name if it desires (schedule 5(4)(2)).
A compliance notice (per section 171) will be filed with a pre-existing company (schedule 5(4)(4)) where the MOI is not harmonised with the new Act once a two year window period has lapsed (1 May 2013).
Should the company fail to comply with the compliance notice, the Commission may apply to court for an administrative fine (the greater of R1mil or 10% of the company’s turnover for the period the company failed to comply with the compliance notice) or it shall refer the matter to the National Prosecuting Authority for prosecution as an offence.
Further, within two years from 1 May 2011, if there is a conflict between the Act of 2008 and the rules, the MOI shall prevail (schedule 5(4)(4)) but once the two year window period lapses, the rules only apply if they are consistent with the Act of 2008 (and inconsistent rules become void) (schedule 5(4)(3)).