Buying property through a company – taking up shares

While many of us are more familiar with situations where a property is purchased by an individual or individuals (classified as natural persons), it is also possible for a property to be purchased in the name of a legal entity, most commonly a company.

The ins and outs of subject to bond approval clauses

A company is incorporated or “brought into life” in terms of the South African Companies Act, 71 of 2008 (the Act). Registration and incorporation of a company is done with the Registrar of Companies whose office is with the Companies and Intellectual Property Commission (CIPC) situated in Pretoria.

There are various forms of companies that exist, such as Public (Ltd), Private (Pty Ltd), State owned (SOC) and Non-profit (NPC) companies. The most popular form of company to use when deciding to buy a house is the Private Company (Pty Ltd).

All the statutory company registration documents (CoR Forms) required in terms of the Act are lodged with the CIPC on registration of the company, the most important of which is the Memorandum of Incorporation (MOI). At the time of its incorporation the company must decide and indicate the amount and type of shares it wishes to “authorise (to be issued)” and “issue”.

In terms of the Act, a share is defined as “one of the units into which the proprietary interest in a… company is divided” and a shareholder is defined as “…the holder of a share issued by a company, and who is entered as such in the … securities register.” If the company at any time after its incorporation wishes to increase its shareholders or increase the number of shares held by existing shareholders, it can issue more shares and prospective shareholders can subscribe to these. This, however, must be done in accordance with and strictly conform to the provisions of the Act. In addition, the number of shares may not exceed the authorised amount as per the MOI.

There are many reasons why one would choose to buy a house in the name of a company, for example to ensure continuity and accommodate more than one owner. This simply means that the company will be the “owner” of the property and more than one individual can own shares in the company. The shares can then be transferred between parties as and when necessary and subject to the provisions of the Act.  

Follow Snymans on Facebook for more legal information, tips and news about property.

Recommended for you

The difference between movable and immovable property
Legislative Guidelines

The AARTO Act: constitutional or unconstitutional?[post_view before=""]

The constitutional validity of the Administrative Adjudication of Road Traffic Offences (AARTO) Act and the Administrative Adjudication of Traffic Offences Amendment (AARTO Amendment) Act was recently challenged in the matter between the Organisation Undoing Tax Abuse (OUTA) v The Minister of Transport and others.

Read More
My name has changed - what happens to my property’s title deed?
Legislative Guidelines

Universal Partnerships: what is required?[post_view before=""]

There is currently no statute in South Africa that regulates the relationships between cohabitees if they are not formally married.

Read More
Minors and immovable property
Legislative Guidelines

CSOS and the courts: where do I take my dispute?[post_view before=""]

Here’s a look at a recent case which dealt with a dispute between the body corporate and residents in a sectional title scheme.

Read More
Your Trusted Partner in Residential and Commercial Property Transfers
Legislative Guidelines

The deal collapsed – is the attorney to blame?[post_view before=""]

The case of Nienaber N.O. and van den Berg (the plaintiffs) versus Nelson and Kitching Attorneys (the defendants) highlights the criteria of the duty of care a conveyancer should be aware of when providing services to clients. In this case, the plaintiffs instituted action alleging that the defendants owed them a duty of care as conveyancers and acted negligently and in breach of such duty. Let’s take a closer look.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Legislative Guidelines

Court ruling: Sale of immovable property – Alienation of Land Act[post_view before=""]

In the recent case of Potgieter v Village and others, held at the High Court of South Africa, Northern Cape Division, Kimberly, the applicant applied for an urgent interdict to restrain the first and second respondents from passing transfer of a specific property. The application for the interdict was pending action by the applicant to claim transfer of the property. In this case, both parties to the contract were represented by their attorneys.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

Buying property through a company – taking up shares

While many of us are more familiar with situations where a property is purchased by an individual or individuals (classified as natural persons), it is also possible for a property to be purchased in the name of a legal entity, most commonly a company.

The ins and outs of subject to bond approval clauses

A company is incorporated or “brought into life” in terms of the South African Companies Act, 71 of 2008 (the Act). Registration and incorporation of a company is done with the Registrar of Companies whose office is with the Companies and Intellectual Property Commission (CIPC) situated in Pretoria.

There are various forms of companies that exist, such as Public (Ltd), Private (Pty Ltd), State owned (SOC) and Non-profit (NPC) companies. The most popular form of company to use when deciding to buy a house is the Private Company (Pty Ltd).

All the statutory company registration documents (CoR Forms) required in terms of the Act are lodged with the CIPC on registration of the company, the most important of which is the Memorandum of Incorporation (MOI). At the time of its incorporation the company must decide and indicate the amount and type of shares it wishes to “authorise (to be issued)” and “issue”.

In terms of the Act, a share is defined as “one of the units into which the proprietary interest in a… company is divided” and a shareholder is defined as “…the holder of a share issued by a company, and who is entered as such in the … securities register.” If the company at any time after its incorporation wishes to increase its shareholders or increase the number of shares held by existing shareholders, it can issue more shares and prospective shareholders can subscribe to these. This, however, must be done in accordance with and strictly conform to the provisions of the Act. In addition, the number of shares may not exceed the authorised amount as per the MOI.

There are many reasons why one would choose to buy a house in the name of a company, for example to ensure continuity and accommodate more than one owner. This simply means that the company will be the “owner” of the property and more than one individual can own shares in the company. The shares can then be transferred between parties as and when necessary and subject to the provisions of the Act.  

Follow Snymans on Facebook for more legal information, tips and news about property.