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.

Property Blog Articles | Advice | Contractual Matters | Market News

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.

1172

Recommended for you

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

Lost original title deeds and bonds

7055

Should an original title deed or bond get lost, here’s the process that needs to be followed as per the latest amendments to Regulation 68 of the Deeds Registries Act 47/1937, published on 25 January 2019.

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

Legal Practice Act to regulate client engagement in the legal practice

10864

The process regulating client engagement has been amended in terms of the Legal Practice Act, 28 of 2014 (LPA), effective as of 1 November 2018, to ensure greater transparency.

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

Historical municipal debt

13355

Prior to the landmark decision in Jordaan and Others v City of Tshwane Metropolitan Municipality and Others [2017] there was some uncertainty around debts incurred by previous owners of a property.

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

Foreign Interest in South African Immovable Property

16533

The South African property market’s continued growth in the last 10 years has proved to offer valuable investment opportunities, both for local buyers as well as for foreign investors. However, as with many transactions that reach cross international borders, a property purchase by an individual or company needs to comply with a specific set of regulations.

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

Municipal Valuations and Disputes

17369

Municipal property valuations can assist sellers in determining an appropriate asking price for a property, but property owners should also keep an eye on these figures so as to plan their monthly expenses properly…

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.

Property Blog Articles | Advice | Contractual Matters | Market News

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.

1172