DGMT NGO Commons - A Resource for Enhancing Good Governance and Accountability

A Resource for Enhancing Good Governance and Accountability

Establishing a Non-profit Company

A Non-profit Company is recognised as a separate category of company which has been established for a public benefit purpose, to promote specific cultural or social activities, or communal or group interests.

Previously known as Section 21 Companies, Non-profit Companies are

  • established in terms of the Companies Act 71 of 2008 (the Companies Act was signed into law in April 2009 but only came into operation on 01 May 2011); and
  • operate in terms of a Memorandum of Incorporation which sets out the objectives of the Company.

A non-profit Company may be established with or without members, but:

  • the Memorandum of Incorporation must be signed by three people, known as incorporators;
  • its income and property may not be distributed to its members, officers, incorporates or directors, except as reasonable compensation for services; and
  • they must be governed by a Board of Directors who guarantees to hold responsibility in the event of financial failure of the Company.