Page 60 - Profmark_2024_Directors Guide

NON-PROFIT COMPANIES (NPC’S)

Section 1 of the Act defines a NPC as a company incorporated for a public benefit
object, or an object relating to one or more cultural or social activities, or communal
or group interests, and where the income and property are not distributable to its
incorporators, members, directors, officers or related persons, except in regards to:

■ Reasonable remuneration
■ Reimbursement for expenses incurred to advance the object of the company
■ Payment in terms of a bona fide agreement
■ Payment in respect of rights of a person, which rights are administered by the
company, or
■ Legal obligations of the company.

Formation of a NPC
■ A NPC is required to be formally registered with Commission, with a MOI which
specifically states that it is incorporated for a public benefit or an object relating to
one or more cultural or social activities, or communal or group interests.
■ It must be incorporated by at least 3 persons acting together, an organ of state or by
a legal entity, and must have a minimum of 3 directors.
■ It can be formed without members or it can have voting or non-voting members, and
membership can be held by juristic persons, including profit companies.
■ It is a separate legal entity distinct from its members or directors, and any assets are
registered in the name of the NPC.
Section 10 and Schedule 1 of the Act
■ A special set of fundamental rules for NPC’s is set out in Section 10 and Schedule
1 of the Act, which sets out on-going regulatory, governance and accountability
requirements. These rules provide clarity to both those working within the
organisation and to those stakeholders outside the organisation.
Financial Statements and Audits of a NPC
■ Financial statements must be prepared within six months of the financial year end
■ There is no audit required unless the NPC passes a public interest score, or meets
any other requirements set out in Regulation 28 of the Act, or elects for a voluntary
audit

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