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Amending your Memorandum of Incorporation (MOI)

Categories: HEADLINES, Corporate Governance
We are still finding that there is a lot of misunderstanding and concern in the non-profit sector around the hype that is being generated by the “deadline” of 30th April 2013! This is the date by which (non-profit) companies can amend their articles and memorandum of association to an MOI “free of charge” in order to accommodate relevant changes arising from the implementation of the Companies Act 2008.

We wrote on this topic in November 2012 but feel it is important to return to it again now.

Firstly, this applies only to organisations that are legally set up as a non-profit company (“NPC”) (formerly a section 21 company). If your organisation is legally set up as a voluntary association (with a constitution) or as a trust (with a trust deed), different legislation applies and your organisation is not affected by the implementation of the Companies Act 2008.

Secondly, for NPC’s, the Companies Act 2008 became effective on 1st May 2011 and, with it, the replacement of articles and memorandum of association with an MOI. However, the previous articles and memorandum of association are deemed to be the new MOI in the absence of a new
document.

Transitional provisions then provided that, for a period of 2 years after 1st  May 2011, a company could amend its MOI and file it with the Companies and Intellectual Property Commission (“CIPC”) without cost. There is no requirement to amend the existing documentation.

During the 24 months from 1st May 2011 to 30th April 2013, the old articles and memorandum of association remain in effect unless there are specific transitional  provisions that override elements of them. The transitional provisions are captured in Schedule 5 of the Act and include requirements such as the duties, conduct and liabilities of directors.

After those 24 months, and therefore from 1st May 2013, the previous articles and memorandum of association (deemed MOI) will continue to be in force and effect to the extent that their provisions are not inconsistent with the provisions of the Companies Act. If there are any requirements in the articles and memorandum of association that conflict with the provisions of the Act, those requirements will be void from 1st May 2013.

We do, however, recommend that existing NPC’s review their articles and memorandum of association (deemed MOI) documents to ensure that they are in line with the new Companies Act to avoid any confusion, although it is not compulsory to do so.   You may still amend the documents after  1st May 2013, but a CIPC fee will then apply.

We hope that this clarifies the position. If you need assistance in reviewing or revising your governing documents, please contact either Nicole Copley (nicole@ngolawsa.co.za) or Ricardo Wyngaard (ricardo@nonprofitlawyer.co.za).

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