What is a private company Pty Ltd?

What is a private company Pty Ltd?

Property Limited, abbreviated as Pty Ltd, is a familiar term, especially if you have ever been in business with companies. So, what does Pty Ltd mean at the end of companies' names? A Pty Ltd is a company that trades for profits. It is a separate legal entity that is unique from its shareholders. In South Africa, a Pty Ltd firm is viewed as a separate legal entity that is registered as a taxpayer in its own right. This is according The Companies Act No. 71 of 2008 that dictates a Pty Ltd company to perform rights and duties of its own.

Image: pixabay.com
Source: UGC

READ ALSO: How to reverse eWallet payment in 2019?

Given that Pty Ltd is a separate entity from its owner, one would wonder who the owners are. The owners of Pty Ltd firm are its shareholders. This type of business institution does not provide its shares to the public and has few transparency and disclosure requirements. This makes it more appealing to big money. It also has to have a minimum of one director. Initially, a (Pty) Ltd company was restricted to a maximum of 50 shareholders. This rule was, however, scrapped from The Companies Act, No. 71 of 2008, allowing firms to have as many shareholders as it possibly can.

Read also

Top 10 most valuable car companies around the world

Is a private company a Pty Ltd? - Is a Pty Ltd company private or public?

The question of whether Pty Ltd Company is private or public is one that many people think about. According to the legal definition of Property Limited, it is safe to conclude that it is a private firm.

According to entrepreneurmag, a private company is defined as, “a privately held firm owned by non-governmental organizations or by a significantly fewer shareholders which does not provide or buy and sell its company stock (shares) to the larger public on the stock market.” While a public company, according to CIPC, is defined as, “ a company that may offer its shares to the public, but is restricted in its right to offer pre-emptive share offers.”

This difference in definition provides a clear distinction between these two types of business structures. It, however, does not provide the solution to the question: What is the difference between a CC and Pty Ltd? A Close Corporation (CC) is mostly preferred by small business owners. It has a maximum memberships of 10 people. It, however, does not have a limitation on the number of employees it can hire. The most important requirement for a CC is the bookkeeper or an accounting officer to keep the financial health of the company in check.

Read also

List of 20 highest paid CEOs in the world, their salary and net worth 2022

READ ALSO: How to start a small business in South Africa without money

When a private institution operates profitably for a number of years and has a promising future, there is a provision in law to convert it into a public company. This is usually referred to as Initial Public Offer (IPO). This also makes it possible for a private company to be converted into a public company or get acquired by a public company.

All these three definitions clearly separate one business type from the other, putting you at ease and pulling you closer towards understanding the different types of businesses in South Africa.

What is the meaning of Pty and Ltd?

Ltd is an abbreviation of limited and Pty is an abbreviation of property.

Pty and Ltd registration

Now that you understand what Pty Ltd means, it is time to let you know about its registration process. The process is a bit complicated, and it is wise for you to seek the services of a qualified attorney who will advise you through the registration process.

Read also

Microsoft offer employees the option to work from home permanently

Registration process of a Pty Ltd is done through the Companies and Intellectual Property Registration Office (Cipro).

Documents needed

When registering your company, you will need to provide the following documents for your application to be successful.

  • CM5: It is meant for name reservation or Translated/Shortened Form or Defensive Name with R50 deposited into the client’s customer code
  • CM22: Notice of Registered Office and Postal Address of the firm. They should be two.
  • Power of Attorney: It gives the business a go ahead to work in the interest of promoters.
  • CM29: This is a document containing the registration details of auditors, officers, and directors.
  • CM31: This documents gives a go-ahead to a possible change of business name and allows the possible resignation or removal of an auditor.
  • CM46: Requisition to get certificate so as to begin business, and 60 Rands deposit made to the client’s customer code.
  • CM47: Director's statement on inadequacy or adequacy of each director's share capital, articles and memorandum of association.

Read also

Top info on who owns Capitec Bank

Image: pixabay.com
Source: UGC

The process

The following is the process of registering a PTY ltd with a standard MOI online using CIPC’s website.

Register yourself as a customer on the CIPC website

If you already are registered as a customer and have the necessary logins, proceed to the next step.

Deposit funds

You can either deposit R125 to register your firm minus name reservation or pay R175 for both firm's registration and name reservation in the CIPC bank. It is important to note that you need to use your customer's code as a reference when making deposits with CIPC bank.

READ ALSO: How safe is Airbnb South Africa 2019?

Reserve a corporate name

You can explore three options when reserving a name as you register your private firm with a standard MOI:

  • Applying for a name as a part of the process – this is the best option to choose when you are applying for a business name as part of the process. The firm’s name will be included in the company registration queue once the name has been approved.
  • Reserve the name first, and then register the firm – with this option, the name of your firm will be added to a firm's registration queue instantly, as long as you have sufficient credit in your customer account.
  • Register using the enterprise number as the firms name – You will enjoy the same benefit as that of reserving the name first and then register the firm. In addition to this, the business name can be added at a later stage using a name amendment.

Read also

Top life insurance companies in South Africa that you would love to know about

Follow this process when reserving your company’s name:

  • Click on Name reservation.
  • Using your customer's code and password, login into your account.
  • On Name Reservations/Proposal Name option, select proposal name.
  • Input four names that you prefer the most in their order or priority. Be careful not to make a mistake to avoid making a correction at a later stage.
  • Once this is done, click on Submit Proposal Name.
  • You will be directed to another page indicating whether or not your name test was successful. If one of the names was declined, you would be notified with a cross. Click back to choose another name then click Lodge Name Reservation.
  • If everything is in order, you will directed to a new page where you will be notified that the proposed names have been accepted. You will be given a reservation number.
  • A message and an email will be sent to you with confirming the reservation name as well as giving you the reference number of the reservation.

Read also

The most reliable free and proprietary payroll software in South Africa

Image: pixabay.com
Source: UGC

READ ALSO: How to make slime without borax 2019?

Registration process using standard MOI Online

Follow this process for actual registration

  • Launch the CIPC website and click on Private company registration.
  • Login using your password and customer code then select Register a new company.
  • Input the ID number of the director of the company and click the plus (+) sign
  • Click “Edit” and follow all the instruction provided and then save your data.
  • Click “Continue” to complete the company’s details and then save the data.
  • The next page is about name reservation, as explained above. Choose one that suits you best and then click Continue
  • A drop-down menu will appear. Select “Lodge a Private Company.” All the details about the director and the company will be displayed. Verify it and click modify if you want to correct any mistakes made earlier. If everything is fine, click “ Lodge Company.”
  • A message will pop up on the screen showing the filing of company registration. You will receive an email via the email you provided during the application process with the details of all the documents required.

Read also

NYDA funding 2022 guide: Application forms, dates, requirements, eligibility criteria

By now, the difference between a public company and Pty Ltd is quite apparent. You now have a good understanding of what is a Pty Ltd company and how to register a company. You also know how many shareholders can a private companies have. All this information is necessary when choosing the type of company to register. For a customer, this information helps you understand the business you are dealing with.


  • How to get your tax number in 2019
  • How to earn eBucks points
  • Latest universal bank codes 2019
  • FNB cellphone banking: how to transfer money and register

Source: Briefly News

Online view pixel