Episode 5: Private Companies: “Corporate Kingdoms: The Crown Jewels and the Cuffs”

Exploring the World of Private Companies previously known as “Close Corporations” Private companies, much like fortresses, safeguard their assets against market forces and regulatory scrutiny. They balance the protection of their assets with the responsibilities that come with running a business.

What is a Private Company?

A private company is a separate legal entity from its owners, designed to conduct business and manage assets. Unlike public companies, private companies do not trade shares on stock markets but instead offer them to a select group of investors. This allows for greater control and quicker decision-making.

Advantages of Private Companies

1. Limited Liability: Protects personal assets from company debts.

2. Tax Benefits: Often enjoy more favorable tax rates and deductions.

3. Raising Capital: Easier to secure loans or investments by offering shares.

4. Professional Reputation: Enhances credibility.

5. Perpetual Succession: The company endures beyond the life of its founders.

6. Separation of Ownership and Management:Owners can focus on strategy while managers handle daily operations.

Challenges faced by Private Companies:

1. Funding Limitations:

Cannot raise capital by selling shares to the public.

2. Regulatory Scrutiny: Company must comply with numerous laws and regulations.

3. Profit Distribution: May need to reinvest profits rather than distribute them.

4. Complexer Setup: Establishing the company requires thorough groundwork.

5. Perception of Size: Might be viewed as smaller compared to larger public companies.

What is the Role of Directors and Shareholders ?

Directors manage the company and ensure it complies with legal requirements, while shareholdersinvest in the company and benefit from its success.

Types of Shares

Ordinary Shares: Provide voting rights, dividends, and growth potential.

Preference Shares: Offer fixed dividends and priority in financial stability. Want to register your company?

Want to register a company?

Reach out to my esteemed colleague Glenys Dempers at Email: glenys@theglasscastle.co.za.

Some of the key Legal Acts in South Africa:

Companies Act: Governs the formation, management, and dissolution of companies.- Income Tax Act: Regulates corporate taxation.

Labour Relations Act: Ensures fair employment practices

Consumer Protection Act: Protects consumers from unfair trade practices.

Protection of Personal Information Act (POPIA): Regulates the handling of personal data.

Broad Based Black Economic Empowerment (BBBEE): – an Scheme by goverment that force companies that scale to embrace selling off equity and generating more equality in the company

Expert Guidance Navigating the complexities of running a private company can be challenging. “The Glass Castle Business Hub” offers strategic advice and support to help you grow and protect your business.

We provide FREE 3-hour strategy sessions to assist you in expanding your corporate kingdom. For more information, contact Barteldt Bakker at barteldt@theglasscastle.co.za or WhatsApp +27824612454, or reach out to Glenys Dempers at glenys@theglasscastle.co.za.

By understanding the intricacies of private companies, you can build a strong foundation for success and ensure your business thrives in the competitive market. Look out later the week for the “Small Business Corporation” in Episode 6 of our season.

With Love & deep respect

Barteld Bakker

(Strategic Mentor – The Glass Castle Business Hub)