When one decides to register a company there are two types of companies that are commonly used in business particularly in Zimbabwe namely a private limited company and a private business corporation. In this article l will talk about a private business corporation.
Private Business Corporation
A private business corporation (PBC) is governed by the Private Business Corporation Act chapter 24:11
Any one or more persons, not exceeding twenty, who qualify for membership of a private business corporation in terms of section twenty-three may, by subscribing their names to an incorporation statement and otherwise complying with the requirements of this Act in respect of registration, form a private business corporation.
The process of forming a private business corporation starts with a name search which is done on a PBC 1 form. Applicants submit up to four names for a search to be made for the availability of a name they want to use for trading. A CV 4 form is issued to confirm the availability of a name or to confirm the rejection of the names. The approved name is reversed for 60 days before the submission of a statement of incorporation by means of a PBC 2.
The incorporation statement states
(a) the name of the private business corporation with “Private Business Corporation” as the last words of the name or the abbreviation “PBC”, in capital letters, at the end of the name; and
(b) The postal address of the private business corporation; and
(c) the physical address, not being a post office box or private bag number, of the registered office of the private business corporation for the purposes of section eighteen; and
(d) The full name of each member and his national identity number or, if he has no such number, the number of any other official identity document he may possess and his date of birth; and
(e) The percentage of each member’s interest in the private business corporation, taking the total of members’ interests as one hundred per centum; and
( f ) the amount of each member’s contribution to the assets of the private business corporation, stating the extent to which each contribution is in cash or in property or in services rendered towards the formation or registration of the private business corporation, and stating the fair value of any contribution that is not in cash; and
(g) The name and postal address of an accounting officer to whom the members of the private business corporation intend to submit their financial statements; and
(h) The date of the end of the financial year of the private business corporation.
(2) Subject to section twelve, the incorporation statement may state the objects of the private business corporation.
Signing of incorporation statement
(1) An incorporation statement is signed by
(a) Every person who is to become a member of the private business corporation upon its incorporation; and
(b) A person who is qualified to become the accounting officer of the private business corporation upon its incorporation.
(2) The effect of each member’s signature on an incorporation statement shall be to acknowledge the correctness of each item in the incorporation statement and the fairness of any valuation included therein and the effect of the signature of the person referred to shall be to indicate that he has no cause to believe that such valuation is unfair.
Registration of incorporation statement
An incorporation statement, together with a duplicate original or a copy in the prescribed form, or, if it is to be registered in Bulawayo, two duplicate originals or copies in the prescribed form, shall be delivered to the Registrar
On registering the incorporation statement of a private business corporation the Registrar:
(a) Assigns a registered number to the private business corporation; and
(b) Endorse on each copy of the incorporation statement a certificate that the private business corporation is incorporated; and
(c) Return one copy of the incorporation statement, endorsed in terms of paragraph (b), to the private business corporation.
(4) An incorporation statement bearing the certificate of incorporation referred to in subsection (3) or a copy thereof issued in terms of subsection (5) shall be conclusive evidence that all the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with and that the private business corporation is duly incorporated under the Act
Incorporation of private business corporation and capacity and powers thereof
(1) The incorporation of a private business corporation shall date from the completion by the Registrar of its certificate of incorporation, from which date it shall be a body corporate by the name contained in its incorporation statement, capable of exercising all the functions of a body corporate, and having perpetual succession, until it is struck off the register or dissolved
(2) A private business corporation shall have the capacity and powers of a natural person of full legal capacity in so far as a body corporate is capable of having such capacity and exercising such powers.
Limitation of liability of members of private business corporation
Subject to the Act, the members of a private business corporation shall not, solely by reason of their membership, be liable for the debts or obligations of the private business corporation.
Registration of amended incorporation statement
If any change takes place in any of the matters stated in an incorporation statement, the private business corporation shall within twenty-eight days deliver to the Registrar—
(a) An amended incorporation statement complying in every respect with the Act and incorporating the change that has taken place, signed by every existing and new member, together with the duplicate original or originals or copy or copies required and
(b) The private business corporation’s copy of its original incorporation statement and any previous amended incorporation statement.
(2) The Registrar shall, upon payment of the prescribed fee, register any amended incorporation statement delivered to him in terms of the provisions of the Act.
(3) On registering an amended incorporation statement the Registrar shall—
(a) Endorse on each copy the date of registration; and
(b) Endorse on each copy of the private business corporation’s original incorporation statement and any previous amended incorporation statement the date of registration of the new amendment; and
(c) Return to the private business corporation one copy of the new amended incorporation statement and its own copy of its original incorporation statement and any previous amended incorporation statement so endorsed.
(4) If any change takes place in any of the matters stated in an incorporation statement, the private business corporation and the Registrar shall proceed, but the change shall not take effect until registration of the amended incorporation statement or any later date specified therein.
(5) If a private business corporation makes default in complying with the Act, the Registrar may, on his own motion or on application by a member or creditor, serve on the members individually by registered post a direction that they rectify the default within twenty-eight days.
(6) If the members of a private business corporation fail to comply with any direction given, the Registrar may, by further written notice served on the members individually by registered post, impose on them, or any of them, liability jointly and severally with the private business corporation for every debt of the private business corporation incurred from the date on which the direction referred to was sent until the default is rectified.
Incorporation statement to be kept at registered office
(1) Every private business corporation shall keep at its registered office the original or a certified copy of its incorporation statement endorsed with its certificate of incorporation and with the dates of any amendments, together with any amended incorporation statements endorsed with their date of registration and with the dates of any amendments.
(2) Every member shall be entitled to one free copy of each document referred to.
Effect of limitation of objects of private business corporation
(1) The members of a private business corporation may agree to specify the objects of the private business corporation and to limit the activities of the private business corporation to such objects, but no such specification or limitation shall invalidate any transaction which exceeds any such objects and which was made by the private business corporation or entered into by the private business corporation with any other person, notwithstanding that the other person was aware of the specification or limitation and notwithstanding that the specification or limitation was recorded in the incorporation statement or by the by-laws of the private business corporation or in any other document whatsoever.
(2) Where the members of a private business corporation have agreed to limit its activities to specified objects, then, without derogation from any other remedies that may be available:
(a) The court may, on application made prior to the event by a member of the private business corporation, issue an interdict restraining the private business corporation from entering into or completing any transaction that exceeds its objects;
(b) Where the private business corporation has entered into any completed transaction that exceeds its objects and has resulted in loss to the private business corporation, the court may, on application made by a member of the private business corporation, order any other member who entered into or took part in the transaction to compensate the private business corporation for the loss:
No constructive notice of incorporation statement or other public documents
The fact that a private business corporation’s incorporation statement or any other document has been registered in terms of this Act or is available or required to be available for inspection in terms of this Act, shall not, of itself, be construed as giving any person notice or knowledge of its contents.