What is an NPC

What is the meaning of NPC?

An NPC, which stands for Non Profit Company, has a certain purpose.  It is meant to either serve the public’s benefit or cultural and social activities. It can also be registered for the community or a group.  Different examples would be a church.  It can also be a community project such as the upliftment of women and children.  It can be used to raise money and help those in need.  It can also be used for animals or sanctuaries.  The easiest way to describe a Non Profit company would be to say that it’s any upliftment or the raising of funds for an individual, community, group or sanctuary.

Most non profits request funding from other entities, they require funding to ascertain their goal, whether it be to raise funds for needy children or community.  There are places such as animal foundations where cats or dogs have been dumped and have nowhere to go, these Non Profit Companies will raise funds for sterilizations, immunizations and vaccinations.  There is usually an adoption fee; this is used to cover these costs as well as food and vet bills.  Most organizations have volunteers, but some staff are paid.  Funds need to be raised for all of the above mentioned.

The Non Profit will not be for the personal gain of the directors, this will be directly linked to the Non Profit Company.  All money or funds raised are used in specific ways to keep the Non Profit running depending on what the company does or is raising funds for.

What is a Non Profit Organization?

A Non Profit Company and a Non Profit organization are similar and have the same basic purpose but can be confused at times.  A Non Profit organization is registered by The Department of Social Development.  There has to be no less than 5 members in order for the Non Profit Organization to be registered.  If there are any less than this The Department of Social Development will reject the application.  A Non Profit Organization would be registered to benefit the public and not for personal profits or gain.

A Non Profit organization can be registered for entities such as schools, churches, sports clubs, youth clubs, dance or theatre groups, associations, learning institutions etc.  A Non Profit Organization takes quite some time to be registered; it can take anything from eight to twelve months, in some cases it can take longer than this.  The Non Profit organization will qualify for funding with the Department of Social Development as it was registered with them.

Does a Non Profit Company have shareholders?

A Non Profit Company does not have any shareholders, only directors.  There is a minimum of three directors required for the registration.  A Non Profit Company is registered with the purpose of not gaining profit for self gain; therefore it cannot have shareholders with shares that are valued at a certain amount.  In short, the company is seen to have no ownership it is basically run by the directors of the Non Profit Company.

Only a company that makes a profit can have shareholders as each shareholder needs a certain amount of shares that are valued, and make a profit from the company depending on how many shares they own.  A Non Profit Company cannot make a profit; the income raised or received needs to be used within the company for the certain purpose it was registered for.

What is a Section 21 company?

A Section 21 Company is the same as a Non Profit Company.  After the companies act changed on the first of May 2011, the name was changed to a Non Profit company.  The definition stays the same.  A Section 21 Company could not have any shareholders with a share capital and could not make a profit.  The sole reason for the registration would be to help communities, raise funds etc.  This is the same for the current Non Profit Companies that are registered through CIPC today.

Who controls a Non Profit Company?

The Non Profit Company will be run by the directors of the company.  There will need to be a bank account for funding, paying of salaries etc and all of the directors, which are a minimum of three, will need to have control over the bank accounts.  The reason behind this is that Non Profits are not allowed to make a profit and has to be controlled by more than one director or person. 

The Non Profit Company is registered with CIPC (Companies and Intellectual Property Commission) but the directors will be running the company and have certain roles to play.  They can draw up a contract between them to decide on who needs to fill which role and what their responsibilities are within the company.

Does a Non Profit Company have a CEO?

A Non Profit Company can have a CEO.  This person would volunteer to be the CEO for the company, usually part time.  Most people would prefer to not have a CEO, as they usually would need to include their personal liabilities that other directors do not need to have.  It’s best to only have directors on the Non Profit Company, and draw up an agreement where each director has his or her own roles and responsibilities. 

Non Profit Companies are best run equally instead of including a CEO who risks his or her own liabilities and has more responsibility within the company.  In short, the Non Profit Company does not need to have a CEO but can appoint one should they feel the need.

Do Non Profit Companies pay employees?

Most Non Profit Companies would employ volunteers, but unfortunately this is not always viable.  If the Non Profit Company needs day to day running and facilities that need to be taken care of, they will need to employ paid staff.  It depends on which industry we are referring to.  The pay is usually not much, but not everyone can work for free.  Most Non Profit Companies will struggle to get enough volunteers to succeed at whatever they are trying to accomplish.

Funding and volunteering directly contributes to the salaries for any employees that need to be paid.  Unfortunately all Non Profit Companies need to raise funds and require donations for the day to day running of the company.  If the Non Profit Company needs to pay employees, the much needed funds will have to be split into salaries.  The biggest goal would be to have volunteers.

Do Non Profit Companies make money?

Non Profit Companies do make money; they just do not make a profit.  A profit would be for personal gain, no director can have any personal gain from a Non Profit Company.  Any money made or raised by a Non Profit Company needs to be used toward the company.  This would be to cover all of the expenses.  If it was a community upliftment project for example, money raised would be to buy school clothes, clothing for children, toiletries etc.

The money can also be used for salaries of staff working for the Non Profit Company.  It would be fraudulent to make a profit from a Non Profit Company, where expenses for the company are concerned these would need to be linked to the company.  SARS will pick up if any fraudulent business is going on by audits and tax returns.

Can a For Profit own a Non Profit company?

A private company and a Non Profit company can work together.  If a private company owns a Non Profit company or enters into a partnership, the private company will have to pay taxes to SARS but the Non Profit Company can apply to be exempt.  Any income or funding generated by the Non Profit Company is not taxable, should they apply to be exempt.  With companies in South Africa, CIPC does not allow a company to be registered as one of the directors on a Non Profit Company.

There has to be a minimum of three directors which are natural persons.  You would need to draw up an agreement or contract to go into partnership with a private company.  Private companies like to do funding for Non Profit Companies as it improves their standing and contributions.

How many directors are required for a Non Profit company?

The minimum number of directors that need to be on the Non Profit Company in order to get it registered with CIPC is three.  If there are not a minimum of three directors, the registration will be rejected.  The maximum number of directors on a Non Profit Company is unlimited.  SwiftReg can register the Non Profit Company on your behalf on the CIPC website.  Unfortunately there is no way to work around the minimum number of three directors for the registration.

Does a Non Profit company need to pay income tax returns to SARS?

A Non Profit Company can apply to become exempt from paying Income Tax to the South African Revenue Service.   If they have not applied, they will be liable to pay the income tax returns.  Once they have applied to be exempt, they will not need to pay tax, however, will still need to do the tax returns.  The fee will be waved, there could also be money owed to the Non Profit Company, as money is coming and going from other sources such as companies who contribute.  All moneys are taxable, it just depends on who is liable to pay.

What does it cost to register a Non Profit Company?

The cost to register a Non Profit Company on the Intellectual Property and Commission’s website is broken down into two sections.  Firstly, the name options need to be submitted.  Usually four choices as they test from the first name option to see which one is not taken or isn’t too similar to that of an already registered company.  The fee for the name submission is fifty rand. Each time all four names are rejected, the fifty rand needs to be paid along with the four new names.  Always remember to be descriptive and creative with your name options as it cannot be too similar to that of an already registered company.

Once you receive the CoR 9.4 name approval document from CIPC, you can submit the Non Profit Company for registration.  You need to deposit the moneys into the CIPC bank account so that the balance reflects under your profile before any submission of a new registration can take place.  Once this is done, it will cost you R475, 00.  You need to compile the name approval document, along with the signed digital document and all certified ID copies for all of the directors.  You can supply the certified copy of the passport for foreigners only.  If it is an SA Citizen it needs to be the certified ID document.

Who registers Non Profit companies?

The Intellectual Property Commission known better as CIPC does all company registrations related to Private Companies and Non Profit Companies.  Non Profit Organizations are registered by the Department of Social Development.  A lot of people get confused between NPO’s and NPC’s.  It is imperative to do research before registering your Non Profit depending on where you want or need to get your funding from.  Certain organizations and companies may have certain requirements they need you to meet before you can receive any funding or advertising.

How long does it take to register a Non Profit company?

The turnaround time for the registration of a Non Profit Company can differ.  The names need to be submitted first, we say this can take an estimated time of 1-7 business days.  Once one of the names are approved and you submit the required documents for the registration of the Non Profit company, the registration process can take 1 – 7 business days as well.  The reason the turnaround times for the registrations differ is because it all depends on the processing time on C I P C.

If there is a back log the turnaround time can be affected or if any web related errors occur there can also be delays.  We always say, the sooner the documents are submitted the sooner the Non Profit Company will be registered.

What is the difference between a Non Profit company and a Non Profit Organization?

There is a few differences between a Non Profit Company and A Non Profit Organization, they are not one in the same which few believe.  A Non Profit Company is registered by CIPC (Intellectual and Intellectual Property Commission) when a Non Profit Organization is registered by the Department of Social Development.  A Non Profit Company takes about 1 to 2 weeks to be registered when a Non Profit Organization can take anything from eight to twelve months, even more at times.

The minimum amount of directors required on a Non Profit Company (NPC) is three.  The minimum amount of members required on a Non Profit Organization is five.  Directors are on a Non Profit company and members are on a Non Profit Organization.  There is an MOI on a Non Profit Company as well as a constitution.  There is only a constitution on a Non Profit Organization.

How do I select a name for a Non Profit company?

When it comes to registering your Non Profit Company, the first thing you need to consider is what name you will be using.  The name represents the company.  After the companies act changed, you can no longer use the term “trading as”.  Whichever name is registered with the company is the name that will be used when trading and on the bank accounts.  The reason for this is that no other company can trade with another company’s name.  This is illegal. 

You will need to do extensive research to try to make sure no one else has the name you like.  There is a search facility on CIPC but it is not always accurate.  The only way to positively know your name option is free is to submit it on the CIPC website and await their results.