MGSA Non Profit
I was wondering why makegamesa wants to establish itself as a non profit organisation -
Can Nick elaborate on the financial benefits of a non profit vs a 'for profit' entity vs say
a Trust?
Can Nick elaborate on the financial benefits of a non profit vs a 'for profit' entity vs say
a Trust?
Comments
http://www.services.gov.za/services/content/Home/OrganisationServices/registeringabusiness/registerasectio21company/en_ZA
For your civil society organisation to be recognised as a legal entity, you must register it as a non-profit company (NPC) with the Companies and Intellectual Property Commission (CIPC).
NPCs are entities that are set up to help people, protect the environment or to lobby for some good cause. They could include churches, charity organisations and cultural organisations. The primary objective of an NPC is to benefit the public, not to make profit.
The income and property may not be distributed to the incorporators, members, directors or officers of a non-profit company, except as reasonable compensation for services rendered by them. All of a non-profit company’s assets and income must be used to advance its stated objectives, as set out in its Memorandum of Incorporation (MOI).
A minimum of three incorporators must complete and sign the MOI. A minimum of three directors must be appointed.
Non-profit companies must at all times have at least three directors (unless MoI indicated a higher minimum number of directors). The appointment of an auditor and company secretary is not mandatory but optional
You can register a Non Profit Company as a:
standard Non Profit Company (with members)
standard Non Profit Company (without members)
customised Non Profit Company (with members),
customised Non Profit Company (without members).
The name of a non-profit company will end with “NPC”.
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So, to answer my own question is it only for tax reasons or is their a management benefit as well.
I did some research on the code and it seems awfully complex.
If we are a Pty, who are the shareholders? Who do we decide gets to be a shareholder? Given that shareholders will ultimately dictate what can happen MGSA would then be obliged in terms of law to serve their needs first. The other problem then is that MGSA would need to have a profit motive, or could be abused to have one. This is not desirable, MGSA is here to serve the industry and community as a whole with out preference to any particular party.
If we are a trust who are the Trustees? How do we manage this? Who is going to amend and update the trust deed with the master of the high court every year when our "directors" change and who will sponsor these costs? Trusts get no tax benefits and are more admin to manage.
By having MGSA a strictly a NPO it cannot be abused by anyone to do something against the community or as a revenue generator for other business's this allows it to remain impartial and have industry and wider community trust.
Also note we are not a NPC, we are an association of people or universitates, again this was done with management and costs implications in mind (there is little to none to be done). I have intended to switch to a NPC if it was warranted, but I don't think the requirements are there yet.