People still call them 'Section 21' companies, but they're set up under the Companies Act as Not‑for‑Profit Companies (NPCs). This is how they differ from for‑profit firms. I'll walk you through how to start one in 2026 — the legal form, what paperwork you'll need, likely fees in rand and pounds, realistic timelines and the common errors that trip people up. Links to the Companies and Intellectual Property Commission (CIPC), SARS and the Department of Social Development are included for quick reference.

Quick reference

Legal basis: the Companies Act No. 71 of 2008 governs NPCs — people often still say 'Section 21' out of habit, but the law moved to the NPC form; the Act became operative in the early 2010s.
- Main regulator: CIPC — https://www.cipc.co.za
- Optional registrations: SARS (tax/PBO), Department of Social Development NPO Directorate — https://www.sars.gov.za, https://www.dsd.gov.za
Expect registration to take somewhere between one and four working weeks, though delays happen if the name reservation or documents are incomplete.
Direct government fees tend to be small, but if you hire a lawyer or agent plan on paying a few thousand rand; simple help will cost less, complex advice more.
- VAT registration threshold: R1,000,000 annual turnover (≈£42,000).

Prerequisites

Before starting, check these points. NPCs exist for specific non‑profit aims and can't pay out profits to members — any surplus must further the company's objectives. Directors or trustees must agree the organisation's non-profit objects and control how any surplus is used. You'll need at least one incorporator — a natural person or another legal entity — and the names and ID/passport numbers of proposed officers.

Step-by-step: register a Section 21 (NPC) in South Africa

  1. Decide the legal form and name. The modern legal form is a Not‑for‑Profit Company (NPC). If you still see "Section 21" used, treat it as informal shorthand. Choose a name that reflects charitable or non-profit aims. Avoid names implying state endorsement. You can reserve up to three names with CIPC.

  2. Prepare a Memorandum of Incorporation (MOI). Make sure the Memorandum of Incorporation spells out your non‑profit goals and clearly bars profit distribution to members. You can use CIPC's standard NPC MOI or a custom MOI drafted by a South African attorney or company secretary. The MOI sets governance rules: appointment and removal of directors, meeting procedures and dissolution clauses.

  3. Create founding documents. You need the MOI, minutes or written resolution from incorporators (approving incorporation), and a list of directors with their ID or passport numbers and contact details. If any incorporator or director is a foreign national, include certified copies of passports.

  4. Reserve the company name (optional but common). Book the name through CIPC's online portal — name approval usually takes a few business days, though it can be faster or slower. If you don't reserve a name, you can incorporate using a registration number supplied by CIPC (e.g. Using the NPC's registration number as the name placeholder) and later change the name.

  5. File incorporation documents with CIPC. Complete the online incorporation via CIPC: upload the signed MOI and the incorporator resolution, list the directors and pay the fee. Go electronic — it's usually quicker than filing on paper.

    Mastheads

  6. Receive registration documents. Once CIPC approves the application you’ll receive a registration certificate and a registration number. Keep the certificate, MOI and company records safe — banks and grant-makers will want certified copies.

  7. Register for tax and apply for PBO status (if eligible). Register the NPC with SARS for an income tax reference number. If the NPC conducts public benefit activities, apply to SARS for public benefit organisation (PBO) status to gain tax exemption and 18A donor receipt status. PBO approval isn't automatic — prepare audited or independently reviewed financial statements once operational and ensure activities match the PBO list in the Income Tax Act.

  8. Register with the Department of Social Development (NPO Directorate) — optional but recommended. NPO registration (https://www.dsd.gov.za) gives legitimacy and access to some funding streams. The DSD issues an NPO registration number after reviewing the constitution and objectives.

  9. Open a bank account and set up accounting controls. Banks require the CIPC registration documents, MOI, proof of directors' identity and proof of address. Set up a finance policy, basic bookkeeping and an annual budgeting process. NPCs must keep financial records and may need audited statements depending on size.

  10. Comply with ongoing filings and governance. Keep minutes, annual financial statements and meeting records. File any required returns with CIPC and SARS. If the NPC employs staff, register for PAYE and UIF with SARS.

Fees, timelines and estimated costs (2026)

The government's filing fees are small compared with what a lawyer or company secretary will charge. Expect two categories of cost:

  • Government fees: CIPC charges for name reservation and registration. These are typically in the order of tens to low hundreds of South African rand. Check CIPC's fees schedule at https://www.cipc.co.za for current 2026 tariffs.
  • Professional fees: Most organisations use a South African attorney, accountant or company formation agent to draft a bespoke MOI and handle filings. Expect professional fees of around ZAR 2,000–10,000 (approximately £85–£420 using 1 ZAR = £0.042). Higher fees apply for complex MOIs or overseas legal advice.

Honestly, timelines: name reservation 2–7 working days; incorporation 3–14 working days after submitting complete documents. Allow more time if SARS or DSD processes are needed for tax‑exempt status or NPO registration.

Alternatives and quick comparison

Look at these options before committing:

  • NPC (Not‑for‑Profit Company) — limited liability, separate legal personality, preferred for organisations seeking grants and contracts.
  • Trust — good for asset protection and legacy trusts, but governance differs and trustees carry fiduciary duties.
  • Voluntary association — simplest form, less formal governance, may be harder to access funding and bank accounts.

For overseas donors and cross‑border fundraising, NPCs with PBO approval and an 18A status are easier to market to funders in the UK and Europe.

Tips for UK-based founders

  • Use a South African-qualified attorney or company secretary to draft the MOI. Local law nuances matter.
  • Retain clear records of foreign directors’ identity documents — certified copies are often required by banks.
  • Plan for tax early. Applying for PBO status can take months and requires clear activity descriptions and governance documents.
  • If you expect turnover to approach R1,000,000 (≈£42,000), register for VAT early and set up VAT accounting.
  • Consider registering as an NPO with the Department of Social Development to boost credibility with local funders.

Common mistakes to avoid

  • Using a profit‑distribution clause. NPCs can't have clauses that allow members to receive profits.
  • Submitting an incomplete or inconsistent MOI. Contradictions between the MOI and the incorporator resolution cause delays.
  • Assuming registration equals tax exemption. PBO status must be applied for separately with SARS and evaluated on the activities performed.
  • Neglecting ongoing compliance. Annual financial statements, minutes and any statutory filings must be kept up to date — failures can trigger penalties or deregistration.
  • Ignoring local banking requirements. Non-resident directors or foreign incorporators should check bank policies on onboarding foreign-controlled entities.

Useful official links

- Companies and Intellectual Property Commission (CIPC): https://www.cipc.co.za
- South African Revenue Service (SARS): https://www.sars.gov.za
- Department of Social Development (NPO Directorate): https://www.dsd.gov.za
- UK government guidance on doing business and charities overseas: https://www.gov.uk/government/publications/doing-business-in-south-africa

Related Articles

Registering a "Section 21" organisation in South Africa today means incorporating an NPC under the Companies Act, then handling tax and sector registrations that give access to grants and donor funding. The paperwork is straightforward if the MOI is correct and the CIPC forms are complete — delays usually follow from governance gaps or missing identity documents. Still, with a clear MOI, local professional help and a plan for SARS and DSD registrations, most NPCs can be set up and receiving funds within a few weeks.

This article was created with AI assistance.