Issuing shares for the first time in a private company can seem very complicated. Mainly because there isn’t enough information online on how to go about it. This is a guide on how to issue shares in a private company in South Africa.
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Value the company shares
The first thing you have to do is to come up with a valuation for the shares. This is calculating how much each share is worth. There are multiple ways to value company shares, you should determine how much each share is. This will be based on how many shares are authorized. If the whole company is worth R10k and there are 100 authorized shares, then each share is worth R100.
Issue a share certificate
This is the difficult part and a part that I struggled with. At first you think that you should change your ownership at the CIPC, but that’s not how it works. The CIPC doesn’t hold information on who owns what shares in a company.
The CIPC only deals with company directors; you don’t have to go through the CIPC to change share ownership; in fact; you can’t. All you have to do is to issue a share certificate, there are multiple share certificate templates online. This is something that you can do all by yourself; alternatively, you can pay people to do it for you; it’s usually between R250 and R500.
The share certificate only has to be signed by the director who is registered at the CIPC in order to be valid. You don’t need a hefty contract or a lot of details, just make sure all the company information is available on the certificate and that the director has signed it.
This was a guide on how to issue shares in a private company in South Africa. Do you have any thoughts or questions? Comment below.