NGOs (Non-Governmental Organisations) and other not-for-profit bodies often incorporate themselves into a Section 21 company - an association not for gain. Section 21 simply refers to the section of the Companies Act that deals with non-profit companies.
Non-profit, not-for-profit, not-for-gain all mean that the Section 21 company operates with a purpose to help people or the environment or for cultural activities, etc, and not primarily to make a profit. If a Section 21 does "make a profit" - actually it is called "a surplus" - for example as a result of donations being more than expenses, tax is not paid on the surplus, as it cannot be distributed to the members - it must be used in the coming period/s for the objects of the company.
As an esentially public-type company, a Section 21 requires 2 directors and 7 members. Members are not owners / shareholders as no-one owns a Section 21 company. It is controlled by the members, managed by the directors for the benefit of society, e.g. for blanket distribution; for feeding the poor; for saving the whales; etc. Naturally, executive directors and other staff may be paid market-related salaries, etc, as long as the company can afford to pay all of its other bills in the ordinary course of it operations.
It is quite an intricate thing, registering a Section 21 company, and we have developed a really good way of ensuring Director control and accountability. We have handled the registration of numerous Section 21 companies for people across South Africa.
We would be pleased to assist you with your application for a Section 21 company - not registered yet, but starting from the beginning with getting a suitable name for your company, etc. Please apply here: Section 21 Company