Business registration in South Africa

If you are a foreign company who wants to work in South Africa, you can enter the market by maintaining the registration of the company outside the country. You can also register your business in South Africa or invest in it here. Moreover, depending on the preferred structure of doing business in South Africa, various conditions are valid.

Opening a business in South Africa

When planning the opening of a business or investment in South Africa, you first need to choose a company that is most suitable for this enterprise. As in other countries, the structure of your business will depend on a number of factors:

• The number of participants in the company;
• Management and control policy;
• limited liability of participants;
• The requirement for unlimited continuity;
• Considerations related to taxation of profit.

These factors determine which method of investing and business structure are best suited for your enterprise, for example:

• Branch or subsidiary of a foreign registered or external company;
• company & mdash; Local private or state;
• Partnership & mdash; either limited or unlimited;
• Closed corporation (not suitable for new companies);
• Business traffic;
• Individual entrepreneur.

Foreign registered companies in South Africa

If you consider the possibility of creating an offshore company, you should keep in mind several points.

Registration of offshore companies in financial centers around the world & mdash; simple process. They provide a wide range of advantages for the company and its leaders.

Companies registered outside South Africa can conduct business in this country in two ways. Firstly, the company can register a South African subsidiary. As an alternative, the company can register as an external company in accordance with section 23 of the Law on Companies.

If none of the founders has a South African visa, then the registration of a local subsidiary may be problematic. Perhaps for South African operations it is better to choose the structure of the external company.

Founders of external companies do not need a South African visa for registration. The Commission on Companies and Intellectual Property (CIPC) should be informed about the company's intention to work in South Africa within 20 business days after the start of business.

When is the company doing business in South Africa? According to the new law on companies, entrepreneurial activity takes place only if the company is a party to an employment contract or if it maintains its activities in South Africa.

External company

An external company can be transformed into a local private company subject to certain requirements. The external company pays taxes at a single rate of 33%, but does not pay the simplified tax system. In addition, 50% of capital growth is also a significant taxable income (the effective tax rate rate is 16.5%).

Registration of an external company in South Africa

In order to register as an external company, applicants must provide the following in CIPC:

• A properly filled form Cor20.1;
• registration fee in the amount of R400;
• A copy of a foreign constituent agreement and registration certificate (or equivalent documents), as well as transfers (if applicable).

After registration, CIPC issues an external company a registration certificate in the form of Cor 20.2. An external company can continue trading activities in anticipation of receiving a certificate of Cor 20.2.

Foreign citizens must apply for professional advice when considering the creation of external companies, since South Africa has no double taxation agreements with all countries. If the country of origin of a foreign company is not a member of the double taxation agreement with South Africa, then the external company can pay twice income tax from the same income, which, as a rule, negatively affects the prospects of its successful activity.

Opening business in South Africa: Types of companies

You can also start and register a business in South Africa. The Law on Companies No. 71 of 2008 with amendments introduced by Law No. 3 of 2011 regulates the creation of companies in South Africa. The most basic classification & mdash; This is a division into commercial and non -profit companies.

Non -profit companies (NPK)

Non -profit companies work for the benefit of society. For registration, at least three people are needed, and there are no securities that could be sold on the market. Contrary to common opinion, non -profit companies can profit, but this profit cannot return to shareholders.

Commercial companies

Commercial companies are divided into the following categories:

• state companies
• Private companies
• personal responsibility companies
• Public companies.

The unifying characteristic of all private companies is that they bring financial profit to shareholders or owners. In addition, each of them has the following main unique characteristics.

State companies

These companies are owned by the state body. Their names end & laquo; soc & raquo;.

Private companies

One or more persons participate in private companies, they must have at least one director and cannot offer their securities (shares or debt obligations) to the market. After registration, private companies have the status & laquo; (Proprietary) Limited & Raquo; or & laquo; (pty) ltd. & raquo;. After their name.

A private company must limit the possibility of transferring shares and limit the number of shareholders up to 50. A private company does not need to submit financial reporting to the company register (CIPC).

Personal responsibility

One or more people participate in personal responsibility companies, and they must have at least one director; The directors of these companies (whether former or current) are jointly solidly responsible for any debts and obligations incurred by the company. For example, accountants, engineers, lawyers are recorded for example. After registration, the organization’s name follows & laquo; inc. & raquo;. or & laquo; incorporation & raquo;.

Public companies

Public companies are allowed to offer their shares on the market. The management of these companies is entrusted to the board of directors. After registration, the company's name follows the word & laquo; limited & raquo; or & laquo; Ltd. & raquo;. Although it is usually necessary by the minimum number of members (about seven), the maximum number of members or the possibility of transferring shares of a public company are not limited. However, only public companies can be listened to JSE Limited.

Closed companies

This concept was introduced in 1985 and was designed to provide a simpler and less costly corporate education for one entrepreneur or a small group with a maximum of 10 entrepreneurs. The closed corporation does not apply to the same legal requirements as for a public company (for example, it is not required to conduct an audit of the annual financial statements or conduct annual general meetings) and it exists separately from its participants who bear limited liability.

Potential business owners can choose this option, provided that the closed joint -stock company was registered until May 1, 2011, since closed corporations are no longer registered in accordance with the latest law on companies.

other types of companies

In addition to the above types of business, potential business owners can also choose options for trusts, non -organizational partnerships, joint ventures and individual entrepreneurship.

Corporate visas in South Africa & Mdash; What has changed?

In the past, corporate visas were recommended by many South African organizations that needed to massively attract foreign workers to the country. In connection with the reforms of the immigration policy of South Africa, which entered into force on May 26, 2014, owners of corporate certificates of employees & mdash; That is, visas issued by the organization-holder of corporate visas to its foreign workers & mdash; They cannot extend their corporate certificates of employees or change their status while in the country.

Corporate employee certificates are now available for a maximum period of three years, and the spouse and children of the employee do not have the right to extend the visa. In order for the employee’s family to accompany him to South Africa, dependents must independently receive the right to receive their own visa. However, these changes will force many owners of corporate visas to reconsider how they use them, as well as corporate certificates accompanying them. The volume of training and investment in the employee should be compared with the maximum three years of experience of the employee. In the field of technology and engineering, where significant investments in the training of an employee are needed, a visa with a certificate of a corporate employee may be invalid. Rather, organizations in these areas should consider the possibility of obtaining internal visas and visas for critical skills.

One of the sectors that is ideal for corporate visas is agriculture. Seasonal workers from neighboring countries complement the local lack of labor. Since these workers can enter the country for seasonal work, and then return to countries of origin, the corporate visa provides an economically effective solution to the problem of lack of unqualified labor in the local market.

Business stimulars

There are a system of various incentives available for the development of foreign business in South Africa. Complete management can be found on the website of the Ministry of Trade, Industry and Competition.

Tax benefits

Various tax benefits are available, including depreciation in relation to fixed assets. Hotel buildings are depreciable for more than 20 years. The tourism support program as part of the investment program in the enterprises of the Ministry of Trade and Industry provides cash grants.

Export incentives

Credit lines are available from industrial development corporation for exports of means of production and services from South Africa.

In fact, the state will partially compensate to exporters certain costs incurred in connection with activities aimed at developing export markets. Assistance in the form of a grant is provided by the Ministry of Trade and Industry for specific sectors in order to develop new export markets.

There are also provisions on discounts or return of some duties applicable to imported goods, raw materials and components used in exported goods.