Being one of the well-developed emerging markets in the world, South Africa tends to offer great competitive advantages for people willing to start a business there. With National Development Plan set forth as its vision, South African economy provides great investment opportunities with the aim to eradicate poverty by 2030. Also registered businesses have advantages in form of lower tax payments.
Table of Contents
Setting Up a Business in South Africa
The overall process of registration, structure, governance and the post-formation regulation of a company in South Africa is governed by the Companies Act. However, the Act alone is not enough as there are other pieces of laws and judicial precedents relevant to company formation.
The Companies and Intellectual Property Commission (CIPC) was set up in the light of Companies Act 2008 in order to run the overall process of business registration in South Africa. The commission has the responsibility to oversee the registration process.
Selecting the type of business
A person going to register his business in South Africa can choose from five types of business setups
- Private Company
- Public Company
- Personal Liability Company
- State-owned company
- External (foreign) Company
- Not-for-Profit Company
Selection of name
As per the postulates of Companies Act 2008, the company is allowed to go for registration without a name, in which case the registration number will become the name of the company. Such a company may choose to apply for name latter. One could choose between 1 to 4 names when applying for name reservation. If the name reservation application is disapproved, a new one is to be filed. Each application will cost R50. The name is reserved for a period of six months, however, a conditional extension of 60 days might be granted by CIPC.
Applying for Registration
Once the name is reserved by the commission the process of registration will follow.
- People with the intention to register, should submit a complete and signed Memorandum of Incorporation along with a Notice of Incorporation and the prescribed fee.
- Once both the above documents are filed, the Commission may accept or reject the notice. It may reject the notice if it is incomplete or improperly filled. However if the number of initial directors is less than as set out in the Companies Act or if there are reasonable grounds to believe that some of the directors are disqualified as per the provisions of the Companies Act and the remaining directors are less than the required number, then the Commission in any case will reject the Notice.
Company Registration by CIPC
On acceptance of the Notice of Incorporation, CIPC should move on to registering the company as soon as possible.
- The first step is the assignment of the registration number to the company.
- Once this is done, the information related to the company is to be entered in the companies register, the Notice of Incorporation and the Memorandum of Incorporation are to be approved and filed
- The company is to be provided with a registration certificate.
Registration by a Foreign Company
A foreign company that wants to register in South Africa may choose to go for the private limited company as its business structure as it could then enjoy the benefits of limited liability with fewer regulations and governance.
However, if a foreign company does not want to register itself as a separate legal entity and is just willing to carry out trading activities in South Africa, it may choose external company as its business structure. Such a company is regulated by the same founding documents and procedures as of its home country.
The external company must still appoint a South African resident as its Public Officer in the CIPC. The particular person will be responsible and accountable for adherence to the South African regulations.
Fee for Registration in South Africa
The fee varies depending on the business structure. For instance, R125 is charged for a private company and R475 for a non-profit company registered without members.