Setting Up a Company and Doing Business in South Africa

Company Formation in South Africa

Investing and Company Formation in South Africa

The Republic of South Africa (South Africa) is the most developed and wealthy country on the African continent.

The state is located in the southern part of the continent. South Africa is bordered by Botswana, Namibia, and Zimbabwe to the north, and by Swaziland and Mozambique to the northeast. The enclave of Lesotho is located within the territory of South Africa. The capital is Pretoria.

Perhaps South Africa is the most diverse republic in terms of the nationalities represented in the state. The population is approximately 49 million people.

11 languages (English, Afrikaans, etc.) have the status of state languages in South Africa.

South Africa's banking system is represented by the central bank and several large banks, as well as a number of small banks.

The South African rand is the currency of South Africa.

Advantages of Opening a Company in South Africa

The main reasons are:

- The state is not included in the "blacklist" of offshore companies

- Developed and effective banking system

- Opportunity for successful tax planning

- Starting a company in South Africa is rapidly gaining popularity

- Forms of doing business in South Africa

It is possible to register companies in South Africa in the following organizational and legal forms:

Public Limited Company (PLC). The company is used as an effective tool in offshore business, for example, for the export of goods (services).

Setting up a Public Limited Company (PLC) in South Africa

• The name of the company established in South Africa must end with “PLC”.
• The capital consists of the shares that the company's shareholders (owners) contribute to the total capital. The amount of capital can be in monetary equivalent or in real assets.
• Real assets can be represented by an object that has a real market value. Intellectual property can act as the registered capital of the company, provided that third parties can acquire rights to it in the future without any restrictions. The value of real estate, expressed as real estate in South Africa and contributed to the registered capital of the company, must receive the approval of a licensed auditor.
• The registered capital of the PLC company shall be at least 100,000 rand. At the time of registration, at least 1/4 of the total amount of the registered capital must be deposited.
• The public company can engage in commercial activity only after the commitment of the entire capital is completed.
• The registration period for a PLC company to open a company in South Africa is approximately 5 weeks.
• The director of the company can be a legal or natural person residing in any country. The number of directors is two or more, and there is no upper limit.
• There must be a secretary in the company.
• The issuance of shares is possible without any restrictions.
• Meetings of shareholders/owners must be held annually. The shareholders themselves determine the place and time. All shareholders/owners must be present at the meeting.
• The first meeting must be held within 18 months from the date of registration. Each subsequent meeting shall be held within 9 months from the end of the current financial year. At the same time, the interval after the previous annual general meeting should not exceed 15 months.
• The Memorandum of Understanding and Articles of Association shall be submitted to the Registrar of Companies. The memorandum must state the name of the company and the address of its registered office. The text of the memorandum is signed by each shareholder in the presence of a witness. The articles regulate the basic rules for conducting the company's commercial activities and internal rules of conduct.
• If the company is owned by a non-resident of South Africa, a "public officer" from South Africa must be appointed to oversee the source of the company's income.
• The company in South Africa can engage in any legitimate activity.

Company Accounting in South Africa

• Accounting records must be kept and reflect the transactions that the company has carried out during a financial year. At the same time, the current financial situation of the company must also be reflected in the report.
• The accounting statement includes a consistent daily calculation of all amounts received or transferred. The report must also include a record of the amounts of liquid assets, the value of partners' shares, and their total amounts.
• The reports must be kept at the legal address specified in the Register for 6 years from the date of signature.
• The statistical report must be sent to the Registrar of Companies. It must be done no later than the end of the 21st day from the end date of the financial year.
• The company's financial year is the period not exceeding 365 days from the first day of the reporting period. The start date of the reporting period for each company is determined by the Registrar. It is the last day of the month in which the company was founded. The director has the right to change this date within 9 months, but prior agreement must be reached with the Registrar on this matter.
• The first financial year of the company can be at least 6 months and at most 18 months from the date of registration.

Company Features in South Africa

• The company name must end with the words "Proprietary Limited" or "PTY Limited".
• The company may have one shareholder who is a natural or legal person and resident or non-resident of South Africa. The maximum number of shareholders is 50 people.
• Only the issuance of registered shares is permitted, and they cannot be transferred to third parties without the consent of all participants.
• The company may have a director who is a resident or non-resident of South Africa.
• The company's founding documents are the Articles and the Memorandum. The memorandum must include the address and name of the company's registration office.
• The registration of the company in South Africa takes approximately 15 business days, after which the company must be registered with the tax office. If the company is not registered within 45 days, it will be automatically canceled, and a penalty of 8000 rand will be applied.

Accounting for a Private Company

The company is obliged to keep accounting records and submit an annual report in which information regarding its directors of operations and shareholders is added. The report also includes information on the shareholders who owned shares during the financial year.

Types of Taxes in South Africa

The South African income tax rate is generally equal to 29%.

We will carry out the registration of a ready-made company in South Africa for you as soon as possible. Buying a company in South Africa is now easier than ever. Business registration in South Africa is one of the simplest and cheapest ways to start legitimate international trade. Company setup in South Africa is one of the main directions of our business.