South Africa is often referred to as the Gateway to Africa and it is this standing that sees many international companies opening a branch in South Africa.
Below we provide companies with information relating to the opening a branch in South Africa, the processes involved and how to obtain the appropriate work visa for any foreign staff they wish to transfer or recruit to their new South African operation.
Setting up a business is a complex matter in most cases and nothing substitutes for an actual consultation. Intergate has been assisting foreign companies with opening up branches, subsidiaries and new enterprises since 2006 and our service entails all aspects from initial structure advice to incorporation and tax registrations and visa for foreign workers.
You can read more on our business set up service here or contact us on + 27 (0) 21 4242460 or email your enquiry.
The companies act of 2008 was described as the most fundamental reform of company law for over 30 years. The Act was brought about by a need to reform corporate policy and has a stated aim of:
- promoting the competitiveness and development of the South African economy;
- encouraging entrepreneurship; and employment opportunities by simplifying the procedures for forming companies and reducing costs associated with the formalities of forming a company;
- For the promotion of compliance with the Bill of Rights as provided for in the Constitution in the application of company law, encouraging transparency and high standards of corporate governance and balancing of rights and obligations of shareholders and directors.
Who is eligible for opening a branch in South Africa?
There are no restrictions on foreign ownership of companies in South Africa. Whether the foreign company is partnering with a local company, or opening a branch with 100% ownership, or taking over an existing operation, foreign ownership is welcomed.
Where to start with opening a Branch in South Africa
The starting point is to establish what category your company will fall under. In essence the company act of 2008 defined companies within two categories:
- For profit;
- Not for profit, for example an NGO.
Thereafter the most appropriate company structure should be selected and registered for the required taxes. Companies have a choice of company structure and the best one will obviously depend upon the companies requirements.
For profit companies
One of the favoured choice of company structure when opening a branch in South Africa is a Pty Ltd. A Pty Ltd has non restrictions in terms of the shareholders and can be 100% owned by a foreign company. A Pty Ltd is viewed as a separate legal entity and it therefore offers the most protection in terms of liability protection.
More details can be found here on a Pty Ltd.
Whether the foreign company is for profit or not for profit the same ethos applies that whilst the company does business in South Africa it remains primarily regulated in its country of origin or registration. There are also implications in terms of exchange control and the ability to remit profits back to the parent company abroad.
Not for profit companies
For foreigners opening a branch in South Africa, that is to be non profit organisation, ownership can be by an organ of state, a juristic person, or 3 or more persons acting in concert. The company will require 3 or more Directors and must adhere to a special set of fundamental rules for Non Profit Companies as set out in Schedule 1 of the Act.
Typically such a structure would be utilised by a non profit organisation.
The company registration process
Naming the company
Once the category and structure have been decided on a name reservation should be submitted. This typically takes about 3 days and companies should be mindful of applicable regulations around this that include:
- The name must not be the same or confusingly similar to a company (any company) already registered.
- It cannot conflict with a registered trademark.
Notice of Incorporation (CoR 14.1)
The notice of incorporation is lodged with the The Companies and Intellectual Property Commission (CIPC). It includes:
- Type of company;
- Incorporation date;
- Financial year-end;
- Registered address (main office);
- Number of directors;
- Company name;
- Whether the company name will be the registration number;
- The reserved name and reservation number;
- List of four names to be checked by the Commission.
The Memorandum of Incorporation
The Memorandum of Incorporation (MOI) is a very important document that requires some serious thought. CIRO has issued certain standard Memorandum’s of Incorporation (MOI’s) available for use but care should be taken as these do not include some significant clauses, such as voting percentages required for passing resolutions, restrictions on transferability of shares in private companies and finances and distributions. It is therefore advisable that consider the advantages of an individual MOI that can be tailored to the You can read more on MOI’s here.
Employing foreign workers
When opening a branch in South Africa there is very likelihood you will require some foreign staff. Depending upon your situation there are various work visa that can be applied for. Below we give you some basic information on these work visa categories and if you require more malformation simply simply click on the work visa header for more details.
Intracompany transfer work visa – designed for companies who have a need to transfer staff from their existing operations abroad to their new operation in South Africa on a temporary basis.
Corporate work visa – where the company will have a definite need to employ a larger number of foreign workers during the next years.
General work visa – for once off situations where the required employee can not be sourced in South Africa.
Getting professional assistance
With an enviable track record of assisting a multitude of corporates with opening a branch in South Africa, Intergate Immigration are one of the only organisations that can provide a comprehensive service that covers all aspects of establishing your South African operation.
Our visa commences with a free consultation and we can assist with the full range from company set up advice, application, establishment, tax registrations and work visa.