South Africa Company Formation

Setting up a South Africa business, or establishing a branch in South Africa for your existing company (Company Formation), whether as a Pty Ltd or external company, as the vehicle to incorporate your business are just some of the options open to corporates when forming a company in South Africa.

You can also access information on permit and visa options here for the recruitment and transferring of foreign staff to your South African operation.

Company formation requires the company to consider a number of options, and professional advice should always be sought.

Below we provide some useful information on South Africa company formation

Details of the three most popular types of business structures (sole proprietorship, close corporations and private companies) are detailed in these web pages. Please note that close corporations were replaced in 2011 leaving just the Pty Ltd information but details are still contained here as some shell companies may still be available or the overseas company may be buying into an existing close corporation.

In the event of you requiring a Section 21 company (non profit company) or if you are setting up a company that has foreign ownership, the decision and advice process is extremely complex. In this instance it is more essential than ever to seek professional advice.

South Africa Company Formation Options

External Companies / Foreign Branches

If you are an existing company based outside of South Africa you should also consider the option of establishing an external company / foreign branch. There are various advantages to this but due consideration must be given, we strongly recommend you contact us in this regard and more information can be viewed here.

Closed Corporations

What is a close corporation?

A close corporation (CC) is similar to a private company in that it is a legal entity with its own legal personality, perpetual succession and a tax payer in its own right. The owners of a close corporation are called members. Membership is restricted to natural persons and, under certain conditions, to trusts. Such members do not hold shares but have a member’s interest in the entity. This member’s interest is expressed as a percentage. The minimum number of members is 1 and the maximum number of members allowed is 10. From a taxation perspective, the close corporation is treated in a similar manner as a company.

Why Register for a CC?

Small businesses, whose members have a close relationship and want to start up with simple administration and legal procedures, usually register for a CC. This is a common form of business entity for smaller businesses but highly unlikely as an option for a South Africa Company Formation for a foreign company commencing operations.

More information is available here at company formation » Closed Corporations

Private Company ((Pty) Limited)

This business entity is treated by law as a separate legal entity and has to register as a tax payer in its own right. It has a separate life from its owners and is required by the Companies Act of 2008 to perform rights and duties of its own. The owners of a private company are shareholders. A company may not have an interest in a close corporation. The Act dicatates a minimum of one Director in a private company and there is no limit to the amount of shareholders. The rights and obligations of the shareholders vis-a-vis each other and vis-a-vis the company are set out in a Memorandum of Incorporation as well as a shareholders agreement. The name of a private company must end with the words ‘(Proprietary) Limited’ or ‘(Pty) Ltd’.

More information is available here at company formation » Private Company ((Pty) Limited)