distributable to its incorporators, members, directors, officers or persons related to any of them, except for reasonable compensation. • Foreign and external company A ‘foreign company’ means an entity incorporated in another jurisdiction outside of South Africa. An external company is a foreign company that carries on business in South Africa and is required to register its presence in the country as an external company. External company When a foreign company carries on business within South Africa, it is required to register as an external company. The Act sets out the scope of activities that require a business to register as an external company. A foreign company will be regarded as conducting business if it is a party to at least one employment contract in South Africa and engages in a course of conduct for at least six months that would lead a reasonable person to conclude that it intended to continually engage in business in the South Africa. However, a company is not regarded as conducting business merely because it has engaged in one or more of the following activities in South Africa: • Holds shareholder or board meetings; • Conducts any of the internal affairs of the company; • Establishes a bank account; • Establishes a share transfer office; • Acquires or collects debts, mortgages or security in any property; • Secures or collects any debt, or enforcing any mortgage or security interest; or • Acquires any interest in any property. If a company is conducting business in South Africa, they must register with the Companies and Intellectual Property Commission ( CIPC ) within 20 business days from when it conducts business activities. Following this, the CIPC will assign a unique registration number to each external company. Registration as an external company does not create a separate legal entity, but rather one legal entity registered in two countries.
Parties dealing with external companies are afforded a degree of comfort as external companies must provide certain information when registering with the CIPC. The company must disclose the names of its directors, its principal place of business outside South Africa, as well as the names and addresses of any representatives of the company who will accept the service of documents on behalf of the company. Furthermore, an external company must maintain at least one office in South Africa. Incorporation Procedure 1
Approximate cost (USD )
Item
Time
1 Register at the Companies and Intellectual Property Commission ( CIPC ).
2 weeks
USD 12
2 Open a bank account.
1 day
-
3 Register for income tax and withholding taxes at the South African Revenue Service. 4 Register for VAT at the South African Revenue Service. 5 Register the company with the Unemployment Insurance Fund ( UIF ). 6 Register with the Commissioner in deference to the Compensation for Occupational Injuries and Diseases Act.
1 day
-
7 days
-
4 days
-
30 days
-
Steps 5 and 6 can be actioned simultaneously. Investment Promotion and Incentives South Africa offers a range of incentive schemes to stimulate and facilitate the development of certain enterprises. The Department of Trade and Industry ( DTI ) are responsible for most incentive schemes in South Africa, along with a number of other governmental departments. Incentive programmes are often in the form of cash grants, tax incentives or subsidised financing instruments. Current investments cover an array of sectors, including manufacturing, automotive manufacturing, aquaculture, tourism, and for specified activities, such as research and development for enhanced competitiveness.
1 Cost and timeframe are based on typical experiences for the incorporation of limited liability companies. These will vary depending on the specifics of each incorporation and may not be relevant for highly regulated sectors.
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