Starting a Business in South Africa

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If you're looking to start a business in South Africa, this guide explains all the different options for doing business in South Africa.

If you are a foreign company looking to operate in South Africa, you can either enter the market while maintaining your company's registration outside South Africa, or register and invest in a business in South Africa. Different conditions apply depending on your preferred structure of doing business in South Africa.

This guide clarifies questions about public, private and external companies in South Africa, closed corporations, corporate visas, business incentives and more.

Your first consideration when planning to start a business or investment in South Africa is the method or vehicle most appropriate to the venture. Similar to elsewhere, the structure of your business will depend on a number of factors:

• the number of participants in the company;
• management and control policies to be put in place;
• limited liability for the participants;
• requirement of perpetual succession;
• income tax considerations.

These factors will determine which investment method and business structure are best suited to your business, for example:

• a branch or subsidiary of a foreign registered or external company;
• a company – either a local private or public company;
• a partnership – either limited or unlimited;
• a close corporation (not an option for new companies);
• a business trust;
• the sole proprietor.

Foreign registered companies in South Africa

Companies registered outside South Africa may conduct business in South Africa in two ways. Firstly, the company can register a South African subsidiary. Alternatively, the company can register as an 'external company' in terms of section 23 of the Companies Act.

If none of the incorporators have a South African visa, then registering a South African subsidiary can prove problematic and it may be advisable to opt for an external company structure for the South African operations.

The incorporators of external companies do not need South African visas to register the external company. The Companies and Intellectual Property Commission (CIPC) must simply be informed in the prescribed manner of the company’s intention to operate in South Africa within 20 business days after it started to 'conduct business'.