Foreign-owned
Description
Different requirements come into play when a start-up wanting to operate in South Africa is owned by foreign nationals. Two primary options are available to so-called foreign owned companies, being firstly to register as an external company in South Africa, and secondly to domesticate the foreign company in South Africa.
A foreign company is required to register as an “external company” with the CIPC if it conducts or intends to conduct business in South Africa. Section 23 of the Companies Act, 2008, lists a series of activities, which will be regarded as conducting business.
This list includes:
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Holding a meeting or meetings of shareholders or board of the foreign company, or otherwise conducting the internal affairs of the company;
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Establishing or maintaining any bank or other financial account;
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Establishing or maintaining offices or agencies for the transfer, exchange or registration of the foreign company’s own securities;
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Creating or acquiring any debts, mortgages, or security interests in any property;
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Acquiring any interest in intellectual property; and
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Entering into contracts of employment.
Differentiating attributes
A foreign or external company is a company incorporated outside of South Africa, irrespective of whether it is a profit or non-profit company or carrying on business in South Africa. A foreign company is prohibited from offering securities to the South African public unless it follows the specific provisions of the Companies Act, 2008, relating to offers to the public.
Useful resources
Requirements for setting up: Achieving Freedom to Operate
The rules and regulations for operating a business in South Africa is the same for both locals and foreigners, all businesses are expected to abide by South African laws.
Obtain a business visa
In order to register a business, foreigners do however need to have the relevant visa in their possession. A business permit (business visa) is a requirement for foreign entrepreneurs who intend to establish or run a foreign owned business.
Two conditions prescribe the eligibility of a business visa:
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Invest a prescribed amount of R5 million into an existing business, or provide a business plan with evidence of the R5 million capital contribution.
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Establish a business, which is of national interest to South Africa, as stipulated in the IPAP policy document (No minimum capital investment required).
The Department of Home Affairs is the custodian of the business visa process, however the Department of Trade, Industry and Competition facilitates the recommendation of support of granting business visas to businesses which have a substantive economic impact.
Obtain a business visa
In the case of employing foreign nationals, an application for a work permit needs to be made through VFS Global.
VFS Global is the world's largest visa outsourcing and technology services specialist for governments and diplomatic missions worldwide.
Work permits (temporary visas) are issued by the Department of Home Affairs and facilitated by VFS Global.
The types of work-related temporary visas are as follows:
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General Work Visas are issued to foreigners where it has been proven beyond reasonable doubt that South African citizens and permanent residents with the relevant qualifications or skills and experience are not available for appointment.
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Critical Skills Visa: From time to time the Minister of Home Affairs publishes a critical skills list in a Government Gazette. To apply for a critical skills visa, you must provide proof of qualifications.
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Intra-company transfer visa: Occasionally, multi-national companies may decide to transfer an existing employee in a key position from a foreign branch to a branch, subsidiary or an affiliate of that company in South Africa. Such employees must apply for intra-company transfer work permits.
Register an External (foreign) company with CIPC
The registration of a foreign company may only be done manually.
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Register as a Customer
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Deposit funds
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Register your company manually
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Print and complete the following forms relating to incorporation:
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CoR 20.1
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CoR20.1A
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CoR21.2
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Attach a certified copy of the company's founding documents and a certificate of incorporation or comparable document.
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These supporting documents must be translated if the original is not in an official South African language.
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Scan and e-mail the completed and signed documents together with supporting information.Scan and
The following supporting documents must be included in your e-mail:
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Certified identity copy of applicant
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Certified identity copy or passport of all incorporators, directors and representative
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Power of attorney (if applicable)
Domesticate a foreign company in South Africa
The domestication of a foreign company may only be done manually.
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Register as a Customer
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Deposit funds
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Domesticate the foreign company
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Print and complete a form Cor 17.1
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Attach the following:
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A letter of law of the jurisdiction in which the company is registered to permit such transfer
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A copy of the MOI to be registered in South Africa (CoR14.1, CoR14.1 Annexure A, either standard CoR15.1A or own MOI)
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A certified copy of the current registration issued by the jurisdiction in which it is registered at the time of application
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A copy of its most recent Annual Financial Statements
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A copy of the shareholder's resolution approving the transfer of the company's registration to South Africa.
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These supporting documents must be translated if the original is not in an official South African language. Click here to upload and submit the signed forms and supporting documents to CIPC.
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The following supporting documents must be included in your e-mail:
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Certified identity copy of applicant
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Certified identity copy or passport of all incorporators, directors and representative
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Power of attorney (if applicable)
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An affidavit reflecting the following:
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That the majority of its shareholders are resident in the Republic of South Africa
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The whole or greater part of its assets and undertaking are within the Republic of South Africa, other than the assets and undertaking of any subsidiary that is incorporated outside the Republic of South Africa
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Immediately following the transfer of registration the company:
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Will satisfy the solvency and liquidity test and
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Will no longer be registered in another jurisdiction.
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Related topics
Foreign-owned business
Summary
Business Visa: Different types of Visas for South Africa
SA Government
09 May 2022
Foreign-owned business
Act
Immigration Act 13 of 2002 | South African Government
SA Government
09 May 2022