FOREIGN-REGISTERED COMPANIES IN SOUTH AFRICA
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. Even none of
the incorporators have a South African visa.
REGISTERING A COMPANY IN SOUTH AFRICA
The incorporators of external companies do not need South
African visas to register the external company. When is a company
deemed to be “conducting business” in South Africa? The Companies Act
stipulates that only when the company is a party to an employment contract or
when it has acted in such a way as to appear that it will be continually
operating in South Africa.
ACTIONS TO TAKE PRIOR TO CONDUCTING BUSINESS IN SOUTH AFRICA
The following actions must be done to justify recognition as
an external company “conducting business” in South Africa:
1.
Conducting a meeting of the shareholders or
board of the foreign company on South African soil, or otherwise conducting any
of the company’s internal affairs within the Republic;
2.
Establishing or maintaining a bank account in
the Republic;
3.
Establishing or maintaining offices or agencies
within the Republic for the transfer, exchange, or registration of the foreign
company’s own securities;
4.
Creating or acquiring any debts within the
Republic, or any mortgages or security interests in any property within the
Republic;
5.
Securing or collecting any debt, or enforcing
any mortgage or security interest within the Republic; or
6.
Acquiring any interest in any property within
the Republic.
CONSIDERATIONS WHEN EXPANDING BUSINESS INTO SOUTH AFRICA
Foreign nationals are advised to seek professional advice
when considering external companies, as South Africa does not have dual taxation
treaties with all other countries. If the country of origin of the
foreign entity is not a party to a dual taxation treaty with South Africa, then
the external company may end up paying income tax twice on the same earnings,
which will usually be fatal to the entity’s prospects of success.
Talk to us for more information
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