As a overseas company, if you’re seeking to broaden your online business operations into South Africa then going the route of establishing an “external company” may simply be the most effective method.
Before a overseas company is allowed to conduct enterprise in South Africa, it should set up a department workplace by registering itself as an external company with the Companies and Intellectual Property Commission (“the CIPC“). An “external company” is outlined in part 1 of the Companies Act, 71 of 2008 (“the Companies Act“) as “a overseas company that’s carrying on enterprise, or non-profit actions, because the case could also be, inside the Republic, topic to part 23(2)“.
The necessities for the registration of an external company in South Africa in phrases of part 23(1) of the Companies Act is that an external company should register with the CIPC inside 20 enterprise days after it first begins to conduct enterprise in South Africa both as:
- an external non-profit company if, inside the jurisdiction in which it was included, it meets the legislative or definitional necessities which are akin to the legislative or definitional necessities of a non-profit company included underneath the Companies Act; or
- an external revenue company (i.e. a personal, private legal responsibility, state-owned or public company) in every other case.
Section 23(2) of the Companies Act lists a sequence of actions that can be considered “conducting business” if that overseas company:
- is a celebration to a number of employment contracts inside South Africa; or
- is partaking in a course of conduct, or has engaged in a course or sample of actions inside South Africa over a interval of at the very least six months, akin to would lead an individual to fairly conclude that the company meant to repeatedly have interaction in enterprise or non-profit actions inside South Africa.
For the needs of the above, the Companies Act particularly factors out {that a} overseas company should not be considered conducting “business activities” or “non-profit activities” in South Africa solely on the bottom that the overseas company involved is or has engaged in a number of of the next actions:
- holding board or shareholders’ assembly(s), or in any other case conducting any of the company’s inner affairs in South Africa;
- establishing or sustaining any financial institution or different monetary accounts inside South Africa;
- establishing or sustaining places of work or companies inside South Africa for the switch, change or registration of the overseas company’s securities;
- creating or buying any money owed, mortgages or safety pursuits in any property inside South Africa;
- securing or amassing any debt or imposing any mortgage or safety curiosity inside South Africa; or
- buying any curiosity in any property inside South Africa.
Once the overseas company has been registered as an external company with the CIPC, it is going to be assigned a novel registration quantity to distinguish it from a typical South African non-public or non-profit company. The registration quantity of an external company normally ends with the quantity “10” fairly than an “07” or and “08” as in the case of a South African non-public company or non-profit company, for instance.
The course of of registering the overseas company as an external company with the CIPC requires the next prescribed types to be lodged:
- Form CoR 20.1 Notice of Registration of External Company;
- Form CoR 20.1’s Annexure A, entitled Directors of External Company; and
- Form CoR 21.2 Notice of Person Authorised to Accept Service.
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The utility is then submitted to the CIPC along with the next supporting paperwork:
- an authorized copy of the overseas company’s Memorandum and Articles of Association or equal constitutional doc;
- the Certificate of Incorporation or comparable doc registered in the overseas jurisdiction;
- the present Registration Certificate of the company (if completely different to the Certificate of Incorporation); and
- licensed copies of the id paperwork or passports of all of the incorporators, administrators and representatives of the overseas company.
As could be seen, whereas there is no such thing as a requirement for a bodily presence of any shareholder or director in South Africa, there’s a requirement for a South African resident to be appointed as a neighborhood consultant of the external company, who would be the individual largely answerable for its operations and accepting service on behalf of the external company.
There are quite a few points one would want to contemplate when establishing a neighborhood department and our worldwide structuring group and CoSec division will be capable to advise on the suitable set-up, authorized construction, tax and change management implications if you wish to arrange a department workplace in South Africa.
This article was initially printed by Dommisse Attorney’s Inc
