A company is a very effective tool when conducting business and all entrepreneurs / business-people should consider using them.

For the purpose of this article, a “company” refers to a private company unless stated otherwise.

Here are ANOTHER 6 things you should know about companies in South Africa (PART 1 can be found here):

What is a public offer?

Every South African Company must appoint a public officer whose main purpose is to represent the company with the South African Revenue Service (SARS) in respect of Income Tax, Value Added Tax (VAT), etc..

The Public Officers must be appointed within 30 days of commencing business.

The Public Officer must be a natural person residing in South Africa; however, he/she does not need to be a South African Citizen.

Shareholders and Directors don’t need to be resident in South Africa

A Shareholder or Director of a company may reside in any country; they don’t need to reside in South Africa (as opposed to a Public Officer, who must reside in South Africa).

What about Tax?

In most cases a South African company will be taxed as follows:

• Income Tax at a flat rate of 28%.
• Capital Gains Tax (CGT) at a rate of 18.6% (we will deal with CGT in more details in future articles; some aspects of CGT can be found in this article).

In the case of foreign shareholders, a 15% withholding tax is usually payable.  In certain circumstances, this percentage can be reduced or abandoned in terms of a Double Tax Agreement between South Africa and the country where the foreign shareholder is resident-for-tax-purposes.

Sending money overseas

To send funds from South Africa to another country, a company, like a natural person, must obtain exchange control approval.  Depending on the reason for the payment, your bank may assist with the transfer after you complete an application with them or your bank may require an application to SARS for approval.  For foreign shareholders to receive payments in respect of their shares/shareholding, their share certificate must be endorsed as “non-resident” by an authorised bank.

Companies require a lot of the same licences as you

Much like a natural person, a company will require certain industry-specific licences or authorisations to operate (for example, financial industry, construction, mining sector, legal, real estate). In some cases, additional licences or authorisations will be required because a Juristic person is conducting the business.

Legal administration of a company

There are compliance regulations that affect companies in South Africa, such as:

• Company Records
• Accounting Records
• Appointment and rotation of auditors
• Annual Returns
• Financial Statements
• Appointment of Social and Ethics Committee
• Solvency and reckless trading
• Obligation to notify the CIPC of certain changes

We will deal with company compliance in more detail in future articles.

DISCLAIMER: THERE ARE MORE CONSIDERATIONS THAN WE CAN COVER IN THIS ARTICLE SO ONLY USE THIS INFORMATION AS A GUIDE.   THIS INFORMATION DOES NOT CONSTITUTE LEGAL ADVICE.  IT IS ALWAYS BEST TO DISCUSS YOUR SITUATION WITH AN ATTORNEY; CONTACT US AT 0861 88 88 35; helpdesk@gcm-legal.com AND THROUGH THE CONTACT FORM ON THIS PAGE.