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TRADE AND INVESTMENT OPPORTUNITIES IN SOUTH AFRICA

Entry of foreigners

The country’s sustained economic growth is encouraged by foreign investment, employing needed foreign labour, enabling the entry of skilled and exceptionally skilled people, and facilitating academic exchanges within the Southern African Development Community (SADC) region. Read more

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Foreign Exchange Control

The responsibility for exchange control policy has always vested with the Minister of Finance. The Minister delegated certain powers and functions to the Exchange Control Department of the South African Reserve Bank, which implements and administers such policy on behalf of the government. Read more

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Registering your business

The most common business entities in South Africa are:

• Companies;
• Close Corporations (CCs);
• Partnerships and sole traders;
• Joint ventures; and
• Local branches of foreign companies.

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Companies (Private and Public)

Companies, common investment vehicles for foreign investors operating in South Africa, may be public (Limited) or private ((Proprietary) Limited). They exist as separate legal entities from their shareholders and/or members. Read more

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Registration Requirements

All required registration forms may be purchased for approximately R100 each from a stationer dealing in statutory forms. To reserve a name, a CM5 application form (duplicate copies are no longer required), stamped with R50 in revenue stamps, must be submitted to the Registrar’s office. Read more

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Close Corporations

A close corporation does not have directors, as its business is conducted by the members, who must be natural persons (i.e. individuals). Another company, close corporation or trust cannot, therefore, own a close corporation. In a close corporation, the members have the rights and obligations of both shareholders and directors. Consequently, ownership and management of the corporation are not separated. Close corporations may have up to 10 members. In general, few formal requirements are imposed on close corporations.

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Registration Requirements

Close corporations are required to register with the Registrar of Close Corporations. The reservation of a name is similar to that of a company. No auditors are required for the registration of close corporations, and lawyers are not necessary. The corporation will need to appoint an accounting officer.

Due to the volume of applications received by the Registrar’s office – up to 650 daily – approval takes five business days. Applications may be submitted either by mail or by hand and should include the founding statement application, the CK1 form in duplicate, an approved CK7 form and an original letter of consent from the accounting officer.

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Partnerships and Sole Traders

Partnerships and sole traders are subject to few statutory requirements, but the partners and the traders generally do not have the protection of limited liability. However, in a partnership in which not all the names of the partners are disclosed, the undisclosed partners may limit their liability to third parties to the amount of their contribution to the partnership.

Under the Companies Act, any unincorporated company, association or partnership may not consist of more than 20 persons, except in the case of certain professional partnerships, where there is no limitation on the number of partners. Registration is not required and there are no statutory reporting requirements, except that for tax purposes financial statements must be produced in sufficient detail to enable tax assessments to be made by the Receiver of Revenue.

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Joint Ventures

A joint venture is a contractual relationship between two or more enterprises engaged in a trade or business that does not qualify as a partnership.

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Local Branch of a Foreign Company

With the exception of banking and insurance companies, any foreign company may establish a place of business and carry on its activities in South Africa without forming a separate locally incorporated company. Read more
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Business Trusts

In South Africa, the Trust Property Control Act, 1988 governs the formation and operation of trusts. Through a trust, trustees for the benefit of nominated beneficiaries can carry on a business. Read more
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Regulatory Environment

There are regulations governing the conduct of business in various sectors of the economy such as finance, banks and other financial institutions; medicine; and manufacturing and mining.

Regulatory bodies include:
• The Financial Services Board (FSB), a statutory body charged with supervising the activities of financial institutions, including financial services and banking services. The FSB acts in an advisory capacity to the Minister of Finance, and its powers include the suspension and withdrawal of authorizations to provide financial services.
• The Independent Communications Authority of South Africa (ICASA) regulates television and radio broadcasting, telecommunications and the assignment of radio frequencies. ICASA also regulates the government-controlled Telkom Limited, which provides telecommunication services, and recently granted an operating license to a second network operator, Neotel, which will compete against Telkom.
• The Securities Regulation Panel (SRP) is a statutory body established to investigate insider trading and regulate acquisitions and takeovers where there is a change in control over public companies and private companies and the shareholders’ interests exceed a prescribed limit. The SRP has the power to compel the making of like offers to minorities or to reverse transactions which have been implemented. In appropriate circumstances, the SRP will grant exemption from compliance with any or all of the provisions of the Code and Regulations.
• Provincial gambling boards regulate gambling and related activities in accordance with national and provincial legislation and regulations.
• The Lotteries Act provides for a license to conduct the National Lottery. The National Lotteries Board regulates the National Lottery and other lawful lotteries.

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Ms. TSD Nxumalo Consul-General
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