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TRADE AND INVESTMENT OPPORTUNITIES IN SOUTH AFRICA

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. The establishment of a branch requires registration with the Registrar as an ‘external company’ under Section 32 of the Companies Act within twenty-one days after the establishment of a place of business in the Republic.

The application requirements to establish a branch include:

• A completed application form;
• A certified copy of the memorandum and articles of association of the company and a certified translation in one of the official languages of the Republic;
• A notice specifying the registered office and postal address of the company;
• The consent and name and address of the auditor in South Africa;
• A notice of the financial year-end of the company;
• Details of the local manager and secretary of the company as well as details of the directors and their consent to act in that capacity; and
• A notice of the name and address of the person authorised to accept service on behalf of the company.

The legal costs should be less expensive than for incorporating a South African company. A registered office must be established in South Africa and the company must appoint a South African resident to act as its legal representative. A local auditor must be appointed, and audited financial statements in respect of the South African branch, together with a certified copy of the most recent financial statements prepared under the requirements of its country of incorporation, must be filed with the Registrar of Companies. In certain circumstances, an exemption may be granted in respect of these filing requirements.

There are no local equity requirements, except for major banking institutions, where local control is required by government policy. However, in the case of business entities with non-resident ownership equal to or greater than 75%, restrictions exist in relation to local borrowings and debt: equity ratios. The company will be taxed at a flat rate of 29%, but no STC is payable. An external company is taxed on 50% of its net capital gain.

 
 
Ms. TSD Nxumalo Consul-General
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