South Africa - International Franchise Association

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Branch profits remitted to a foreign firm's headquarters are not subject to withholding tax. The legal liabilities of a branch are not limited to only its South African assets. There are three forms of business enterprises in South Africa: Private Companies (Pty), Public Companies (Ltd), and Close Corporations (CC). South Africa has an estimated 400,000 Private Companies and 4000 Public Companies, and 1.6 million Close Corporations. Each form has its own setup and reporting requirements as detailed below: Private Companies: A locally registered private company, identified by the words "Proprietary Limited" (Pty) in its title, is a form commonly used to carry on operations as a subsidiary of a foreign company. Private companies may have up to 50 shareholders, but cannot offer shares to the public or transfer them and are not required to have a minimum capital subscription. Private Directors need not lodge a written consent with the Registrar and they need not be South African nationals or residents of South Africa. The registration of a company is established by filing the following information with the Registrar of Companies: • a certified copy of the Memorandum and Articles of Association; • the registered address; • the name and address of the company's local auditor; and a share capital duty receipt. Private companies are not subject to the statutory meeting and reports requirements of public companies and do not have to lodge their annual financial statements with the Registrar. Public Companies: Public companies, designated by the word “Limited” or letters "Ltd" in the title, are formed to raise funds by offering shares to the public. Therefore, there is no limit on the number of shareholders in a public company. Public companies are required to file annual financial statements and reports with the Registrar of Companies. For public companies that issue a prospectus, proof must be submitted to the Registrar that each director has paid full price for the shares and the number of shares issued equals the stated minimum subscription. For public companies with share capital, the following must be forwarded to the Registrar: • a director's statement that capital is adequate for business operation; • particulars of the directors and officers; and • proof that the annual duty has been paid. A public company may not commence operations prior to receipt of the Registrar's certification.
Close Corporations: Close corporations, designated by the letters "CC" after their names, are a form of business organization unique to South Africa. They can only be organized by natural citizens of South Africa and are limited to a maximum of ten persons. Close corporations are subject to fewer registration and operating regulations than companies. However, the recently revised Companies Bill forbids the new registrations of CC’s, and the Companies and International Property Registration Office (CIPRO) has established a new process whereby these companies would be required to file annual tax returns. As many of these companies are thought to be dormant, this procedure is intended to give CIPRO more up-to-date information on how many of these companies are still active. For more information on company formation and registration contact: Companies and International Property Commission (CIPC) Postal Address: PO Box 429, Pretoria, 0001 Physical Address: The DTI Campus, Block F, 77 Meintjies Street Sunnyside, Pretoria Tel: +27 (0)12-394-9500; Fax: +27 (0)12-394-9501 Email Address: info@cipc.co.za Website: www.cipc.co.za Franchising Return to top Recent years have seen a significant increase in the popularity of franchising in South Africa, as it perceived as an effective way to conduct and grow successful businesses across a range of services. Franchising also plays an important role in furthering the development of small and medium businesses. Job creation, poverty alleviation, economic growth and black empowerment rank high on the South African government’s agenda. Franchising, with its advantages of skill transfer, start-up support and ongoing operational assistance, is becoming a preferred type of business to address these areas. Business format franchising, in particular, is a proven concept offering potential opportunities for interested firms. More information about this sector of the South African economy can be found in Chapter Four within the Franchising sub-section. Additional information can also be found at: Franchise Association of Southern Africa (FASA) Posnet Suite 256, Private Bag X4, Bedfordview, 2008 Physical Adress: First Floor, Block A, Eastgate Office Park, South Boulevard, Bruma 2198 Tel: +27 (0) 11 615 0359; Fax: +27 (0)11 615 3679 Ms. Vera Velasis, Executive Director Email: fasa@fasa.co.za Website: http://www.fasa.co.za/ Direct Marketing Return to top
Page 1 and 2: Doing Business in South Africa- 201
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Development Program (APDP). It will
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A proposal to amend the four pieces
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