Founding a Company

If you are planning to found a company in Cape Town, we offer our services in South Africa as a CIPRO agent. CIPRO is the trade register of the South African Department of Commerce. We can help you process the creation of start-ups, change names and general changes to corporate structures. You should especially take our German-speaking advice on board if you buy real estate that is integrated into a company or corporation (guest house, hotel, holiday home, apartment). You can also add tax advice to our consultation as well.

Founding a Company - Companies - Tax Consultancy - Business Creation

 

Founding a Company

 
All foreigners are able to found a company in South Africa, and the law offers you various opportunities to build a business. In addition to being a sole trader or belonging to a partnership, becoming legal persons of a Private Company (Proprietary Limited (Pty) Ltd) or a Close Corporation (abbreviated as CC) are also possibilities. Both types of companies are regulated by different laws. Pty Ltd is subject to the Companies Act and a CC is governed by the Close Corporations Act.    
 
Business Creation - CC - Close Corporation
 
Using a CC for founding a company in South Africa is only conditionally possible. At the moment, you are only able to take over a CC because the legal situation has changed.
 
A CC is the smallest legal entity that can be founded in South Africa. In the past, it was a popular way to found a company in an unbureaucratic way in South Africa. It required capital of ZAR 100. What is special about this company structure is that only natural persons can belong to it, and their number is limited to 10. The business partners are referred to as owners (members). The owners of the company hold Membership´s Interest in the Close Corporation. Every owner of the company (CC) can fully represent the company externally. It’s therefore similar to a German Civil-Law Partnership (BGB-Gesellschaft) in comparison. There are also concessions when it comes to accounting. Legally, the CC is not obligated to have an auditor create balance sheets.
 
A profit or loss statement is completely sufficient. However, the owner of the CC is obligated to appoint a certified accountant to the commercial register with their full name and address. The commercial register in South Africa still requires a fixed service address, an indication regarding the business sector, as well as personal information concerning the individual owner. This information is made available in the commercial register through completed forms, the CK 1, CK 2 and CK2a documents. In addition to the founding of a CC, the acquisition of a shell company often comes into question.
 
These companies are unencumbered and can immediately participate in legal transactions with the signature of the members on the CK2 documents. The owner’s liability is limited to their own contribution in the CC. The CC is liable as a separate legal entity with its entire assets. Piercing the corporate veil only occurs for serious infringements of the members against the Close Corporations Act and criminal acts. If several people are members of a CC, it is recommended that they are organised internally within a contract regarding the CC (Association Agreement).
 
If you take over an existing CC, we recommend that you appoint an accountant to review the CC so that you do not take on any inherited liabilities (loans or other obligations).
 
Founding a Company - Business Creation - PTY Ltd - Private Company
A PTY Ltd company is very similar to a German GmbH. In contrast to a CC, both legal and natural persons can be shareholders. The number of members is limited to 50 by law. The company/corporation is represented externally by at least one director, who is appointed by the shareholders/owners. 
 
In many cases, the shareholders of one such Pty Ltd are also the directors of the company at the same time. There is also the possibility to appoint independent directors. The directors must be specified in writing in the commercial register. The starting capital of a Pty Ltd is ZAR 1,000, since every company has 1,000 shares available. Generally, only 100 to 120 shares (share ratio, and depending on the number of shareholders) are awarded when a Pty Ltd is founded. Legislature requires balance sheets to be created at the end of the financial year. These are created by a certified chartered accountant (tax auditor). This tax auditor (certified chartered accountant) must be specified in writing in the commercial register.
 
At the same time, the commercial register must have a registered postal address, an address from which business (commercial) is conducted and information on the running operation. Annual re-registration must be lodged with the commercial register each year (annual return). It is not necessary to appoint a secretary. The shareholders also don’t need to appear in the commercial register. In addition, Pty Ltd limits both the liability on the shareholders’ deposits and the capital of the company.
 
Piercing the corporate veil occurs in cases when income tax has not been paid for its employees or other criminal acts have taken place. With one or more shareholders in the Pty, it is an advantage to create a shareholders agreement to regulate all possible problems within the company and a lawyer-formulated contract.
 
Tax Advice - Tax Office - Double Tax Treaties
A double tax treaty exists between Germany and South Africa. The international agreement stipulates that a German living in South Africa is only liable to one tax office. When immigrating to South Africa there are some specifics to keep in mind which we are happy to explain in a personal conversation. You can ask for more information from the tax office in South Africa.
 
 
If you are interested in founding a business or receiving tax advice in South Africa, we are happy to advise you.
 
We look forward to hearing from you.
 
Your Cape Town real estate team