Starting a business in South Africa is relatively straightforward. Before hiring employees, companies must first set up a South Africa subsidiary, which can be a time-consuming process. However, there is an alternative. Working with an EOR like G-P can simplify the process, enabling companies to begin hiring in minutes, not months.
How to set up a South Africa subsidiary
There are certain factors that influence whether you should set up a South Africa subsidiary. Some businesses — such as those exporting and importing food or using heavy infrastructure in South Africa — also need special permissions, licenses, or other requirements.
There are many types of entity forms to consider when establishing a subsidiary: private company, public company, close corporation, partnership, joint venture, or branch. The most common option is a private company. The setup process includes:
- Reserving the name of the company.
- Completing a Memorandum of Incorporation (MOI)
- Completing a Notice of Incorporation (NOI)
- Completing and filing an application form along with the MOI and NOI to the Companies and Intellectual Property Commission (CIPC).
Once the entity has been fully registered, the CIPC will provide a company number, facilitating the process of opening a bank account. The company will also have to register for VAT and file for unemployment insurance with the Department of Labor.
South Africa subsidiary laws
South Africa subsidiary laws differ based on the type of entity you decide to establish. After registering, South Africa subsidiary laws require that private companies maintain company records, including a copy of the MOI and any amendments, and a register of its shares, company secretary and auditors, if appointed. The company must keep these records for a period of 7 years.
Private companies also need to keep copies of all reports presented at annual general meetings, annual financial statements, any accounting records, notices and minutes of shareholder meetings, and resolutions of directors. Additionally, all private companies must keep accurate and complete accounting records, which must be accessible at the company’s registered office.
All private companies are required to file an annual return within a certain period of time. Failure to file an annual return can result in the CIPC assuming that the company is not doing business — noncompliance with the filing of an annual return may lead to deregistration of the company. Companies have 30 business days to file the annual return to the CIPC.
Benefits of setting up a South Africa subsidiary
Setting up a subsidiary in South Africa offers several benefits. A private company operates independently from the parent company. This arrangement can protect the parent company from any losses or litigation. Plus, it allows the subsidiary to create its own structure that caters to South Africa’s culture and workplace practices.
Other important considerations
Before establishing a South Africa subsidiary, it’s advisable to research the amount of time and resources it requires. You’ll likely have to task someone from your company to learn every aspect of South Africa’s subsidiary laws or invest a significant amount of money to hire an advisor or professional counsel to assist with the set up and maintenance to remain compliant with local laws and regulations.
Enter new markets with G-P — no new entities required.
Beat the competition and enter new markets in minutes, not months, with G-P. We’ve paired our industry-leading team of in-region HR and legal experts with our #1 Global Growth Platform™ to help you hire compliantly in 180+ countries, eliminating the need to set up local entities or subsidiaries.
Get in touch today to learn more about how we can streamline the global growth process.