The branch is an extension of a company registered abroad, and one of the ways in which a foreign company can expand its activities to South Africa. Investors who open a branch in South Africa should be mindful of its characteristics and advantages, as well as the general set-up process.
Our South African lawyers provide complete assistance to foreign companies interested in entering the market by opening a local branch.
If you wish to know more about company formation in South Africa, as well as receive detailed information about the other business forms that can be incorporated by foreign investors, do not hesitate to contact our local team of experts.
Table of Contents
Branch registration requirement in South Africa
Foreign companies that open a branch in South Africa are required to register it as an “external company”. For the purpose of branch creation, the Companies and Intellectual Property Commission in South Africa refer to this step as the registration of a foreign company. This is a legal entity incorporated outside of SA, and it can be a profit or non-profit company.
All foreign legal entities doing business in South Africa need to register with the Companies and Intellectual Property Commission (CIPC), according to the Companies Act. For the purpose of a branch, the following fall under the types of activities which are considered as conducting business in SA:
- Conduct the internal affairs of the legal entity, hold meetings;
- Open and maintain a bank account/other financial account;
- Open and maintain offices or agencies used for the transfer/exchange/registration of the parent company’s securities;
- Acquiring intellectual property interests;
- Concluding employment agreements.
Our attorney in South Africa can give you more details on the activities that may be undertaken by a foreign company registered in SA, as well as the conditions under which it can offer securities to the local public (to which special provisions apply).
Branch registration steps
After they decide to open a branch in South Africa, foreign investors follow several steps:
- Documents: the foreign company prepares for registration by gathering the needed documents; our team will give you complete details on the requirements of the CIPC;
- Funds: the registration of an external company is subject to a fee of R400; the domestication of a foreign company is subject to a fee of R100;
- Forms: three distinct forms are filed when making the mandatory registration for a foreign company; our team will assist you with filling these in;
- Submission: the documents are submitted to the CIPC for review and approval; this submission is done electronically.
Apart from the mandatory forms needed to open a branch in South Africa, the applicant will also submit a certified passport copy, the certified passport copies of all founders, directors, and the branch representative, as well as a power of attorney, if this is the case.
The branch will be subject to the following requirements:
- its registration is mandatory for the purpose of engaging in business activities and should take place prior to these or no later than 20 days after their commencement;
- it will appoint a local resident who will act as its local representative in relation to the CIPC;
- the branch will be subject to the corporate income tax rate of 28% (27% for the year of assessment ending on or after 31 March 2023).
Foreign companies interested in opening a branch in South Africa can rely on our assistance during the registration process. Upon request, our team can draw up a power of attorney, which will be used by one of our lawyers in South Africa to act on behalf of the foreign company during the registration process.
For more information about branch creation, as well as the incorporation of other business forms, you can reach out to our lawyers in South Africa.
Our attorneys offer a wide range of services to both companies and individuals. If you are interested in other matters, such as immigration to South Africa, do not hesitate to contact us.