What is regarded as a Closed Corporation business in South Africa?

A Closed Corporation business is controlled by a few people who own all the voting stock and interest in the company.  A family corporation is one common example of a Closed Corporation, although partnerships in which two or three business partners have complete control of the company would also qualify as a Closed Corporation. Many small businesses choose to operate with this model.

In order to legally operate a Closed Corporation company in South Africa by a foreigner, the relevant business visa will need to be obtained before this company can be established. The decision to make a company a Closed Corporation is dependant on the applicant.

What South African business sectors can be excempted with a Waiver letter for the investment amount?

Applications to waiver the capitalization investment amount of ZAR 2.5 million can be submitted to the Department of Trade and Industry (DTI) if the applicant intends to start an own business in one of the following sectors:

Tourism Industry i.e. guesthouse businesses
Information and Communication Technologies
Chemical and biotechnological industry
Clothing and Textile industry
Agro-processing industry
Metal and mineral processing industry
Automotive and transport industry
Crafts industry.

What is the process of registering a business in South Africa?

The process for registering a business in South Africa is dependant on the type of business (i.e. CC or sole proprietor, etc) you wish to operate or open, the requirements may differ slightly.

It is always best to obtain advice on not just the structure of the business, but if you are an immigrant or foreign owner, the registration as an offshore branch or indeed South African company from a Registered Immigration Practitioner to avoid future problems, or hassels that may occur during this process.

Are there any restrictions on business start ups within South Africa?

With regards to starting up of a business within South Africa, the appropriate member/shareholder (applicant) would need to have the correct visa in place from the Department of Home Affairs before the operation of the business can commence.

The South African business visa is a specific visa; therefore, additional businesses, etc cannot be operated by the foreigner unless the appropriate visa is obtained.

What is meant by investing into the book value of the business for South African immigration purposes?

As the South African government shows one of the requirements regarding investments for a South African business visa that applicants who wish to operate a business in South Africa, must “invest at least R 500,000 in the book value of the business” – this means that the applicant would need to invest in the equity or assets of the business.

i.e. If the applicant purchases the property in question in the private name, not the business name, this would not be investing in the book value of the business.

What can I do when I cannot invest the R2,5 million that is required for a South African business visa?

For applicants wishing to invest less than the required ZAR 2.5 million into the book value of the business that will be operated in South Africa – a recommendation letter (waiver letter) is required by the Department of Home Affairs that is issued by the Department of Trade and Industry (DTI) to waiver the capitalization requirement. Waiver applications can take from approximately 6 weeks to 6 months.

These waivers are used for the certain business sectors within South Africa.