South Africa Expansion Guide
Global Upside helps companies set up, hire, and operate in South Africa. Set up a legal entity quickly and easily with our solutions for branch, subsidiary, and rep office. Looking for an alternative to permanent establishment? Hire and pay employees in South Africa without a legal entity by using our PEO & employer of record services. Once your business is set up, our teams can support with recruitment and staffing, human resources, employee benefits, payroll, accounting, and tax.
Pretoria: Administrative Capital
Bloemfontein: Judicial Capital
From the early 2000s, the economic growth of South Africa has boosted considerably and both the capital formation and employment percentage increased during this time. After the discovery of diamonds and gold, in the late 19th century, the economy of the nation saw a transformation. The South African economy is based on the private venture, yet the state cooperates in many ways.
- South Africa ranks as the 37th largest economy in the world in terms of nominal GDP.
- South Africa ranks as the 2nd largest economy in Africa.
- South Africa is one of the top exporters of gems and precious metals.
- South Africa ranks as one of the top 60 best countries in the world for business.
Private Company is a form of establishment that requires at least 1 investor and 1 director; and the liability of the investors is limited. It is a non-state possessed establishment and does not require to prepare audited financial reports.
Public Company is a kind of a legal entity set up which requires a minimum of three directors. The prospects under which a director of a public organization could be held liable are equivalent to that of a privately owned business.
Branch Office is also known as an external company and needs at least one resident of South Africa in the board of directors. A foreign company that does not want to start a subsidiary here can set up a branch office in terms of the Companies Act.
It takes approximately three to four weeks to establish a legal entity set up in South Africa, depending on the kind of establishment required.
All employment requirements and advantages are conducted by the Basic Conditions of Employment Act (BCEA), which is also administered by the Department of Labor, guided by the Employment Conditions Commission (ECC).
The South African Labor Acts handles the employer-employee bond and governs how both the parties should conduct themselves while in the employment term and gives an equivalent right to both. Simultaneously, the Labor Relations Act (LRA) 66 of 1995 monitors the freedom of collective bargaining, affiliations, lockouts, industrial actions, and strikes. Additionally, the Employment Equality Act (EEA) 55 of 1998 administers preference and action issues that are confirmatory.
The employment contracts are in a written format for fixed-term employments and need to mention the following details:
- Job location
- Date of commencement of the job
- Job description
- Working hours
- Remuneration and overtime benefits
- Leave entitlements
- Termination policy and notice period
- Details of previous employment if relevant to the present job
There is no set payroll frequency in South Africa and is something that both the employee and employer can decide mutually. However, salaries can be paid monthly, weekly, or bi-weekly. There is also a 13th-month salary which is usually paid in December.
In South Africa, the Accounting Practices Board (APB) approved the internationally recognized accounting standards of International Financial Reporting Standards (IFRSs). All financial reports need to be prepared yearly conforming with it. Certain organizations are needed to have audited financial reports and other companies must have their budget statements reviewed freely (Companies Act necessities).
The Protection of Personal Information Act 4 of 2013 (PoPIA) states that the right to privacy of personal data is a fundamental human right and is acknowledged in the Bill of Rights of the Constitution of South Africa. Despite being a common law, it is not severe and can be adaptable as, and when, required. The PoPIA administers the scope of accessibility of personal information, it’s processing, and lending consent and any personal information will be processed just if the employee is notified of.
Anti-Bribery & Anti-Corruption Law
The Prevention and Combating of Corrupt Activities Act, 2004 (PCCAA) governs the bribery of public officials and criminalizes bribery and corruption. That said, some extensive laws and acts deal with different industry-specific types of corruption.
The consequences for bribery are:
1. Bribery for public officials
For individuals: On account of a sentence to be imposed by
i) High Court – Lifetime imprisonment or a monetary fine.
ii) Territorial court – Imprisonment for up to 18 years or a monetary fine.
iii) Judge’s court – Imprisonment for up to 5 years or a monetary fine.
For legal entities
The penalty remains the same as for individuals.
2. Bribery for private officials – For individuals and legal entities.
The PCCAA does not differentiate between bribery of public officials and private sector bribery.