The process of incorporating a business can be rather complicated, especially if you're not familiar with the language of business law. Our 법인설립절차 guides you through the entire process, step by step, so that you can get your business registered and trading as soon as possible.
Often, people think that incorporating a business will protect them from any lawsuits, but that's not necessarily true. As long as you're acting within the law, you won't have any problems as long as you play your cards right. However, it's always better to be safe than sorry, especially when you're starting a new business. Thus, it's best to follow the correct procedure so that you can enjoy the benefits of incorporation without any hassle.
The following is a brief overview of what you need to know about incorporation procedure in South Africa. If this article is new to you, then read our general overview of Incorporation or follow the links to read more in-depth articles about specific topics:
The Basics
Incorporating a business is pretty straightforward. You need to determine whether you'll use a sole trader or professional services company to incorporate your business. The choice is yours, as long as you're not a sole trader and are registered with Professional Services Agency (PSA). If you're using a sole trader, then you'll need to find a registered agent to represent you in the process. You'll also need to decide whether to incorporate formally or informally. Formal incorporation is when you apply for a Certificate of Incorporation with the Companies and Intellectual Property Commission (CIPC), while informal incorporation occurs when you register your business with the Business Registry.
If you decide to go for formal incorporation, then you'll need to follow a certain procedure that must be adhered to. This involves registering the company name with the Business Registry as well as filing the necessary documents with the CIPC. It is important to note that there are additional documents that you'll need to file with the Companies and Intellectual Property Commission (CIPC) even after you've registered your company with the Business Registry. These include:
- a shareholder's statement
- a directors' consent statement
- an articles of association (only if you have more than one member of the board)
- a corporate governance document (only if you have more than three members of the board)
- a resolution of the annual general meeting (only if you have more than three shareholders)
You'll also need to apply for a Company Identification Number (CIN) and a Trading License. A CIN is a nine-digit number that identifies your company legally. A Trading License is a permission granted by the governing body of the industry to legally conduct business in the marketplace. You'll need to renew your Trading License every year, so make sure that you keep up-to-date records of when it expires. Also, file an annual return and financial statement whenever required.
Formal Incorporation
When you register your company with the Business Registry, you'll receive a confirmation email. You'll also need to check your email regularly as part of the registration process, as the Business Registry will send you important notifications regarding amendments and renewals.
Once you've registered your company with the Business Registry, you'll need to follow the process outlined above to complete the formal incorporation. You'll need to fill in forms B1, B3, B5, B6, and B7 in order to obtain your CIN. Forms B1, B3, and B5 are only required if you're incorporating a company that's previously not been in existence. The remaining forms are required whether or not you're incorporating a new company.
After you've completed the forms B1, B3, and B5, you'll need to contact the CIPC to make an appointment to meet with a legal practitioner that's been vetted by the corporation law council. During this meeting, you'll need to provide the legal practitioner with all the necessary documentation, such as:
- The articles of association/constitution
- The registered office address
- The proposed company name
- The purpose of the company
- Details of the directors
- A statement of the shareholders
- The proposed registered office address
- The proposed mailing address
- Details of the managing director
- A statement of the secretary
Once you've provided this documentation, the legal practitioner will take care of the rest. Within seven days, the CIPC will send you a Certificate of Incorporation that you can forward to the proper authorities to use in your business.
In order to legally conduct business in South Africa, you'll also need to acquire a Trading License from the South African Revenue Service (SARS). You can acquire a valid Trading License for $60,000 for a five-year period. Make sure that you keep this documentation as it can be required at any time by the SARS. In case you become redundant or lose your registration, you'll also need to reapply for a Trading License.
Informal Incorporation
If you decide to go ahead with informal incorporation, then the following documents must be filed with the Business Registry:
- A statement of details
- A statement of proposed activities
- A statement of the directors
- A statement of shareholders
- A resolution of the annual general meeting
- An articles of association/constitution (if incorporated)
- A proposed company name
- The registered office address
- The proposed mailing address
- Details of the managing director
- A statement of the secretary
It is important to note that the above documents must be filed within 30 days of starting the business. If you're using a registered agent, then the agent must be notified of the incorporation as soon as possible, as the registered agent's functions will be limited to administrative matters during that time period. After that, the directors will need to take care of the remaining corporate documentation.
If you've decided to go ahead with informal incorporation and are using a sole trader, then you'll need to find a legal practitioner that can assist you in the process. Once you've found this legal representative, then the remaining steps are the same as those listed above.
Once your business is registered with the Business Registry, you'll need to ensure that you comply with all the legal requirements. If you're doing business within the country, then you'll need to register with the SARS and obtain a Trading License. You must also comply with all relevant employment laws and ensure that you offer your employees all the necessary legal protections. In case you become redundant or lose your registration, you'll also need to reapply for a Trading License.