South Africa

Operating a business

Setting up a company

Legal business entities

Different types of companies	Number of partners/shareholders	Maximum and/or minimum capital	Liabilities	Registration fees
Private Limited Company	Minimum number is 1; while as the maximum number is 50.	No legal limit	Liability limited to the amount contributed.	Registration fee of R 350 plus R 5 per R 1,200 of nominal share capital (or part thereof).
Public Limited Company .	Minimum number is 7; while as there is no limit on the maximum number of members/shareholders.	No legal limit	The liability of a member is limited to the face value of the shares he owns	Registration fee of R 350 plus R 5 per R 1,200 of nominal share capital (or part thereof).
Close Corporation	One	No minimum capital.	Liability is limited to the amount contributed.	Registration fee of R 350
Partnership	Minimum 2; Maximum 20 partners.	No minimum capital.	Liabiltity of the active partners is unlimited. Liability of the sleeping partner is limited to the amount contributed.	Registration fee of R 350 plus R5 per R 1,200 of nominal share capital (or part thereof).

Business setup procedures

Registration of an external company is effected by lodging the following documents with the Registrar of Companies within 21days after the establishment of a place of business:-

1. a certified copy of the memorandum of association of the company,

2. a notice of the registered office and postal address of the company;

3. the consent of, and the name and address of, the auditor of the company in South Africa;

4. a notice of the financial year of the company;

5. a notice of the name and address of the person resident in South Africa who is authorised by the company to accept, on the company's behalf, all service of processes and notices.

Thereafter, the Registrar will register the company, allocate a registration number to the company concerned and issue a certificate of registration to the company.

For details, refer to ‘Register a company’

The competent organization

Companies and Intellectual Property Registration Office

Working conditions

Legal weekly duration: 45 hours in a week or 9 hours in a day. For employees who work a 6-day week, it is 8 hours per day.
Retirement age: The retirement age is 65 for men and 60 for women.
Working contracts: Employment is mainly regulated by the law of contract and by Labour Relations Act (LRA),1995. The contract should clearly mention : maximum hours of work, overtime rates, minimum periods of annual leave, notice of termination, organizational rights in respect of trade unions, strike law, rights and responsibilities of employers and workers in the event of retrenchments, insolvency and transfers of businesses, protection from unfair dismissal and the prohibition of unfair discrimination.

Cost of labor

Minimum wage: South Africa does not have a national minimum wage, but the Minister of Labour can make sectoral determinations, which may include a basic remuneration level. Legislation differentiates between urban and rural areas.
Average wage: The average minimum wage in urban areas is approximately USD149 (1041 rand) a month and USD141 (989 rand) a month in rural areas. The minimum monthly wages for domestic workers employed more than 27 hours per week ranged from USD88 (613 rand) to $153 (1068 rand).
Social contributions: Social security contributions paid by employers: 1 %.
Social security contributions paid by employees: 1 %.

Social partners

Bargaining power

For effective bargaining, South Africa has Bargaining Council system. Bargaining takes place between the employers and trade unions under the auspices of the Bargaining Council. The collective agreements concluded in the Bargaining Council bind only the parties to the Bargaining Council.

The Congress of South African Trade Unions (COSATU) is the largest and most effective trade union in South Africa. It is affiliated with the African National Congress (ANC) and the South African Communist Party. COSATU represents 21 national industrial affiliates.

Unions

COSATU (Congress of South African Trade Unions)
FEDUSA (Federation of Unions of South Africa)

Unionization rate

30% (approximately)

Labor regulation bodies