The Best Way For A Foreigner To Start A Business In South Africa

By Celesté Snyders 

Introduction  

Ever wondered if a foreign national can start a business in South Africa? Are you a foreign national and planning on starting a business in South Africa, but you are not sure if you can? This article will explain how a foreign national may start a business in South Africa in section 23 of the Companies Act 71 of 20081.  

Is there more than one way to start a business?  

There are two ways a foreigner may start a business in South Africa. Namely, the Business Visa and the Independent Financial permit2. Suppose a  foreign national would like to register their business. In that case, they require the following documents: a VFS appointment letter, a duly completed Department of Home Affairs letter 947 (application for permanent residence), your original Passport, a valid business visa for temporary “stay” at the time of application in respect of each applicant, if the application is made in the Republic3, to name a few.  

Most foreign nationals open a business in South Africa on a business visa. However, the Independent Financial permit is not as strict as the business visa application because it requires ongoing reporting. In addition, the independent financial permit allows a foreign national to reside in South Africa permanently4.  

Who can apply?  

The business visa allows foreign nationals to invest in a business or an existing business that will work within the said business.  

The Independent Financial skills permit is not restricted to a particular economic activity. There is no obligation on the foreign national to start a business or to invest in one. The Independent permit allows the foreign national to decide whether they want to start a business, join an existing business, work or even retire.  

The process of registering your business  

There is no flexibility offered on a business visa to a foreigner to shop around for other business. The business visa involves the Department of Home Affairs and the supporting documentation such as the company registration and the memorandum of incorporation. The compliance can therefore take 4 – 12 weeks.  

The Independent Financial permit allows for a foreign national as many businesses as the holder requires. This is also for the foreign nationals to take up employment or to explore other opportunities while they register or join the business of their choice. This process does not involve third parties like the business visa and can be much quicker. However, submitting the documents to the department of home affairs can take up to 4 -12 weeks. 

Is the Independent Financial Permit the better option?  

The Independent financial persons permit has disadvantages in that the processing time and the high Department of Home Affairs fee of R120 000.00 for the application5. The foreign national should also have a larger net wealth6. However, if you do not have considerable net wealth, applying for a business visa would be better. 

Conclusion 

Therefore, getting advice on the best route possible for a foreign national to start a business in South Africa is important. Contact an attorney at SchoemanLaw to help you better understand how a foreign national can start a business in South Africa as well as any other commercial needs. 

Celesté Snyders | SchoemanLaw Inc.Attorneywww.schoemanlaw.co.za