Buy a Shelf Company in South Africa

Entrepreneurs who want to reduce the time required to start a business to a minimum buy a shelf company in South Africa. This is a pre-incorporated company that observes all the rules for local registration, without any history of debts or bad credit. Our South African lawyers list the main advantages of the shelf company in this article.

What is a shelf company?

When you buy a shelf company in South Africa you essentially buy an existing business. This is also known as an “aged corporation”, given the fact that, in many cases, the company is registered but it is not used or put up for sale right away, thus one or more years pass since its incorporation date.

A South African shelf company has the following characteristics:

It is legally registered as per the South African Companies Act. This is the country’s company law and it can be detailed upon request by our attorney in South Africa;
Those interested can often choose between different types of companies, according to the projected size of their investment;
In most cases, it was not used for business, thus the origin of its name, that is has been “left on a shelf”. In those cases in which the company does have (some) business history, it has not typically registered liabilities nor has it acquired assets;
It is ready to be sold upon request: no negotiation is required with the seller, the new owner can commence the sale procedure as at the most convenient time;
It can have its particulars changed, upon request: these are the name (if the newly proposed one is available for use), and/or its object(s) of activity. The new owners can also decide to register their trademark in South Africa once they buy the company.

Therefore, investors who buy a shelf company in South Africa as opposed to commencing company formation in South Africa will save the time required to gather and prepare the incorporation documents, and the decision period from the moment the documents are submitted, until the Companies and Intellectual Property Commission (CIPC) confirms the registration of the business.

An important issue to note is that investors are not required to have a residence permit in South Africa to be allowed to buy a shelf company. Our team of experts in company formation in South Africa can also help you open a company.

What are the advantages for investors who buy a shelf company in South Africa?

Saved time can be seen as the most important advantage for entrepreneurs who choose to buy a ready-made company in South Africa. However, there are also other advantages and our lawyers in South Africa briefly list some of these below:

Immediate trading in most cases;
Credibility through the fact that it has been “aged”;
Duly registered with the CIPC;
No bad credit or history of debt towards creditors.

What compliance requirements do shelf companies have to observe?

Once you buy a shelf company in South Africa, it will start trading and engaging in commercial activities, meaning that it will pay taxes on its income. Some of the most important tax rates in South Africa are the following:

27% corporate income tax rate;
20% withholding tax on dividends (with exceptions);
15% standard value-added tax;
1% social security contributions per employee by the employer, plus others, up to a cap.

The shelf company will, like all companies in South Africa, prepare and submit annual financial statements. In some cases, audits are required.

Do you want to buy a shelf company in South Africa? The advantages presented in this article can be just some of those that apply in your case, depending on the industry in which you will activate and how fast you want to start doing business.

Contact the experts at our law firm in South Africa for more information about shelf companies or the incorporation of new companies.