South Africa: Operating a Business

Private Limited Liability Company

Number of partners: Minimum: 1, no upper limit.
Capital (max/min): No legal limit.
Shareholders and liability: Liability limited to amount of capital contributed.

Public Limited Liability Company

Number of partners: Directors: minimum of 3, no upper limit.
Shareholders: minimum of 1, no upper limit.
Capital (max/min): No legal limit.
Shareholders and liability: A member's liability is limited to the par value of the shares he/she owns.

Private Company

Number of partners: 1 partner.
Capital (max/min): No minimum capital.
Shareholders and liability: The active partner's liability is unlimited. 

Partnership

Number of partners: Minimum 2, Maximum 20 partners.
Capital (max/min): No minimum capital.
Shareholders and liability: The active partner's liability is unlimited. Associates' liability is limited to the amount of capital they contributed.

Business Setup Procedures

The Competent Organisation

Companies and Intellectual Property Registration Office

For Further Information

Doing Business, to learn more about how to start a business in South Africa.
Companies and International Property Commission (CIPC)

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Recovery Procedures

Principle

The Insolvency Act (which regulates bankruptcy of companies in South Africa), entitles creditors to apply to court for recovery purpose (even if actual insolvency has not been proved).

Certain creditors may be secured, such as the mortgagees of mortgage bonds over immovable property of the insolvent or the holders of book debts/recoverables. Other creditors may have preferred claims, such as the claims of employees for outstanding wages and the revenue authorities for arrear taxes. Creditors without secured or preferred claims are treated as concurrent creditors and only share in whatever excess remains after payment of secured and preferred creditors.

Investors who choose to acquire equity in the company rather than simply loaning money to the company are not regarded as creditors at all and accordingly are unlikely to receive anything. Foreign creditors are treated in the same manner as local creditors.

Minimum Debt-to-Capital Ratio Triggering Liquidation

Not applicable

Bankruptcy Laws

Companies Act 1973

Reorganization and Rehabilitation Laws

A liquidator is appointed to supervise the winding up of an insolvent company. The liquidator acts according to the directions of creditors who have proved claims, and are also subject to supervision by the Master of the High Court in the applicable jurisdiction. It is also possible for companies to be placed under judicial management if they are in financial difficulty. The purpose is to allow the company to trade itself out of financial difficulty.

For Further Statistics

Statistics South Africa

For Further Information About the Labour Market

South Africa Labour Law Profile

Opening Hours

 

• 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.

• Maximum Duration

10 hours per week and not exceed 3 hours of overtime per day.

• Night Hours

6 o’clock in the evening till 6 o’clock the next morning

Working Rest Day

The rest period must include a Sunday unless otherwise agreed.

Paid Annual Vacation

Leave period of at least 21 consecutive days per completed year of employment (or 1 day for 17 day’s worked, or 1 hour for 17 hours worked), on full pay. Leave accumulation from one year to another not allowed.

Retirement Age

The retirement age is 65 for men and 60 for women.

Child Labour and Minimum Age For Employment

15 years of age or under the minimum school-leaving age.

Informal Labour Market

The informal employment sector (excluding agricultural sector) is substantial. In the year 2006, it accounted for 17.6% of the total employed work force.

Pay

Minimum Wage

The National Minimum Wage (NMW) for each ordinary hour worked is R23.19.

Average Wage

According to the latest survey by Stats SA, average monthly earnings were measured at R23,982 in the formal non-agricultural sector of the economy in November 2021. This is a 0.3% increase compared with August 2021, and an annual increase of 3.9%.

Other Forms of Pay

• Pay For Overtime

50% more than the regular wages.

• Pay For Rest Days Worked

100% more than the regular wages, if the employee does not normally work on Sundays, Otherwise 50% more than the regular wages, if the employee does normally work on Sundays.

• Pay For Night Hours

Paid extra, %age varies depending on nature of work.

• Pay For Overtime at Night

Paid extra, %age varies.

Social Security Costs

The Areas Covered

South African social security includes payroll tax (PAYE), contributions to the Unemployment Insurance Fund (UIF) and the skills development levy (SDL). For more information, consult the Social Security Program in South Africa from the U.S Social Security Administration's website.

Contributions

Contributions Paid By the Employer: South Africa does not have a comprehensive social security system or a national healthcare program; consequently, no significant social security taxes are levied.
Employers are obligated to make contributions to an unemployment insurance fund at the rate of 1% of gross remuneration.
Contributions Paid By the Employee: 1% contribution of unemployement insurance fund.

Competent Organization

Department of Social Development

Recruitment

Method of Recruitment

The various methods of recruitment used by companies in South Africa are :
1.Advertising
2.Direct recruitment
3.Employment Exchanges
4.Educational Institutions

Recruitment Agencies

There are mainly three types of recruitment agencies available in South Africa :

- Employment Exchanges (Public)

-Employment Agencies (Private)

-Labor Contractors ( Private )

Recruitment Websites

Career Junction
Executives in Africa

The Contract

Dispute Settlement

Social Partners

Employer Associations

NAFCOC - National African Federated Chamber of Commerce and Industry

Social Dialogue and Involvement of Social Partners

For effective bargaining, South Africa has a 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.

Unionisation Rate

30% (approximately)

Labour Unions

FEDUSA (Federation of Unions of South Africa)