A number of jurisdictions have local stakeholder requirements for private companies. South Africa has a hybrid system where there are local requirements (so that some positions can only be held by South African citizens or residents).
A South African private company must have at least one director but there is no requirement that this director be a South African citizen or even resident.
There is no requirement that any of the shareholders of a company must be resident in, or citizens of, South Africa. However, for exchange control purposes, if 75% or more of a company’s shares are held by non-residents, then the company is an ‘affected company’ which restricts the company’s ability to borrow money.
There are Black Economic Empowerment (BEE) policies of the Black Economic Empowerment Act 2003 and also sector specific BEE requirements. In terms of BEE requirements, there may be commercial incentives and obligations to consider when establishing a company and conducting business in South Africa, for example local shareholders. The renewable energy projects programme under the Department of Energy has local economic development requirements.
Each company carrying on business or having an office in South Africa must appoint a public officer who serves as the face of the company for tax purposes and liaises with the South African Revenue Service. The public officer must live in South Africa but does not have to be a South African citizen or tax resident. The public officer must be a senior official which may include a director, company secretary or other officer of the company. If no senior official resides in South Africa, then the company can appoint another suitable person.
A private company may appoint a company secretary. A company secretary must:
- have the requisite knowledge of or experience in relevant laws; and
- be a permanent resident of South Africa (and remain so while holding the role).
Companies must be aware of the local requirements in South Africa and consider how to apply them to their best advantage.