Legal Compliance Checklist for South African Startups

Starting a business in South Africa can be a daunting task, especially when it comes to legal compliance. The regulatory bodies in South Africa have very stringent rules and requirements concerning compliance for companies operating within their territory. Compliance requirements apply to both foreign and local companies. In this article, we will explore some of the items on the legal compliance checklist for South African startups.

Company Details

Ensure that all company details such as registration number, name, and address are accurate 4. The name and registration number of the company must be used correctly and appropriately and must be stated in legible characters in all notices 5.

Tax Compliance

All companies must register for tax with the South African Revenue Services (SARS) 15. It is important to ensure that all tax returns are submitted on time and that all taxes are paid in full. Failure to comply with tax regulations can result in hefty fines and legal action.

Annual Returns to CIPC

The Companies and Intellectual Property Commission (CIPC) requires all companies incorporated in South Africa to declare their compliance with specific sections of the Companies Act 2008 by completing and submitting a compliance checklist online 126. This checklist is a questionnaire containing 24 questions, and companies are required to complete and submit this checklist before they can file their annual returns. The checklist covers compliance with a broad spectrum of company law and corporate governance matters during the previous calendar year, including the keeping of company secretarial, accounting, and other statutorily prescribed records as well as the completion of required corporate approvals relating to previous share trading transactions, rights issues, share buy-backs, fundamental transactions, and company governance generally 6.

Value-Added Tax (VAT)

Companies that have an annual turnover of more than R1 million must register for Value-Added Tax (VAT) 15. It is important to ensure that all VAT returns are submitted on time and that all VAT is paid in full.

Employment and Labour Laws

Employment and labour laws regulate the relationship between employers, employees, and other stakeholders, such as trade unions 35. It is important to ensure that all employees are treated fairly and that all labour laws are adhered to. This includes ensuring that all employees are registered for UIF (Unemployment Insurance Fund) and that all contributions are paid in full.

Business Entity Regulation

It is important to ensure that the business entity is registered correctly and that all necessary documentation is in place 35. This includes shareholder agreements, share certificates and registers, memorandum of incorporation, trust solutions, CIPC annual returns, etc. Once registered with the Companies and Intellectual Property Commission (CIPC) and depending on the type of entity you select for your business, individual legislation will apply, for example the Companies Act 3.In conclusion, legal compliance is not an easy task, but it is essential for the success of any business. The consequences of non-compliance can be severe, including hefty fines and legal action. It is important to ensure that all legal requirements are met and that all necessary documentation is in place. If you are unsure about any legal requirements, it is advisable to seek the services of a suitably qualified professional.