Corporate Structuring — questions
Frequently asked questions about corporate structuring
Most South African trading businesses should incorporate a private company under the Companies Act 71 of 2008, then layer a holding company, trust or external company registration on top only where a specific structuring need, such as risk separation, succession or foreign entry, actually exists.
Is a private company always the right choice for a trading business?
For almost every trading business, yes. The structuring question is usually what sits above the private company, such as a holding company or a trust, rather than whether to use a private company at all.
When does a business need a holding company?
A holding company is worth the additional administration where the business holds valuable assets and carries genuine operating risk. For a low-risk services business with few assets, it often adds cost without adding protection.
Should a trust own the trading business directly?
Generally no. A trust works best owning the shares in a trading company rather than trading itself, since a trust is a succession vehicle and is poorly suited to day-to-day operating risk.
What happens if my shareholders agreement conflicts with the MOI?
Section 15 of the Companies Act generally gives the Memorandum of Incorporation precedence as against the company and third parties where there is inconsistency, which is why both documents should be drafted together.
What is the beneficial ownership filing and who does it apply to?
It is a filing with CIPC identifying the natural persons who ultimately own or control a company. It applies to companies incorporated under the Companies Act and must be kept updated as ownership changes.
Do I need a personal liability company for my business?
Only if a professional body governing your profession requires it. Otherwise a personal liability company removes the main benefit of incorporation, since directors remain personally liable for company debts.
How does a non-profit company get tax exemption?
Registering a non-profit company under the Companies Act does not by itself create tax exemption. A separate application for public benefit organisation status is required for exemption and for the ability to issue tax-deductible donation receipts.
Should a foreign company set up a branch or a subsidiary in South Africa?
It depends on the activity. A branch, registered as an external company, is quicker to establish, but a locally incorporated subsidiary is usually preferable where the business needs local licences, employs staff or tenders for local contracts.
What is an asset-for-share transaction used for?
It is a mechanism that can, in appropriate cases, allow assets to move between group companies without immediately triggering adverse tax consequences, provided specific statutory requirements are met. It requires careful, transaction-specific advice.
How often should a group structure be reviewed?
A group structure should be reviewed whenever the business changes materially, such as taking on investors, acquiring significant assets or expanding into new risk areas, and at minimum whenever beneficial ownership or shareholding changes.
Related pages
Last reviewed: 2026-09-17
Written and reviewed by Dynamic Legal Services (Pty) Ltd, registration 2016/074955/07. Registered with the Department of Water and Sanitation, EAPASA applicant. Offices in Faerie Glen, Pretoria and Sandown, Sandton. Telephone 087 153 6207, support@dlegal.co.za. General information on South African regulatory practice, not advice on a specific matter — the first consultation is free.