Establishing a holding company is not that different from establishing any other company in South Africa. This is a guide on how to set up a holding company in South Africa.
People use holding companies for a lot of reasons; some for having separate departments and some for financial reasons. A holding company is a company that has one or more subsidiaries that are under it. The company should own at least 30% of the issue shares to be considered a holding company.
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Register with the CIPC
The first thing you have to do is to register your business with the CIPC, this only costs R125. You will be required to send your ID, proof of address and other documents. Choose a company name and select the appropriate category to register your company under. At this point you will have to select the number of shares that your company will start with.
Have a business bank account
Create a business bank account for your holding company; this is something you can do while registering the business. Simply register your business through a bank instead of the CIPC, the bank will register the business on your behalf and automatically create a business account for you.
Register a subsidiary
Register the first subsidiary of the holding company. The process is similar with just minor differences. Normally; you would name yourself as the owner of the company; this time your holding company should own all shares of the subsidiary.
You will also be required to have a director and a CEO; you can appoint a new director or appoint yourself as a director. This time you will be required to produce documentation that is related to the holding company and the director.
Buy equity in other companies
You can also buy shares in other companies and have your holding company own them. The company has to own over 50% of shares for the other company for it to be considered a parent company.
Most holding companies diversify their portfolio by investing in a lot of different companies.
This was a guide on how to set up a holding company in South Africa. Do you have any thoughts or questions? Comment below.