Foreign Company Property Purchases
Foreign companies purchasing property in South Africa must register as External Companies with the CIPC or provide proof that registration isn't needed.
Updated from the original article 1 July 2018.
When considering legislation and requirements applicable to a particular property transfer, the fact that the entity buying the property is a foreign company must be considered.
An External Company, as defined in Section 23 of the Companies Act 71 of 2008 (i.e., a company conducting business within the Republic), is also eligible to purchase immovable property in South Africa.
Such a company is required to register as such an External Company with the Companies and Intellectual Property Commission (CIPC). If a foreign company is not registered as an ‘external company’, it is still possible for this entity to purchase immovable property provided that the conveyancer provides the Registrar of Deeds with documentary evidence (e.g. auditor’s certificate or affidavit from the company director) to the effect that the company need not register, in terms of section 23(2) of the Companies Act.
The question is however if the transfer of a property will be allowed into the name of a foreign company which has not been registered with the CIPC.
Section 23(2)(f) the Companies Act stipulates:
“For the purposes of subsection 1, a foreign company is not to be regarded as “conducting business, or non-profit activities, as the case may be, within the Republic”, unless that foreign company is engaged in, or has engaged in, one or more of the following activities within the Republic …(f) acquiring any interest in any property.”
A foreign company will therefore be required to register with the CIPC as an external company as soon as it acquires any interest in a property.
Updated, edited and approved by: Jean-Mari De Beer – Le Grange
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