By Innocent Muchererwa Mutara
Many business owners register their companies one at a time. A construction company here, a trading company there, each in their own name. Then they realise they would rather have one company at the top that owns the rest. A group like that is easier to manage, easier to explain to banks and investors, and easier to hand over one day.
The good news is that you can still do this after you register. The shares just have to be moved properly.
100%
ownership makes a subsidiary
7
steps to transfer the shares
0.25%
STT, usually a few rand
10 days
to update beneficial ownership
A holding company is simply a company that owns shares in other companies. The companies it owns are its subsidiaries. Under the Companies Act, a company is a subsidiary when another company controls it, mainly through owning most of its shares or votes. If the holding company owns 100% of the shares, there is no doubt.
There is no special “subsidiary registration” at CIPC. The ownership is what makes the relationship.
If you registered your companies in your personal name, you own the shares, not the holding company. Setting up a holding company on its own changes nothing. The shares must be formally transferred to it before it legally owns anything.
Route A: holding company first.
Register the holding company, then register the others with the holding company as their shareholder from day one. There is no transfer, so there is less paperwork and nothing to correct later. Talk to us before you register if you are starting from scratch.
Route B: transfer the shares afterwards.
If the companies already exist, the shares must move from you to the holding company, as the steps below show.
1
Check where you stand.
Confirm who holds how many shares in each company, using the securities register and the share certificates.
2
Sign a transfer agreement.
You, as the seller, and the holding company, as the buyer, sign a short agreement for each company. For brand-new companies with no assets, the price is usually the nominal value of the shares.
3
Pass resolutions.
The holding company approves buying the shares, and the subsidiary approves the transfer.
4
Replace the share certificate.
The old certificate is cancelled and a new one is issued to the holding company.
5
Update the securities register.
The register must show the holding company as the shareholder, and it must be kept for at least seven years.
6
Handle securities transfer tax (STT).
SARS charges 0.25% on the higher of the price and the market value of the shares. For a new company with nominal share capital, that is usually only a few rand. It must still be declared.
7
Update the beneficial ownership declaration.
You are still the real owner, but you now own the company through the holding company. The declaration must show that. Changes must be filed within 10 business days.
Forgetting the beneficial ownership update.
The shares move, but the declaration still shows the old structure.
Skipping the resolutions.
Without them, the transfer is hard to defend later.
Transferring shares with real value without tax advice.
If the company holds assets, the market value, and the tax, can be much higher than the nominal share capital. Get advice first.
Trading before the structure is settled.
It is far easier to restructure a company that has not traded yet.
A holding structure is not right for everyone. It adds some admin, such as separate records for each company. A group may also have to prepare consolidated financial statements, depending on its reporting framework. For a single small company, it may not be worth it. For several companies, foreign directors, or a family business, it usually is.
We handle the whole process remotely: the agreements, the resolutions, the new certificates, the securities register, the STT filing and the beneficial ownership update. You can see the details and the price on our Group Restructure: Share Transfer service in the SA-Biz Shop. If you are a foreign director, our foreign director compliance guide explains what else you need to keep in order.
Yes. The holding company must exist before it can sign the agreement and be recorded as the shareholder.
No. You are moving the shares inside your own group. You remain the real owner through the holding company.
The securities register is an internal record and is not filed at CIPC. The beneficial ownership declaration, however, must be updated within 10 business days.
STT is a tax of 0.25% charged by SARS on the transfer of company shares, based on the higher of the price paid and the market value. For companies with nominal share capital, it is usually only a few rand.
Yes. We do two or three subsidiaries together.
No. We work remotely and send you the documents to sign.
Yes. Foreign directors can own a South African holding company. We handle the signing and the certified documents remotely.
This article is general information. It is not legal or tax advice.
Ready to move your shares? Enquire with Maltech-Africa and a consultant will guide you through the steps above.
We handle the agreements, resolutions, STT filing and beneficial ownership update — remotely. See the fixed price in the SA-Biz Shop or talk to a consultant.