More South African businesses are setting up subsidiaries in the UK, often as a hedging strategy in the uncertain economic climate in SA. In a country known for its bureaucracy, it’s not surprising that many businesses are daunted at the prospect of establishing a business in Britain.

Scott Brown, MD of Sable International UK, specialises in guiding companies through the process. He says the biggest issue is not registering the company but rather setting up a bank account.

Setting up a company

“In some areas, there’s no red tape at all. To incorporate a company is relatively quick and easy. The set-up can be done in 48 hours. Most people take the subsidiary option, as opposed to branch. When it comes to a branch, you would have to declare your overseas companies to the Company House Registrar in the UK and most people don’t want to do that,” says Brown.

The Companies Act of 2006 governs company law in England and Wales. A foreign company is required to register as an establishment with Companies House within one month of commencing business in the UK.

Once registered, an overseas entity established in the UK must file certain documents at the UK's Companies House. General information about the company, including its constituting documents and any accounts, are filed in accordance with the laws of the country in which it is incorporated. When these documents are filed, they become public record.

“The red tape is not necessarily created by the government; it’s actually created by the banks,” says Brown.

Opening a bank account

“After company registration, the next stage is the bank account; this is where things often become frustrating and painstakingly slow. There are certain formalities to be met from a ‘know your client’ and anti-money-laundering perspective. As a chartered accountancy firm, we are also obliged to adhere to these procedures and regulations. Usually, the proofs obtained when we gather information to act on your behalf will also be acceptable to a banking provider.

“We anticipate that the process of opening an account should normally take three to six months from start to finish. However, because we know there can be delays, especially on more complex structures, we usually open a designated managed trust account for you to use in the meantime,” says Brown.

The red tape is not necessarily created by the government; it’s actually created by the banks
Scott Brown, MD at Sable International UK

Sable International offers an RE Account facility to help clients whose bank account application is slow. The bank allows Sable to set up a company account – this account can be opened in the company’s name, its clients can make payments into that account and Sable can help facilitate payments out of the account. The benefit of the RE Account is that it can generally be set up in one to two weeks.

Issues arise when there are multiple shareholders or directors because every director and shareholder has to be KYC-compliant (Know Your Client). The banks may also want proof that the business is legitimate and ask for anything from a business plan to what the business is doing, its operations in SA and whether it has a website. The bank must be sure the company is set up for legitimate purposes and will not be involved in crimes such as money laundering.  

Another issue that can cause problems is when shares are held in trusts. Banks may require full disclosure of the trust and details of the settlor, trustees and beneficiaries.  

“The banks need to go down to the level of individual ownership. If we have a UK company, owned by a South African company, which is owned by a trust, then the account opening procedure will take longer than normal as the banks want to know who the individuals in charge are. Proof of identification, ownership, who you are and your physical address is everything in the UK. You’re not going anywhere without that,” says Brown.

You do not have to be a UK resident to set up a UK company bank account. To open a bank account as a non-resident, you will need proof of identity and your residential address that has been notarised. There are strict requirements regarding who can do this and how they can do it.

Private-limited companies are not obliged to appoint a company secretary unless the company's articles contain a reference to this position. Existing private-limited companies may retain a company secretary if they wish, and newly established companies can opt to appoint one. If you're running a public-limited company, you must, by law, have a company secretary.

The company secretary usually acts as the chief administrative officer of the company, leaving the directors free to concentrate on running the business. The company secretary doesn't have to be a director but he or she does share some of the directors' legal responsibilities. However, the ultimate responsibility for the proper administration of the company remains with the directors.

Says Brown: “One of our principals will take this role for the UK companies we act for. With our address as the registered office (legal, not trading), we combine the two roles and ensure that official documents from HMRC and Companies House are received and dealt with in a timely and professional manner.”

Setting up an entirely new business in the UK

“This is not impossible to do. If it’s an individual that is looking to do it, they would go for the simplest structure possible; this would be one person being the director and one person being the shareholder. Over time more people can be added,” Brown says.

Why South Africans are taking their businesses to the UK

“The UK is an investor- and entrepreneur-friendly country, making start-up costs for businesses lower than in most other developed countries. [Because it is] a small, densely populated and wealthy country, it’s easy to find a large customer base,” says Brown.

Visit the Sable International website for more information.


This article was paid for by Sable International.