16.4.4 THE MEANING OF CARRYING ON BUSINESS OR NONPROFIT ACTIVITIES
1. The old definition of external company was defined as a company incorporated outside South Africa which had an established business. The new definition has a much broader scope which means more foreign companies will now have to register as external companies.
S’s 23(2) and 2A set out the meaning of carrying on business or Nonprofit activities. The carrying on of business or nonprofit activities is if a Foreign company is party to one or more employment contracts in South Africa and this is the situation no matter what the employee’s duties may entail.
2. The company has engaged in a course of activities within the last six months that would give the idea that the company intended to establish a place of business and continually engage in business or nonprofit activities.
If, however in terms of this s 23(A) the foreign company has engaged in one or more of the following activities it does not mean that it is carrying on of business or nonprofit activities.
a. Holding a meeting of a shareholders or board in the Republic, or otherwise conducting any of the company’s affairs in the Republic.
b. Establishing or maintaining any bank or other financial accounts.
c. Establishing or maintaining offices or agencies within the Republic for the transfer exchange or registration of its own securities.
d. Creating or acquiring any debts within in the Republic or any mortgages or security interest in any property within the Republic.
e. Securing or collecting any debt or enforcing any mortgage or security interest within the Republic or acquiring any interest in any property within the Republic.
I.e. A foreign company must have conducted business or non-profit activities over and above any of these activities over a period of at least six months in order to satisfy the continually engaged in business or non-profit activities test.