Starting a partnership in South Africa

A partnership is formed when two or more people (usually between 2 and 20) come
to an agreement about starting a business, by contributing their personal savings as
start up capital. In a partnership, the partners have an agreement about loss and
profit distribution, and come to an agreement about the distribution of the business.
Different countries have different laws about starting a partnership.

In South Africa, a partnership is not regarded as a legal entity. In some other places
on the other hand, like Scotland, a partnership has a separate legal personality. Also,
while some countries do not have a maximum number of people that can be part of a
partnership, in South Africa, there can be a maximum of 20 members in the
partnership (a minimum of 2, like all other countries).

Moreover, in South Africa, like many other countries, no registration is required for
a partnership and no legalities/formalities are required to start a partnership. There
is no legislation compelling an audit for a partnership. Though it can be easily set up,
with no legalities required, a partnership in South Africa, like in other countries,
involves huge risks. If one of the partners’ estates is impacted, it will have an impact
on the other partners as well.

In Africa, there are two types of partnerships: ordinary and extraordinary.

Extraordinary partnerships are either anonymous or en comandite (in
sponsorship).

Anonymous partners are those whose names are not disclosed but they contribute
to and play a role in the business. So, extraordinary partnerships are partners are
not disclosed to third parties, therefor third parties will not know about them.

Extraordinary partnerships that are en commandite are also called limited

partnerships. The reason for this partnership is that the partner who is en
commandite is only liable, to third parties, to the extent to which he/she has
contributed, and nothing more (basically, the en commandite partner does not
suffer unlimited liability)

An ordinary partnership is one in which all the partners are liable for the debts
based on the partnership agreement. They all suffer unlimited liability, which means
that their personal assets are not safeguarded.

Bibliography:
https://www.findanattorney.co.za/content_partnership-agreement
https://www.findanaccountant.co.za/content_partnerships
https://www.experthub.info/business/doing-business-in-sa/doing-business-in-sa-qas/how-do-i-register-a-
partnership-and-what-documents-are-involved/