EXTRACTS FROM SOUTH AFRICAN RESERVE BANK REGULATIONS

FOREIGN INVESTMENTS

Private individuals (natural persons) resident in the Republic

a. Authorised Dealers may allow the transfer, as a foreign capital allowance, of up to a total amount of R2Million per private individual who is a taxpayer in good standing and over the age of 18 years, for investment purposes abroad. These investments may also be held in F.C. Accounts with Authorised Dealers.

Private individuals are not required to transfer the full amount at one particular time, but are permitted to effect such transfers in tranches, as and when required.

Authorised Dealers are advised that a South African Identity Document is the only acceptable document proving residency in the Republic.

b. Prior to authorising the transaction, Authorised Dealers must ensure that a Form M.P. 1423 is completed in duplicate and signed by the applicant, or a representative appointed in terms of a special power of attorney, irrespective of the amount involved. The original Form M.P. 1423 must be submitted to Exchange Control on a daily basis via the Head Office of the Authorised Dealer. The Form M.P.1423 must only be completed in respect of foreign investments and for deposits to F.C. Accounts and not in respect of the repatriation of funds. A copy of the Form M.P.1423 and special power of attorney, where applicable, must be retained by the branch for a period of 5 years for inspection purposes.

c. A duly completed “TAX CLEARANCE CERTIFICATE (IN RESPECT OF FOREIGN INVESTMENTS) issued by the South African Revenue Service must be presented to the branch, prior to authorising the transaction. No transfer may be affected unless the original Tax Clearance Certficate bears the official stamp, as well as the date and signature of an official of SARS. Authorised dealers must ensure that the amount to be transferred does not exceed the amount reflected on the certificate. Since the Tax Clearance Certificate is specifically dated, such certificate may only be regarded as valid for a period of 12 months from the date reflected thereon. The format and content of the Tax Clearance Certificate is prescribed and no variation thereof, whatsoever, may be accepted. This certificate must be retained by the branch for a period of 5 years for inspection purposes.

Private individuals who do not have any of the tax reference numbers referred to on the Form M.P.1423 will have to register at their local branch of SARS.

d. Private individuals may not utilise funds in terms of the aforementioned dispensation or any other authorised foreign assets to enter into a transaction or a series of transactions to directly or indirectly acquire shares or some other interests in a CMA company or CMA asset. Similarly, such funds may not be re-introduced as a loan to a CMA resident.
Funds so transferred abroad may not be used to facilitate, directly or indirectly (through any structure) any investment or scheme of arrangement whereby any asset or facility of any nature is acquired in the CMA.

e. Authorised Dealers must, however, bring the attention of their customers who utilise this facility that they may not enter into any transactions whereby capital or the right to capital will be directly or indirectly exported from the Republic, e.g. may not enter into a foreign commitment with recourse to the Republic.
It follows therefore that private individuals may raise loans abroad to finance the acquisition of foreign assets without recourse to the Republic.

f. The unutilised portion of foreign travel allowances may not be used for foreign investment purposes, but must be offered for sale to an Authorised Dealer in terms of the provisions of Regulation 2(5).

g. Exchange Control will also consider applications by private individuals to invest in fixed property, e.g. holiday homes and farms, in SADC member countries.

h. F.C. Accounts may be opened for private individuals (natural persons), as well as for
non-residents. Withdrawals from these accounts may only be transferred abroad by means of the S.W.I.F.T. MT103(customer transfer) or converted to Rand.

For assistance with the above regulations contact Adele