South African Exchange Control Regulations dictate how much and under what circumstance a South African company may transfer money offshore. A South African company may transfer up to R1 billion each calendar year (from January to December) out of South Africa for any legal purpose (which includes investment offshore, acquisition of foreign assets, or outward foreign loans funding).
Where a South African company acquire shares in another company outside of eSwatini, Lesotho, Namibia, and South Africa (the Common Monetary Area (“CMA”)), the South African company must acquire at least 10% of the foreign company’s voting rights, and it must not be a passive real estate investment. If the foreign investment or a portion thereof is being disposed of, the net sale proceeds must be repatriated to South Africa under the advice of an Authorised Dealer.
When a South African company acquires assets situated in the CMA through an offshore structure, i.e., the South African company acquires authorised foreign assets that hold assets in the CMA or invest in the CMA, thereby creating a loop structure investment must be reported to an Authorised Dealer.
A South African company may borrow money offshore. This inward foreign loan must be approved by an Authorised Dealer, subject to specific criteria and the Authorised Dealer recording the loan through the Loan Reporting System.
Failure to adhere to these regulations may give rise to adverse consequences.