Issues Currency and Exchanges Guidelines for Business Entities
12 Sep 2024
On 12 September 2024, the Reserve Bank of South Africa issued new guidelines affecting outward foreign direct investment (FDI):
• Conditions for Outward FDI: South African companies, including State-owned enterprises, can transfer capital for FDI outside the Common Monetary Area (CMA). There is no limit on the amount transferable, but investments up to R5 billion ($284.26 million) per calendar year can be approved by Authorized Dealers. Investments exceeding this must be referred to the Financial Surveillance Department.
• Additional Requirements: Capital transfers must be converted into foreign currency by an Authorized Dealer. Rand transfers abroad are prohibited. Annual reports on financial statements and investment benefits are required. Proceeds from the sale of foreign investments to non-residents must be repatriated, while sales to South African residents need prior approval.
• Financing and Profit Repatriation: Unused authorized amounts can be transferred to foreign entities or used to increase equity stakes, within the R5 billion limit. Foreign dividends can be retained or repatriated abroad, subject to reporting. Foreign branches may retain profits abroad with annual reporting.
The removal of monetary limits and allowance to retain foreign earnings abroad represent a liberalization of outward investment policies compared to previous restrictions.
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Type:
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Treatment and operation (Capital transfer and FOREX)
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Promotion and facilitation (Investment facilitation )
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Industry:
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