South Africa Policy, Plans and Priorities
Foreign Investment & Capital Mobility
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- 1.8Foreign Investment Establishment, Registering and Licensing Processes
1.7Foreign Investment & Capital MobilityThere is no general screening or review process for foreign investment in RSA, but foreign investment is subject to exchange control policy and regulations (see http://www.reservebank.co.za/internet/Publication.nsf/LADV/E9C6A4DE319A518D422577700045F090/$File/Q_R.pdf). Non-residents that comply with exchange control policy and regulations may invest in South Africa with evidence that the transaction is at arm’s length and at fair market related prices, financed by the introduction of foreign currency, rands from a non-resident account, or local financial assistance to non-residents or an “affected person”. The proceeds of a sale or redemption of assets owned by a non-resident may be remitted from South Africa, or used in the Common Monetary Area (Republic of South Africa, Lesotho, Namibia and Swaziland), for investment and other purposes and credited to a non-resident account. By regulations made under the Currency and Exchanges Act (Act No. 9 of 1933) the Minister for Finance has delegated powers and functions in implementing and administering exchange rate policy to the Financial Surveillance Department of the SA Reserve Bank. The Minister for Finance has appointed eligible banks to be Authorised Dealers in foreign exchange. Their function is to assist the Financial Surveillance Department in administering exchange control. All applications to the Financial Surveillance Department have to be made through an Authorised Dealer. Rulings, issued by the Financial Surveillance Department, set out the authorities granted to Authorised Dealers and the rules and procedures to be followed by the Authorised Dealers in dealing with day-to-day matters relating to exchange control. These are amended as required and supplemented by Circulars. The Rulings are a technical handbook for use by the Authorised Dealers, containing authorities, instructions and conditions applicable to the wide range of transactions that they may undertake on behalf of their clients. A South African registered entity that is 75% or more foreign controlled is an “affected person” and is restricted in the amount it may borrow from South African lenders. A company that is wholly owned by non-residents may borrow up to 300% of total shareholder investment for use in the business. Effective capital for shareholder investment includes paid-up equity capital, preference shares, undistributed earned profit, shareholders’ loans from abroad and, in some cases shareholders trade credit. Where there is South African as well as non-resident ownership additional sums may be borrowed. Non-residents who are in possession of a valid work permit are considered to be South African residents for the duration of the permit and are not subject to the borrowing restrictions on a non-resident without a permit. Royalites, licence and patent fees and management fees to non-residents may be approved where they meet the relevant conditions. The B-BBEE Codes of Good Practice require that all entities operating in RSA contribute towards the objectives of B-BBEE. Where MNCs have global practices preventing them from complying with the ownership element of B-BBEE through sale of shares to black South Africans, the codes make provision for the recognition of Equity Equivalent (EE) contributions in lieu of sale of equity. Firms are expected to invest the equivalent of 25% of the value of their investment in South Africa over ten years in programmes that promote enterprise or human development, sustainable growth, research and development or the accelerated empowerment of black rural women and youth. Financial flows are also subject to the Anti-Money Laundering Act 2001 and Financial Intelligence Centre Act (Act No. 38) (anti-money laundering) 2001. 1.8Foreign Investment Establishment, Registering and Licensing ProcessesSouth Africa has removed almost all investment approval processes to focus on data collection and monitoring via registration and reporting processes. There is no limit on foreign ownership, except in banking and the media. When establishing a business, a business licence is required to be obtained from the local authority. The licence is valid indefinitely, except for businesses handling foodstuffs and those where people gather, such as clubs or theatres, which require renewable licences. There is a choice of entity through which a South African or foreign investor may carry out business in South Africa. The choice is influenced by factors that include limited liability, reporting requirements and tax efficiency. Despite the ongoing liberalisation, two restrictions to foreign investment remain in place in South Africa: (i) local minimum equity requirements for banks and insurance companies; and (ii) businesses with non-resident ownership or control equal to or greater than 75% are restricted as to the amount they may borrow from local financial markets. In addition, a foreign bank establishing a branch may be required to employ a minimum number of local residents to obtain a banking licence, and to have a minimum capital base. Foreign companies are also required to register as "external companies" before immovable property can be registered in their name. With the exception of financial institutions, any foreign company may establish a place of business in South Africa, and conduct its activities without having to incorporate as a local entity. The establishment of a branch requires registration as an "external company" within 21 days of establishment of a place of business. Additional approval is required for a business entity that will be involved in import and export activities. The Companies Act (No. 711, of 2008) regulates the formation, conduct of affairs and liquidation of companies in South Africa. There are five main types of company:
Further details on companies are available from Companies and Intellectual Property Commission of South Africa (CIPC) www.cipc.co.za. A company and a close corporation incorporated in South Africa are governed by the Companies Act No 71 of 2008, which is based on English company law. The Act is administered by the Commission. . The Act regulates the formation, conduct of affairs, and winding up of companies and does not distinguish between companies owned by South Africans or foreigners. The steps involved in setting up a company include:
Other forms of business entity include sole proprietor, partnership, Business of Trading Trust or a contractual form of joint venture. An institutional form of joint venture is usually a company with the parties in the joint venture holding shares in the company. Banking & Financial Services Banking and financial services are regulated by the Banks Act (Act No. 94) 1990, Financial Institutions (Protection of Funds) Act (Act No. 28) 2001, Financial Markets Control Act (Act No. 55) 1989, Financial Services Board Act (Act No. 97) 1990, Mutual Banks Act (Act No. 124) 1993, Stock Exchange Control Act (Act No. 1) 1985 and Unit Trusts Control Act (Act No. 54) 1981. Manufacturing Manufacturing is subject to the Manufacturing Development Act (Act No. 187) 1993. Tourism is regulated by the Tourism Act (Act No. 72) 1993. Mining & Petroleum Mining and petroleum are regulated by the Mineral and Petroleum Resources Development Act (MPRDA) (Act No. 28) 2002 and the Minerals and Energy Laws Rationalisation Act (Act No. 47) 1994. The MPRDA Act provides that foreigners and nationals have the right to apply for a prospecting right, mining permit, reconnaissance permit, beneficiation right, exploration right, and / or mining right as long as they comply with the requirements set out in the law. The law makes no reservations for South African citizens but it empowers the Minister to give preference to applications from historically disadvantage peoples when considering applications received on the same date. Diamonds & Precious Metals The South African Diamond and Precious Metals Regulator (SADPMR) regulates the diamond and precious metals (gold and platinum-group metals) industries, under the Diamond Act No. 56 of 1986 and the Precious Metals Act No. 37 of 2005. SADPMR administers, and controls the purchase, sale, beneficiation, import, and export of diamonds. It also administers and controls the acquisition, possession, smelting, refining, fabrication, use, and disposal of precious metals. SADPMR issues licences, permits, and certificates for all activities related to diamonds and precious metals. SADPMR ensures that all diamond dealers comply with the Kimberley Process certification scheme. Energy Sector The National Energy Regulator of South Africa (NERSA) regulates petroleum, gas, and electricity. It issues licences for building petroleum pipelines, and loading and storage facilities, constructing and operating gas transmission, distribution, and re-gasification facilities, conversion of infrastructure, and trade in gas, and electricity generation and distribution. Communications The Department of Communications (DoC) is responsible for policies and legislation related to communications technology (ICT), ensuring reliable and affordable ICT infrastructure, strengthening the Independent Communications Authority of South Africa (ICASA), the regulator, enhancing the capacity of and overseeing state-owned enterprises (SOEs), and meeting South Africa's international ICT responsibilities. The Electronic Communications Act No. 36 of 2005 is aimed at facilitating the synergies between telecom, broadcasting, and information technologies services, while promoting competition in the sector through inter alia, facilitating access to networks. According to the Act, the Competition Act applies to the telecom subsector. ICASA cooperates with the Competition Commission on any type of investigation. ICASA regulates broadcasting, postal, and telecom services, issues licences for providers, enforces compliance with rules and regulations, monitors complaints and disputes brought against licensees, manages the frequency spectrum; and protects consumers. WTO (2009) states that “under its GATS specific commitments South Africa committed to license a second telecommunications supplier no later than 1 January 2004, to compete against Telkom in long distance, data, telex, fax, and private-leased circuit services. As a result, a second operator was licensed, but Telkom continues to have a de facto monopoly over the network.” Directory: files files -> Answer True False 2 points Question 2 files -> Integer programming and game theory files -> 4 Integer Programming files -> Bpa vehicle Window Repair Scenario #1 task: Procure vehicle window relacement. Objective files -> Pop Warner History files -> North Carolina Inclusion Initiative Mapping Where Children with ieps are Being Served Purpose files -> Fall 2013 Spring 2014 Program Data: Standard 1 Exhibit 4d files -> Hanban – asia society confucius classrooms network 2010 request for proposal files -> Northern England’s set-jetting locations Download 410.91 Kb. Share with your friends:
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