Gina Granger for the name Rainbow news.
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months edition of the newsletter.
ECONOMY:
Contribution by the Trade Section:
Investing in South Africa
Frequently Asked Questions
1. Are there any requirements for
notification, registration, approval or authorization of
foreign investment?
No government approval is required for
foreign investors to establish a new business in South Africa
apart from the approval required under the exchange control
regulations. The investor will be required to appoint
consultants/auditors/legal advisors to register a company on
his/her behalf. The company should be registered within
21days; it should also register for tax. In South Africa there
are no locations where a foreign-owned business is prohibited
or investment is officially discouraged. The forms, which are
to be filled by an investor, are simple and understandable.
The whole process from beginning to end on average may take
six months but if done through Trade and Investment South
Africa it can be finalized within one month. Trade and
Investment South Africa is a one-stop shop to help investors
with issues relating to exports and investment.
2. Do you have any limitations on foreign
investment entry?
South Africa actively encourages direct and
indirect investment by non-residents persons and companies.
Virtually all business activities are open to foreign
investors and there are generally no restrictions on foreign
investment. Restrictions would usually relate to a particular
industry and be applicable both to residents and
non-residents. Very few restrictions apply only to foreign
companies. For example, a foreign bank establishing a branch
in SA may be required to employ a certain minimum number of
local residents in order to obtain a banking license and may
be obliged to have a minimum capital base. Restrictions also
exist regarding the ownership of immovable property by foreign
companies. Foreign companies are required to register as
external companies before immovable property may be registered
in their names.
3. What corporate organisation forms are
possible?
The most common form of business entity in
SA is the limited liability company having a share capital.
These companies may be either public or private companies.
Public companies:
Public companies must have at least seven
members, except in those circumstances where a public company
is a wholly owned subsidiary of another public company, in
which event a single shareholder is permitted. There are no
restrictions on the maximum number of members. It must have at
least two directors. A public company may apply for a listing
on The Johannesburg Stock Exchange provided that it complies
with the JSE listing requirements.
Private companies:
Private companies must, by their articles
of association, restrict the right to transfer their shares,
limit the number of their members in most instances to no more
than fifty and prohibit any offer to the public for the
subscription of their shares or debentures. The minimum number
of directors and shareholders in a private company is one.
Other typical business entities
Branches:
A foreign company may also operate through
a branch in SA. A Company incorporated outside SA that
establishes a place of business in SA is classified as an “external
company” and its South African business is colloquially
known as a “branch”. The foreign company is obliged to
register with the Register of Companies and must comply with
the provisions of the Company Act. If a foreign company wishes
to establish a branch in SA, registration is accomplished in
much the same way as for a domestic company, and a branch is
in most respects subject to the same regulations as a South
African company.
Close Corporations:
A close corporation is a suitable, and
popular, form of structuring small business for investors whom
are individuals. They provide limited liability without the
administrative burden of companies and an audit is not
required.
Partnerships:
The Companies Act limits the membership in
a business partnership to twenty persons except for
partnerships in certain recognized professions. A partnership
is not subject to the specific legislative requirements
applicable to companies and close corporation.
Trusts:
A trading trust is a form of unincorporated
business organization created by an agreement under which
property is held and managed by trustees for the benefit and
profit of beneficiaries designated in the agreement. Trading
trusts are not widely used in SA, but could be a useful hybrid
entity in cross border structuring of investment. A trust
could also be a convenient and effective means for holding
passive investments into South Africa.
4. Can foreign investors access local
credit and finance?
There is a restriction on the local
borrowings of business entities, which are 75% or more owned
or controlled by non-residents. Local borrowings include
overdrafts, local discounting, financial leasing of capital
equipment; mortgage bonds; preference shares and debentures
not subscribed for by equity shareholders, and local
shareholders' loans.
To the extent that the local shareholders
lend more than the foreign shareholders proportionate to their
respective shareholdings, the excess would also be local
borrowings. Excluded from the restriction is normal commercial
credit for the sale of goods and services rendered.
The level of local borrowing is limited to
a percentage of "total effective capital".
"Effective capital" is essentially the net worth of
the company, together with shareholders' loans (which are
regarded as investment funds) and "hard-core" trade
credit extended to the company by non-resident shareholders.
Local shareholders' loans are excluded from effective capital,
to the extent that they exceed the proportionate foreign
shareholders' loans. The percentage is calculated in
accordance with the following formula:
100% + [% South African interest / %
non-South African interest x 100%]
Although these local borrowing restrictions
are for the most part strictly applied, the authorities adopt
a more flexible approach for businesses that are established
in de-centralisation areas, have a substantial import
substitution or export potential, or have a large local
employee component.
The banking system in SA is highly
developed and is closely regulated to protect the interests of
investors. The banking system consists of a central bank, a
few large financially strong institutions, a few smaller
institutions, and branches or representative offices of
foreign banks.
The Industrial Development Corporation (IDC)
is a state-owned corporation that provides financial
assistance to foreign and local entrepreneurs for industrial
development. The IDC is often prepared to make an equity
investment or enter into joint ventures with foreign
investors.
The Small Business Development Corporation
(SBDC) is a joint venture between the government and the
private sector, aimed at providing finance and support for the
small local and foreign business.
In addition to the IDC and SBDC, the
Development bank of South Africa, Land Bank and various
regional development corporations provides financial
assistance for economic development.
5. What are the level and the structure of
taxation?
Company Tax
The rate of South African Normal Company
Taxation applicable to Companies (0ther than small business
corporations and "employment companies" with
financial years ending after 1 April 1999) is 30%. Companies
are not entitled to any rebates except for foreign royalty and
foreign taxes paid.
Companies are also liable for Secondary Tax
on companies (STC) at 12.5% in respect of all dividends
declared after 13 March 1996.
Close Corporations
Close Corporations is treated as companies
for taxation purposes.
Trusts
From 1 March 2000, income vesting in Trust
as a taxpayer is taxed at a rate of 32% on taxable income up
to R100 000 and at a rate of 42% on the amount of taxable
income in excess of R100-000, with the exception of a trust
created solely for a person who suffers from "mental
illness" as defined in section 1 of the Mental Health
Act, 1073; or a serious physical disability.
6. Does your country allow free
convertibility and repatriation of funds (capital, profits,
royalties and fees)?
Exchange controls have effectively been
abolished in relation to non-residents, and the Government is
pursuing a policy of gradually relaxing the remaining exchange
controls applicable to residents. Exchange control was
introduced in order to stem the outflow of capital from South
Africa, and to ensure a Measure of stability in currency
markets.
The Statutory Authority for exchange
control is the currency and Exchange Act, 1933(No. 9 of 1933).
The exchange control regulations (as amended) came into force
in 1961. The administration of exchange control has been
delegated to the South African Reserve Bank, which in turn has
delegated certain of its powers to banking institutions.
Generally, there are no restrictions on
inward or outward transfer of funds of which non-residents are
the beneficial owners. For exchange control purposes,
non-residents are persons not resident in South Africa and
non-South African companies, excluding external companies
registered in South Africa. Capital invested in South Africa
can be freely returned abroad, as can capital and revenue
profits, for example, dividends and branch profits. There is
generally no limit on the remittance of commissions,
director's fees, technical service payment, management fees,
or the purchase of technology, although certain restrictions
may apply when these payments are made within group companies.
Where management fees are paid to a non-resident group
company, invoices based on time spent will be required.
Non-residents are permitted to maintain foreign currency
accounts with South African Banks. If a South African company
is 100% owned by non-residents, the are certain requirements
that need to be satisfied before a non-resident can transfer
his/her profits abroad. In the case where the ownership is
having a South African partner, the non-resident can transfer
his/her profits without any restrictions.
The Remaining Exchange Control Restrictions
The Reserve Bank of South Africa, assisted
by authorized dealers in foreign exchange, administers the
remaining exchange control restrictions.
Restrictions still exist with regard to
local borrowing by foreign-held companies, but these are not
onerous and are intended merely to ensure that local
borrowings are not exploited so as to permit large-scale
remittances of profits on minimal capital investments. If a
non-resident grants a loan to a South African resident, the
South African debtor is required to obtain approval for the
amount and the interest rate, to ensure that, the interest is
freely remittable.
Tourism:
This month we are on focusing on the Augrabies Falls National Park:
The Khoi people called it 'Aukoerebis', the
place of the Great Noise, referring to the Orange River
thundering its way downwards for 60 metres in a spectacular
waterfall. Picturesque names such as Moon Rock, Ararat and
Echo Corner are descriptive of this rocky region,
characterised by the 18 kilometre abyss of the Orange River
Gorge and craggy outcrops dominating scrub-dotted plains.
Klipspringer and kokerboom (quiver trees) stand in stark
silhouette against the African sky, silent sentinels in a
strangely unique environment where only those that are able to
adapt ultimately survive. The 28 000 hectares on both the
northern and southern sides of the Orange River provide
sanctuary to a diversity of species, from the very smallest
succulents, birds and reptiles to springbok, gemsbok and the
endangered black rhino.
Click Here to read more.
The South African Business Council (SABCo):
The South African Embassy will celebrate the
10th year of its existence in the UAE in 2005. The Embassy's
facilitation of the establishment of the South African
Business Council (SABCo) at this time signifies a clear
realisation that bilateral relations between the two
countries have increased to such an extent that South
African companies and business groups in the UAE should now
be brought together in a more formalised structure to focus
their efforts in order to further expand trade and business
opportunities between South African and the UAE. There are
currently 42 registered South African companies based in the
UAE. South African service sector companies are in high
demand. South African skills are highly regarded and could
serve as a catalyst in improving trade. Dubai is an
important hub for South African warehousing and distribution
companies. The South African companies in the construction
sector are essentially very active in the UAE market. There
are about 11 South African companies within the construction
sector that are involved in various development projects.
The other sectors in which the South African companies have
a presence are the chemical, clothing and textile,
foodstuff, IT, recruitment, oil and gas maintenance,
airline, finance, furniture and carpets. There are four
South African franchises in the food sector, which are also
very popular in the UAE.
The
South African Business Council will have its first networking evening on the 28 September 2004 at Carters Wafi City
from
18:00 -- 21:00
Click here to go to
SABCo website.
Click Here
for more information on the networking evening!!
NEWS FROM SOUTH AFRICA:
Can you export your car to South Africa?
Click
here to find out
Great South African inventions go on show:
Over 200 of South Africa's greatest inventions
go on show in Cape Town in an exhibition designed to
highlight innovation and entrepreneurial spirit. The
inventions and innovations range from the Kreepy Krauly pool
cleaner to the noisy vuvuzela and the famous dolos concrete
structures which protect harbours and seawalls worldwide.Other
South African inventions on show are the tellurometer, the
first commercial microwave distance-measuring device, used
mainly for land surveying, the Scheffel Bogie, an
undercarriage for trains, and the Freeplay wind-up radio.
Visitors will be able to ride the bicycle-powered water pump,
and play the Afri-Can oilcan guitar.The exhibition will run in
Cape Town until December 31 before travelling to other science
centres and science fairs across the country.
Click here to verify your marital status.
New ID cards will help keep fraudsters away:
In the wake of reports of the growing
fraudulent use of identity documents and passports, the
government is to fast-track the introduction of a new format
for IDs and passports. Within six months South Africans will
have to begin applying for the new "smart" ID card in a
programme that will cost an estimated R1,5-billion. The new ID
and passport system follows the deadline for the conversion to
credit card licences for motorists early last year, during
which people with late applications waited in queues for up to
12 hours at licensing offices across the country. Applicants
for the new ID will have to pay about R120 for the card while
the process to install new technology and put the country's
identity database on an electronic system is expected to cost
more than R1,5-billion. A fee has not been set for the
passport. South African IDs are being used fraudulently by
foreign nationals to gain citizenship while passports are said
to be easy to obtain abroad and are being used by terrorists.
Fake IDs and fraudulent marriage certificates are being used
to obtain citizenship.
Joburg gets it's own Time Out Guide:
Joburg is set to get a major tourism boost when
it gets it's own Time Out Guide. The Tourism department says
the guide will improve tourism because it will advertise all
the hot spots in the city. The department says Cape Town
already has it's own guide which has worked well for them. SA
Tourism's Chief Operatoins Officer Moeketsi Mosola says the
project is about knowing what's going on in a town.
Boks are waiting for the fairytale to sink
in:
Springbok coach Jake White said: "I woke up and
realised the victory had not yet sunk in. I think it will take
a few days before I come to terms with the fact we are
Tri-Nations champions. "I know this team is full of potential
and talent, but to be honest they surpassed even my
expectations in terms of the time they've taken to develop
into a winning combination. It's just been unbelievable. I
didn't think it would happen so quickly," said White.
"It was the biggest game of some of these players' lives.
Australia had vastly experienced combinations. We have played
only eight tests together. Already we have seen the value of
keeping players together."Assistant coach Allister Coetzee
described it as a "fairytale come true". "Nobody gave us a
chance when we started. The way in which Jake has transformed
the team into one big unit is amazing. We have had consistency
of selection and a solid game plan," he said.
Mixed bag for SA Olympians:
The XXXVIII (28th) Olympiad
produced heart-stopping moments of glory for South Africans
who celebrated six medals, the most won since the country
returned to the embrace of the IOC at Barcelona in 1992.
However, there were also heart-wrenching moments involving
administration and infrastructure that athletes would like to
address for the sake of future teams. Foremost in the minds of
most, however, is the shine of gold that captured the
imagination of the world watching the Olympics - especially
the hosts of Hellas who celebrated a dizzying collective high
when their team of underdogs fought through as top-dogs in
European soccer. Who would have expected the swimming foursome
of Roland Schoeman, Lyndon Ferns, Damian Townsend and Ryk
Neethling to swim a magical golden world record in the 4x100m
freestyle?
NEWS FROM THE
SOUTH AFRICAN EMBASSY/CONSULATE:
Contribution by the
Consular Section:
This month the
Consular Section will look at the important issue of
registering your new born baby's birth in South Africa.
APPLICATION FOR THE
REGISTRATION OF A SOUTH AFRICAN BIRTH:
The following
documents must be forwarded (originals) to the
Department of Home Affairs, Pretoria, via the South African
Embassy or Consulate.
PROCESS:
All documentation with
regards to the registration of birth
must be submitted
to the Embassy / Consulate.
The original documentation
will then be forwarded via the secure diplomatic bag to South
Africa, where it is dispatched to the Department of Home
Affairs.
The Department of Home
Affairs begins to create an Identity Number for the new born
baby. This process takes approximately 6 - 8 weeks to
complete, whereafter, a birth certificate will be issued to
the new born baby. (This process will not continue
without all the required ORIGINAL DOCUMENTATION.
The Department of Home Affairs does not accept faxed copies,
especially with regards to the creation of a identity number
for a new born baby!)
Thereafter, the
documentation is forwarded to the Passport Section, whereby a
child passport is issued for the new born.
This entire process from
beginning to end will take approximately 3 - 4 months to
complete.
Requirements:
Ÿ
Form
BI-24
Ÿ
Form
BI-529
Note on
BI-529: The person who completes the BI-24 must
complete the BI-529 i.e. father of child
completes the BI-24, then father of child must complete:
Section
A: Personal particulars
Section B: Mother of
child
Section C & D:
Grandparents of child
Ÿ
Copy
of UAE Birth Certificate (legal translation)
Ÿ
Copy
of parents’ ID documents / passports
Ÿ
Copy
of parents’ marriage certificate
Ÿ
2 x
Passport size photographs (eyes must be open on the
photographs!)
It is suggested
that parents complete the application for a South African
child passport when they hand-in the forms for birth
registration. (The documentation for the registration
of birth and the application for the child passport will be
dispatched together to the Department of Home Affairs in South
Africa.)
Please take
note: Both parents signatures are required on
the passport application form. The application will not
be accepted without both signatures of the mother and father.
Fees:
None
Please do not
hesitate to contact the Embassy / Consulate - Consular Section
- should you require further information.
The Consular
Section at the South African Consulate in Dubai solemnized the
first ever wedding ceremony between a South African couple on
the 11th of September 2004. The Vice-Consul, Mrs
Michelle Aspeling was appointed as the Marriage Officer for
this very special occasion. The newly weds are Mr and
Mrs Wayne & Linda Randall. Our congratulations goes
out to the happy couple, may they have many happy years
together.
Click
Here for pictures of the wedding.
In Closing: We hope you enjoyed
this bumper packed edition and look forward to the next
edition. Look out for info about the South African pavilion at
the Gitex exhibition in the next issue.
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