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South Africa: Permissible loop-structure dispensation

South Africa: Permissible loop-structure dispensation

The Financial Surveillance Department (Finsurv) of the South African Reserve Bank has relaxed its policy on loop structures in relation to private individuals.


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A loop structure entails the formation by a South African resident of an offshore structure which, by reinvestment into the country, acquires shares, loan accounts or some other interest in a South African resident company or a South African asset. Transactions creating loop structures can be in contravention of Regulation 10(1)(c) of the Exchange Control Regulations, 1961, among others, that provides that no person may enter into any transaction whereby capital or any right to capital is directly or indirectly exported from South Africa, except with permission granted by the Treasury and in accordance with such conditions as the Treasury may impose.

In line with the relaxation of Finsurv’s policy in relation to loop structures into the common monetary area (CMA) by companies (Exchange Control Circular No. 5/2018), Finsurv has also relaxed its policy in relation to private individuals. Finsurv guidance allows private individuals, individually or collectively, to acquire up to 40% equity and/or voting rights, whichever is the higher, in a foreign target entity, which may in turn hold investments and/or make loans into any CMA country.

This dispensation will only apply in respect of loop structures formed after 30 October 2019.

Read a February 2020 report [PDF 342 KB] prepared by the KPMG member firm in South Africa 

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