In the 2013 Budget Speech, the Minister of Finance indicated that a new gateway holding company regime would be established by National Treasury and the Financial Surveillance Department of the South African Reserve Bank.

This new regime will effectively remove exchange control restrictions on a qualifying subsidiary company within a multinational group listed on the Johannesburg Stock Exchange (JSE), when the subsidiary acts as a gateway holding company for Africa and offshore operations.

The following requirements would, however, need to be met for subsidiary companies to qualify:

• the subsidiary company must be registered with the Financial Surveillance Department;
• the subsidiary company will need to be tax resident, incorporated and effectively managed in South Africa;
• only one subsidiary company for a JSE-listed company will qualify;
• the subsidiary company must be wholly-owned by the listed company; and
• the subsidiary company will remain subject to certain reporting conditions.

The benefits of participating in the scheme are clear in that a qualifying subsidiary company will be allowed to:

• receive up to ZAR 750 million per year from the listed holding shareholder, with additional amounts per specific application, which will be freely transferable;
• raise and invest capital in foreign jurisdictions, outside of the Common Monetary Area, without restriction, provided the amounts are not subject to South African guarantees;
• pool liquid currency for the multinational in question and transmit cash originating from local income freely; and
• choose a functional currency at its discretion.