With reference to the February 2022 Budget Speech of the Minister of Finance, wherein further exchange control reforms were announced in Annexure F of the Budget Review, the Financial Surveillance Department issued the undermentioned Exchange Control Circulars to amend the Currency and Exchanges Manual for Authorised Dealers in foreign exchange.

Short summary of the Exchange Control Circulars issued on 23 February 2022

Exchange Control Circular No. 4/2022

This Circular attached Annexure F of the Budget Review, for ease of reference.

Exchange Control Circular No. 5/2022

This Circular provides that private individuals may now export dual/multi-listed domestic securities to a foreign securities register in a jurisdiction where those securities are listed utilising their single discretionary allowance and/or foreign capital allowance, subject to certain conditions.

Exchange Control Circular No. 6/2022

This Circular provides that resident individuals may utilise the investment portion of their single discretionary allowance and/or foreign capital allowance to participate in online foreign exchange trading activities.

These online trading activities generally include one or a combination of options, such as trading global currencies against each other, trading a contract of difference, trading in foreign stocks, trading commodities including crypto assets and trading foreign indices, using the online trading platform of the broker concerned.

Residents should note that they may not fund their international trading accounts at registered brokers using South African credit, debit and/or virtual cards.

Exchange Control Circular No. 7/2022

This Circular provides that resident individuals may now receive and retain abroad monetary and other legitimate gifts and donations received from a non-resident source without having to declare it.

In addition, resident individuals may without reference to the Financial Surveillance Department retain foreign assets inherited from a South African estate, and resident with authorised foreign assets may now lend and/or dispose of such authorised foreign assets to other South African residents, subject to certain conditions.

Exchange Control Circular No. 8/2022

This Circular provides that South African resident individuals may now invest authorised foreign capital in excess of R10 million foreign capital allowance per calendar year via foreign domiciled and registered trusts.

Exchange Control Circular No. 9/2022

This Circular provides confirmation that approved debt and derivative instruments as well as exchange traded funds referencing foreign assets, that are inward listed on a South African exchange, traded and settled in Rand, are classified as foreign.

Inward listed shares remain classified as domestic.

Exchange Control Circular No. 10/2022

This Circular provides for the increase in the prudential limit available to Institutional Investors to 45 per cent of total retail assets under management, including the African allowance of 10 per cent.

Exchange Control Circular No. 11/2022

This Circular provides for the increase in the foreign direct investment limit for companies investing funds offshore that can be processed by Authorised Dealers from R1 billion to R5 billion.

Exchange Control Circular No. 12/2022

This Circular provides that Authorised Dealers may process transfers from the parent company to domestic treasury management companies up to a maximum of R5 billion per calendar year for listed entities and up to R3 billion per calendar year for unlisted entities.

Exchange Control Circular No. 13/2022

This Circular provides that Authorised Dealers may, on a once-off basis, remit abroad the remaining cash balances of private individuals who have ceased to be resident for tax purposes, provided that such cash balances do not exceeding R100 000 in total, without reference to the South African Revenue Service (“SARS”).

Comment

Enquiries relating to the above-mentioned Exchange Control Circulars and/or any other exchange control issues may be addressed to the writer.

Written by Charles R van Staden, Consultant, Exchange Control, Cox Yeats Attorneys