4.3. South African holding company for African and offshore operations (Capital Transfers)

Entities listed on a South African exchange and unlisted entities may establish one subsidiary as a holding company, also known as a DTMC, to hold African and offshore operations subject to the following conditions:

(a) registration with the Financial Surveillance Department via an Authorised Dealer;

(b) the DTMC must operate as a South African tax resident and be incorporated and effectively managed and controlled in South Africa;

(c) the parent company may transfer up to R5 billion per calendar year to the DTMC in respect of listed entities and R3 billion per calendar year to the DTMC in respect of unlisted entities. Up to the afore-mentioned limits, there will be no restriction on transfers in and out of the DTMC, provided that such transfers are not undertaken to avoid tax. Additional amounts of up to 25 per cent of the listed company’s market capitalisation will be considered on application to the Financial Surveillance Department, provided that the entity is able to demonstrate benefits to South Africa.

(d) Unlisted companies may also apply to the Financial Surveillance Department via an Authorised Dealer for additional funding, provided that they can demonstrate benefits to South Africa;

(e) the DTMC is allowed to freely raise and deploy capital offshore, provided that these funds are without recourse to South Africa. Additional domestic capital and guarantees will be allowed to fund bona fide foreign direct investments in the same manner as outlined in (c) above;

(f) the DTMC is allowed to operate as a cash management centre for South African entities. Cash pooling is allowed without any restrictions and local income generated from cash management will be freely transferable; the DTMC may choose its functional currency and operate a foreign currency account and a Rand denominated account for operational expenses; and

(g) applications for the listing of the DTMC and joint ventures will be considered by the Financial Surveillance Department.