South African Reserve Bank Finally Abolishes Restrictions On Loop Structures

The Financial Surveillance Department of the South African Reserve Bank issued a circular on the 4th of January 2021 lifting restrictions on so-called loop structures with effect from the 1st of January 2021. The rationale behind the liberalisation of our exchange control regulations is to encourage investment into South Africa and establishing South Africa as an investment and financial hub within Africa.

Loop Structure

A loop structure arises when a South African exchange control resident holds an investment in a foreign company (or other vehicle) which directly or indirectly owns shares or assets (including loan assets) in the Common Monetary Area (including South Africa). This restriction was partially relaxed in 2019 when South African exchange control resident individuals and companies have been allowed to acquire up to a 40% direct or indirect interest in an offshore vehicle that held South African assets.