On 31 October 2019, the Financial Surveillance Department of the
South African Reserve Bank (“Reserve Bank”) released
Circular 18/2019 stating that the loop dispensation currently
available for South African corporates under the Foreign Direct
Investment (“FDI”) dispensation will be extended to
private individuals.
It is important to note that this dispensation is extended to
private individuals only and not to trusts.
This represents a significant deviation from the current policy
of the Reserve Bank, in terms of which South African residents are
prohibited from investing in a foreign company which in turn
invests back into South Africa. This deals with so-called loop
structures.
