The South African Reserve BankFinancial Surveillance Department (SARB-FSD) has on 4th January 2021 issued a circular  which spells good news, especially for South Africans with investments in foreign entities intending to own South African assets. The subject of the circular “South African resident individuals and companies – loop structures” takes effect as from 1st January 2021 and the reform applies to private individuals and companies, including private equity funds that are tax resident in South Africa.

Generally, loop structures in its typical form arise where a resident of Country A holds an investment in a foreign company that owns shares or assets back in Country A. Following the South African Minister of Finance announcement, the objectives of the removal of the prohibition on the loop structures in South Africa, is to support South Africa’s economic growth by encouraging inward investments and to promote South Africa as a financial hub for the African continent.

Loop structures were previously prohibited on the basis that they created a channel for the export of capital from South Africa. This prohibition had been in place for decades and had been the subject of much debate as well as various court cases, with some partial relaxations occurring in recent years.

The changes can be summarised as follows:

Resident individuals, companies and private equity funds may utilise authorised foreign assets to invest in South African assets through a loop structure, subject to the following:

  • The investment must be reported to an Authorised Dealer;
  • An annual progress report must be submitted to the SARB-FSD;
  • An Authorised Dealer must view an independent auditor’s written confirmation or suitable documentary evidence verifying that such transaction(s) is concluded on an arm’s length basis;
  • Upon completion of the transaction, the Authorised Dealer must submit a report to the SARB-FSD;
  • All inward loans from South African affiliated foreign investors must comply with the current exchange control rules and
  • Existing unauthorised loop structures (i.e. created prior to 1 January 2021), must still be regularised with the SARB-FSD.

Foreign Inheritance

Section B.17(D)

(ii)    The foreign assets inherited may be retained abroad provided that the assets were held abroad by the deceased in compliance with the provisions of the Regulations.

(iii)   The approval of the FSD to retain such foreign assets abroad will be granted subject to the condition that the foreign assets may not be placed at the disposal of other residents.

The removal of the prohibition on loop structures is a significant exchange control relaxation that will impact many structures for both individuals and companies.


The above have been communicated for information purposes only and not intended in anyway to be any kind of advice. Proper legal advice must be sought as appropriate.


Adrien Li, CKLB

PO Box 80
24 Dr Joseph Riviere Street
Port Louis