Doing Business in South Africa

2009

Contents
1. 2. 3. 4. 5. 6. 7. 8. 9. Introduction................................................................................................... 2 Businessenvironment .................................................................................. 4 Foreigninvestment....................................................................................... 9 SettingupaBusiness.................................................................................. 17 Labour .......................................................................................................... 23 Taxation........................................................................................................ 26 Accounting&reporting............................................................................. 35 UHYfirmsinSouthAfrica ........................................................................ 38 UHYofficesworldwide ............................................................................. 38

Appendix:Usefulweblinks.............................................................................. 38

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1.

Introduction

UHYisaninternationalorganisationprovidingaccountancy,business managementandconsultancyservicesthroughfinancialbusinesscentres inover70countriesthroughouttheworld.Businesspartnerswork togetherthroughthenetworktoconducttransnationaloperationsfor clientsaswellasofferingspecialistknowledgeandexperiencewithintheir ownnationalborders.Globalspecialistsinvariousindustryandmarket sectorsarealsoavailableforconsultation. Thisdetailedreportprovidingkeyissuesandinformationforinvestors consideringbusinessoperationsinSouthAfricahasbeenprovidedbythe officeofUHYrepresentatives: UHYHellmann(SA) 1stFloor,9SturdeeAvenue Rosebank2196 SouthAfrica Tel: +27114478447 Fax: +27114478400 Email: carlosp@uhy.co.za Web: www.uhy.co.za YouarewelcometocontactCarlosPedregalforanyinquiriesyoumay have. Informationinthefollowingpageshasbeenupdatedsothattheyare effectiveatthedateshown,butinevitablytheyarebothgeneraland subjecttochangeandshouldbeusedforguidanceonly.Forspecific matters,investorsarestronglyadvisedtoobtainfurtherinformationand takeprofessionaladvicebeforemakinganydecisions.Thispublicationis currentatFebruary2009. WelookforwardtohelpingyoudobusinessinSouthAfrica.
UHYHellmann(SA)isamemberofUHY,aninternationalassociationof independentaccountingandconsultancyfirms,whoseorganizingbodyisUrbach

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HackerYoungInternationalLimited,aUKcompany.EachmemberofUHYisa separateandindependentfirm.ServicesdescribedhereinareprovidedbyUHY Hellmann(SA)andnotbyUrbachHackerYoungInternationalLimitedorany othermemberofUHY.NeitherUrbachHackerYoungInternationalLimitednor anymemberofUHYhasanyliabilityforservicesprovidedbyothermembers.

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2.

Business environment

Withregardbothtoregulatorylawandtocommercialpractice,South AfricaseconomyhasmuchincommonwiththoseofNorthAmerica, EuropeandAustralasia.Freeenterpriseisthenorm,althoughtherearea numberofimportanteconomicsectors(suchastransport, telecommunications,electricityandwater)thathavebeenorcontinuetobe whollyorpartlyGovernmentownedandcontrolled.TheGovernments policyistopromotethecommercialisation,restructuringandprivatisation ofcertainGovernmentownedenterprises. SouthAfricanentrepreneursandbusinessprofessionalsaregenerally highlyeducated,skilledandcompetitive. RelationshipofGovernmentandBusiness TheGovernmentiscommittedtoprovidingfacilitiesandopportunitiesto thecommunitiesthatweredisadvantagedbythepre1994apartheid system,andtoenablingthosecommunitiestoshareequitablyinthe resourcesofthecountryanditseconomicactivity.TheGovernments MacroeconomicStrategyforGrowth,EmploymentandRedistribution (GEAR)ishoweverbasedonpromotingthefreemarketandfinancialand fiscaldiscipline,andaimsateconomicgrowth,jobcreationandthe developmentanddistributionofbasicservicestoallSouthAfricans. EconomicStructure SouthAfricahasthemostsophisticatedfreemarketeconomyonthe Africancontinent.Thecountryrepresentsonly3%ofthecontinents surfacearea,yetitaccountsforapproximately40%ofallindustrialoutput, 25%ofgrossdomesticproduct(GDP),overhalfofgeneratedelectricity and45%ofmineralproductioninAfrica.MostofSouthAfricaseconomic activityoccursinthefourmainmetropolitanareas(whichtogether representabout3%ofthetotallandarea)namelytheWitwatersrandarea surroundingJohannesburgintheGautengProvince,theDurban/Pinetown areainKwaZuluNatal,theCapePeninsula,andthePort Elizabeth/UitenhageareaintheEasternCape. Privatisation ThepublicsectorsroleinSouthAfricaseconomyhashistoricallyalways beensubstantialincomparisonwiththeprivatesectorsrole. TheGovernmentishowevertakingstepstocommercialise,restructureand increaseprivatesectorinvolvementinGovernmentcontrolledenterprises.

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ImportsExportsandFreeTradeAreas MostofSouthAfricasexportstoindustrialisedcountriesconsistof primaryandintermediatecommodities.Alargeproportionofexports consistofunprocessedrawmaterials,withtheminingindustry contributingthegreatestproportiontothecountrystotalexports.Moreof SouthAfricasrawmaterialsarehowevernowprocessedinSouthAfrica beforebeingexported.SouthAfricaisamajorexporterofgold,diamonds, platinum,wool,sugar,manganeseandchromeores,asbestos,atomic energymaterialsandbasemineralssuchascoal,antimony,copperand ironore.Thecountryisalsoanexporterofdeciduousandcitrusfruitas wellasanimalhidesandskins.Exportsofchemicals,metalproducts, machinery,transportequipmentandmanufacturedgoodshaveincreased, particularlytoAfrica,inrecentyears. Importsincludemainlycapitalgoods,certainrawmaterials,intermediate goodsaswellassophisticatedconsumergoods. IndustrialandTradeOrganisations Numerouspublicandprivatedevelopmentandotheragenciesprovide adviceandassistanceinordertofurthereconomicdevelopment. BlackEconomicEmpowermentandAffirmativeAction BlackEconomicEmpowerment(BEE),aprogrammethatpromotesthe acceleratedintegrationofblackpeopleintotheSouthAfricaneconomy, hasbeenapolicyoftheGovernmentsince1994.Until2003 implementationofthepolicywasnotparticularlyeffective. In2003theDepartmentofTradeandIndustrypublishedastrategy documentforbroadbasedblackeconomicempowerment,thekeytheme ofwhichwasthatblackeconomicempowermenthadtobeviewedasa broadbased,integratedandcoherentsocioeconomicprocess.This strategystatementwascrystallisedinlegislationwiththepromulgationof theBroadBasedBlackEconomicEmpowermentActwhichcameinto operationinApril2004.TheActprovidesthelegislativeframeworkfor broadbasedblackeconomicempowerment (BBBEE)bydefiningthepolicy,outliningthemechanismsforthe regulationandmeasurementofBEE,andestablishingtheBlackEconomic EmpowermentAdvisoryCouncil. BroadBasedBee BBBEEinvolvestheeconomicempowermentofallblackpeople(which, subjecttocertainlimitations,includesBlack,IndianandColouredSouth Africans)withinfourinterrelatedcontexts:

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directempowermentincreasingthenumberofblackpeoplewho manage,ownandcontrolenterprisesandproductiveassets; humanresourceandskillsdevelopmentachievingequitable representationinalloccupationalcategoriesandatalllevelsofthe workforce; indirectempowermentpromotionofpreferentialprocurement fromempoweredenterprisesandinvestmentinenterprisesowned ormanagedbyblackpeople;and socialeconomicdevelopmentinitiatives.

ImplementationofBee Twoprimarymechanismshavebeenintroducedtoensurethatthesesocio economicstrategiesareimplemented: CodesofGoodPracticeweregazettedinFebruary2007bythe MinisterofTradeandIndustrythatspecifyempowermenttargets consistentwiththeobjectivesoftheAct,andtheperiodswithin whichthosetargetsmustbeachieved.Thepublicsectorisobliged toapplyandadheretotheBEEgoalsandtargetssetoutinthe Codes;and SectorCodesthatmaybedevelopedbymajorstakeholdersin varioussectorsoftheeconomywhichpromotetransformationfor thatparticularsector. TheSectorCodesareindustryspecificandwillbindthesignatoriesthereto andthegovernment,oncegazetted.SeveralTransformationChartershave alreadybeenconcludedMining,Petroleum,Maritime,Agriculture, HealthandTourism,InformationCommunications Technology,amongstothers,andnumerousChartersarebeingnegotiated amongststakeholdersonacontinuingbasis.Ingeneralterms,the TransformationChartersdonotbindthegovernmentwhensuchcharters areconvertedtoSectorCodes.IftheTransformationChartersarenot convertedintoSectorCodes,theCodesofGoodPracticeshouldbeusedto measureBBBEE.TheCodesdefinetheelementsofBEEandspecifythekey principlesrelatingtothemeasurementofBEE.Agenericscorecard (applicabletoCode000Code700)isusedtomeasureprogressin achievingthetargetssetforeachofthesevenelementscontainedinthat genericscorecard.Inturn,eachoftheelementshasitsownindividual scorecard.Pointsareallocatedinaccordancewithprescribedformulaeto measurethelevelofanentityscompliancewiththeBEEtargetssetfor eachelementofBEEonthescorecard.Thescorecardalsoprovidesforthe awardofbonuspointsifcertainprescribedBEEmilestonesareattainedor ifperformanceisinexcessoftherequisitetargets.Thekeyelementsand theirrespectiveweightingsinthescorecard,beingthemaximumnumber

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ofpointsthatmaybeattainedforeachelement(excludingbonuspoints, are: ownership(20points)Code100; managementcontrol(10points)Code200; employmentequity(15points)Code300; skillsdevelopment(15points)Code400; preferentialprocurement(20points)Code500; enterprisedevelopment(15points)Code600; socioeconomicdevelopmentinitiatives(5points)Code700 Code000istheFrameworkCodethatsetsoutthemainmeasurement principles. QualifyingSmallEnterprises(withanannualturnoverofbetweenR5 millionandR35million)havetheirownscorecard(Code800)whichis distinctfromthegenericscorecardshownaboveonlyinrelationtothe weightingsgiventoeachelementandthemeasuringprinciples. Compliance Allorgansofstateandvariousspecifiedpublicentitieswillbeobligedto takeintoaccounttheBEEstatusofthepartyconcernedwhen implementingpreferentialprocurementpolicies,sellingstateenterprises, enteringintopublicprivatepartnerships,etc.Anentitythatattains100 pointsormore(madepossiblebytheawardofbonuspoints)onthe balancedscorecardwillberegardedasaLevelOneContributortoBEE, whereas,forinstance,ascorebelow30pointswillcategorisetheentityasa NonCompliantContributor.ExemptedMicroEnterprises(EMEs)which areentitieswithannualrevenueofR5millionorlessaredeemedtohavea BEEstatusofaLevelFourContributortoBEE.Thismeansthatanentity procuringgoodsfromanEMEmayrecognise100%ofitsexpenditure relatingtosuchprocurementforpurposesofcalculatingthatentitys procurementpoints.Noncompliancewillnotresultincriminalsanction butwillmeanthatGovernmentsupportwillnotbeforthcoming. However,aknockoneffectiscreatedinthesensethatcompliancewill requirethoseseekingcompliancethemselvestoenterintobusiness relationships(suchassupplycontracts)withpartieswhointurnare compliant. Multinationals TheCodesdefineaMultinationalasanentitythatdoesbusinessinthe RepublicofSouthAfricaandelsewhereandmaintainsitsinternational headquartersoutsidetheRepublicofSouthAfrica.TheGovernmenthas issuedaspecificstatementunderCode100dealingwiththerecognitionof EquityEquivalentsforMultinationals.Recognisingthatthereare

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MultinationalsthatlooktotheGovernmentorpublicentitiesforworkthat areunabletosellequitytoSouthAfricans,theMinisterintheDepartment ofTradeandIndustrymayapprovecertainEquityEquivalent ProgrammesaftertheMultinationalhasconsultedwiththesectoralline ministryorotherstakeholdersinanyothergovernmentdepartment, provincialgovernmentorlocalgovernmentwithrespecttotheirEquity EquivalentProposal.EquityEquivalentProgrammesmayinvolve programmesthatsupporttheAcceleratedandSharedGrowthInitiative forSouthAfrica(ASGISA),theJointInitiativeforPrioritySkillsandthe NationalSkillsDevelopmentStrategy.EquityEquivalentProgrammes mayalsoinvolveprogrammesthatpromoteenterprisecreationinrespect ofcooperativesthatmeetcertainrequirementsandanyotherprogrammes thatpromotesocioeconomicadvancementorcontributetotheoverall sociodevelopmentoftheRepublicofSouthAfrica. Conclusion TheimplementationofaBBBEEpolicymeansthatmanyforeigninvestors, whomaybewarytosellequity,maynowcompensatefortheownership requirementbytakingpartinEquityEquivalentProgrammesandplacing extraeffortinskillsdevelopment,training,preferentialprocurement, socialresponsibilityinitiatives,promotingrepresentivitywithinhuman resourcesandsupportingsmallblackbusinesses.Inthisway,aforeign investorcouldpotentiallyberankedasagoodBEEcontributorwithout sellingequitytoblackpeople.ItisfundamentaltodoingbusinessinSouth Africathatpotentialinvestorsandothersbecomefamiliarwithandmeet theirobligationsintermsoftheBBBEElawsandregulations.

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3.

Foreign investment

ExchangeControl Exchangecontrolregulations,whichrestrictthefreeflowofcapitalinand outofthecountry,existinSouthAfrica.Theseregulations,whichuntilthe recentpastwereratherstrict,havebeensignificantlyrelaxed.The expressedgoaloftheSouthAfricanGovernmentistheultimateequal treatmentofresidentsandnonresidentsinrelationtoinflowsand outflowsofcapitalandtheabolitionofexchangecontrolmeasures. TransfersofCapital 3.1NonResidents Nonresidentsarenolongersubjecttoexchangecontrolandcurrentlymay freelytransfercapitalintoandoutofSouthAfrica.InvestmentsintoSouth Africamusthoweverbereportedtotheauthoritiesandsharecertificates evidencingsuchinvestmentmustcarryanonresidentendorsement.It shouldbenotedthatnonresidentswhowishtoinvestinSouthAfricaby meansofloancapitalneedtoobtainpriorapprovalfromtheSouthAfrican ReserveBank,particularlywithreferencetointendedrepaymentdates, andinterestrates.ItshouldalsobenotedthattheReserveBankwillnot agreetointerestinexcessofprimebeingchargedbynonresident shareholdersonloanstotheirSouthAfricansubsidiaries,butloansfrom nonresidentsotherthanshareholdersmaybeallowedtocarryinterestat prime+2%.SouthAfricansubsidiariesandbranchesofforeigncompanies areconsideredtobeSouthAfricanresidentsandare,therefore,subjectto exchangecontrol. 3.2ResidentsofSouthAfrica SouthAfricancompaniesmayasageneralrule,butsubjecttopossible exchangecontrolrequirements,freelyremitthefollowingtononresidents: Repaymentofcapitalinvestmentsmadebynonresidents. Dividendsandbranchprofits,providedthatsuchtransfersare madeoutoftradingprofitsandarefinancedfromavailablecash resourceswithoutresortingtoexcessivelocalborrowing.Certain auditcertificationsarerequired.SouthAfricancorporate professionalsareallowedtoretainforeigndividendsoffshore. ForeigndividendsrepatriatedtoSouthAfricaafter26October2004 maybetransferredoffshoreagainatanytimeforanypurpose exceptforfundinginvestmentsorloansintotheSouthernAfrican CommonMonetaryAreaforanypurposewhatsoeverviaaloop

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structure.Aloopstructurecomesintoexistencewhenfundswhich arelegitimatelyoffshoreexSouthAfricaarereintroducedintothe CommonMonetaryArea.Therationaleisthattheexportof dividendsonsuchnewinvestmentswillthenresultintheSouth Africanresidentexpatriatingmorethanispermitted. Interestpayments,providedthattherateisreasonableinregardto thenatureoftheloan,currentinterestratesandpastpractices,and conformstotherequirementsofthethincapitalisationrulesif applicable. Paymentofroyaltiesorsimilarfeesfortheuseofknowhow, patents,designs,trademarks,copyrightorsimilarproperty,subject tothepriorapprovaloftheexchangecontrolauthorities,andalso incertaininstancesoftheDepartmentofTradeandIndustry. Generallyspeaking,suchroyaltieswillbelimitedtoanamountof between2%and6%ofturnover. PaymentsforgoodsimportedintoSouthAfrica. Otherfeesinrespectofservicesrenderedbynonresidents,subject toreasonableness.

Thefollowingmayalsobenoted: Exchangecontrollimitsonnewoutwardforeigndirect investmentsbySouthAfricancorporatesareabolished. ApplicationtotheSouthAfricanReserveBanksExchangeControl Departmentisstillrequiredformonitoringpurposesandfor approvalintermsofexistingforeigndirectinvestmentcriteria, includingdemonstratedbenefittoSouthAfrica.TheSouthAfrican ReserveBankreservestherighttostaggercapitaloutflowsrelating toverylargeforeigninvestmentssoastomanageanypotential impactontheforeignexchangemarket. SouthAfricancompanieswillbeallowedtoraiseforeignfunding onthestrengthoftheirlocalbalancesheets.Butwheresuchloans areguaranteedbySouthAfricancompaniesintermsofapprovals grantedbyexchangecontrol,then,currently,noforeignlender maytakestepstoenforcesuchguaranteepriortotheexpiryofa periodoftwoyearsafterthedateoftheloan. Foreigncompanies,governmentsandinstitutionsmayliston SouthAfricasBondandSecuritiesExchanges.Thisaimsto promoteforeigninvestmentintoSouthAfricaandtosupportthe positioningofSouthAfricaasaregionalfinancialcentrebetterable tocaterforthecapitalraisingneedsofthecontinent.Tofurther supporttheseaims,SouthAfricanprivateindividualswillnowbe abletoinvest,withoutrestriction,ininwardlistedinstrumentson SouthAfricanExchanges.Suchinvestmentsfalloutsidethelimitof theforeigninvestmentallowanceapplicabletoprivateindividuals.

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SouthAfricancompanieswillbeallowedtoretainexportproceeds foramaximumof180daysfromthedateofshipmentorthedate ofrenderingtherelevantservice. Localinstitutionalinvestors,whichincluderetirementfunds,long terminsurersandcollectiveinvestmentschememanagement companies,areeligiblefortheforeignportfolioinvestment allowance,subjecttoregistrationwiththeSouthAfricanReserve Bank.Theexchangecontrollimitonforeignportfolioinvestments byinstitutionalinvestorsmaynotexceed15%oftheinstitutions totalretailassetsinthecaseofretirementfunds,longterm insurersandinvestmentmanagersregisteredforsuchpurposes.

3.3Restrictionsonlocalborrowings Theexchangecontrolregulationsprovidethatwhen75%ormoreofthe votingstock,capital,assetsorearningsofalocalcompanyaredirectlyor indirectlyvestedin,orcontrolledby,anonresident,alocalloanmaynot bemadeorgrantedtothecompanywithoutthepriorapprovalof exchangecontrol.TheSouthAfricanexchangecontrolauthoritiesallow localborrowingscalculatedasapercentageofthecompanystotal effectivecapital(seebelow) %SouthAfricanInterest 300%+x100% %NonresidentInterest Theaboveratiodoesnotapplytoemigrants,theacquisitionofresidential propertiesbynonresidentsoraffectedpersons,andanyotherfinancial transactions,suchasportfolioinvestmentsbynonresidents,securities lending,hedgingandrepurchaseagreements.Inalltheseinstances,the figureof100%mustbesubstitutedforthefigureof300%intheabove formula.Totaleffectivecapitalincludessharecapital,shareholderloans fromabroad,unappropriatedcapitalorrevenueprofitsand,incertain instances,thehardcoreofshareholderstradecredit.Arelaxationofthese provisionsmaybegrantedinexceptionalcircumstances.Therestrictions onlocalborrowingsapplybothtoaSouthAfricancompanyandtoan externalcompany. 3.4Moneylaundering KnowYourClientsProcedures

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Althoughnotpartoftheexchangecontrolsystemassuch,money launderingactivitiesarenowcontrolledbytheFinancialIntelligence CentreActof2001(asamendedbytheProtectionofConstitutional DemocracyagainstTerroristandRelatedActivitiesAct,2004),the PreventionofOrganisedCrimeActof1998,andtheregulationspublished undertheseActs.Thislegislation,inkeepingwithworldwidetrends,aims atcurbingtheuseoftheproceedsofcrimeandmoneylaundering. Rigorouscomplianceobligationsareimposedonaccountable institutionsintermsofthislegislationAccountableinstitutionsare obligedtoaccountableinstitutionincludesattorneyssuchasfollowknow yourclientprocedures,namelyto:identifyandverifynewandexisting clients;keeprecordsofidentitiesofclientsandalltransactionsenteredinto withclients;reportcertaintransactionstotheauthorities;trainemployees; andappointacomplianceofficer.Pleasebearinmind,therefore,thatin askingyou,ourclients,fortherequiredinformationwearedoingnomore thancarryingoutourlegalduties. 3.5StockExchange TheJSESecuritiesExchangeSouthAfrica(JSE)istheonlystockexchange operatinginSouthAfrica.Inadditiontothemainboardlisting,thereisa divisionoftheJSE,isaparallelmarketforsmalltomediumsizedhigh growthcompanieswhichopenedfortradinginOctober2003.Itisthefirst alternativeexchangeinAfrica. ThecenturyoldopenoutcrytradingsystemutilisedintheJSEwas successfullyconvertedtofullyautomaticelectronictradingonthe JohannesburgEquitiesTradingSystem(JETS)inJune1996.TheJETSisan orderdrivenautomatedtradingsystemwhichwasacquiredfromthe ChicagoStockExchange. Inaddition,anewelectronicsettlementsystem,theShareTransactions TotallyElectronicSystem(STRATE)wasimplementedin1999/2000.This systeminvolvesthedematerialisationofsharecertificatesandthe cancellationofsharecertificatesdepositedwiththeCentralSecurities Depository(CSD)oftheJSE.Shareholdingsarerecordedbywayofbook entriesintheaccountsofparticipantsacceptedbytheCSD.The introductionofSTRATEnecessitatedsubstantialamendmentstoarangeof SouthAfricanlegislation,includingtheCompaniesAct,theSafeDepositof SecuritiesActandtheJSEListingRequirementsandRules. 3.6RegulatoryBodies

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Thereareregulationsgoverningtheconductofbusinessinvarioussectors oftheeconomysuchasfinance,banks,otherfinancialinstitutions, medicine,andmanufacturingandmining(inwhichsafetyandother workingconditionsaresubjecttoinspectionbyGovernmentbodies). TheFinancialServicesBoard(FSB)isastatutorybodychargedwith supervisingtheactivitiesoffinancialinstitutions,includingfinancial servicesandbankingservices.TheFSBactsinanadvisorycapacitytothe MinisterofFinanceanditspowersincludethesuspensionandwithdrawal ofauthorisationstoprovidefinancialservices. TheIndependentCommunicationsAuthorityofSouthAfrica(ICASA) regulatestelevisionandradiobroadcasting,telecommunicationsandthe assignmentofradiofrequencies.TheGovernmentcontrolledTelkom Limitedhadexclusivityontheprovisionofbasictelecommunication servicesbutthisterminatedin2002.Itslicenceforthoseservicesandfor otherservicesthatitprovidesaswellasthelicencesgrantedtoother serviceproviderswillberegulatedbyICASA.ICASAiscurrentlyinthe processofgrantingalicencetoasecondnetworkoperatorwhichwill competeagainstTelkom. TheSecuritiesRegulationPanel(SRP)isastatutorybodyestablishedto investigateinsidertradingandregulateacquisitionsandtakeoverswhere thereisachangeofcontrolinpubliccompaniesandprivatecompanies wheretheshareholdersinterestsexceedaprescribedlimit.Atpresent, controlisdefinedastheholdingofatleast35%ofthevotingsharesof theofferedcompany,irrespectiveofwhetherornotactualcontrolinfact resultsfromsuchshareholding.Transactionsextendingshareholdings alreadyover35%butunder50%areincertaincircumstancesalsosubject totheSRP.TheSRPhaspublishedaCodeandRegulations,whichhave theforceoflaw.Copiesofallrelevantdocumentsandannouncements concerningtransactionsaffectedbytheCodearerequiredtobelodged withtheexecutivedirectoroftheSRPforapprovalpriortoissue.The SRPspowersincludethepowertocompelthemakingoflikeoffersto minoritiesortoreversetransactionswhichhavebeenimplemented.In appropriatecircumstances,theSRPwillgrantexemptionfromcompliance withanyoralloftheprovisionsoftheCodeandRegulations. Provincialgamblingboardsregulategamblingandrelatedactivitiesin accordancewithnationalandprovinciallegislationandregulations. TheLotteriesActprovidesforalicencetoconducttheNationalLottery. TheNationalLotteriesBoardregulatestheNationalLotteryandother lawfullotteries. 3.7ImportandExportRestrictions

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TheMinisterofTradeandIndustryisempoweredbystatutetoregulate, prohibitorrationimportstoorexportsfromSouthAfricainthenational interest.SuchpowersareexercisedwithintheambitofWTOrulesand consistofimporttariffsanddirectcontrols.Manyofthedirectcontrols havebeenphasedout.However,ifapplicable,importpermitsmaybe obtainedfromtheDirectorateofImportandExportControlinPretoria. Exportcontrolsareimposedtopreventlocalshortagesofgoods,but,in viewofthecountryspolicyofexportpromotion,thesecontrolsarekeptto aminimum. CustomstariffsaresetforthinaccordancewiththeBrusselssystemof nomenclature. Thereisfreeandvirtuallyunimpededexchangeofgoodsbetweenthe memberstatesoftheSACUBotswana,Lesotho,Namibia,SouthAfrica andSwaziland.Thesecountriesapplythetariffsandregulationsinforcein SouthAfrica. 3.8InvestmentIncentives TheDepartmentofTradeandIndustryprovidesalargenumberof incentives,loansandrebates,includinginvestmentsupport,small businessdevelopment,empowermentfinanceandexportassistance. Legislationwaspassedin2000providingfortheestablishmentof IndustrialDevelopmentZones.Thesezonesarepurposebuiltindustrial estatesthatarelinkedtoaninternationalportorairportwhichcontainsa controlledCustomsSecuredArea(CSA).Eachzoneoffersdirectlinksto aninternationalportorairport;adedicatedcustomssupportservicesto expediteexciseinspectionandclearing;dutyfreeimportationof productionrelatedrawmaterialsandinputs;azerorateofVATon suppliesprocuredfromSouthAfricansources;importstatusforfinished goodswhicharesoldintoSouthAfrica. 3.9Governmentincentiveschemes ThereareIndustrialDevelopmentZonesatEastLondonandCoega(near PortElizabeth)intheEasternCapeandatJohannesburgInternational AirportandRichardsBayinKwaZuluNatal.TheDepartmentofTrade andIndustrynowoperatesseveralExportMarketingandInvestment AssistanceSchemesavailabletoqualifyingexporterswhoareregistered withtheDepartment. ThePrimaryExportMarketResearchSchemeprovidesexporterswith somereimbursementofcostsincurredindevelopingnewexportmarkets. Assistanceprovidedmayincludeairfares,asubsistenceallowance,and

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assistancewiththetransportofsamples,withtheproductionofmarketing materialsandwithproductregistration. TheOutwardSellingTradeMissionSchemeassistsexporterstomake contactwithforeignbuyersbyprovidingassistancewithflights,a subsistenceallowanceandthetransportofsamples.Foratrademissionto qualifyforassistanceitmustbeorganisedbyaqualifyingorganisation. TheInwardBuyingTradeMissionSchemeprovidesassistanceto organisersofinwardbuyingtrademissionssothatprospectivebuyerscan makecontactwithSouthAfricanexporters.Foratrademissiontoqualify forassistanceitmustbeorganisedbyaqualifyingorganization. TheExhibitionAssistanceSchemeassistsindividualexporterstointroduce theirproductstoforeignmarketsbyparticipatinginexhibitions. TheForeignDirectInvestmentResearchSchemepartiallycompensates exportersforcostsincurredinresearchingnewforeigndirectinvestment intoSouthAfricathroughvisitstopotentialinvestorsinforeigncountries. Otherschemesprovideassistanceforexporterstoparticipateincertain tradefairsandexhibitionsabroad,totakepartinoutwardinvestment recruitmentmissionsorinwardinvestmentmissions.TheDepartmentalso providesassistancetospecificindustrysectorstodevelopnewexport markets,broadentheexportbase,andincreasetheparticipationofblack economicempowermentcompaniesandsmallbusinessintheexport process. 3.10Exportcreditincentives TheIndustrialDevelopmentCorporationmakesfinancingavailableat reducedratesforselectedexpansionschemesthatareexpectedtoresultin increasedforeignexchangeearnings.Financingofcreditforexportersof capitalgoodsisalsoavailablethroughtheIDCorprivatesectormerchant banksatreducedrates. 3.11Customsandexcisedutyrefunds,drawbacksandrebatesprovision ismadeintheCustomsandExciseActforgeneralrefundsaswellasa largenumberofspecificdrawbacksandrebatesofcustomsandexcise dutiestoexporters.Theseconcessionsareavailabletomanufacturersas wellastomerchantswhoimportgoodsforreexport. 3.12ExportcreditinsurancetheCreditGuaranteeInsuranceCorporation of Africa Limited provides substantialexport creditinsuranceand export projectinsuranceagainstpoliticaland/orcommercialrisks.Theguarantees are reinsured by the Department of Trade and Industry. To qualify, the

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exporttransactionmustincludesubstantialSouthAfricancontentofgoods and/orservices.

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4.

Setting up a Business

Thereareanumberofformsinwhichpersonsmayelecttocarryon businessortoinvestinSouthAfrica.Themostimportantare: individuallyasasoleproprietor; jointlywithothersinpartnership; throughaclosecorporationwhereonlynaturalpersonsmaybe involved; throughaprivateorpubliccompany; bytheregistrationofajuristicpersonincorporatedoutsideSouth AfricaasanexternalcompanyinSouthAfrica.Investmentsand enterprisescanalsobecarriedonthroughabusinesstrust.This involvesthepassingofownershipinassetstotrusteeswhothen holdthoseassets,asaseparateestatedistinctfromtheirown personalestates,forthebenefitofthebeneficiaries.Trustsareoften usedtoattainaformoflimitedliabilitywithouttheformalitiesof incorporatingaclosecorporationorcompany.Theyarealsoused forthepurposesofprotectingassetsbyseparatingtheassetsfrom thoseofthebeneficiaries.Trustscanplayanimportantrolein estateplanningforindividuals. 4.1SouthAfricanInvestments ExceptforthecomprehensiveprovisionsoftheBlackEconomic EmpowermentlegislationinSouthAfrica,andrelatedindustrycharters whichgovernandregulateblackparticipationintheownershipand managementofbusinessesinthiscountry,anindividualoranyoneor moreindividualmembersorshareholdersofaclosecorporationora companyneednotbecitizensoforresidentinSouthAfrica.Saveforsuch empowermentprovisions,thereisalsonorequirementthatanyofthe directorsofcompaniesshouldbecitizensoforresidentinSouthAfrica. Thenonresidentstatusofindividuals,shareholdersordirectorsdoes, however,haveanumberofconsequences.Forexample: certaininvestmentsheldbynonresidentsarerequiredtobe endorsedasnonresidentintermsoftheexchangecontrol regulations therearelimitsonthelocalborrowingpowersofnonresidents whichinthecaseofjuristicpersonsapplywhereownershipor controlof75%ormoreoftheequityorvotesisinthehandsofnon residents thesocalledthincapitalisationrulesmaybeappliedtolimitthe amountofinterestchargedinrespectoffinancialassistance,such asaloan,grantedbynonresidentstoconnectedorrelated companies(asdefined)inSouthAfrica,specificallywhereadebt:

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equityratioof3:1isnotobserved theantitransferpricingprovisionscontainedintheIncomeTax Actmaybeappliedinrelationtogoodsorservicesacquiredor suppliedunderaninternationalagreement(whichisdefined), concludedbetweenconnectedpersons thenationalityofnonSouthAfricandirectorsmustbedisclosedon alldocumentswheredirectorsnamesarerequiredtobelisted,for exampleonletterheads.

Inaddition,otherrequirementsmustbemet.Forexample: tradersarerequiredtoregisterasvendorsintermsoftheValue AddedTax(VAT)Act,1991wheretheirincomeexceedsaspecified amount.WhereatraderisnotaSouthAfricanresident,aperson residentinSouthAfricamustbenominatedastherepresentativeof thatpersonforVATpurposes; closecorporations,companiesandexternalcompaniesmust: appointanaccountingofficerorauditorresidentinSouthAfrica; appointarepresentativeresidentinSouthAfricatoreceiveservice ofdocumentsandtoactasthePublicOfficerforliaisonpurposes withtheSouthAfricanRevenueService;andhavearegistered addressinSouthAfrica. 4.2BusinessEntities 4.2.1Individual/SoleProprietor Therearenoadditionalformalitiesrequiredwhereapersoncommences businessasasoleproprietor.Thebusinessisnotaseparatelegalperson andalltransactionsareregardedashavingbeenconcludedbytheperson concerned.Accordingly,thesoleproprietordoesnotenjoylimitedliability. 4.2.2PartnershipsandJointVentures Ingeneral,apartnershipmaybeformedbetweenatleast2andnomore than20persons.Thisnumbermaybeincreasedwiththepermissionofthe relevantMinister.Therearenoformalitiesrequiredtoformapartnership andapartnershipwillexistifthefollowingrequirementsaremet:twoor morepersonsagreetoactjointlytopursueaventure;theyeachmakea contribution(whetherinmoneyorotherwise);thepurposeoftheirventure istomakeaprofit;andtheydividethatprofit(orloss)betweenthem. Althoughnoformalitiesarerequired,itisusual,ifnotessential,thata writtenagreementbeconcluded.Adistinctionisoftendrawnbetweenthe termpartnershipandthetermjointventure.Althoughjointventure agreementsmaycontainastatementthattheyarenottobeconstruedasa partnership,jointventuresgenerallymeetalltherequirementsofa partnershipandmay,whereappropriate,betreatedasaformof partnership.Thetermjointventureisusuallyusedwheretheparties

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concernedintendtopursueasingleventureonly,forexample,inthe miningindustryjointventuresareoftenformedforthepurposeof prospectingformineraldeposits.Ifaviabledepositisfoundthe exploitationofthemineralsisthereaftercarriedoutbyacompanyin whichthejointventuremembersbecomeshareholders.Althoughthereare certainspecialformsofpartnership,partnershipsdonotgenerallyoffer limitedliabilityandduringtheexistenceofthepartnershipthepartners arenormallyjointlyandseverallyliableforthedebtsandlossesofthe partnership.Ifapartnershipissequestrated,theindividualestatesofthe partnersareautomaticallyandsimultaneouslysequestrated.However, shouldapartnergiveanundertakingtodischargethepartnershipdebts andprovidesecurityforsuchdischarge,thepartnersprivateestatewill notbesequestrated.Jointandseveralliabilitymeansthatanyoneofthe partnersmaybecompelledtopaythewholeofthedebt.Ifapartnerhas paidmorethanitsshareofthedebts,ithasarightofrecourseagainstthe otherpartner(s)fortheexcess. 4.2.3CloseCorporations Thisformofbusinessentitywasintroducedin1984.Itisintendedtoserve smallerbusinesses,extendinglimitedliabilityandotheradvantagesof corporateidentitywithoutrequiringcompliancewithalltheformalitiesof theCompaniesAct,1973.Aclosecorporationexistsasaseparatelegal entityfromitsmembersandhasanunlimitedlifespan. Membershipisrestrictedtotenmembers.Legislationrecognisesthe personalnatureoftherelationshipbetweenmembersofaclose corporation.Thusthecourtshaveextensivepowerstoregulatethe relationshipofthemembersshouldtherebeadispute,includingwhere appropriate,thepowertoorderonemembertosellitsinterestintheclose corporationontermsfixedbythecourt.Thelimitedliabilityofmembers maybelostifcertainoftheprovisionsoftheCloseCorporationsAct,1984 arecontravened.Membersinaclosecorporationcommonlyregulatetheir relationshipbywayofanassociationagreement.Theassociation agreementmayvarysome,butnotall,oftheprovisionsoftheClose CorporationsAct,1984.Aclosecorporationdoesnothaveanydirectors andthereis,therefore,nopracticalseparationbetweenownershipand management.Itispossibletoconvertaclosecorporationintoacompany andviceversa. 4.2.4Companies AllcompaniesareregulatedintermsoftheCompaniesAct,1973as amended.TheActismodelledverycloselyonEnglishlaw,althoughthere areseveralimportantdifferences.AfairlycomprehensiverevisionofSouth Africancompanylawiscurrentlybeingconsideredsoastobringitmore intolinewithinternationalpractices,butthechangesareunlikelytobe

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implementedforanotheryearorso.Asinthecaseofclosecorporations,a companyexistsasaseparatelegalentityfromitsshareholders/members andhasanunlimitedlifespan.But,unlikeclosecorporations,bothnatural andjuristicpersonsmaybecomemembers.Furthermore,sincecompanies musthavedirectors,thereisaseparationbetweenownershipand management. ShareCapital Generallyspeaking,allcompanieshaveasharecapitalconsistingofshares eitherhavingaparvalueornoparvalue.Differentclassesofsharemaybe created.Eachdifferentclassofsharemusthaverightsthatdifferfromthe otherclassesinoneormorerespects,whichmayincludevotingrights.All issuedsharecapitalmustbefullypaidup.Acompanymaybuybackits ownshareswithincertainlimits,butnormallyitisnotpermittedtogive financialassistancedirectlyorindirectlyforthepurchaseofitsshares. TherearenominimumsharecapitalrequirementsinSouthAfrica. Companiesmaythusbeformedwithanominalsharecapital.However,on incorporation,thedirectorsofthecompanymustlodgeastatementthat thecapitalofthecompanyisadequateforitspurposesormuststatehow thecompanyproposestoprocuresufficientfundstocarryoutitsbusiness. Stampdutyispayableontransfersofsharesbutnotontheissueofshares. Incorporation AcompanyisincorporatedbylodgingitsMemorandumandArticlesof Associationandvarioussupportingdocumentsandcompanyformswith theRegistrarofCompanies.Acompanymaytradeonlywhenthe Registrarhasissueditwithacertificatetocommencebusiness.Onceallthe documentshavebeenlodgedthereisonlyaminimaldelayinthecompany beingincorporatedandacertificatetocommencebusinessbeingissued.A companysmainbusinessmustaccordwiththatwhichisdescribedasits mainbusinessinitsMemorandumofAssociation.Companiesmayeither beprivatecompanies(designatedbythewords(Pty)Ltdor (Proprietary)Limitedafterthename)orpubliccompanies(designated bythewordLtdorLimitedafterthename),ormaybeincorporatedas companieslimitedbyguaranteewhichareassociationsnotforgain,the businessofwhichiscarriedonforaltruisticorphilanthropicorspecial purposes. PrivateCompanies Aprivatecompanymaybeestablishedbyoneormorepersonsprovided thatitdoesnothavemorethan50shareholders.Althoughaprivate companyisobligedtoprepareauditedfinancialstatementsonanannual

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basis,thesefinancialstatementsdonothavetobelodgedwiththe RegistrarofCompaniesanddonotthereforebecomepublicdocuments. Therighttotransferthesharesofaprivatecompanymustberestrictedby itsMemorandumandArticlesofAssociation.Shareholderscommonly regulatetheirrelationshipbywayofashareholdersagreement.Save whereanyprovisioniscontrarytotheCompaniesAct,theshareholders mayagreethatasbetweenthemselvescertainoftheprovisionsofthe MemorandumorArticleswillnotbebindingonthem.Usuallytheywill agreetoprocurechangestotheMemorandumandArticlestogiveeffectto theiragreement. PublicCompanies Apubliccompanyrequiresaminimumof7shareholders.Public companiesarerequiredtolodgeauditedfinancialstatementswiththe RegistrarofCompanieseachyeartomakesuchstatementsavailablefor inspectionbymembersofthepublicattheregisteredofficeofthe company.Onlyapubliccompanymay,butisnotobligedto,andofferits sharesordebenturestothepublicandonlyapubliccompanymaybe listedintermsoftheStockExchangesControlAct.Inordertoobtaina listingthecompanymustcomplywiththelistingsrequirementsofthe JohannesburgStockExchange(JSELimited).Apublicofferwillrequirea detailedprospectuswhichmustcontainalltheinformationrequiredbythe CompaniesAct,exceptwhereminimumsubscriptionsexceedaprescribed amount,ortheofferisaprivateplacement.Anelectronicclearingand settlementsystemforequitysecuritieslistedontheJohannesburgStock Exchange,namelyShareTransactionsTotallyElectronic(STRATE)has beenintroduced.Thisinvolvesthedematerialisationofscripi.e.the substitutionofapapersharecertificatewithanelectronicrecordof ownership. ExternalCompanies SouthAfricanlawrecognisesthecorporateidentityofjuristicpersons incorporatedoutsidetheRepublicofSouthAfrica.However,whereany companyorotherassociationofpersonsincorporatedoutsidetheRepublic ofSouthAfricaestablishesaplaceofbusinessintheRepublicofSouth Africa,itisobligedtoregisterasanexternalcompany.Placeofbusiness isdefinedasanyplacewherethecompanytransactsorholdsitselfoutas transactingbusiness.Anexternalcompanymustregisterwithin21daysof establishingitsplaceofbusiness.Registrationinvolvesthelodgingofa notariallycertifiedcopyoftheMemorandumandArticlesofAssociation ofthecompany.Ifthatdocumentisnotinoneoftheofficiallanguagesof theRepublicofSouthAfricaitmustbeaccompaniedbyasworn translationintooneoftheofficiallanguages.Inaddition,theexternal companymust:givenoticeofitsregisteredandpostalofficeinSouth

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Africaanditsfinancialyearend;appointanauditorwhopractisesin SouthAfrica;givefulldetailsofalldirectors;andnominateaperson residentinSouthAfricatoacceptserviceofdocumentsonbehalfofthe company. Anexternalcompanymustfileacopyofitsannualfinancialstatements withtheRegistrarofCompaniesinrespectofitsSouthAfricanbranch,as wellasacertifiedcopyoftheforeignfinancialstatementsofthecompany. Exemptionsmaybegrantedundercertaincircumstances.Theexternal companywillbesubjecttotaxonitsSouthAfricanbranchprofitsata higherratethanSouthAfricancompaniesbutwillbeexemptfromthe SecondaryTaxonCompanies.Theresultisthattheeffectivetaxrate shouldbelowerforthebranchthanwouldbethecaseforalocalcompany.

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5.

Labour

Thelegislativeenvironmentgoverningtherelationshipbetweenemployer andemployeehasundergoneaprocessofmajorreformoverthepast numberofyears.TheGovernmenthasattemptedtoobtainconsensuswith itssocialpartners,BusinessandLabour,ontheprocessofaligningSouth AfricanemploymentlegislationwithInternationalLabourOrganisation recommendationsandconventions.Thisprocesstookplaceunderthe auspicesofastatutorytripartiteforum,theNationalEconomic DevelopmentandLabourCouncilandhasresultedinanumberofkey statutesbeingenacted.Theimpactofthesestatutesisbrieflyexplained below. LabourRelationsAct ThepurposeoftheLabourRelationsAct,1995(LRA)istoadvance economicdevelopment,socialjustice,labourpeaceandthe democratisationoftheworkplaceTheLRAprovidesaframeworkwithin whichemployees,tradeunions,employersandemployerorganisations canbargaincollectivelyonwages,termsandconditionsofemployment andothermattersofmutualinterest.TheLRAisspecificallydesignedto promoteorderlycollectivebargainingatindustrylevel,particularlyby meansofbargainingcouncilsthathavethepowertoconcludeandenforce collectiveagreements.TheLRAalsopromotesemployeeparticipationin decisionmakingintheworkplacethroughconsultationandjointdecision making.TheLRAprovidessimpleproceduresfortheresolutionofmost labourdisputes,includingunfairdismissalandunfairlabourpractice disputes.Thesecanberesolvedthroughstatutoryconciliationand arbitrationbytheCommissionforConciliation,MediationandArbitration (CCMA),orthroughindependentalternativedisputeresolutionservices accreditedforthispurpose.TheLabourCourtandtheLabourAppeal Courtaretaskedwiththeadjudicationanddeterminationoflabour disputesofamoreseriousnature.TheLabourCourthasthestatusofan ordinaryHighCourtandappealsagainstLabourCourtjudgmentsare dealtwithbytheLabourAppealCourt,buttheSupremeCourtofAppeal hasjurisdictiontohearappealsfromtheLabourAppealCourt.TheLRA alsocontainsprovisionsaimedattheprotectionofemployeesintheevent ofthetransferofabusinessorthereductionofstaffonthegroundsofthe operationalrequirementsoftheemployer BasicConditionsofEmployment TheBasicConditionsofEmploymentAct,1997(BCEA)prescribes minimumstandardsofemployment.AlthoughtheBCEAallowsfora certainmeasureofvariationofsomeofitsprovisions,importantminimum

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standardsmaynotbevariedbyagreement.TheBCEAregulatesworking timeinrespectofcertaincategoriesofemployeessuchasmanagersand employeeswhoearnlessthananamountdeterminedbyGovernment Gazette,byinteraliaprovidingforthemaximumordinaryhoursofwork perweekat45hoursanddeterminingpaymentforovertimework.The minimumextentofannualleave,familyresponsibilityleaveandmaternity leaveprovisionsinrespectofalltheemployeesareregulatedbytheBCEA. TheBCEAalsoplacescomprehensiveadministrativerequirementson employers.TheBCEAcreatesapermanentcommissionwithbroadpowers tosetminimumstandardstailoredprimarilyforthoseindustrieswhere collectivebargainingdoesnottakeplace.TheBCEAgivestheDepartment ofLaboursinspectorateextensivepowersofinvestigationandactionwith regardtobreachesofminimumemploymentstandards.TheCCMAplays amajorroleinthedeterminationofdisputesandoffencesinrespectof allegedbreachesofemploymentstandards. EmploymentEquityAct TheEmploymentEquityAct,1998(EEA)waspromulgatedtoachieve equalityintheworkplacebypromotingequalopportunityandfair treatmentinemploymentthroughtheeliminationofunfairdiscrimination. ThefurtherpurposeoftheActistoimplementaffirmativeactionmeasures toredressthehistoricaldisadvantagesinemploymentexperiencedby designatedgroups(definedasblackpeople,womenandpeoplewith disabilities),inordertoensuretheirequitablerepresentationinall occupationalcategoriesandlevelsintheworkforce.Extensivefinesare imposeduponemployerswhodonotcomplywiththetransformation provisionsoftheEEA. HealthandSafety TheCompensationforOccupationalInjuriesandDiseasesAct,1993 providesforcompensationforinjury,diseaseordeatharisinginthework environmentCompensationispaidoutofpublicfundsandnoactionlies againsttheemployerwhichcontributestothosefunds.TheMineHealth andSafetyAct,1996andOccupationalHealthandSafetyAct,1993place dutiesonemployerstoensureasafeworkingenvironmentasfarasis reasonablypracticable.FailuretocomplywiththeprovisionsoftheseActs isacriminaloffence. HumanResourcesDevelopment AneedhasbeenidentifiedtodeveloptheskillsofSouthAfricas workforce,inordertoenablethecountrytoattractinvestmentandto competeglobally.TheSkillsDevelopmentAct,1998andSkills DevelopmentLeviesAct,1999havebeenpromulgatedtoachievethis purpose.Employersarerequiredtopayanamountequaltoacertain

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percentageofthevalueoftheirpayrollstothegovernment.Thesefunds arethenappliedbyeitherthegovernmentorindustrybasededucational andtrainingauthoritiestotrainworkers.Thisisconsistentwiththegoalof improvingtheproductivityoftheworkforceforthesakeof competitiveness.Businessesthatundertakeapprovedtrainingcanapply forrefundofportionofthelevypaid. Conclusion SouthAfricahasasophisticatedlegislativenetworkthatregulates employmentmatters.Thishastobetakenintoaccountwhendoing businesswithSouthAfrica.Inthemediumtolongterm,itisexpectedthat thelegislativeframeworkwillgoalongwaytowardsestablishinga competent,stableandproductiveworkforce.

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6.

Taxation

Residentsaretaxedontheresidencebasis,whilenonresidentsaretaxed onthesourcebasis.Theeffectonnonresidentsisthatanyincomeaccruing fromaSouthAfricansourceistaxableintheRepublic.Residentsaretaxed ontheirworldwideincome,withreliefinrespectofforeigntaxespaidon incomefromforeignsources,uptotheamountoftheequivalentSouth Africantaxpayableonsuchincome.Anaturalpersonmayqualifyasa residentinoneoftwoways: bybeingordinarilyresidentintheRepublic.IntermsofSouth Africancaselaw,apersonisordinarilyresidentinthecountryto whichthatpersonwouldnaturallyandasamatterofcoursereturn fromhiswanderings.Itistheplacethatmaymostaptlybedescribed asthepersonsrealhome; byqualifyingunderthephysicalpresencetest.Apersonwhoisnot ordinarilyresidentwillbedeemedtobearesidentifheorsheis physicallypresentinSouthAfricaformorethan91daysineachofthe currentandprecedingfiveyearsandforaperiodorperiodsexceeding 915daysinaggregateduringtheprecedingfiveyears.Acompany, trustorsimilarentityisdeemedtobearesidentifitisincorporated, established,formedorhasitsplaceofeffectivemanagementinSouth Africa.Theresidencestatusofapersonunderanydoubletaxtreaty will,however,takeprecedenceoverthisdefinition.Whereoneormore residentstogetherholdmorethan50%ofthevotingorparticipation rightsinaforeigncompanythenitisacontrolledforeign company(CFC)inrelationtothoseresidents.TheincomeofaCFCis imputedtothecontrollingholdersinproportiontotheirholdings, subjecttocertainexclusionsandtaxcreditswhereapplicable.Related tothisprovision,foreigndividendsareexemptfromtaxinSouth Africawheretheyarereceivedbyresidentshareholdersholdingin excessof20%oftheequitysharecapitalandvotingrightsofthe companydeclaringthedividend.Dividendsreceivedbyresidents holdinglessthan20%ofsuchcapitalwillbetaxableinSouthAfrica subjecttoataxcreditforforeignwithholdingtaxespayablebythe recipientshareholder.Residentshareholdersholdingfrom10%to20% oftheparticipationrightsorvotesintheforeigncompanymayelecton anannualbasisthattheirattributableshareofthatcompanysnet incomebetreatedastaxableincomeinSouthAfrica(asiftheyheld morethan50%ofsuchrightsorvotes).Inthiseventtheywillgetthe benefitofataxcreditfortheforeigntaxespaidbysuchcompanywith respecttotheirproratashareofthatincome.Trustsarenotcoveredby theCFCrules,butprovisionsexisttoachievesubstantiallythesame

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effectwheretrustsareusedforoffshoreactivitiesandcapitalorincome isvestedinabeneficiaryresidentinSouthAfrica,orinanonresident beneficiaryinconsequenceofanydonation,settlementorother dispositionmadebyaresidentofSouthAfrica. CapitalGainsTax Since1October2001acapitalgainstax(CGT)hasappliedinSouthAfrica. Subjecttoanumberofexemptions,limitationsandrolloverprovisions,the taxisimposedbyincluding,intaxableincomeondisposal,gainsoverthe valueoftheasseton1October2001ortheactualcostinrespectofassets acquiredafterthatdate: inthecaseofnaturalpersons,25%ofanygainondisposal.The effectiverateoftaxforsuchpersonsisthus10%atthemaximum marginalrateof40%;and forothertaxableentities,50%ofanygainondisposal. Theeffectiverateoftaxforcompaniesisthus14%and20%fortrusts. Capitallossesmayonlybesetoffagainstcapitalgains,sothatifinany yearthelossesexceedthegains,thedifferenceiscarriedforwarduntil therearegainsagainstwhichtosetthemoff.Thegainorlossineach caseisthedifferencebetweenthebasecostandtheproceeds.Basecost isthevalueat1October2001wheretheassetwasheldatthatdate, determinedbyaformalvaluationoronatimeapportionmentbasis,or bydeeming20%oftheproceedstobethebasecost,orthecostof acquisitionwhereitwasacquiredafterthatdate.Wherethestatusofa personoranassetchanges(seethelistofdeemeddisposalsbelow),the basecostafterthechangeisthemarketvalueonthedateofthechange. Inallcases,otherexpensesofacapitalnatureincurredafteracquisition areaddedtothebasecost.Proceedsaretheamountsaccruedon disposal.Provisionsareinplacetopreventthemanipulationofthe proceedsofdisposalsbetweenconnectedpersons.Suchdisposalsare deemedtohavetakenplaceatmarketvalueDisposalforCGT purposesmeansmorethanmeresale.Disposalsinclude: inbroadterms,anyactoroccurrencethataffectsthevalueofthe patrimonyofaperson; death; becomingorceasingtobearesident; convertingacapitalassetintotradingstockandviceversa; convertingacapitalassetintoapersonaluseasset(whichis exemptfromCGT)andviceversa; capitalisationofloans,waiversofclaimsonloanaccount,and variationsoftherightsattachingtosharesincertaincircumstances.

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ThefirstR1.5millionofthegainonthedisposaloftheprimaryresidence ofanaturalpersonisexempt,asisthefirstR15000ofgainseachyear.In theyearofdeath,thefirstR120000isexempt.Therearespecialprovisions relatingtogainsinforeigncurrencies.Inessencetheyhavetheeffectof takingintoaccountforeignexchangegainsandlossesforindividuals,but notforcompanies.Thelatteraresubjecttonormaltaxontheresultsof theirforeignexchangegainsandlosses. TheCGTlegislationisverycomplexandadocumentsuchasthiscannot dojusticetoit.Amoredetaileddescriptionisavailablefrommembersof ourtaxdivision. TaxRates Companiesandclosecorporationsaretaxedataflatrateof28%on income.ThereisalsocurrentlyaSecondaryTaxof10%ondeclared dividendsresultinginaneffectiverateof34.54%inrespectofdistributed profits.Externalcompaniesaretaxedonbranchprofitsataflatrateof33% onincome.TheSecondaryTaxonCompaniesdoesnotapplytoexternal companiesSmallbusinesscorporations(definedbelow)aretaxedat0%on thefirstR46000oftaxableincome,10%uptoR300000and28%thereafter. Individualspaytaxbasedonaslidingscalewithamaximummarginal ratecurrentlyof40%.Trustsaretaxedatarateof40%onalltaxable income. CapitalAllowances Expenditureisingeneraldeductibleifitisnotofacapitalnatureandhas beenincurredintheproductionofincome,andthenonlytotheextentthat itislaidoutorexpendedforthepurposesoftrade.Limitedallowancesin respectofcapitalexpenditurearegranted.Theseinclude: WearandtearAnannualwriteoffofpartofthecostorvalueofa capitalasset.Theamountoftheallowanceisatthediscretionofthe SouthAfricanRevenueService(SARS)andtheperiodofthewrite offdependsonthetypeofasset.Thewearandtearallowanceisnot grantedonstructuresofapermanentnature(suchasbuildings)or anyassetswhicharewrittenoffintermsofthespecialdepreciation allowanceprovisionsoftheIncomeTaxActreferredtobelow. IndustrialbuildingsAnannualallowanceexpressedasa percentageofthecostofbuildingsorimprovements(excludingthe land)isgrantedinrespectofbuildingsusedwhollyormainlyfor commercialpurposesorinaprocessofmanufactureorasimilar process.Thepercentageoftheallowancevariesaccordingtothe dateofcommencementoftheerectionof,orimprovementsto,the buildings.Therateapplicabletoerection/improvements commencedbetween1July1996and30September1999,and

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buildingsbroughtintousebefore31March2000,is10%per annum.Thecurrentrateforbuildingsbroughtintouseafterthat dateis5%perannum. NewraillocomotivesandwagonsAnallowanceof20%per annumoncostisgranted. NewquaywallsandotherportfacilitiesAnallowanceof5%per annumisgranted. Environmentalcapitalexpenseswillqualifyforallowancesnot yetannounced. HotelsAnallowanceof5%perannumofthecostofthatportion ofthebuildingsorimprovementsusedforthepurposesofthe taxpayerstradeasahotelkeeperisgrantediftheerectionor improvementwascommencedonorafter4June1988(ifthe erectionorimprovementcommencedbefore4June1988the allowanceis2%perannum).Improvementstoanexistinghotel buildingwhichdonotextendtheexteriorframeworkofthe buildingandwhichwerecommencedafter17March1993are subjecttoanallowanceof20%perannum.Anannualallowanceof 20%isalsograntedonneworusedhotelequipment. AircraftAnallowanceisgrantedof20%perannumofthecostof aircraftacquiredonorafter1April1995forthepurposeofany trade. ShipsAnallowanceisgrantedof20%perannumofthecostof shipsacquiredonorafter1April1995forthepurposeofanytrade. IntellectualpropertyInrespectofsuchpropertyacquiredbefore 29October1999,thecostmay,atthediscretionoftheSARS,be writtenoffoverthelesseroftheestimatedlifeofthepropertyor25 years.Inrespectofexpenditureincurredafterthatdatebutbefore anyyearofassessmentcommencingonorafter1January2004: expenditureonpatents,trademarks(otherthanacquisition), copyrightsandsimilarpropertymaybewrittenoffover20years; expenditureondesignsandsimilarpropertymaybewrittenoff over10years;expenditureontheacquisitionoftrademarksmay notbewrittenoffatall.Inrespectofyearsofassessment commencingonorafter1January2004,thecostofacquiringanyof thecategorieslistedabovemaybewrittenoffasindicated.Thecost ofresearchanddevelopmentconductedinSouthAfricathatresults ormayresultinanidentifiableintangibleassetmaybewrittenoff asfollows:buildings,machinery,plantandothercapitalassets: 40%intheyearoffirstuseand20%perannumthereafter;other expenditure:intheyearinwhichitisincurred. LeaseholdimprovementsThecostofleaseholdimprovements effectedbythelesseemaybewrittenoffovertheperiodofthe lease,providedthelesseristaxableonthevalueofthe

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improvements,andprovidedtheimprovementsarecarriedoutin termsofanobligationunderthelease. CertaincommercialandresidentialbuildingsIfbuildingsin certaindesignatedmunicipalareas,usuallyCBDsinneedof revival,arerefurbished,thecostmaybewrittenoffat20%per annum.Ifnewbuildingsareconstructedinsuchareas,thecost maybewrittenoffat20%intheyearoffirstuseand5%perannum thereafter. PlantandmachineryThereisaspecialdepreciationallowance expressedasapercentageofthecostofplantandmachineryinthe yearitisbroughtintouseforthefirsttimebythetaxpayerforthe purposeoftrade(otherthanminingorfarming)andinsucceeding years,anduseddirectlyinaprocessofmanufactureorsimilar process.Theallowanceispresently40%intheyearinwhichitis firstbroughtintouseand20%perannumforthenextthreeyears. SmallbusinesscorporationsThecostoftheplantandmachinery broughtintousebyasmallbusinesscorporation(SBC)andusedin processofmanufacturemaybewrittenoffinfullintheyearoffirst use.AnSBCisacompanyorclosecorporationallofwhose membersarenaturalpersonswithnootherinvestmentsin companies(otherthaninlistedsharesorcollectiveinvestment schemes).ThegrossincomeoftheSBCmaynotexceedR14million, notmorethan20%ofwhichmayconsistofinvestmentincome. StrategicindustrialprojectsWhereacompanycarriesona strategicindustrialproject(SIP),itmaywriteoff100%ofthecostof industrialassets,uptoalimitofR600million,intheyearoffirst usewheretheSIPhaspreferredstatus,and50%,uptoalimitof R300million,wheretheSIPhasnonpreferredstatus.Thevalue oftheinvestmentinassetsmustexceedR50millionovernotmore thanfouryears.Ministerialapprovalisrequired,andapplications aredealtwithonacasebycasebasis.Intheyearofdisposalor scrappingofanyassetusedforthepurposesoftrade,an adjustmentrecoupmentofallowancesondisposalislimitedtothe initialcostoftheasset.Itshouldbenotedthatforeignlosses incurredbyaresidentmaynotbesetoffagainstisallowedtothe extentthatthetaxvalueexceedstheproceeds.Anythedomestic profitsofthetaxpayer.Thereareprovisionstopreventtheabuseof allowancesbymeansofdisposalsbetweenconnectedpersons (thisisabroadlydefinedexpressionintheIncomeTaxAct).

TransferPricingandThinCapitalisationRules TransferpricingTheantitransferpricingprovisionscontainedin theIncomeTaxActmaybeappliedwheregoodsorservicesare suppliedoracquiredintermsofaninternationalagreement

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concludedbetweenconnectedpersons(essentiallygroup companies).Ifthepriceofthegoodsorservicesisotherthanit wouldbebetweenpersonstransactingwitheachotheratarms length,SARSmayadjusttheconsiderationinthedeterminationof thetaxableincomeofeithertheacquirerorthesupplier. ThinCapitalisationThethincapitalisationrulesmaybeapplied bySARSwherefinancialassistance,suchasaloan,advanceor debt,ortheprovisionofanysecurity,isgrantedbyanonresident investortoaresidentinvesteewhoiseitheraconnectedperson,or acorporateentityinwhichtheinvestorhasadirectorindirect interestentitlingittoparticipateinnotlessthan25%ofthe dividends,profits,capitalorvotes.Thethincapitalisationrules, whenapplied,disallowthedeductibilityofinterestpaidbythe SouthAfricanresidenttotheforeignlender,totheextentthatsuch interestisconsideredtobeexcessivebytheSARS.Inbroadterms, theruleswillnotbeappliedifthedebt:equityratiofallswithina safehavenratioof3:1.Inotherwords,wherethefinancial assistancegrantedbythenonresidentinvestordoesnotexceed threetimesthefixedcapital(beingessentiallysharecapital,share premiumandaccumulatedprofits)oftheresidentinvestee;and theinterestratedoesnotexceedtheweightedaverageofprime plus2%forSouthAfricanRanddenominatedloans,ortherelevant weightedaverageinterbankrateplus2%forloansdenominatedin othercurrencies.Theserulesdonotapplytofinancialassistance grantedbyaparentcompanytoitsbranchoperatingasan externalcompanyinSouthAfrica.

WithholdingTaxes Awithholdingtaxof12%isdeductiblefromgrossroyaltiespayableto nonresidents.Awithholdingtaxof15%isalsoleviedontheincomeof visitingentertainersandsportspersons.Anewwithholdingtaxofbetween 5%and10%ontheproceedsofthesaleofimmovablepropertybyanon residentwillsoonbeapplicable.SouthAfricahasenteredintoanumberof doubletaxationtreatieswithforeigncountries(see4.6below).These agreementsoftenvarytheprovisionsconcerningthewithholdingtaxon royaltiesandmaybeanimportantconsiderationrelativetotheoffshore shareholdingandfundingstructureofaSouthAfricancompany. PassiveInvestmentIncome DividendsLocaldividendsreceivedbyataxpayerarecurrently exemptfromtax.Foreigndividendsreceivedbyresidentsare taxableinSouthAfricaunlesstherecipient(ortherecipientsgroup

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ofcompanies)holdsinexcessof20%ofthetotalequityshare capitalofthecompanydeclaringthedividend,ortheforeign profitsgivingrisetothedividendhavealreadybeentaxedinSouth Africa,orthedividendisdeclaredbyacompanyenjoyingadual listingbothinSouthAfricaanditscountryofdomicile,andin excessof10%ofthesharecapitalofthatcompanyisheldby residentsofSouthAfrica. InterestInterestpayabletononresidentsisexemptfromnormal taxinSouthAfricaprovidedthat: interestpayabletopersons(otherthancompanies) ordinarilyresidentoutsideSouthAfricawillonlybeexempt ifpayabletoanaturalpersonwhoisphysicallyabsentfrom SouthAfricaforatleast183daysduringthetaxyear; interestpayabletoacompanymanagedandcontrolled outsideSouthAfricawillonlybeexemptiftheinterestisnot effectivelyconnectedwiththebusinesscarriedonbysuch companyinSouthAfrica. Inthecaseofallpassiveinvestmentincome,reliefis availableinrespectofforeigntaxespaidontheincome.

SecondaryTaxonCompanies(STC) SecondaryTaxonCompanies(STC)appliestocompaniesandclose corporations,butnottothelocalbranchesofforeigncompanies.Thenet amountofadividenddeclaredbyacompanyandaclosecorporation)is subjecttoSTCatarateof10%.Thenetamountistheamountbywhich dividendsdeclaredduringadividendcycle,andonwhichSTCwaspaid, exceeddividendsaccruedtothecompanyduringtherelevantcycle.The dividendcyclecommencesonthedayafterthedeclarationoftheprevious dividendandendsonthedateonwhichthenextdividendaccruestothe shareholders.Dividendspassingthroughagroupstructurewillbeexempt fromSTCwhendeclaredbyawhollyownedsubsidiary,butwillsuffer STCwhensubsequentlydeclaredoutbytheparentcompany.STCis payablebythecompanydeclaringthedividend,andnotbytherecipient. CompaniesthatearnprofitsbothfromwithinandoutsideSouthAfricaare liabletoSTContheprorataportionofdividendsdeclaredwhichrelatesto profitsearnedfromasourcewithinSouthAfrica.Dividendsreceivedare nottakenintoaccountinthedeterminationoftheratio.STCisbeingfazed outaltogether.From2008,STCwillbeabolishedandreplacedwitha dividendtax,payablebytherecipientofthedividendratherthanthe declaringcompany.Currentlysomecountriesgranttaxreliefinrespectof theSTCimposedinSouthAfrica.Specialprovisionsapplytogoldmining companiesandlongterminsurers. ValueAddedTax(VAT)

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ValueAddedTax(VAT)mustbechargedandpaidoverbyallsuppliersof goodsandservices(otherthanverylimitedexemptgoodsandservices). Thecurrentrateis14%.Allsuppliersofgoodsandserviceshavingan annualturnovercurrentlyexceedingR300000areobligedtoregisteras VATvendorsandtochargeoutputVAT.Othervendorsmayelectto registerasVATvendorsprovidedtheirannualturnoverexceedsR20000. Iftheydonotregister,theyareprohibitedfrom: chargingVATongoodsorservicestheysupply;and claiminganinputtax(rebateofVATpaid)ongoodsandservices whichtheyacquire. DoubleTaxationAgreements SouthAfricahasconcludedbilateralagreementsfortheavoidanceof doubletaxationwithapproximately60countriesandiscontinually increasingthisnumber.Mostoftheagreementsarecomprehensive,while thereareseverallimitedSeaandAirTransportbilateralagreementsin force. EstateDuty Anestatedutyof20%isimposedonthenetvalueofdeceasedestates, afteranabatementofR3.5million.Thisappliestotheworldwideassetsof residents,subjecttocertainexemptions,andtotheSouthAfricanassetsof nonresidents. DonationsTax Ataxof20%isimposedondonationsmadebyresidents,subjectinthe caseofnaturalpersonstoanannualexemptionofR100000.Personsother thannaturalpersonsmaymakecasualdonationsofnotmorethanR10000 perannumwithoutincurringthetax.Publiccompaniesareexemptfrom donationstax,asaredonationsinthepublicinteresttorecognisedpublic benefitorganizations,institutionsfortheadvancementofscienceorart, politicalpartiesandspheresofgovernment. PublicBenefitOrganisations Organisationscarryingoutoneormorepublicbenefitactivitiesmay applyforexemptionfromnormaltax.Thereareelevencategoriesofsuch activities: welfareandhumanitarian; healthcare; landandhousing; educationanddevelopment; religion,belieforphilosophy; cultural; conservation,environmentandanimalwelfare;

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researchandconsumerrights; sport; theprovisionoffunds,assetsorotherresourcestoaPBOor institution,boardorbodyconductingoneormorepublicbenefit activities;or theprovisionofsupportservicestooneormoreoftheentities referredtoin4.9.10,orabidtohostorthehostingofan internationaleventapprovedbytheMinister.Taxpayerswhomake donationstoexemptedPBOsmaydeductthevalueofsuch donationsfromtheirincome,subjecttocertainlimitations.

AssessedLossesandSecondaryTrades Whereasassessedlossesfromonetrademaygenerallybesetoffagainst incomefromothertradesconductedbythesametaxpayer,certain limitationsapplytonaturalpersonswhosetaxableincomeexceedsthe levelatwhichthemaximummarginalrateispayable.Lossesfromany denominatedsecondarytradecarriedonbysuchapersonmayincertain circumstancesberingfencedandonlysetoffagainstsubsequentprofits fromthesametrade. TransferDuty Transferdutyatbetween0%and8%ispayablebypurchasersof immovablepropertywhoarenaturalpersons.Thedutyinrespectof purchasesbyotherlegalpersonsis8%.Transferislikelytoberefusedif thetaxaffairsofthesellerarenotuptodate. SoccerWorldCup Inpreparationofthe2010SoccerWorldCuptobeheldinSouthAfrica,a numberoftaxfreebubbleswillbecreatedinandaroundthefootball venues.Activitieswithinthesebubbleswillbeexemptfromincometax andVAT.Suppliestothebubbleswillbezerorated,withtheresultthat supplierswhoareregisteredvendorswillenjoyaconsiderableVAT benefit. Thebenefitswillapplytoconsumableandsemidurablegoodsbutnotto fixedassetsordurablegoods.FIFAanditsassociatedmemberswillin additionbeexemptfromimportdutieswherethegoodsconcernedwillbe reexportedaftertheevent.Otherentitiesthatwillbenefitinclude: commercialaffiliatesofFIFA;licensees;broadcasters;merchandising partners;FIFAdesignatedserviceproviders;concessionoperators; hospitalityserviceproviders;andtheFIFAflagshipstoreoperator.

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7.

Accounting & reporting

SouthAfricanlawrequirescompaniestokeepproperaccountingrecords inoneofSAsofficiallanguagesforeachfinancialperiod.Thereisno specificlegalrequirementforsoleproprietorstokeepaccountingrecords. However,taxlegislationrequirestheretentionofrecordsusedinthe completionoftaxreturns.Partnershipsmustkeeprecordsofallreceipts andpaymentsandallsalesandpurchasesofgoods. Taxlegislationrequiresthataccountingrecordsbekeptforatleast15 years. Preparationofaccounts Thedirectorsofacompanymustprepareabalancesheet,income statementandcashflowstatementforeachfinancialyear.Theannual reportmustincludeadirectorsreport.Ifacompanyhasoneormore subsidiaries,itmustalsopreparegroupannualfinancialstatements. TheCompaniesActprescribestheformandcontentofthebalancesheet, incomestatementandadditionalinformationtobeprovidedbywayof notes,suchasdetailsofdirectorsremuneration.Accountsmustbe preparedinoneofSAsofficiallanguages. Thereisanoverridingrequirementfortheaccountstofairlypresentthe stateofaffairsandbusinessofthecompany. Reportingandaccountingrequirements Reportingandaccountingrequirementsarecontainedinthefollowing references: TheCompaniesActandregulationsmadeunderit; AccountingstandardsSouthAfricanStatementsofGenerally AcceptedAccountingPractice(SAGAAP); InternationalFinancialReportingStandards(IFRS);and TheListingRulesissuedbyJSELimited(listedcompaniesonly). GAAP SAGAAPisnotdefinedbylawbutisconsideredtoencompassallthe officialmaterialaboveaswellastheaccountingpracticesthatareregarded asappropriatebytheaccountingprofession.TheCompaniesActrequires directorstoproduceaccountsthatfairlypresentthestateofaffairsand businessofthecompany.SAGAAPmustnormallybeadoptedinorderto giveatrueandfairview. IFRS

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Foraccountingperiodsbeginningonorafter1January2005,companies mustadoptIFRSintheirannualfinancialstatements. Abbreviatedaccounts TheCompaniesActdoesnotprovideforthepreparationofabbreviated accounts. Auditrequirements Allcompaniesmusthavetheiraccountsaudited.Theauditormust examinetheaccountsandaccountingrecordsofthecompanyandprepare areportforthecompanysmembers.Thereport,includedinthepublished reportandaccounts,mustcontainanopiniononwhetherornotthe companysannualaccountshavebeenproperlypreparedinaccordance withtheCompaniesActandwhetherornottheyfairlypresentthestateof affairsandbusinessofthecompany.Theauditorwillconsiderwhetheror nottheinformationgiveninthedirectorsreportisconsistentwiththe annualfinancialstatementsandaccompanyingnotes.If,intheauditors opinion,theaccountsordirectorsreportdonotcomplywiththe CompaniesAct,theauditorwillqualifythisinthereport. Whocanactasauditor? TheeligibilityforactingasauditorissetoutintheCompaniesAct. Eligibilityisalsogovernedbyethicalconsiderations.Anauditormustbe independentofthecompany.Thereforeapersoncannotbeappointedas anauditorifhe/sheis: Adirector,officeroremployeeofthecompany,itsholding company,subsidiaryorfellowsubsidiaryofsuchacompany; Adirector,officeroremployeeofanycompanyperforming secretarialworkforthecompany,itsholdingcompany,subsidiary orfellowsubsidiaryofsuchacompany; Apartneroremployeroremployeeofadirectororanofficerofthe company,itsholdingcompany,subsidiaryorfellowsubsidiaryof suchacompany; Apersonwho,personally,orwhosepartneroremployee habituallyorregularlyperformsthedutiesofsecretaryor bookkeeperofthecompany,itsholdingcompany,subsidiaryor fellowsubsidiaryofsuchacompany; Apersonwhoatanytimeduringthefinancialyearwasadirector orofficerofthecompany,itsholdingcompany,subsidiaryor fellowsubsidiaryofsuchacompany;and ApersonnotqualifiedtoactassuchunderthePublicAccountants andAuditorsAct. Otherservicesthatanauditormayprovide

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Anauditormayprovidesecretarialandbookkeepingservicestoaprivate company,nosharesofwhichareheldbyapubliccompany,subjecttothe approvalofalltheshareholdersinwritingandthedisclosureofthisinthe auditorsreport.

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8.

UHY firms in South Africa

UHYHellmann(SA) 1stFloor9SturdeeAvenue Rosebank 2196 SouthAfrica Phone: +27114478447 Fax: +27114478400 Contact: CarlosPedregal Email: carlos@rahellman.co.za Website: www.rahellman.co.za

9.

UHY offices worldwide

ForcontactdetailsofUHYofficesworldwide,orfordetailsonhowto contacttheUHYexecutiveoffice,pleasevisitwww.uhy.com

Appendix: Useful web links

DepartmentofTradeandIndustry: www.dti.gov.za IndustrialDevelopmentCorporation: www.idc.co.za SouthAfricanRevenueServices: www.sars.gov.za TheSouthAfricanReserveBank: www.reservebank.co.za Acknowledgement AcknowledgementisgiventoDeneysReitsAttorneysforinformation containedinthisdocument.

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