Four new circulars: Recent developments on the exchange control front

On 23 May 2023, the Financial Surveillance Department of the South African Reserve Bank (FinSurv) issued four new circulars containing various amendments to the Currency and Exchanges Manual for Authorised Dealers (AD Manual). The AD Manual contains the permissions and exceptions contemplated in the Exchange Control Regulations, 1961. In this article, we briefly discuss the amendments proposed in each circular. In light of the recent challenges facing the South African economy and the rand, these changes are of potentially greater importance, but we will analyse their practical importance in further detail in a subsequent alert.

Customs and excise

A few changes relating to controlled foreign companies

A controlled foreign company (CFC) is essentially a foreign company where 50% or more of its shares or voting rights are collectively held by South African residents.

What happens when there are no employee/employment contracts transferred? Is the business still transferred as a going concern?

The Labour Court recently had to decide whether the termination of a service agreement and the concluding of another service agreement with a new service provider to render the same or similar services constituted the transfer of a business as a going concern in terms of section 197 of the Labour Relations Act 66 of 1995 (LRA).

Fraudulent non-disclosure and misrepresentation of property defects in sale render seller liable

Latent defects are flaws in a property that could not have been identified despite a reasonable inspection prior to the sale. In terms of common law, the purchaser will have a right of recourse after the sale if the seller was aware of latent defects and fraudulently did not disclose the defects to the purchaser.

What Directors expect from their juniors

Chairperson, Tim Fletcher and CDH Partner Njeri Wagacha speak to Graduate Programme Manager, Boipelo Mathodlana.