ENDORSE SHARES AS ‘NON-RESIDENT’ TO AVOID TRANSACTION CASH FLOW DELAYS

By Robyn Berger Tuesday, December 08, 2020
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South Africa operates a system of exchange controls that seek to regulate the flow of capital in and out of the country.

Non-residents are free to own shares in South African companies. However, non-resident shareholders must ensure that the share certificates issued by the South African company are endorsed ‘non-resident’ within 30 days of becoming the owner of the shares.

The primary objective of this endorsement is to police trading in the share for values other than market values.       

Moreover, the transfer of dividends, profit and/or income distributions from South African companies to non resident shareholders in proportion to their percentage shareholding and/or ownership in the company is permitted subject to certain documentary evidence being presented and confirmation that the shares are endorsed as non-resident.

However, in practice, we find the need to attend to the non-resident endorsement is often overlooked when the shares are issued.

If you have omitted to attend to the non-resident endorsement of your share certificate(s), contact us so that we can assist you to rectify this position.

By undertaking this rectification process, you should not be unnecessarily delayed when funds need to leave the country in the form of dividend distributions and/or negatively impacted when undertaking merger and acquisition transactions.