The South African legal system is a mixed or hybrid, and uncodified system based on a legacy of RomanDutch common law, as influenced by English law. Statute and judicial precedent constantly develop upon, alter, and update this common law base. Alongside the civil law there exists a rich tapestry of customary law based on the cultures, beliefs and traditions of the South African people.
Cornerstone
The Constitution of the Republic of South Africa, 1996 is the supreme law against which law and conduct are measured. The Bill of Rights, housed in the Constitution, forms the cornerstone of South Africa’s democracy and enshrines the rights of all people in the republic. The fundamental tenets are the democratic values of human dignity, equality and freedom.
The beginning of 2015 marked the coming into effect of the Labour Relations Amendment Act which formed part of a suite of recent labour law amendments. On May 1, 2015 amended Codes of Good Practice on Broad-Based Black Economic Empowerment came into effect. Further progress has been made in regard to the regulation of the financial markets to ensure more systemic stability. These developments, as well as other highlights are explored below.
Financial Markets
On July 4, 2014 South Africa published its proposed over-the-counter derivatives regulations in terms of the Financial Markets Act, No. 19 of 2012. In June 2015 the National Treasury and the Financial Services Board published a second draft of the ministerial regulations for the over-the-counter derivatives markets. Also published in June were the draft margin requirements, draft licensing requirements and additional duties of trade repositories, and a draft code of conduct for over-the-counter derivative providers, as well as draft criteria for the authorisation of over-the-counter derivatives providers (ODP), and reporting requirements for these ODPs and central counterparties. In the arena of Twin Peaks regulatory reform, the National Treasury has outlined its next steps in a briefing paper published in June 2015. The target for the tabling of the revised Financial Sector Regulation Bill was June 2015, and the National Treasury aims at establishing the new regulatory authorities by April 1, 2016. Identified regulatory challenges in South Africa include the fact that there are, in the opinion of the National Treasury, too many regulators in the financial sector applying fragmented legislation and oversight.
The second draft of the Financial Sector Regulation Bill addresses comments on the December 2013 iteration, with some key changes being improvements to the legal enforceability of the legislation, clarification of the role of the financial sector regulators, and the alignment of the reserve bank’s powers so that it might have systemic oversight. The developments in this regard hold the promise of stronger macro- and micro-prudential regulation, higher standards for the market conduct of financial institutions and a continued focus on the combating of financial crime.
Corporate Law
The South African corporate and company law landscape has been strongly influenced by, and modelled on, the English law model. With the advent of the new Companies Act, No. 71 of 2008 (Companies Act), which came into force in May 2011, influences and concepts from jurisdictions such as the US and Canada have also been brought into the fold, and as a result the South African model is now a combination of Commonwealth and US law.
South Africa has a highly developed and advanced system of company and corporations law. The Companies Act is the primary piece of legislation that governs and regulates companies operating in the country. As South Africa has a common law legal system, case law and precedent play an integral role in interpreting and applying the Companies Act.
The act governs the incorporation, registration, governance, operation, rescue and winding-up of companies, and provides for shareholder remedies and protections as well.
Business Vehicles
When considering the commencement of business or an investment in South Africa, one needs to consider which vehicle will be best suited to the circumstances. The company is the primary, but not only, vehicle that may be used for this purpose. Factors to be taken into account include the number of participants in the business, how the business is to be operated from a management and control point of view, achieving limited liability for participants, the requirement of perpetual succession and, importantly, income tax considerations.
There are a number of different investment methods and vehicles available. These are (1) company – either a local profit or non-profit company or a branch of an external company; (2) partnership – either limited or unlimited; (3) business trust; (4) close corporation (although new close corporations cannot be formed as of May 1, 2011, with the advent of the Companies Act); and (5) sole proprietorship.
Company Law
For purposes of this discussion, we will focus on companies, being the primary investment vehicle. The Companies Act requires a notice of incorporation and memorandum of incorporation (MOI) to be filed with the Companies and Intellectual Property Commission (CIPC) in order for a company to be registered and incorporated. From the date of incorporation, a company exists as a separate juristic person. The shareholders enjoy limited liability since the liability of the shareholders for the company’s debts is limited to the amount that they have contributed to its establishment. The company continues in existence irrespective of the change in shareholding from time to time. Both natural and juristic persons can hold shares in a company.
In addition to shareholders, each company has a board of directors. The directors are typically elected and appointed by the shareholders, but the company may determine this in its MOI. Profit companies are formed with authorised shares. Different classes of shares can be created (for example, ordinary, preference, redeemable or convertible shares, or a combination thereof). Debentures and other securities can also be issued by a profit company.
The Companies Act has partially codified directors’ duties which include their common law fiduciary duties and the obligation to perform their duties with reasonable care, skill and diligence. However, the common law is not excluded by the statutory provisions and will continue to apply except in so far as it is specifically amended by the Companies Act or is in conflict with one of its provisions. Heightened director responsibility, accountability and liability are key features of the Companies Act, and a number of recent judgments of the High Court have applied the new director delinquency and liability provisions to redress misconduct on the part of company directors.
There is no requirement that a shareholder or director must be South African. There are, however, ancillary consequences if the shareholders are foreign. Exchange control regulations may also apply.
A public company, state-owned company or any other company required to do so in terms of the regulations, will have to appoint an auditor and have their annual financial statements audited. All other companies may be audited voluntarily, and if they are not audited then they must be independently reviewed, subject to the exception that a private company is exempt from the obligation to have its annual financial statements audited or independently reviewed so long as all persons who are holders of or who have a beneficial interest in any securities issued by the company are also directors of the company.
Public and state-owned companies are also required to have audit committees. Listed and state-owned companies must also have social and ethics committees that monitor and report on the company’s corporate social responsibility activities and initiatives. This requirement also applies to certain large unlisted public or private companies.
The Companies Act introduced a business rescue regime for financially distressed companies, modelled to some extent on the Chapter 11 bankruptcy provisions in the US, as well as business rescue and administration provisions found in other jurisdictions. The business rescue provisions have been utilised extensively as an alternative to liquidation, the aim being to restore financially distressed companies to solvency with the concomitant benefits of continuing business and avoiding job losses. Business rescue may be commenced voluntarily by the company or through an application to court by any “affected person” as defined in the Companies Act, which includes creditors, shareholders, trade unions and employees.
Foreign Investment Law: External Companies & Subsidiaries:
A foreign concern may establish a presence and conduct business in South Africa as either an “external company” as defined in the Companies Act or by establishing a subsidiary in South Africa. An external company is a foreign company conducting business or non-profit activities in the country. It has to register as an external company (a branch). It must always have at least one registered office within the Republic of South Africa. External companies are regulated under section 23 of the Companies Act. External companies will also need to lodge annual returns at the CIPC.
The Companies Act also provides for the domestication of foreign companies. Subject to section 13(5) of the Companies Act, a foreign company may make an application to the CIPC to transfer its registration to South Africa from the foreign jurisdiction in which it is registered, and thereafter exist as a company in terms of the Companies Act as if it had been originally so incorporated and registered. A subsidiary, on the other hand, is a South African incorporated company which would typically be wholly owned by the foreign company of which it is a part.
Exchange Control
South Africa is subject to exchange control regulations, which implies that foreign investments and the repatriation of funds are regulated and require the approval of the South African Reserve Bank (SARB). The SARB has delegated much of its power and authority to so-called authorised dealers (essentially banks and other institutions licensed to undertake exchange control functions and grant approvals under exchange control). Exchange control authorities have a wide discretion that is exercised in accordance with the Exchange Control Regulations, 1961 (including the various orders and rules issued under the said regulations) and the Exchange Control Rulings in line with the policy guidelines laid down by the minister of finance.
All applications for exchange control approval must be made through an authorised dealer. In respect of smaller transactions, an authorised dealer is generally prepared to grant the requisite approval itself, however, when more substantial transactions are involved it is quite usual that an authorised dealer would rather refer the matter to the SARB for its approval. An authorised dealer would then facilitate the application to the reserve bank. In practice the process of obtaining exchange control approval is relatively fast if all requisite documents are properly submitted. South Africa’s exchange control system has been gradually liberalised over the past few years and it is the stated intention of the National Treasury that the gradual liberalisation and deregulation of exchange control will continue.
Most (but not all) of the exchange control policies and regulations are focused on the exchange control transactions of South African residents (that is, outward transactions). It is important to keep in mind that the interpretation of the Exchange Control Regulations and Rulings, on which the exchange control system is based, is largely subject to the policies of the SARB and the National Treasury.
Foreign Investment Rules
Generally speaking, a non-resident investor may freely invest in South Africa, provided that suitable documentary evidence is available in order to ensure that the transactions are concluded at arm’s-length, at fair market value and are financed in an approved (by exchange control authorities) manner. Non-resident investors seeking to invest in and introduce funds into South Africa may either purchase South African currency or borrow funds locally. The use of these media is regulated by exchange control law and approval will be dependent on the nature of the investment.
Exchange control authorities will generally permit either loan capital or equity to be introduced into the country via the South African rand. A non-resident has a great degree of flexibility in the way in which it funds a South African investee company’s operations. Consideration should be given to possible adverse tax implications if the amount of interest-bearing debt of the resident, or the rate of interest payable, is too high. Although exchange control does not insist on a specific shareholder debt-to-equity ratio, the introduction of loan funding, its repayment, as well as the interest rate charged, nevertheless remain subject to prior approval by the authorities. The repatriation of funds is also regulated by exchange control.
Competition Law
South Africa has a modern and developed system of competition law which regulates two broad aspects: merger control and prohibited practices. Merger control is concerned with the regulation of intermediate and large mergers and acquisitions. The Competition Act, No. 89 of 1998 (Competition Act) is the key legislation in this regard.
The Competition Act establishes three categories of mergers, determined with reference to the turnover or assets (whichever is higher) of the acquiring firm and the target business. A small merger occurs where the target company’s assets or turnover are below R80m ($6.9m) or the combined assets or turnover of the acquiring firm and the target firm are below R560m ($48.4m). An intermediate merger occurs where the target firm’s assets or turnover equal or exceed R80m ($6.9m) and the combined assets or turnover of the acquiring firm and the target firm equal or exceed R560m ($48.4m). A large merger occurs where the target firm’s assets or turnover equal or exceed R190m ($16.4m) and the combined assets or turnover of the acquiring firm and those of the target firm equal or exceed R6.6bn ($570.2m). For purposes of calculating the thresholds, the entire acquirer group is taken into account. In relation to the target firm, the company over which control is transferred together with all businesses controlled by such transferred firm are taken into account.
The parties to an intermediate or large merger may not implement the merger without the prior approval of the competition authorities which take into account both competition and public interest concerns in coming to a decision. In this regard, the Competition Commission has published draft guidelines on the assessment of public interest provisions in merger regulation under the Competition Act.
In respect of prohibited practices, the Competition Act regulates vertical restrictive practices that include the practice of minimum resale price maintenance and horizontal restrictive practices that include cartel conduct and the abuse of dominance. The penalty for participation in restrictive practices is a fine of up to 10% of a participating firm’s turnover and the Competition Commission has published the draft guidelines for the determination of administrative penalties for prohibited practices in this regard. In an attempt to curtail cartel activity, the Competition Commission has prepared a Corporate Leniency Policy according to which cooperation with the Competition Commission may be exchanged for immunity. Although the Competition Amendment Act, 2009 (Amendment Act) introduces criminal sanctions against directors of firms that participate in cartel conduct, this and most other provisions of the Amendment Act have not yet come into force. To date the only provision of the Amendment Act that has come into force relates to market inquiries and the Competition Commission’s powers to investigate the general state of competition in a market.
Developments in Foreign Investment
The majority of the bilateral investment treaties (BITs) that South Africa concluded with countries with which it has trade and investment relationships are near completion or are in the process of being terminated by the South African government (pursuant to the relevant BIT’s terms). It is the intention for South Africa to in future regulate the protection of foreign investments by means of national legislation in the form of the Protection of Investment Bill, 2015, as adopted by the Portfolio Committee for Trade and Investment of the parliament of South Africa. The idea behind the Investment Bill is to incorporate international investment protection principles usually found in BITs into South Africa’s domestic legislation to ensure that all investors (whether foreign or national) are treated equally in all aspects of investment in South Africa. The Investment Bill received a significant amount of criticism from stakeholders, specifically relating to the following: The limitation of compensation in the event of an expropriation by the South African government to the level prescribed in the South African Constitution, as opposed to the “immediate, full and effective compensation” standard usually found in BITs.
One of the concerns resulting from this is that foreign investors will not be guaranteed compensation at full market value in the event of an expropriation. This is because the Constitution provides, among other things, that the amount of compensation and the time and manner of payment must be deemed just and equitable, reflecting an equitable balance between the public interest and the interests of the foreign investor. Market value is taken into account, but the compensation does not necessarily need to comprise the full market value.
A foreign investor who has a dispute with the South African government relating to its foreign investment in the country will be limited to domestic dispute resolution mechanisms such as a mediation with the state, domestic court action or an agreed domestic arbitration. A foreign investor will have no recourse to any international arbitration, or other neutral forum to resolve the dispute, except if such dispute arises during the sunset period of the BIT and in relation to an investor protected by such treaty.
The Investment Bill is challenging the status quo regarding how foreign investment protection and promotion is conducted in international trade. The termination of BITs and the concerns relating to international arbitrations by states when domestic policies are changed to achieve certain economic and social objectives are not just South African phenomena; Bolivia, Ecuador and Venezuela have all withdrawn from the International Centre for the Settlement of Investment Disputes Convention, and Indonesia and Australia have also raised concerns in relation to international dispute resolution mechanisms which challenge certain sovereign state policy decisions. The South African government’s view is that there is no real correlation between BITs and foreign direct investment flow to South Africa and that, overall, BITs pose a greater harm than good to the country’s developmental objectives.
The Investment Bill was released for further public comment during July 2015 and public hearings with all interested and affected parties were held during September 2015 by the Portfolio Committee for Trade and Investment. The Portfolio Committee accepted certain of the proposed amendments by interested and affected groups. However, foreign investors continue to be concerned by issues affecting them, including the right to protection of property (expropriation), fair and equitable treatment provisions, national treatment and the dispute resolution mechanism which, amongst others, excluded investor-state arbitration. Should the Investment Bill be passed in its current form, there is speculation that it may discourage future investment in South Africa. However, it is difficult to say whether that will actually be the case having regard to concerns other jurisdictions also have with certain of the provisions of existing BITs. The question is whether domestic measures (similar to the Investment Bill) for the protection of foreign investors could become the norm for other countries concerned with the actual benefit of BITs in promoting reciprocal trade. A proper cost-benefit analysis would have to be conducted by each country to ascertain whether BITs still serve the purpose for which they were originally concluded.
Broad-Based Black Economic Empowerment
Transformation is an important part of the South African legal and economic landscape. To this end, there are a number of legislative measures aimed at promoting broad-based black economic empowerment (BEE). Section 10 of the Broad-Based Black Economic Empowerment Act, No. 53 of 2003 (BEE Act) compels organs of state and public entities to apply any relevant code of good practice issued in terms of the BEE Act in, inter alia, determining qualification criteria for the issuing of licences; concessions or other authorisations in terms of any law; developing and implementing a preferential procurement policy; determining qualification criteria for the sale of state-owned enterprises; and developing criteria for entering into partnerships with the private sector.
While this provision is a mandatory obligation of the public sector (being specifically, a national or provincial department, municipality, Parliament, a constitutional institution and other public entities), it does have indirect application to private sector businesses that have, or are required to have, a regulatory relationship with the public sector because they conduct one or other form of licensed business activity, or provide goods or services to the public sector, or provide goods or services to other businesses that have a regulatory relationship with the public sector.
Such private sector businesses may find themselves subject to commercial requirements to become and remain BEE-compliant. The requirements to become and remain BEE-compliant apply not only to businesses interacting with the public sector, but also to those businesses interacting with private sector suppliers and service providers to the public sector.
In February 2007 the minister of trade and industry gazetted the Codes of Good Practice on Broad-Based Black Economic Empowerment (Codes), a general framework on the methodology for measuring BEE compliance, which can be applied to all industries. The Codes were amended in October 2013 and such amendments (New Codes) came into effect on May 1, 2015. The New Codes provide for five elements, as opposed to the seven that were outlined in the original Codes, against which measured entities are tested for BEE compliance.
These five elements are: (1) ownership; (2) management control; (3) skills development; (4) enterprise and supplier development; and (5) socio-economic development. These amendments will make it harder for entities to achieve a particular BEE compliance level as the standards and thresholds have been heightened and a discounting principle implemented for priority elements (ownership, skills development, and enterprise and supplier development).
Labour Law
Labour legislation has undergone a material overhaul in recent years. While still based in the common law (including contract law) principles, this area of the law is regulated to a large degree by a set of statutes. A recent legislative process designed to bring employment law in line with South Africa’s international obligations, and to offer extended protection to the most vulnerable of employees, is almost complete. The last of the material legislative changes (related to the Employment Services Act, No. 4 of 2014) which came into effect on August 9 2015.
Non-Standard Employment
One of the aims of the amendments to labour legislation (largely contained in the amendments to the Labour Relations Act, No. 66 of 1995, LRA) is to respond to the growth of informalisation of work in the South African labour market and to regulate the use by employers of so-called non-standard employment. Some of the most important amendments introduced relate to workers employed through a temporary employment service and fixed-term employees, who, together with part-time employees, are referred to as non-standard employees. With effect from January 1, 2015, significant limitations are imposed on the utilisation of such non-standard forms of employment.
These non-standard employees will in future enjoy far greater protection than that which was previously available to them, with concomitant limitations placed on employers to fully utilise such employment structures. The new protections are limited in some respects. For instance, they only apply to persons earning below a statutory income threshold that is currently set at R205,433.30 ($17,749) per annum, and in the case of fixed-term employees, some smaller and start-up employers may be exempt.
The amendments are primarily intended to limit the use of these non-standard employees to true short-term contracts (three months or less; to replace another employee who is temporarily absent; or in categories of employment lawfully characterised as suitable for such employees). Failure to abide by the limitations will result in temporary employment service (TES) workers becoming deemed employees of the client, and all fixed-term employees (whether placed by a TES or directly employed on a fixed-term contract by the employer) becoming permanent employees. Some aspects of the amendments, especially as they pertain to non-standard employment, remain unclear, for instance, the exact relationship between the client, the TES, and the TES employee, once the client becomes a deemed employer. It is unclear whether the employment relationship between the TES and its employees who are deemed to be employed by the client, should terminate, either at the point that the deemed employment relationship with the client commences, or when such deemed employment becomes permanent. Litigation is already afoot to try to resolve these questions.
To the extent that businesses in the country have previously relied on such non-standard forms of employment to generate flexibility, and avoid the consequences of labour legislation, the limitations now imposed on such non-standard forms of employment may have a profound effect on the manner in which organisations are structured.
Trade Unions
The LRA amendments relating to non-standard employment will also have an impact on trade unions and collective bargaining, in that non-standard employees will be included when consideration is given to whether a trade union should have organisational rights in a workplace. These amendments will expand the employee pool in a workplace for purposes of procuring organisational rights, and extend the industrial action possibilities against TES employers and their clients to counteract the perceived abuses that were previously experienced in these relationships.
The amendments will have the effect of creating a more inclusive collective bargaining arena in the workplace by bringing non-standard employees into the fold, and as a result of a possibility of enforced recognition of trade unions even though they may have less employee support than what was previously required, even in the face of opposition from the majority union. It is hoped that these changes may bring about a positive effect, for instance by lessening the need felt by smaller unions to use industrial action as the only route to obtain organisational rights. The amended LRA now gives employees the right to picket at a place controlled by someone other than their employer, provided that the former has a say in the establishment of the picketing rules.
More Protection for Lower Earners
As stated above, many of the limitations imposed on the use of non-standard employment structures apply only to employees earning below the stated threshold. In addition to these protections for lower earners, a move towards a national minimum wage is gaining momentum. However, at the date of publication, no such minimum wage is in effect, nor has a clear indication been given by the government as to what such a minimum wage would be.
Discrimination & Affirmative Action
Other developments within employment law that should be kept in mind relate to the increased focus on the “equal pay for work of equal value” principle, as a form of unfair discrimination, and the indications that compliance with affirmative action legislation will be enforced to a greater extent in future. While unequal pay based on discriminatory grounds has been actionable for a considerable time, the emphasis placed on this aspect of anti-discrimination legislation, and the publication of regulations prescribing the manner in which employers must apply the “equal pay for work of equal value” principle, are indications that we may expect increased scrutiny of pay grade practices. The repercussions of a failure to comply with employer obligations have been made more strenuous, and the enforcement process streamlined.
Property
South African law in regard to title in property; the transfer of property; as well as property as real security, is well developed, drawing both on Roman-Dutch common law heritage as well as on legislation. The result is a complex area of the law operating within the framework of section 25 (the property clause in the Bill of Rights) of the Constitution, and which is supported by a sophisticated and efficient system of registration of rights in land, primarily through the machinery of the Deeds Registries Act, No. 47 of 1937 (Deeds Registries Act).
The sale and purchase of immoveable property is regulated to a large extent by the common law. The Alienation of Land Act, No. 68 of 1981, the Sectional Titles Act, No. 95 of 1986 (Sectional Titles Act), which covers the transfer of units and the cession of real rights in sectional title schemes; and the Subdivision of Agricultural Land Act, No. 70 of 1970, affecting the granting of real rights in agricultural land, all also play important roles. Delivery of immoveable property is effected through registration of the title deed in the relevant Deeds Registry. South Africa applies the abstract system of passing of ownership, meaning that the requisite intention combined with delivery would pass ownership. If there is a defect in the “real agreement” (a matter of intention rather than form), ownership will not pass. Therefore, it is imperative to scrutinise the authority of persons (or entities) entering into property agreements, since defective authority may impact on the validity of the real agreement.
Various statutes regulate the authority of certain persons or entities with regard to their dealings with property. Section 13(1) of the Deeds Registries Act provides that “…deeds executed or attested by a registrar shall be deemed to be registered upon the affixing of the registrar’s signature thereto, and deeds, documents or powers of attorney lodged for registration shall be deemed to be registered when the deeds registry endorsement in respect thereof is signed”. In South Africa it is accepted that the Deeds Office records are correct until proven otherwise as there may be instances where ownership may have passed, but where this has not been reflected in the Deeds Office, as in the case of acquisitive prescription. Nevertheless, the South African Deeds Offices maintain a consistent high standard of accuracy.
Real Rights
Mention was made above of “real rights”, and in South African property law the distinctions between “real rights” and “personal rights”, as well as “limited real rights”, are both conceptually and practically important. Personal rights are created in terms of contract and apply between the parties to a contract (the obligation to respect and the power to exercise the right rests with the contracting parties only unless third parties were aware of the existence of personal rights, in which case the doctrine of notice applies). Real rights and limited real rights are rights – mostly created through registration thereof against the title deed of a property – which must be respected by, and are enforceable against, all persons even if they were unaware of such rights.
Ownership is the most comprehensive real right that one may have with regard to property. Limited real rights are rights that a person in his personal capacity or in his capacity as land owner may have in property owned by someone else. These rights are said to run with the land and are enforceable against third parties, regardless of whether they were privy to prior contractual arrangements.
South Africa does not recognise a closed list of real rights, and new rights may be created by legislation. Existing limited real rights include: servitudes; registered long-term leases; and rights in terms of the Sectional Titles Act such as rights to exclusive use areas and the developer’s right to extend an existing sectional title scheme in phases. Depending on the nature of the right, limited real rights in immoveable property may be encumbered by mortgage bonds. As such, long-term leases (not exceeding 99 years) in respect of land are becoming increasingly popular as an alternative to ownership.
Securities
In the context of security by means of moveable and immoveable property, parties requiring security, or securing an obligation often require, and provide, land or moveables as security. This type of security includes: mortgage bonds for immoveable property and special notarial bonds over clearly defined and identified moveable property in terms of the Security by Means of Moveable Property Act, No. 57 of 1993. There are no restrictions on foreign lenders obtaining such security, but exchange control regulations will apply. Deeds Office fees are payable and are calculated as a percentage of the value of the bond. Creditors with valid claims in an insolvent estate of a debtor, and who possess real security, will have preference over concurrent creditors for the proceeds of the sale of the asset.
Importantly, foreign creditors should also be aware of recent Supreme Court of Appeal judgments regarding limited real rights created in favour of homeowners’ associations, in respect of outstanding levies, and the municipalities in respect of historic debts for rates and taxes.
In the Willow Waters Homeowners Association judgment ([2015] 1 All SA 562, SCA), the court held that the rights of homeowners’ associations to claim levies in arrears take precedence over a bond holder’s rights. The implication is that in instances where banks try to sell a property in execution, the homeowners’ association may stay the transfer of the property until the outstanding levies have been paid.
Real Risks
Before investing in land, investors should conduct a comprehensive due diligence to be aware of the title conditions and pre-emptive rights in favour of third parties (such as a homeowners’ associations or usufructuaries) that may exist. These restrictions appear in the title deed of the property. There may also be statutory restrictions relating to the zoning of the land and permissible land uses, electrical compliance, invasive species and other certificates related to health and safety, subdivision of agricultural land, and environmental authorisations and responsibilities to consider. In the context of agricultural land, it is also advisable to investigate the existence of land claims (which may now be lodged until 2018) and mining or prospecting rights.
There are no restrictions on foreign persons owning South African real estate. This includes foreign juristic persons, save that foreign companies must register as an external company in terms of the Companies Act. Land ownership will always be a contentious issue, but property and rights in property are valued in South Africa and may not be arbitrarily taken away or interfered with (statutorily or otherwise) as proscribed by section 25 of the Constitution.
Read More from OBG
