South Africa - Joint Ventures/LicensingSouth Africa - Joint Ventures
Joint ventures and licensing arrangements involving foreign entities attract the attention of the South African regulatory authorities when the parties agree to, or possibly require in the future, the repatriation of funds (royalties, fees, and profits) from South Africa to a foreign recipient.
When a company is interested in entering into a foreign licensing agreement to manufacture a product in South Africa, the South African licensee must apply to the Department of Trade and Industry (DTI). DTI, in turn, will make a recommendation to the South African Reserve Bank (SARB), which must approve the payment of royalties. When a licensing agreement involves no manufacturing, the South African licensee sends the request for exchange control approval directly to SARB. The calculation of discretionary funds (royalties, fees, etc.) that can be set by the parties to a joint venture or licensing arrangements are subject to complex foreign exchange controls set by the SARB that have been made less onerous over recent years. The government prohibits contract conditions involving obligatory purchasing and pricing agreements or requiring the licensee to sole source articles from the licensor.
More detailed and up-to-date information on the foreign exchange aspects of joint ventures and licensing can be obtained from the SARB or an approved foreign exchange dealer and can be found in the SARB’s Exchange Control Manual, accessible via the following Website:
http://www2.resbank.co.za/internet/Publication.nsf/LADV/FF8AEAEEE560A6E7422575550045B09D/$File/CoverDisclaim.pdf.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
When a company is interested in entering into a foreign licensing agreement to manufacture a product in South Africa, the South African licensee must apply to the Department of Trade and Industry (DTI). DTI, in turn, will make a recommendation to the South African Reserve Bank (SARB), which must approve the payment of royalties. When a licensing agreement involves no manufacturing, the South African licensee sends the request for exchange control approval directly to SARB. The calculation of discretionary funds (royalties, fees, etc.) that can be set by the parties to a joint venture or licensing arrangements are subject to complex foreign exchange controls set by the SARB that have been made less onerous over recent years. The government prohibits contract conditions involving obligatory purchasing and pricing agreements or requiring the licensee to sole source articles from the licensor.
More detailed and up-to-date information on the foreign exchange aspects of joint ventures and licensing can be obtained from the SARB or an approved foreign exchange dealer and can be found in the SARB’s Exchange Control Manual, accessible via the following Website:
http://www2.resbank.co.za/internet/Publication.nsf/LADV/FF8AEAEEE560A6E7422575550045B09D/$File/CoverDisclaim.pdf.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.