Under South Africas current exchange control (Excon) rules, South African residents are required to seek approval from the South African Reserve Bank (SARB) should they wish to export a South African listed security outside of the Common Monetary Area. As a result of the proposed modernisation of South Africas Excon regime, discussed in the Exchange Control section of our Budget Alert, under which the SARBs permission will no longer be required, it is proposed that such an export results in income tax consequences. Specifically, the Budget proposes that such a transfer now constitute a deemed disposal of that security for income tax purposes, with further consequences once the share is traded on the relevant foreign exchange.
Essentially, it appears that to prevent the transfer of securities abroad in the dual-listed context, adverse tax consequences will arise, as opposed to adverse Excon consequences, as is the case under the current Excon regime.