In the final quarter of 2025, South Africa received R41.3 billion in foreign direct investment (FDI). That investment went everywhere from small startups (US$643 million across 85 deals) to major enterprises (Coca-Cola HBC’s US$2.6 billion acquisition of a 75% stake in Coca-Cola Beverages Africa being among the largest).
While we have plenty of stories of entrepreneurs and organisations hustling to get international investment, what many don’t realise is that the real hard work begins once you’ve got the investment. In part, that’s because international investments are a lot more complex than they’re made out to be.
There are, for example, several types of international investments a company can receive, including equity investments, foreign loans, and funding from an overseas parent company. Each of these requires different levels of compliance and effort, both in preparation for receiving the investment and after the investment has been made.
It seems like hard work, and it is, but it can save companies a lot of time and frustration down the line. Meanwhile, those that get it wrong, face delayed payment, incorrect records that need correcting later, and friction when it’s time to pay dividends, repay a loan, or return capital.
Loans, investments, and parent company funding
The first step for any business preparing to receive international investment is to familiarise itself with the South African Reserve Bank (SARB) regulations for the kind of investment it’s receiving. Broadly speaking, these can be divided into equity investments, foreign loans, and funding from an overseas parent company.
An equity investment – where an investor buys a stake in the business – is governed by the securities control provisions of the SARB’s Currency and Exchanges Guidelines for Business Entities. These kinds of acquisitions require the use of an Authorised Dealer (a financial institution, typically a bank licensed to buy, sell, and process legal foreign currency transactions). The company receiving the investment is also required to deploy the capital from its share sale within one month of it being raised and recorded in the designated account.
Businesses receiving an international loan are required to comply with a different set of recently updated rules. The most important thing to know here is that the loan must be recorded via the SARB’s Loan Reporting system and that all applications must be compliant with the requirements set out in the Currency and Exchanges Guidelines for Business Entities and the Currency and Exchanges Manual for Authorised Dealers.
Since the release of Exchange Control Circular No.14/2026, there is no longer an interest rate cap. The interest on the loan must, however, be market-related in the country of denomination or normal in the trade concerned.
Finally, funding from an overseas parent company largely follows the same framework as inward loans. There is, however, an additional layer: because the parent company and its subsidiary are related parties, Authorised Dealers must confirm that the right transfer pricing documentation is in place before approving the transaction.
Getting it right before the money moves
Knowing what kind of investment your business is getting before the transaction takes place also means that you’ll have the right paperwork in place beforehand. But there are other benefits, especially when it comes to the SARB’s Financial Surveillance (FinSurv) system.
Every cross-border transaction, whatever the funding type, must be reported to FinSurv. Doing so helps the SARB compile the country’s balance-of-payments statistics, track foreign debt and repayment obligations, and generally keep visibility over the volume and nature of money moving in and out of South Africa.
That, in turn, contributes to the kind of stable and transparent investment environment that attracts more foreign investors. So, businesses shouldn’t see this kind of reporting requirement as a tedious obligation but as a contribution to a better South African business environment. And getting it right from the start can save a lot of pain down the line.
A startup example
Let’s consider a Cape Town-based software company that’s closed a $2 million funding round from an offshore venture capital (VC) fund. Everything seemed smooth initially, with deal terms agreed within weeks. But because the company hadn’t confirmed whether the investment was an acquisition of equity or a shareholder loan, the transfer took a month longer than expected.
Even once the classification was settled as an equity investment, the company would still have to work with an Authorised Dealer to correctly process the share issuance and ensure the transaction was reported through FinSurv. If that had all been in place before the term sheet was signed, much of the financial paperwork could have run in parallel with the legal deal, meaning that the business would have had much quicker access to the capital it had secured.
Get it right now
Ultimately, any business in line to receive foreign investment in the near future shouldn’t view SARB compliance as just another box-ticking exercise. Instead, by taking it seriously, they put themselves in a better position to use the capital gained from that investment. More than that, structuring an investment correctly and within the relevant regulatory guidelines makes for a much more sustainable relationship with the investor.
- Harry Scherzer, CEO, Future Forex
