The Financial Services Board of South Africa (FSB) is the administrative body for the business in South Africa since the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act). Any organization that expects to carry a Foreign Exchange business (forex) on a discretional basis must receive a Category II Discretionary FSP license with the FSB. The FSB needs a corporation to maintain current assets which are enough to meet current liabilities.

Overview

Annual levy funded by an authorized FSP is calculated by FSB depending on the entire gross premiums and on a number of Key Individuals and Representatives in FSP.

Entities listed both in and outside South Africa can ask for a license with FSB.

The application for Category II license carries an exorbitant amount of paperwork, constant liaising with FSB and local residence of an applicant in South Africa in order to pass administrative exams and attend confirmation at a local bank. The suggested action of a company-applicant, identity and background of all elected individuals/entities will be closely examined by the regulator.

In order to keep sufficient management and control of the company, it is expected to appoint a Representative, at least one Key Individual, and an acquiescence officer; all the persons must be recorded with FSB. At least one Key Individual must be living in South Africa in order to efficiently take part in business management. Each Key Personal and Representative need to pass certain administrative examinations that are held on a regular basis in South Africa or UK.

A licensee must have an account in a local bank for keeping initial capital and a further utilization for corporate needs.

A licensed business is subject to stringent compliance reporting and continuous monitoring of its action by a compliance officer who presents the same to FSB.

Notable features

General information

Company structure and staff:

  • At least one shareholder (can be legal entities or natural persons)
  • At least one director (can be only natural persons)
  • A Representative
  • Minimum one Key Individuals
  • A Compliance officer
  • External auditor(s)

Timeframe

The process may be somewhat lengthy – approximately 1 year

Taxation

  • Corporate tax – 28%
  • No withholding taxes
  • Capital gains tax – 18.6%

Capital

The FSP shall manage current assets which are at least adequate to meet current debts

Accounting conditions – Annual presenting of audited financial statements

Local office – Not Needed

Registered office – Needed

Local employees – Needed

Regulatory examinations for Key Individual  and Representative(s)– Needed

Professional Compensation Cover – Needed (R5 million Rand (around 350,000 USD))

Procedure

In order to receive a license, the subsequent steps will be carried out:

  • Gathering of appropriate KYC reports for primary verification
  • Registering Key Representative attending supervisory exams
  • Establishment of an external organization/branch/shelf company in South Africa (if relevant)
  • Development of a business plan and required manuals and systems, getting the insurance
  • Opening a bank account in a local bank
  • The FSB will conduct basic inquiries and make questions/remarks about the application with the need to be explained/fulfilled

Company name

  • Language: Any
  • Letters: From the Roman alphabet
  • Names having royal, state, foreign, and economic or other signs are banned
  • Names that are misleading or vague are prohibited
  • Offensive names are prohibited
  • Identical or almost identical names are prohibited
Documents Required
  • For local regulatory authority:
  • CV
  • A notarized copy of valid passport
  • Notarized 2nd ID
  • A copy of evidence of residential address
  • Bank Reference Letter
  • Bank Statement Letter
  • A notarized proof of a University Diploma
  • Signed and notarized application forms
  • Two Acknowledged letters from a notary, lawyer, auditor or similar