Lex Africa Guide 2012 Full - Afrer.org

68SOUTH AFRICAWERKSMANS INCFirm InformationWebsite address: www.werksmans.comLanguages spoken: English, Mandarin, German, French,Portuguese, Zulu, Tswana, Xhosa, Sotho and Afrikaans.Contacts: Pieter Steyn and Roger WakefieldTelephone: +27 11 535 8296 and +27 11 535 8209Fax: +27 11 535 8600Email: psteyn@werksmans.com andrwakefield@werksmans.comWerksmans has been recognized as a leading firm by ChambersGlobal, IFLR 1000, Legal 500 and PLC Which Lawyer in variouspractice areas including corporate/mergers and acquisitions,banking and finance, competition/anti trust, intellectualproperty, labour law, tax and dispute resolution. Werksmanshas been consistently recognized as a leading adviser in mergersand acquisitions and corporate finance by DealMakers, Ernst &Young's M&A Review and MergerMarket. Individual directors ofWerksmans have been recognized by various international andSouth African bodies (including Best Lawyers International andInternational Who's Who) in various practice areas includingcompetition/antitrust, dispute resolution, mergers andacquisitions, tax, mining and banking and finance.Country InformationSouth Africa is the largest economy in Africa and contributesabout 25% of African gross domestic product (GDP), 40% of itsindustrial output and 50% of its electricity supply. It hassophisticated banking, financial services, mining,telecommunications, agricultural, IT, commercial and industrialsectors and a developed road, rail, airport and portinfrastructure. Its population is about 50 million (although it isestimated that there could be several million legal and illegalimmigrants) and comprises a rich diversity of cultures andreligions (Christian, Hindu, Islam, Judaism and Africancustomary). It has 11 official languages including English,Afrikaans and nine African languages. Its area is about 1 219 090square kilometres and it is divided into nine provinces with threecapital cities, Pretoria (administrative capital), Cape Town(legislative capital) and Bloemfontein (judicial capital). Povertyand unemployment (about 25%) remain major problems.Political SystemMultiparty democracy. The Constitution is one of the mostprogressive in the world and entrenches a bill of rights whichguarantees property rights, equality, socioeconomic rights,individual freedoms, an independent judiciary and a free press.The President is limited to two five year termsof office.Latest GDP FiguresIt is estimated that real annual grossdomestic product (GDP) increased by 3.1%in 2011 compared with 2.9% in 2010. The seasonally adjustedreal GDP at market prices for the fourth quarter of 2011increased by an annualised rate of 3.2% compared with anincrease of 1.7% during the third quarter of 2011.GDP: US$364 billion (2010)GDP per capita: US$3745 (December 2010)GDP (PPP): US$524 billion (2010 est)GDP per capita (PPP): US$10 700 (2010 est).Inflation rateAnnual Consumer Price Index for 2011 was 5%.Investment ClimateSouth Africa generally welcomes foreign investment andvirtually all business activities are open to foreign investors.However foreigners may not directly or indirectly control or havea greater than 20% interest in a commercial broadcastinglicensee and foreign residents may not hold more than 25% ofthe voting rights in an air services licensee (although theMinister of Transport may grant an exemption in this regard).The establishment of branches of foreign banks requires theconsent of the Registrar of Banks (several foreign banks operatein South Africa including Citibank, China Construction Bank,Bank of Baroda, Standard Chartered Bank, Bank of China, JPMorgan Chase, State Bank of India, Deutsche Bank and RoyalBank of Scotland).Foreign investors are generally afforded the same treatment aslocal investors with some exceptions (for example only residentsare subject to the South African exchange control regime —seebelow).The promotion of Broad Based Black Economic Empowerment(BBBEE) is one of the key Government policies to address theracial and gender inequalities of the country’s apartheid legacy(which restricted and excluded non-white South Africans fromparticipating in the economy). BBBEE is regulated by the BroadBased Black Economic Empowerment Act and Codes of GoodPractice that have been issued by the Government. The Codesset out BBBEE targets and quite complex methods of measuringBBBEE which are based on seven elements —ownership,management, employment equity (affirmative action), skillsdevelopment, enterprise development, preferentialprocurement and corporate social investment. A firm’s BBBEErating is measured against its performance in each of the sevenelements. However a firm with a turnover under R5 million isdeemed to have a level four BBBEE status (level one being thehighest status out of nine levels) and firms with a total turnoverof between R5 million and R35 million may select their bestscores in four of the seven elements to calculate their BBBEErating. Government, regulatory bodies, parastatals and otherpublic entities are obliged to take BBBEE into account in grantingtenders and licences (eg mining and gambling licences). Privatesector firms also try to increase their BBBEE rating by procuringfrom other private sector firms with good BBBEE ratings.Multinationals may earn BBBEE ownership points by means of”equity equivalents” which allow them to remain 100% foreignowned.South Africa is often described as the ”Gateway to Africa”. Manyforeign companies have based their sub Saharan operations inSouth Africa due to its advanced infrastructure and economy(especially compared to other African countries) and strong