Offshore investing, defined as investing in companies in a jurisdiction other than one’s country of residence, is a dinner party topic that is sure to solicit many differing and conflicting views. Some of these opinions are likely to be tainted by fear and anxiety stemming from local politics and currency fluctuations.
Whenever emotions and politics enter into investment decision making, it is time to revert to timeless investment principles for rational decision making.
At AXIAM, our offshore investing goal is to buy shares in the world’s great companies, regardless of their geography.
For us, the world’s great companies have at least the following characteristics:
- They own great brands
- They generate a large and growing cash flow, where increasing portions of that cash flow is paid out to investors as income in the form of dividends.
- They have low debt-to-equity ratios meaning they easily survive any shocks to the financial and credit markets.
When the above criteria are applied to the universe of public companies listed on the world’s global stock exchanges, a relatively short but very familiar list of global leaders emerges. The list includes, for example, Apple, McDonald’s, Nestle, Anheuser Busch, Unilever and Louis Vuitton.
If you are a South African citizen and you wish to become an owner in these great businesses through offshore investing, there are a few actions to consider.
STEP 1: Moving your capital offshore:
The first step is to transfer your capital from South Africa.
Option 1: Your R1 million annual allowance.
South African’s have a single discretionary allowance of R1 million per calendar year enabling you to transfer R1 million abroad for citizens 18 years and older. No tax clearance certificate is required to use your annual R1 million allowance for offshore investing.
Option 2: Your R10 million Rand annual allowance.
South African’s can invest up to R10 million in their name outside the Common Monetary Area (CMA-Lesotho, Swaziland and Namibia), per calendar year. You must obtain a Tax Clearance Certificate (in respect of foreign investments) from the South African Revenue Service (SARS).
Option 3: Transferring more than R10 million offshore per calendar year.
Your bank must submit an application to the Financial Surveillance Department of the South African Reserve Bank for approval. A Tax Clearance Certificate, in the prescribed format, must always accompany the application.
STEP 2: Opening an offshore trading account:
AXIAM has a partnership with Saxo Bank enabling our clients to open an account which will hold the funds in USD to be invested. The Saxo Bank Trading platform enables us to buy shares in the world’s great companies listed on global exchanges.
STEP 3: Executing the trades:
Once your account is opened and funds transferred, the AXIAM fund management team will make the trades for you. You will have a segregated portfolio expertly managed on your behalf by the AXIAM fund management team.
Please see the list below detailing the exact requirements to begin your offshore investing journey. You are welcome to contact our fund management team to guide you through the application journey.
- 1. Certified ID Document
- 2. Proof of address – this can be a utility bill, telephone account, bank statement etc. addressed to yourself
- 3. Confirmation of bank details (you latest statement suffices)
- 4. Any SARS letter confirming your tax number
- 5. Foreign Investment Tax Clearance Certificate if investing more than R1 million in the calendar year.
- 6. Copies of all passports reflecting passport numbers and your photo
- 7. W8_BEN – this is a document for non-USA citizens confirming their foreign status for tax purposes
- 8. Saxo Individual Application Form
- 9. Saxo Bank Power of Attorney – to allow our fund manager to trade on your behalf
- 10. Axiam Mandate Form
- 11. Axiam Disclosure Document
At AXIAM, we have spent many years growing wealth with an investment strategy inspired by the wisdom of great investors like Warren Buffett. We buy shares in companies that pay regular, increasing dividends, because they own great brands that are known, loved and used around the world daily and we keep them for a long time. Sign up for our newsletter, or contact our fund management team to invest.