Transferring intellectual property offshore might appear the obvious route to take your business global and secure funding from interested investors. But can you?
South African legal position: Transferring Intellectual Property Offshore
The South African Currency and Exchanges Act prohibits anyone entering into an agreement which, directly or indirectly, results in the ‘exportation of capital or any right to capital’ from South Africa, without permission from the South African Reserve Bank (SARB).
The Act defines ‘capital’ as including ‘any intellectual property right (whether registered or unregistered)’. ‘Exported’ is broadly defined to include ‘the cession of, the creation of a hypothetic or other form of security over, or the assignment or transfer of any intellectual property right, to or in favour of a person who is not resident in If you are considering assigning and transferring intellectual property offshore as a means to expand your business globally or secure overseas investment, you will need SARB approval. You will also need approval where overseas investors take security over your intellectual property for purposes of securing their investment. But what if you grant an exclusive licence to a potential overseas partner to use and exploit your intellectual property offshore? Does this constitute transferring intellectual property offshore? Licensing intellectual property is not specifically included in the definition of ‘exported’. Does this mean you can do so without SARB approval? Arguably a non-exclusive licence, which does not restrict to how many people you licence your intellectual property, is not a ‘transfer’ of intellectual property offshore and so should not require SARB approval. An exclusive licence however prevents you from using your intellectual property or licensing it to anyone other than the exclusive licensee. This type of licence could be regarded as a ‘transfer’ of ownership of your intellectual property. If granted to a non-resident, it will require SARB approval. The SARB’s position regarding licensing intellectual property offshore is currently unclear. Until there is clarity and specific guidance on this point, it is prudent to get SARB approval if you intend granting a licence (of whatever kind) to a non-resident to use and exploit your intellectual property offshore. Realising the need to attract foreign investment to South Africa, the SARB has ‘relaxed’ the exchange control regulations somewhat. If you operate in the technology, media, telecommunications, exploration or research and development sectors, transferring intellectual property offshore is permissible where required to “raise foreign loans and capital for [your] operations’ (subject still to SARB approval). Take note: you will need to satisfy the SARB that: If you are interested, please complete the form on the right or enquire now. We will contact you to find out more about your requirements and give you a quote.It is not quite so simple …
BUT: there is a small silver lining …
How can we help?
Interested?
