It has now, once again, become necessary for foreign exchange approval to be obtained when intellectual property (including trade marks, patents, designs and copyright) is sold to an off-shore entity.

Regulation 10 of the Exchange Control Regulations has been amended to provide that "capital" (referred to in Regulation 10(1)(c)) includes an intellectual property right (whether registered or not) and "exported from the Republic" includes the transfer of an intellectual property right to a person who is not resident in the Republic of South Africa.

Therefore, despite the decision of Supreme Court of Appeal in Oilwell (Pty) Limited v Protec International Limited (to the effect that a trade mark does not constitute "capital" as envisaged in Regulation 10(1)(c)), as a result of the amendment to Regulation 10, foreign exchange approval will now be required in order for a South African resident to transfer an intellectual property right to a person who is not a resident of the Republic of South Africa.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.