Intellectual property (IP) assets, although intangible and invisible, are financially quantifiable. This means that they can be traded and commercialised. Intellectual property exchange control regulations govern limitations on the purchase and/or sale of IP assets.
Intellectual property exchange control oversees sales, outsourcing, joint ventures, technology transfers, development, service arrangements or other related transactions involving outward IP transfers and royalty payments.
These regulations were recently amended during the National Treasury's 2020 Budget Review.
Exchange Control Act: 2020 Amendments
In summary, the following amendments were made:
- There was expressed intention to relax restrictive export controls administered by the South African Reserve Bank (SARB) with regards to South African-owned IP. This is good news for South Africans looking to maximise the commercial potential of their IP.
- Since 2011 any IP transferred from a South African entity to a foreign entity required SARB approval; without approval the transaction would be deemed unsuccessful. The speech included the announcement that the export of intellectual property for fair value to non-related parties will no longer be subject to approval. This means that there will be an alleviation of overly restrictive onerous exchange controls that inhibit low risk cross-border IP transactions between unrelated parties.
- Such a relaxation of the exchange control regulations may allow for increased investment into South Africa, as technology and other IP-intensive companies might feel more confident that they can deal with the transfer of IP assets developed in South Africa with more certainty and less restriction.
The policy statement has yet to be made law, as it will require official implementation through circulars issued by the SARB's Financial Surveillance Department. According to the National Treasury, exchange control reforms will be rolled out over the next 12 months.
While we await further advancements, our IP Commercialisation Team can assist with intellectual property valuations and exchange control compliance, as the regulations stand.
Intellectual Property Valuations
Intellectual property that can be valuated include:
- Trade marks
Companies require IP valuations in order to determine the single, fair value of the IP, equated by the sum total of all future benefits to be derived from the IP, at current rates. As mentioned, these assets are intangible and often difficult to valuate; therefore, an IP service specialist is key in this process.
Adams & Adams is an internationally recognised, leading African law firm that specialises in providing intellectual property and commercial services. Our Intellectual Property law services help our clients to protect, enforce and commercialise their intellectual property. Contact us for more information on our IP valuation services and exchange control compliance.
Originally published August 11, 2020.
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.