An investment into a foreign entity that develops into an investment loop (as a result of money coming back into the country through a loan and/or an investment from this foreign entity) creates a loop structure. This loop structure could possibly contravene South African exchange control regulations. It is important to know about loop structures and understand the South African law surrounding this. Those who lack insight on loop structures could experience untoward penaltie

Introduction A company is typically financed (or capitalised) through debt and/or equity. Thin capitalisation refers to the situation in which a company is financed through a relatively high level of debt compared to equity levels. Thin capitalisation occurs where a business/ entity/ company has been funded to an extent where the debt is not in proportion to the equity of the business/entity/company, to the extent to that its debt far exceeds its equity with the result that s