January 23, 2025

Business

Endorsing Share Certificates: An Important Step for Non-Resident Shareholders

Endorsing Share Certificates: An Important Step for Non-Resident Shareholders

Imagine you’re a UK-based investor who has just acquired a 15% shareholding in a South African manufacturing company. Excited about the growth potential, you look forward to receiving dividends and, one day, selling your shares for a profit. However, without an important step – endorsing your share certificate as “non-resident” – you could face frustrating delays or even legal hurdles.

In South Africa, non-resident shareholders must ensure their original share certificates are stamped with a “non-resident” endorsement. This endorsement, facilitated by an Authorised Dealer, must be completed within 30 days of acquiring the shares. Why is this step so important?

Key Benefits of Share Certificate Endorsement

1. Effortless Dividend Payments
With an endorsed share certificate, South African companies can distribute dividends to non-resident shareholders without complications. For example, as the UK investor, your share of profits would be paid seamlessly if your certificate is endorsed and all required documents are in place.

2. Smooth Disinvestment Process
When selling your shares in the future, an endorsed certificate is essential to avoid a bureaucratic nightmare when repatriating your proceeds. Endorsement ensures the process is seamless and fully compliant with South African Reserve Bank (SARB) regulations.

3. Proof of Ownership
An endorsed certificate is more than a stamp – it’s your proof of ownership, solidifying your legal rights as a shareholder.

4. Fraud Prevention
Endorsed certificates establish a clear ownership trail, making it harder for unauthorised parties to tamper with your investment.

How to Get Your Share Certificate Endorsed

To complete the endorsement, you’ll need:

  • A share sale agreement
  • Proof of inflow of funds (e.g., an inward SWIFT document also know as a MT103)
  • A copy of the signed share certificate
  • An independent auditor’s letter confirming the sale was concluded at fair value and at arm’s length.
  • A Board Resolution from the South African entity specifying the number of shares, the sale amount, and the name of the non-resident recipient/ shareholder.

The endorsement process is straightforward; however, an application to the South African Reserve Bank (SARB) might be necessary if the transaction occurred more than 12 months ago.

Important Note: Only Original Wet Ink Signatures are Valid for Share Certificate Endorsements

Copies of certificates, including digitally signed versions, are not acceptable for this purpose.

This emphasises the importance of maintaining physical possession of the original share certificate when seeking to transfer ownership or make any necessary endorsements.

Take Action Today

At Currency Partners, we assist non-resident shareholders in navigating the complexities of share certificate endorsement by ensuring full compliance with South African regulations. Our expert team facilitates the endorsement process, streamlining dividend distributions, and enabling seamless repatriation of funds when disinvesting. By providing tailored guidance and support, we help safeguard your ownership rights and protect your investment from unnecessary delays or complications.

Don’t let regulatory hurdles jeopardise your investment. Contact your trusted currency exchange intermediary or Authorised Dealer to facilitate the endorsement process quickly and efficiently.

To speak to an expert in our specialist business team, email enquiries@currencypartners.co.za or call us on +27 21 203 0081.

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