oa Comparative and International Law Journal of Southern Africa - Legal aspects of offshore transactions

Volume 27, Issue 1
  • ISSN : 0010-4051



The operation of an offshore company is lucrative when transactions are conducted according to plan. But in the event of contracts not being met, the legal implications can be manifold. Therefore, it is worth giving some thought to the legal implications by taking the necessary precautions against unforeseen litigation. The failure of offshore transactions can result in three main problems: 1) The contractual partner, the offshore company, does not usually have any assets in the jurisdiction of the other company. 2) The foreign contractual partner's assets are usually to be found only in the area of that company's jurisdiction. Since the other company is a peregrinus in that jurisdiction, it will be bound to give security for costs. 3) On the other hand, in the event of an offshore company being sued by a local South African company, a South African court may decide that the overseas company's representative office in South Africa is that company's principal place of business, despite its head office being registered in a tax haven country. Thus, the defendant would be an incola and the South African courts would have jurisdiction over a company that was structured as an 'untouchable' foreign entity.

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