Funds acquired by De Novo Capital may only be invested in qualifying investee companies. The following restrictions apply with regards to investee companies:

  • The company must be a resident company;
  • The company must not be a controlled group company in relation to a group of companies;
  • The company’s tax affairs must be in order;
  • Save for junior mining company’s which may be listed on AltX (i.e. the JSE’s alternative exchange), the company must be an unlisted company;
  • The company may not carry on any impermissible trade;
  • The sum of the ‘investment income’ derived by that company during any year of assessment must not exceed 20% of its gross income for that year;
  • The book value of the Company’s assets may not exceed R50 Million immediately after an investment by De Novo Capital; and
  • In the case of a junior mining company, the book value of its assets may not exceed R500 Million immediately after an investment by De Novo Capital.

As aforementioned, the investee company may not carry on any impermissible trade. In this regard, the Income Tax Act defines the term “impermissible trade” as any trade carried on:

  • in respect of immovable property, other than a trade carried on as an hotel keeper;
  • by a bank as defined in the Banks Act, a long-term insurer as defined in the Long-term Insurance Act, a short-term insurer as defined in the Short-term Insurance Act and any trade carried on in respect of money-lending or hire-purchase financing;
  • in respect of financial or advisory services, including trade in respect of legal services, tax advisory services, stock broking services, management consulting services, auditing or accounting services;
  • in respect of gambling;
  • in respect of liquor, tobacco, arms, or ammunition; and
  • mainly outside the Republic.

If you are unsure if your investment opportunity qualifies,

Please contact us and one of our experts will provide you with some guidance