Shuttleworth also wanted the court to force the Reserve Bank to abandon it’s closed door policy, which restricts the public from dealing with it directly, but via commercial banks.
The ‘Afronaut’ also lost his bid to have more than R250 million he paid to the Reserve Bank in exit levies, refunded.
The SA-born entrepreneur immigrated to the Isle of Man in the UK in 2001 and at the time, his assets were worth more than R4.27 billion. He transferred some of his assets out of the country in 2008 and 2009 and was charged a 10% exit levy each time, as per the provisions of Section Nine of the Currency and Exchanges Act of 1933.
Economists have hailed the ruling as a victory for the country, arguing that if Shuttleworth had succeeded, there would have been no restrictions on removing capital from South Africa. This would have been devastating for the economy.
However, economist Mark Schussler disagrees, and says the ruling has dealt a blow to individuals and companies who are looking to get better value for their money in international markets.
“There are a number of people who want to take their money out of the country, but because of the tight exchange regulation, it’s difficult for them to do so,” he says.
Schussler explains that because of the state of our economy and the rand’s weakness, people would like to put their money in different countries but are now restricted. “If things were cheaper for us, then we would be able to do so.
“And it doesn’t only affect individuals but big companies too, making it difficult for them to expand into other countries. Already we have seen Nigerian businesses coming to South Africa, but it has not been the same for our companies; they can’t take their business elsewhere.”
Too much power
Judge Francis Legodi however ruled in Shuttleworth’s favour regarding the section in the exchange control regulations, which give the president the power to amend or suspend any part of the currency exchange and power to amend or suspend an act of Parliament.
Legodi ruled it was unconstitutional, saying it gave too much power to the president.
“This provision has the potential to unravel the healing wounds of the past when laws were changed at the stroke of a pen by one individual. This can never again happen in a constitutional and democratic South Africa,” he said.
Legodi also ruled that the blanket prohibition on any transactions involving foreign currency, gold or other assets readily convertible into foreign currency, unconstitutional because it prohibited the right to free trade.
Regulation 3(1) C, which prohibits paying a person residing outside the Republic – making most modern-day internet transactions illegal – was also struck down, as was the section forcing one to disclose the nature of the goods one wished to purchase when one obtained permission.
The court gave government twelve months to amend certain sections of the regulations.