Registration of foreign principals and agents in a nutshell

The risk of a local agent taking on a foreign principal under the requirements of last year’s amended rules in the Customs & Excise Act is somewhat diminished by an escape clause, according to Quintus van der Merwe, lead partner for international transport, trade and energy at lawyers Shepstone & Wylie. “Section 99 of the Act deals with liability of an agent for obligation of the principal,” he told FTW. “At first glance, Section 99(2) is important because it provides for an escape from liability if the agent was not a party to the non-fulfilment by the principal. “But a careful reading reveals that this proviso does not apply if the principal is a person outside the Republic.” However, Van der Merwe added, Section 99(4) then provides for a similar defence for an agent (including a representative or associate of the principal) representing or acting for or on behalf of any exporter, manufacturer, supplier, shipper or other principal outside the Republic who exports goods to the Republic. He can escape liability if he proves that: (i) He was not a party to the non-fulfilment by any such exporter, manufacturer, supplier, shipper or other principal, of any such obligation; and (ii) When he became aware of such nonfulfilment, he forthwith notified the Controller; (iii) All reasonable steps were taken by him to prevent such non-fulfilment. But care has to be taken in appropriately filling in all the requirements demanded by customs. “This,” said Van der Merwe, “because Section 99(4) makes it clear that this exemption only applies if the foreign principal and the agent are duly registered as such with customs.” Section 99(5) then also provides a time bar for any liability to cease after a period of two years from the date on which it was incurred. The changes to the act were contained in Government Notice 3527 dated February 10, 2012. This gave effect to the amendment of the rules (and in particular rule 59(A) of the Customs & Excise Act 91 of 1964. This to provide that a foreign principal must appoint an SA agent. Both principal and agent must register with customs. “Various circulars and legislative amendments,” Van der Merwe said, “reflect the SA Revenue Service (Sars) intention that the agent then bears responsibility and will therefore be held liable by Sars for any noncompliance by the principal.” The principal will be any foreign importer, exporter and/or removers of bonded cargo by road. The procedure is that principals are required to register or license, as applicable, directly with Sars as a ‘foreign principal’. They must simultaneously nominate an agent who is located in SA. The agent must accept the appointment, and then assumes full liability for the acts of the principal in relation to any business activity with customs. “Application for registration as a ‘foreign principal’ must be made on a form DA185,” said Van der Merwe, “together with the appropriate annexure for which registration is required. In addition, the foreign principal must complete a form DA185D, which provides details of the ‘registered agent’ with whom the principal has an agreement as his/her representative in SA. The agent may not complete and sign an application for registration or licensing on behalf of the principal.” The definition of registered agents is that “natural or juristic persons located in SA” may register as agent for the principal. But Van der Merwe warned that a ‘registered agent’ is not the same as the current licensed ‘clearing agent’. “Any SA individual or registered company may make application to become a ‘registered agent’. However, a licensed clearing agent may also become a ‘registered agent’. “The agent must accept the nominations made by the foreign principal indicating which functions (importer, exporter or remover of goods in bond) are to be fulfilled on behalf of the ‘foreign principal’. Also he may perform the functions of a licensed clearing agent on behalf of the foreign principal in complying with all obligations imposed by the act on such a licensed clearing agent.”