Given the current state of the South African economy, the Treasury’s Section 12J tax incentive is arguably one of the few incentives ensuring the country receives investment across most sectors, particularly sectors that have a large impact on job creation, such as mining, agriculture and tourism. Given the enormous interest from South Africans to invest in Section 12J venture capital companies (12J companies), more than 120 have already been formed. Over the years, 12J companies and investors have often been guilty of focusing too much attention on the tax savings associated with Section 12J and not nearly enough attention as to what these 12J companies are investing in. Not only is the underlying investment an important consideration for investors so, too, are the softer issues, such as whether the 12J companies are managing to re-invest an investor’s capital and whether the fees charged for identifying and managing the funds are justifiable. There are a number of key factors inve...

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