Mark Thatcher has denied any involvement in an alleged coup in Equatorial Guinea after being released on bail by a South African court.
Sir Mark was arrested at his home
He is accused of violating laws banning South African residents from taking part in foreign military action.
A prosecution spokesman earlier said he was suspected of providing funding and assistance for the alleged coup.
Sir Mark, the 51-year-old son of former UK Prime Minister Margaret Thatcher, said he was innocent of all charges.
In a statement released by his spokesman, Lord Bell, the 51-year-old said: "I am innocent of all charges made against me. I have been and am cooperating fully with the authorities in order to resolve the matter.
"I have no involvement in an alleged coup in Equatorial Guinea and I reject all suggestions to the contrary."
Sir Mark appeared before magistrates in Cape Town after being arrested at his home in the wealthy suburb of Constantia.
He was ordered to pay a bail bond of two million Rand (£165,000) and hand over his passport.
Until he pays the bond, he remains under house arrest.
He was charged with contravening two sections of South Africa's Foreign Military Assistance Act.
Sir Mark, who inherited his late father's hereditary baronetcy in 2003, appeared in court in a dark suit and said nothing during the short hearing.
He has been bailed to return to the court on 25 November and has been ordered not to leave the district and to hand over his passport and travel documents to the South African authorities.
Speaking outside the court, Sir Mark's lawyer, Peter Hodes, said he had been held on suspicion of providing financing for a helicopter linked to the coup plot and intended to plead not guilty.
A spokeswoman for Baroness Thatcher said the former prime minister was on holiday in the United States and had not yet been contacted.
Sir Mark's twin sister, Carol Thatcher, told BBC News 24 she was shocked by the allegations against her brother but that she had "lived through scandals before".
Speaking at Heathrow Airport, as she returned to London from Switzerland, she said she had not spoken to Sir Mark and did not know the details of the charges against him.
She said: "My real concern is for my mother because she's in America and I haven't spoken to her and I don't know her reaction and I care about her."
She said she planned to contact Baroness Thatcher before trying to get hold of her brother.
An alleged plot to overthrow the president of Equatorial Guinea has sparked dozens of arrests across Africa.
South African arms dealer Nick du Toit is accused of helping to organise the coup.
He went on trial with 13 other foreign nationals on Monday in the country's capital, Malabo.
The eight South Africans and six Armenians have been detained since March this year.
A 15th defendant died in prison. Both Amnesty International and Mr du Toit's wife allege the accused were tortured.
Seventy other accused mercenaries are on trial separately in Zimbabwe, where they were arrested on 6 March as they allegedly prepared to board a leased aircraft to launch the coup.
The alleged plot leader, former British SAS captain Simon Mann, an old Etonian turned leading African mercenary, has admitted trying to procure dangerous weapons - a charge which carries a possible 10-year jail sentence.