Legal - CDH - July 2025

Your trusted legal advisors across Africa

2 BUSINESS RESCUE

A walk through the landlords’ journey in the evolution of the business rescue process.

By: Lucinde Rhoodie, director – Dispute Resolution, and Belinda Scriba, director –Dispute Resolution.

4

B-BBEE OWNERSHIP TRANSACTIONS

A quick guide to B-BBEE ownership transactions in South Africa.

By: Vivien Chaplin, sector head, Director – Corporate & Commercial, and Gaby Wesson, associate –Corporate & Commercial.

7 THE IMMIGRATION ACT

Exploring the impact of the 2024 blitz inspections on workplaces.

By: Imraan Mohammed, director –Employment Law, Taryn York, senior associate – Employment Law, and Thobeka Kalipa, associate designate –Employment Law

8 DRIVING CHANGE

Legal technology is relatively new, but adopting it is essential for law firms to remain competitive and effective.

By: Tayyibah Suliman, Sadia Rizvi, Marco Neto and Izabella Balkovic.

10 AI IN THE

SHADOWS

Revealing how e-discovery can transform the legal practice and unlock new opportunities in South Africa.

By: Retha Beerman, head and director of Knowledge Management, Safee-Naaz Siddiqi, senior associate in Knowledge Management, Shanley Webb, candidate attorney in Knowledge Management, and Rynhardt Haarhoff, data solutions engineer at Knowledge Management.

13

KNOWING WHAT TO DISCLOSE

We unpack the importance of submitting critical documents in premerger filings.

By: Lebohang Mabidikane, director – Competition Law.

14

PUBLIC-PRIVATE PARTNERSHIPS

Discussing the opportunities presented by the amended National Treasury Regulation 16 for public-private partnerships, distinguishing that from private sector participation initiatives. By: Jackwell Feris, director and sector head: Industrials, Manufacturing and Trade.

18 OPPORTUNITY TO CONNECT (SECTION 34)

Unpacking how Section 34 determination and draft regulations are paving the way for private sector involvement in new electricity transmission infrastructure. By: Alecia Pienaar, counsel –Corporate & Commercial, and Tessa Brewis, joint sector head: Projects & Energy and director: Banking, Finance & Projects.

20 JURISDICTION AND REFERRED DISPUTES

Unpacking jurisdiction challenges. By: Khaya Mantengu, director – Dispute Resolution and Construction and Engineering, and Zodwa Malinga, associate – Dispute Resolution and Construction and Engineering.

22

THE TAO OF EQUITY CAPITAL

Finding a balance between dividend reinvestment plans and share buybacks. By: Nastascha Harduth, head of Corporate Debt, Turnaround & Restructuring and designate – Dispute Resolution, Yaniv Kleitman, director, Corporate & Commercial, and Zachary Kokosioulis, associate designate, Dispute Resolution.

24 ENGAGING

INEQUALITY

Discussing the legal pathways to equity and gender justice in South Africa.

By: Nadeem Mahomed, director –Employment Law

26 COMPANY TAX DEBTS

Understanding when SARS can hold individuals personally liable and what you can do about it.

By: Heinrich Louw, director – Tax & Exchange Control.

28

TRANSACTING IN THE MINING SECTOR

Unpacking the security options when transacting with contract mining service providers or with the holder of a mining right.

By: Chané Stievenart, senior associate – Corporate & Commercial.

30 ENERGY AND ENVIRONMENT

Breaking down the rigid dichotomy between South Africa’s constitutional environmental right and its energy landscape.

By: Alecia Pienaar, counsel –Corporate & Commercial.

LANDLORDS’ BUSINESS RESCUE JOURNEY

A walk through the landlords’ journey in the evolution of the business rescue process. By LUCINDE RHOODIE , director – Dispute Resolution, and BELINDA SCRIBA , director – Dispute Resolution, at Cliffe Dekker Hofmeyr

In cases where the business rescue practitioner (BRP) is aiming to rescue the business from nancial distress, the support of the landlord is usually an integral key to the success of that rescue. This notwithstanding, and although business rescue is a creditor-driven process, landlords generally do not have the same protection when a tenant commences business rescue as when a tenant goes into liquidation.

In terms of section 128 of the Companies Act 71 of 2008, business rescue is a process that seeks, best case scenario, to rescue a company from nancial failure and ultimate liquidation of a company, or, at least, to ensure a better return for the creditors in the event the company cannot be rescued.

In terms of section 136(2) of the Act, a contract concluded before the commencement of business rescue

proceedings, such as a lease, is not suspended or cancelled by virtue of the business rescue, but the business rescue practitioner may suspend, or apply to court to cancel, any obligation of the company under the contract. This means that the BRP can seek to suspend certain obligations under the lease agreement, including payment of rental. However, this may have knock-on consequences which may affect the ultimate success of the business rescue, the most obvious being the landlord’s cancellation of the lease.

ALTHOUGH BUSINESS RESCUE IS A CREDITOR-DRIVEN PROCESS, LANDLORDS GENERALLY DO NOT HAVE THE SAME PROTECTION WHEN A TENANT COMMENCES BUSINESS RESCUE AS WHEN A TENANT GOES INTO LIQUIDATION.

Section 133(1) of the Act provides that inter alia during business rescue proceedings, no legal proceeding, including enforcement action, against a company, or in relation to any property lawfully in its possession, may be commenced or proceeded with except (a) with the written consent of the BRP, or (b) with the leave of the court and in accordance with any terms the court considers suitable. However, the Supreme Court of Appeal in Cloete Murray and Another NNO v FirstRand Bank Ltd t/a Wesbank held that the cancellation of a contract does not constitute “enforcement action” prohibited by section 133(1). One of the reasons provided by the SCA for reaching this conclusion was that the terms “enforcement” and “cancellation” are mutually exclusive and not interpreting them as such would be contrary to the language,

context, provision and purpose of section 133(1). In terms of landlords, it means that they could cancel a lease agreement that had been concluded with a company under business rescue prior to the business rescue should that agreement be breached as a result of nonpayment of rental.

If the landlord cancels the lease agreement they do not have to rely on section 133 to commence eviction proceedings against the company in rescue. This is according to a decision from the Gauteng High court, Kythera Court v Le Rendez-Vous Cafe CC and Another 2016 (6) SA 63 (GJ). This is obviously not ideal for the BRP as it may mean the failure of the business rescue if the landlord is successful. A failed rescue is also not in the landlord’s best interest, as their prospects of recovering outstanding rental due may

be greatly diminished should the rescue fail. Because of this the BRPs and landlord often negotiate that any rental due during business rescue is either paid immediately or constitutes post-commencement nance. This was by no means a guarantee, however, and left huge uncertainty for landlords especially after the judgment of The South African Property Owners Association v Minister of Trade and Industry and Others 2018 (2) SA 523 (GP) (29 November 2016).

SOME GOOD NEWS

Fortunately for landlords, the latest amendments to the Act, section 135(1a), have entrenched that at least part of the costs incurred by a landlord during the period of business rescue shall be treated as post-commencement nance, giving the landlords a preferent right in business rescue. These costs are in respect of and not exceeding the aggregate for all public utility services such as the company in business rescue’s share of rates and taxes, electricity, water, sanitation and sewer charges paid by the landlord to third parties during business rescue. Despite this amendment, it may still be necessary and advisable for a landlord to enter into an agreement with the BRP in regard to payment of rental during business rescue to ensure that by agreement this is also regarded as post-commencement nance. This is good news for both BRP and landlord, as it gives an added degree of comfort to landlords, which, in turn, allows the BRP to better rely on the landlord’s co-operation, allowing for a more secured business rescue plan.

Zachary Kokosioulis

Lucinde Rhoodie

Belinda Scriba

B-BBEE OWNERSHIP TRANSACTIONS

A quick guide to B-BBEE ownership transactions in South Africa. By VIVIEN CHAPLIN, sector head, director – Corporate & Commercial, and GABY WESSON, associate – Corporate & Commercial, at Cliffe Dekker Hofmeyr

Ownership is regarded as one of the most important elements of the broad-based black economic empowerment (B-BBEE) scorecard, as set out in the Codes of Good Practice issued in terms of the Broad-Based Black Economic Empowerment Act 53 of 2003 (Codes). The ownership element is a key driver of a company’s B-BBEE level and, in some cases, a mandatory requirement for certain sectors of the economy governed by bespoke sector charters (such as in the mining industry) that prescribe minimum ownership thresholds. It is also often a critical consideration in contracting, particularly in public procurement processes.

We brie y outline the potential B-BBEE ownership transactions available to companies seeking to secure a minimum level of ownership or otherwise improve their B-BBEE score, as well as the key principles and criteria that must be considered.

B-BBEE OWNERSHIP MEASUREMENT PRINCIPLES AND CALCULATIONS

Ownership is governed by Statement 100 of the Codes and measured against the following sub-elements:

• Voting rights exercised by black people and women

• Economic interest enjoyed by black shareholders (for example, dividends and sale proceeds). This includes black people, black women, black designated groups, black participants in an employee stock ownership plan (ESOP), broad-based ownership scheme (BBOS) or co-operatives.

•Realisation or net value, which is the portion of ownership that is effectively free from debt, measured over a 10-year scale based on the above criteria and scores.

Ownership is measured in terms of the following principles:

• Flow-through principle: in terms of which black ownership is recognised in proportion to direct ownership rights in a measured entity.

• Modified Flow-through principle: where an intermediary entity is imposed between the measured entity and a 51 per cent black-owned entity in the chain of ownership, 100 per cent of the black-owned entity’s ownership may be recognised (only once in the chain of ownership) as owing to the measured entity’s shareholding. This is a tool that can be used for B-BBEE structuring.

The points in terms of the ownership element are broken down as follows:

Voting rights:

•25 per cent + 1 vote target for exercisable voting rights in the hands of black people (4 points).

•10 per cent target for exercisable voting rights in the hands of black women (2 points).

Economic interest:

•25 per cent target in respect of economic interest to which black people are entitled (4 points).

•10 per cent target in respect of economic interest to which black women are entitled (2 points),

•3 per cent target in respect of economic interest to which black designated groups, black participants in an ESOP, BBOS or co-operatives (3 points).

OWNERSHIP IS A PRIORITY ELEMENT THAT REQUIRES 40 PER CENT COMPLIANCE TO AVOID THE MEASURED ENTITY AUTOMATICALLY DROPPING ONE B-BBEE LEVEL.

OWNERSHIP

IS REGARDED AS ONE OF THE MOST IMPORTANT ELEMENTS OF THE BROAD-BASED BLACK ECONOMIC EMPOWERMENT SCORECARD.

•2 per cent target in respect of economic interest to which new entrants are entitled (2 points).

Realisation points:

•8 points in respect of net value. This is calculated according to a formula and is dependent on the scores obtained above. Ownership is a priority element that requires 40 per cent compliance to avoid the measured entity automatically dropping one B-BBEE level.

TYPES OF B-BBEE OWNERSHIP FORMS AND TRANSACTIONS

Direct shareholding by black individuals/consortia

The most straightforward B-BBEE ownership transaction is through direct investment/ acquisition of equity by a black company/ companies or individual. Crucially, however, this must confer real voting and economic rights to the black investor.

Broad-based ownership schemes

Broad-based ownership schemes (BBOS) are collective ownership vehicles established for the bene t of a broad base of black bene ciaries in communities. These typically include local communities, youth organisations or educational initiatives. These schemes are often structured as trusts and are particularly prevalent in regulated sectors such as mining and telecommunications. To qualify under the Codes, BBOS structures must comply with Annexe 100(B), which sets out governance and operational requirements, including the requirement that 85 per cent of the value of the bene ts allocated by the scheme must accrue to black people. Furthermore, if the BBOS is structured using a trust, speci c rules in terms of Annexe 100(D) must be complied with for a trust to qualify for points under the Codes. Additionally, it is important to remember that any such structure must also comply with the Trust Property Control Act 57 of 1988.

Employee share ownership plans

Employee share ownership plans (ESOPs) are, simply put, company share schemes for employees, with the majority of participants/bene ciaries being black employees.

These schemes allocate shares or share-linked bene ts (such as units) to qualifying employees either directly or through a vehicle such as a trust. To qualify for B-BBEE ownership recognition, ESOPs must comply with Annexure 100(C) of the Codes, which prescribes requirements such as the appointment of duciaries of the scheme (including the extent to which participants appoint the duciaries), rules of participation and mechanisms for distributing economic interest. These ESOP structures can also use either a trust or a company structure.

Vendor/notional financing transactions

Should direct nancing not be available, vendor nancing or nancial assistance by the seller of the equity interest/measured entity is also permitted to enable the black investor to nance its ownership. Vendor nance can take the form of preference shares, deferred purchase arrangements or notional vendor funding. To qualify under the Codes, it is particularly important that such arrangements confer genuine economic and voting rights upfront, despite deferring repayment. Vendor nancing is typically assessed against the net value calculation in Annexe 100(E) of the Codes.

Statement 102 transactions

Statement 102 transactions are fairly niche and a relatively unknown form of ownership transaction. They provide an alternative form of ownership recognition where a transaction is regarded as a “qualifying transaction”, which can include the sale of an asset, business or equity instruments to black people. Equity instruments are instruments through which a participant holds rights

WHILE OWNERSHIP TRANSACTIONS CAN SIGNIFICANTLY ENHANCE A COMPANY’S B-BBEE LEVEL, THERE ARE INHERENT RISKS THAT MUST BE BORNE IN MIND BY INVESTORS.

of ownership in an enterprise. As a result, such a company may get the equivalent recognition via a sale of assets to black people. For a Statement 102 transaction to result in ownership points being achieved, the transaction must:

•Result in the creation of viable and sustainable businesses or business opportunities in the hands of black people.

•Result in the transfer of critical or specialised skills, managerial skills and productive capacity to black people.

• Involve a separately identi able related business which has (i) no unreasonable limitations or conditions with regards to its clients or customers; (ii) clients, customers or suppliers other than the seller; and (iii) B-BBEE shareholders, or their successors if the B-BBEE shareholding is the same or improved, holding the asset for a minimum of three years.

Equity Equivalent Programmes

Equity equivalent programmes (EEPs), as governed by Statement 103 of the Codes, are

an alternative form of ownership transaction available to multinational companies unable or unwilling to dilute equity in their South African measured entity. Similar to Statement 102 transactions, EEPs present another form of deemed equity ownership. These programmes allow for recognition of ownership points through providing qualifying economic contributions to black South Africans, equivalent in value to a direct equity sale. The contributions must be formally approved by the Department of Trade, Industry and Competition, and can include foreign direct investment into an equity equivalent programme, enterprise creation or investment in social advancement programmes. The value of the contribution is calculated at 25 per cent of the value of the South African operation or 4 per cent of its total revenue. However, these structures are quite dif cult to implement in practice, given the requirements imposed in terms of Statement 103, the duration during which the programme must be in place, and the expenses incurred.

Special rules for multinationals

Finally, in addition to the EEPs, there are also special “rules for multinationals” whereby equity held by South Africans in an offshore holding structure can be recognised, however, the calculations and rules for recognition are complex and require detailed legal and commercial advice.

CONCLUSION

In short, a measured entity may be able to claim points under the ownership element of the B-BEE scorecard through the aforementioned transactions provided that: •All applicable provisions in the Codes are complied with.

•The investor holds exercisable voting rights and economic rights or recognised equivalent rights as set out above.

•The ownership can be calculated through the Flow-through or the Modi ed Flow-through Principle.

•The transaction is disclosed to the B-BBEE Commission should the value thereof equal or exceed R25 000 000.

While ownership transactions can signi cantly enhance a company’s B-BBEE level, there are inherent risks that must be borne in mind by investors, including the possibility that the transaction constitutes a fronting practice, where there is a lack of genuine participation by black shareholders.

Evergreen debt structures present another risk, particularly in vendor funding transactions where debt remains inde nitely, thus preventing the achievement of net value thresholds required by the Codes and potentially causing the black shareholder to be “locked in”.

We advise companies embarking on B-BBEE ownership transactions to seek professional advice to ensure any proposed transaction complies with the provisions of the Codes and is structured in a manner that is bene cial to all participants and encourages true and tangible transformation of the South African economy.

THE IMMIGRATION ACT AND THE EMPLOYMENT OF ILLEGAL FOREIGNERS

IMRAAN MAHOMED, director – Employment Law, TARYN YORK , senior associate – Employment Law, and THOBEKA KALIPA , associate designate – Employment Law, at Cliffe Dekker Hofmeyr, explore the impact of the 2024 blitz inspections on workplaces

In 2024, the Department of Employment and Labour (DEL), the Department of Home Affairs and the South African Police Service ramped up workplace inspections to clamp down on the employment of illegal foreigners and ensure compliance with the Immigration Act 13 of 2002 (Immigration Act).

In mid-February 2025, the DEL minister indicated that:

•68 employers were arrested across South Africa, all of whom paid a R10 000 admission of guilt ne in lieu of nes in terms of the Immigration Act, with the highest number of employer arrests

having occurred in the Eastern Cape and Mpumalanga.

•Accordingly, the total amount paid in lieu of nes was R680 000.

•322 employees were arrested and further processed under the Immigration Act.

CLAMPING DOWN

ON IMMIGRATION

ACT CONTRAVENTIONS

The DEL continues to spearhead compliance inspections and to clamp down on contraventions of the Immigration Act in 2025. Employers are reminded of their obligation to ensure they are not employing any illegal foreigners, and to determine the status of any foreigner who is employed. Where an illegal foreigner is employed, employers need to be aware that this constitutes a breach of the Immigration Act.

In managing the employment relationship with any foreign employees, it is therefore important to be proactive and mitigate against any risks associated with such employment. Regular audits have become a necessity. Where illegal foreigners are identi ed, employers should take caution to manage the situation appropriately to avoid being on the wrong side of dismissals and having to defend claims in the Commission for Conciliation, Mediation and Arbitration.

EMPLOYERS ARE REMINDED OF THEIR OBLIGATION TO ENSURE THEY ARE NOT EMPLOYING ANY ILLEGAL FOREIGNERS, AND TO DETERMINE THE STATUS OF ANY FOREIGNER WHO IS EMPLOYED.

WHERE AN ILLEGAL FOREIGNER IS EMPLOYED, EMPLOYERS NEED TO BE AWARE THAT THIS CONSTITUTES A BREACH OF THE IMMIGRATION ACT.

Thobeka Kalipa

Imraan Mahomed

Taryn York

The high-stakes race to integrate legal tech DRIVING CHANGE

Legal technology is relatively new, but adopting it is essential for law firms to remain competitive and effective. By

TAYYIBAH SULIMAN, SADIA RIZVI , IZABELLA BALKOVIC and MARCO NETO from Cliffe Dekker Hofmeyr

The use of legal technology in the legal profession mirrors the intense competition on a racetrack. Legal professionals have entered a high-stakes race to the nish line, where every decision impacts their chances of nishing ahead of competitors to win. Legal professionals must become adept at navigating the complexities of legal tech, especially considering the introduction of arti cial intelligence (AI) tools.

Pick your driver

Law rms must choose the driver to lead them to victory. Is it the tried-and-tested practices of the legal profession or a new generation that embraces legal tech?

The legal profession is, by nature, risk-averse and resistant to adopting legal tech. Some legal professionals advocate for the slower adoption of technology to ensure the legal profession can maintain detail-orientated and high-quality work with extensive human oversight.

On the other hand, the new generation of legal professionals are accustomed to using technology daily and are more receptive to adopting legal tech and innovative methods for performing legal tasks.

Which driver will be successful? Complex legal technology adoption remains relatively novel in the industry. Cultural resistance to change affects the pace of adoption, but technology remains imperative for meeting the demands of increasingly complex business structures and large volumes of data.

RACE STRATEGY

Now the driver has been chosen, it is time to select the right race strategy.

Law rms must strategically decide which tools and technology are most suitable for their area of specialisation to meet the speci c instructions of their clients.

Today, many rms use practice management software to streamline billing, accounting and matter management. Legal research platforms have reshaped how case law, legislation and legal commentary are accessed, signi cantly reducing research time. These platforms are increasingly incorporating AI and automation features to boost usability and ef ciency.

ADOPTING DOCUMENT AUTOMATION SOFTWARE

Adopting document automation software enables the rapid generation of contracts and complex legal documents. These tools assist legal practitioners and in-house counsel to save time, reduce errors and maintain consistency. Digital signature tools are commonplace and are essential for completing transactions and signing agreements with ease, including expedited cross-border contracting.

PIT STOPS

Unforeseen challenges arise in adopting legal tech regardless of the strategy of law rms. Much like a pit stop, the decisions made when these challenges arise will be crucial to continue to the nish line.

Legal professionals need to understand that legal tech adoption is not cheap. Law rms must conduct a cost-bene t analysis and consider the return on investment. The type of legal tech adopted is dependent on the business’s needs. The needs of a small law rm vary largely from those of a big practice. Regardless of a law rm’s size or the type of clients served, the legal tech must be carefully selected to meet the business needs.

Firms should also be mindful that adopting multiple legal tech tools doesn’t always mean better performance; it can lead to inef ciencies if the tools are not integrated properly or don’t address a rm’s core requirements.

Another critical consideration in the adoption of legal tech is cybersecurity and the associated costs of maintaining robust cybersecurity measures to protect law rms from cyberthreats. Law rms are frequently targeted by phishing and hacking attempts due to the sensitive nature of the information they handle. This is equivalent to another driver making deliberate contact with your race car on the track and causing a crash. The adoption and integration of new technology necessitates that professionals diligently implement appropriate measures to safeguard con dential and sensitive information.

If you place an inexperienced driver in a race car you cannot expect them to win. Much like this, the resistance to adopting technology in the legal profession indicates that training is essential for incorporating legal tech. Customised and thorough training for using legal tech will play a critical role in maximising the

Tayyibah Suliman Sadia Rizvi

effectiveness of legal tech. Bringing in legal tech specialists, people who truly understand how to maximise the use of legal tech, can make a signi cant difference in ensuring its successful implementation.

TRUST THE DRIVER

Every driver should trust their instincts when making decisions while on the racetrack. The engineers sitting in the pit are not always aware of what you face in the heat of the race.

AI has become synonymous with everyday life. It is no longer unusual to nd an AI integration in just about any software used in a company. AI has the potential to increase the accuracy and ef ciency of work.

As it has recently been seen in many jurisdictions, including South Africa, there have been legal practitioners who have relied on AI which has hallucinated cases and the law who neglected to verify the information and accuracy of the AI generated information. The legal practitioners have been held accountable where they have relied on ctional AI cases/ case citations and have faced nes, penalties and the revocation of their licence to practice law. Magistrate Mark J Dinsmore, in the US District Court for the Southern District of Indiana, said: “The use of arti cial intelligence should be accompanied by the application of actual intelligence in its execution.”

These wise words should underpin the application of AI in every company, especially the legal profession. Many users of AI fail to understand the

WHEN SENSITIVE OR PRIVILEGED DOCUMENTATION OR INFORMATION IS PROVIDED TO AI TO ASSIST IN A MATTER, THIS DOCUMENTATION OR INFORMATION MAY NOT ALWAYS REMAIN PROTECTED UNDER LEGAL PRIVILEGE.

underlying way in which AI works. For example, generative AI relies on the quality of its uploaded data. It may rely on an incorrect document stored on its system. Legal practitioners must act similarly to a steward in a race who ensures the race is conducted fairly and safely by monitoring the race, investigating incidents and imposing penalties when necessary.

Several ethical considerations should be taken into account when using AI. AI systems may contain biases that are applied when processing information. The lack of transparency in the processes used by AI to reach its outputs may perpetuate these biases. Furthermore, legal professionals cannot ascertain the reasoning process used by the AI to arrive at its conclusions, despite being required to justify these outcomes to clients and the courts when relying on such information. When sensitive or privileged documentation or information is provided to AI to assist in a matter, this documentation or information may not always remain protected under legal privilege.

QUANTUM COMPUTING: THE HYPERCAR IN THE RACE

Quantum computing is like driving a race car on a multilane highway while classical computing is like driving a go-kart on a single-lane track. Quantum computing is like entering a hypercar into a race: no restrictions, no limits and operating at a level far beyond what’s currently on the track.

Quantum computing poses a signi cant threat to the security foundations of legal technology. Many of today’s legal systems, from document management platforms to e-signature veri cation and client communication tools, rely on encryption methods that could be rendered obsolete by the immense processing power of quantum computers. As these machines

grow in capability, they may be able to break widely used cryptographic protocols, exposing sensitive client data, privileged communications and con dential records to unprecedented risks. The legal industry must start preparing now for a post-quantum world.

CROSSING THE FINISH LINE

The chequered ag is waved. The race is complete.

Effective legal tech has been implemented with precision, strategy, co-ordination, training and time ef ciency. Legal professionals who seamlessly integrate legal tech into their business will have a competitive advantage in the legal industry. The types of tools chosen will be important in ensuring law rms and professionals can deliver high-quality services and meet client needs. Equally important, is ensuring the risks posed by legal tech are mitigated and accounted for to ensure the con dentiality and security of information. The winner of the race to implement legal tech takes it all, but in the technology world, it’s always on to the next race!

Izabella Balkovic

Marco Neto

AI IN THE SHADOWS

RETHA BEERMAN , head and director of Knowledge Management, SAFEE-NAAZ SIDDIQI , senior associate in Knowledge Management, SHANLEY WEBB, candidate attorney in Knowledge Management, and RYNHARDT HAARHOFF, data solutions engineer, at knowledge Management, at Cliffe Dekker Hofmeyr, reveal how e-discovery can transform legal practice and unlock new opportunities in South Africa

In 2014, a bright-eyed candidate attorney found herself transformed into a human paper mill. For days, she stood over printers churning out electronic nancial statements, meticulously organising them into 350 bulging lever-arch les before hand delivering them to several of ces for experts of all descriptions to wade through them.. This wasn’t the end of her ordeal – she repeated this Sisyphean task many more times, often without being able to recover fees for the time spent on this thankless labour. To make it worse, even without billing for all time spent the nal invoice often still shocked the client. Following several similarly soul-crushing experiences that made

her question her career path, the young attorney eventually abandoned both the rm and, temporarily, the legal profession.

PAPER OVERLOAD

Legal teams must thoroughly examine evidence to uncover that crucial smoking gun or construct an impenetrable defence. Case outcomes often hinge on meticulous document review, and earlier insights signi cantly improve strategic decision-making. Traditionally, this meant exhaustive paper-handling exercises culminating in talented lawyers – sometimes entire teams – reading every single document received.

The scenario we outlined is far from unique. Though it represents a personally painful memory for at least one of the authors, it’s likely not controversial to suggest clients themselves have little fondness for this particular aspect of dispute preparation. You would think that law rms would revel in a seemingly open ended reason to bill time, but that is very seldom the case - sophisticated and informed clients demand “more for less” and increasingly lawyers will lose out on matters and transactions if they cannot increase speed, ef ciency and cost effectiveness.

It seems surprising then that technology, which signi cantly reduces the burden of evidence management and assessment –widely used internationally for over a decade and to a limited extent locally – hasn’t gained broader adoption in South Africa. As knowledge lawyers, we’ve frequently questioned why convincing colleagues and clients to embrace these technologies proves so challenging. Whatever factors have slowed adoption thus far, we’re convinced lawyers will readily implement these technologies when clients demand their use. Responsibility for the current

Retha Beerman

WITH LLM INTEGRATION, TODAY’S AI TOOLS CAN IDENTIFY PATTERNS ACROSS THOUSANDS OF DOCUMENTS, PROVIDE CONTEXTUAL ANALYSIS OF COMMUNICATIONS AND GENERATE COMPREHENSIVE SUMMARIES.

state lies with both attorneys and clients, and meaningful progress requires initiative from both sides.

WHAT IS THIS TECHNOLOGY?

Colloquially referred to as e-discovery tools, users can apply a form of technology-assisted document review, allowing them to gather and review massive amounts of electronic evidence without needing multiple copies of physical bundles, and use a single collaborative version of all review notes.

Human reviewers expertly wield the tool to ensure duplicates are removed, con dential or privileged documents are marked and relevant documents are identi ed. Access rights can differ within the teams if necessary, but the senior team members can view and track what others have thought about the documents and easily structure and assess work previously done. Searching over the document set is easy and generating court bundles is child’s play.

E-discovery tools not only allow effective organisation and trackable management of the document set, but are also extraordinarily good at helping human reviewers nd those smoking guns or ironclad defences. Algorithms are used to learn from the human reviewers’ process, enabling an automatic application of the learned evaluation matrix to other documents not yet reviewed.

While humans will ultimately review the tool’s suggested conclusions, there comes a point when document volumes make it virtually impossible for legal teams to examine every page with the same focus and unwavering ef ciency as a machine. Though it’s acknowledged in legal tech circles

that arti cial intelligence (AI) systems will misclassify a small percentage of documents, human reviewers typically produce even more errors – machines don’t experience fatigue, never grow bored and can process documents continuously through the night, every night.

AI’S ROLE IN MODERN E-DISCOVERY

AI VERSUS HUMANS IN DISCOVERY: A COMPLEMENTARY PARTNERSHIP

When AI is used as part of the e-discovery document process, it can scan millions of documents in hours by keywords or themes spot buried patterns e.g. (a key email) translate foreign documents and even redact names or numbers. Advanced algorithms can identify conceptually similar documents even when they share no common terms, agging potentially relevant evidence that might otherwise remain buried.

For our candidate attorney’s 350 les, AI could’ve scanned them overnight, tagged the hot spots and left a shortlist. What took months could have been distilled to days with experts focusing only on the most promising material rather than wading through thousands of irrelevant pages.

However, technology is not infallible, and it is ultimately up to the lawyer doing the review to be comfortable enough with the technology to be able to navigate within it as easily as reading a le of documents from start to nish, applying multicolour tags and adding brilliantly insightful scribbles in the margin. Once one achieves that level of domain expertise and realises that one’s electronic note will not be lost accidentally, the technology can come into its own, and deliver useful tasks such as de-duplicating unnecessary documents, automatically date ordering the document set, making reviewers’ notes legible, ndable and shareable.

THE ECONOMICS OF AI-POWERED DOCUMENT REVIEW

E-discovery is not new and has always relied on machine learning (a form of AI), however, the advent of generative AI (large language models) has resulted in a new urry of developments in this space. We are only beginning to see how generative AI/Large Language Models (GenAI/ LLM) might change how e-discovery platforms operate. GenAI/LLM has much more advanced inherent natural language processing capability than the traditional machine learning algorithms, which required an extensive training process before being useful. This means it signi cantly increases the tools’ ability to understand the reviewer’s intent when searching for a smoking gun, attach meaning to the documents’ content and convey that conclusion conversationally to the reviewer, all without requiring the traditional continuous active learning process currently available in leading e-discovery platforms. AI in e-discovery uses machine learning to revolutionise the traditional review process. Even before the advent of the current generation of LLMs, these systems could continuously learn from reviewer feedback, becoming more accurate with each iteration. Now, with LLM integration, today’s AI tools can identify patterns across thousands of documents, provide contextual analysis of communications and generate comprehensive summaries that would take human reviewers weeks to produce., effectively bridging the gap between raw data and actionable legal insights.

The time and cost implications of AI-assisted e-discovery are staggering. Recent studies indicate that properly implemented AI review systems can reduce document review time by up to 70 per cent. A 2023 survey of international law rms found that AI-powered document review resulted in average cost savings of 30–45 per cent compared to traditional methods, with some complex cases seeing reductions of over 70 per cent in both time and billable hours.

Rynhardt Haarhoff

Safee-Naaz Siddiqi

Shanley Webb

AI-ASSISTED E-DISCOVERY OFFERS MORE THAN MARGINAL GAINS; IT SIGNALS A FUNDAMENTAL SHIFT IN HOW LEGAL PROFESSIONALS

SOUTH AFRICA’S UNIQUE POSITION FOR AI ADOPTION

South Africa is well-positioned to leapfrog traditional e-discovery methods through AI-assisted solutions. Several factors support this potential shift:

• The country’s hybrid legal system, blending Roman-Dutch law with English common law, presents complex document review challenges that AI’s pattern recognition is well-suited to handle.

• The legal market is relatively concentrated, meaning successful adoption by a handful of top rms could quickly set new industry norms.

• Cost pressures on South African businesses make AI-assisted review an economically attractive alternative to traditional manual processes.

• Most signi cantly, South Africa’s still-developing e-discovery infrastructure offers a unique advantage: rms can adopt state-of-the-art AI tools without the drag of legacy systems, unlike many counterparts in Europe and North America.

SO WHY IS ADOPTION SLOW?

We don’t want to suggest we have all the answers, but these are some reasons for the slow adoption.

• Inertia and established practice. Change takes effort. Without a compelling reason to do things differently, the natural tendency is to continue with familiar methods, particularly in high-pressure environments where time is limited and risk aversion is high.

• Dependence on specific process. The best use is achieved from an e-discovery tool if (1) the document set is electronically available, (2) when it is carefully moved into the e-discovery platform with retention of its metadata, which, like the envelope of a letter, provides critical contextual information, (3) the full set of relevant documents is provided, and (4) this is done early in the process.

• Client behaviours and preferences. Clients often prefer to curate and control the documents they share – sometimes to manage costs, sometimes to control the narrative. Many still hand over hard copies or PDFs, which strip away valuable metadata and require extensive manual handling. This undermines the ef ciency gains e-discovery tools are designed to offer.

• Discomfort with the unfamiliar. Lawyers are expected to be in control of both substance and process. Adopting unfamiliar technology can feel risky, especially when the bene ts aren’t immediately obvious or the learning curve seems steep.

• Procedural realities. Our litigation rules do not require early or extensive discovery. In jurisdictions where early-stage document disclosure is standard, the volume of data often makes e-discovery essential. Here, the urgency is simply not the same.

THE FUTURE OF AI DOCUMENT REVIEw

Despite the listed reasons for resisting e-discovery, it seems we are moving slowly but surely towards greater adoption. Not only has the fear of technology greatly reduced since COVID-19 (when lawyers of all ages and comfort levels with technology had to embrace online solutions), but the volume of documents (especially in electronic format) is ever-increasing. At some point, the impossibility of navigating large litigious document sets in any other way will catch up with us if the bene ts of using it don’t lead us to adoption rst.

The next frontier for AI in South African legal practice extends beyond mere document identi cation to substantive analysis. Advanced systems are already beginning to assess the merits of potential litigation by evaluating similar historical cases, identifying potential precedent challenges and even predicting judicial tendencies in speci c types of disputes.

The “smoking gun” search – once the domain of bleary-eyed junior attorneys – is increasingly becoming an algorithmic exercise. AI systems can identify anomalous communications, ag suspicious timing of transactions and highlight conspicuous gaps in document trails, all while learning from each new case to improve future performance.

IS E-DISCOVERY WITH GENAI RIGHT FOR YOU?

It depends – not every matter justi es it, but when the conditions are right, the bene ts can be signi cant. Here are a few questions to ask yourself as a client or lawyer:

• Is there a large volume of documents? If you’re dealing with thousands of emails, reports or internal records, GenAI can help surface patterns, prioritise review and reduce the time spent trawling through irrelevant material.

• Is the data already in digital form? GenAI tools work best with structured electronic documents. If most of your material is still in hard copy or disorganised PDFs, the tech may be less effective or require extra work to prepare.

• Do you need to move quickly?

GenAI-assisted review can accelerate timelines, especially in fast-moving litigation or regulatory matters.

• Is cost a factor? AI doesn’t eliminate legal fees, but it can reduce the billable hours required for early-stage document review. If you’re looking for ef ciencies, it may be worth exploring.

• Are you comfortable experimenting? These tools are powerful, but they’re still evolving. If you’re open to trying something new – and can work with your legal team to test the outputs and re ne the approach – it’s more likely to succeed.

If you’re still unsure, ask your legal team to walk you through a pilot using a small, controlled document set. You’ll get a feel for what’s possible and whether it’s a good t for your matter.

A Fundamental Shift

The era of bakkies stacked with lever-arch les doesn’t need to endure.

As South Africa’s legal landscape continues to evolve, AI-assisted e-discovery offers more than marginal gains; it signals a fundamental shift in how legal professionals approach document review. Firms that embrace this change won’t just work faster; they’ll uncover strategic insights and deliver client value that remains inaccessible to those holding onto outdated methods.

KNOW WHAT TO DISCLOSE AND DISCLOSE IT

The importance of submitting critical documents in premerger filings.

By LEBOHANG MABIDIKANE , director – Competition Law at Cliffe Dekker Hofmeyr

In January 2025, the US Department of Justice (DOJ) led a complaint against KKR & Co. Inc. (KKR), alleging systematic violations of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The HSR Act requires parties to transactions that satisfy monetary thresholds to provide premerger lings to the DOJ and the Federal Trade Commission. These lings enable the authorities to evaluate potential anticompetitive effects before the implementation of certain mergers.

By way of background, KKR is one of the largest and most sophisticated private equity rms in the United States and handles numerous high-stake mergers and acquisitions, many of which require premerger lings under the HSR Act.

According to the DOJ’s complaint, KKR repeatedly outed these requirements. The DOJ alleges that KKR failed to make complete and accurate premerger lings in at least 16 instances, omitting critical documents that assess competition, which deprived the DOJ of being able to assess the anticompetitive effects of the transactions properly.

The DOJ is seeking more than $650-million in civil penalties and, notably, the DOJ’s request for relief also includes structural relief (that is, the potential for divestitures is possible).

The DOJ’s complaint makes serious allegations against KKR, for example, it states that:

•“KKR’s own employees suggest a culture of noncompliance with the [HSR Act] that pervades its investment businesses. One KKR partner explicitly instructed a subordinate to ‘revise [a chart] for HSR purposes’, and the subordinate followed that instruction by deleting material relating to ‘Competitive Behaviour’ in a presentation deck analysing KKR’s contemplated acquisition”, and “one KKR deal team member described to a colleague her

‘two-player market’, … as the ‘biggest’ and ‘closest and most formidable competitor’. KKR’s sanitised HSR ling hid KKR’s expectation that the planned merger of Emsi and Burning Glass would be ‘the killer combination’ and provide KKR with an ‘opportunity to … create the undisputed category leader’ and a ‘scaled category killer’ in the market.”

approach to these requests: ‘I’ve always been told less is more’.”

•“KKR provided inadequate training to employees involved in collecting responsive documents and certifying HSR lings. At times, KKR deal teams failed to search the les of certain directors or of cers for relevant Item 4 documents in preparing HSR lings.”

•“The omitted documents included statements related to potential post-merger price increases as a result of a reduction in competition. The omitted documents also described the competitive landscape as a

•KKR has led a lawsuit in the US District Court for the District of Columbia, asserting that the DOJ’s complaint lacks merit and accusing the agency of weaponising ambiguous guidance. KKR claims the alleged “filing errors” were immaterial to antitrust reviews.

WHAT THIS MEANS FOR SOUTH AFRICAN COMPANIES

This case reiterates the underlying principle of understanding which documents are legally required to be disclosed to a particular authority evaluating a merger. This principle is equally applicable under South African competition law when parties notify a merger to the Competition Commission (Commission). In South Africa, penalties can also be severe for noncompliance given that the competition authorities are empowered to revoke their decision to approve a merger if the Commission’s decision was based on incorrect information for which a party to the merger is responsible. In essence, this means that the failure to provide complete and accurate information may ultimately lead to the merger being forced to unwind. Having a deep understanding of and adhering to each jurisdiction’s speci c disclosure requirements is critical. Intentional or inadvertent noncompliance presents signi cant reputational damage for rms and the potential for authorities to scrutinise future transactions that ordinarily would pass muster without much intervention. To mitigate risks and to facilitate a smooth and ef cient mergers and acquisitions (M&A) process, rms should consider proactively providing training to their employees and seek expert legal advice at the outset of an M&A process to ensure documents are prepared and disclosed in a legally compliant manner.

Lebohang Mabidikane

PUBLIC-PRIVATE PARTNERSHIPS AND PRIVATE SECTOR PARTICIPATION: OPPORTUNITY AWAITS

JACKWELL FERIS , director and sector head: Industrials, Manufacturing and Trade at Cliffe Dekker Hofmeyr, discusses the opportunities presented by amended National Treasury Regulation 16 for public-private partnerships distinguishing that from private sector participation initiatives

Public-private partnerships (PPPs) have long been a recognised mechanism for delivering public infrastructure and services by a state with limited resources. In South Africa, there has been an attempt to do so through the introduction of Regulation 16 of the Public Finance Management Act 1 of 1999 (PFMA), which has served as the primary regulatory instrument governing PPPs, speci cally designed for ”institutions” as de ned within the PFMA, which includes national and provincial government departments, constitutional institutions and certain public entities listed in

Schedules 3A, 3B, 3C, and 3D of the PFMA that perform speci c institutional functions.

In response to the evolving economic landscape and the pressing need for infrastructure development, the Minister of Finance, Enoch Godongwana, published the amended National Treasury Regulation 16 for PPPs on 7 February 2025 (Treasury Regulation 16). These amendments, effective 1 June 2025, are the result of a comprehensive review of the South African PPP framework. The primary goals of this review and the subsequent amendments are to create more favourable conditions for attracting greater private sector

participation, mobilising signi cant private sector nancing and leveraging the technical expertise of the private sector to augment the limited capacity within the public sector. This initiative also seeks to ease the strain on stretched government nances by shifting some of the burden of infrastructure investment to the private sector.

Notably, the PPP regulatory framework had remained largely static for almost 15 years, despite considerable changes in the economic environment. This extended period without signi cant regulatory updates suggests that the amendments represent a potentially critical and long-awaited step towards aligning the PPP framework with current infrastructure needs and investment realities. The strong emphasis on attracting private capital and expertise underscores the government’s recognition that PPPs are an essential tool for addressing South Africa’s infrastructure de cit, especially

given the constraints on public resources. It is important to note that while Treasury Regulation 16 focuses on PPPs for speci c government institutions, the government is also developing separate private sector participation (PSP) frameworks for state-owned entities (SOEs) in strategic sectors such as energy and transport (ports and rail). These PSP frameworks aim to address the unique challenges and opportunities within these sectors and may involve different models of private sector engagement compared to traditional PPPs under Treasury Regulation 16.

KEY IMPACTS OF THE AMENDED TREASURY REGULATION 16 FOR PPPS

The amended Treasury Regulation 16 introduces several key changes with distinct implications for different categories of PPP projects undertaken by institutions, as de ned in the PFMA.

Impact on unsolicited projects

A signi cant development in the amended regulations is the of cial establishment of a transparent system for handling and evaluating unsolicited PPP proposals (USPs). An unsolicited proposal is de ned as a proposal prepared by a private sector proponent and submitted to a public sector institution for the development of a PPP project. The amendments introduce speci c incentives aimed at encouraging greater private sector participation through this route. For a USP to be considered, it must demonstrate innovation and align with one or more strategic sectors or objectives identi ed by the procuring institution. Furthermore, the proposal must support the core functions of the institution to which it is submitted.

The amended regulations also introduce the possibility of a development fee, which may be recovered by a proponent whose unsolicited proposal is not ultimately selected as the preferred bid. However, it is important to note that amended Treasury Regulation 16.14.4 outlines speci c circumstances under which this development fee may be

CLEAR COMMUNICATION AND CO-ORDINATION WILL BE ESSENTIAL TO ENSURE THE DISTINCTION BETWEEN PPPS UNDER TREASURY REGULATION 16 AND THE SEPARATE PSP FRAMEWORKS FOR SOES IS WELL UNDERSTOOD BY BOTH THE PUBLIC AND PRIVATE SECTORS.

forfeited, such as if the procurement process is unsuccessful for any reason. Despite the introduction of this framework, USPs will still be subject to a competitive bidding process to ensure adherence to the constitutional principles of fairness, equitability, transparency, competitiveness and cost-effectiveness. The process for pursuing a USP involves registration of the proposed project with the relevant treasury and obtaining written approval to proceed. Typically, the proponent submitting the unsolicited proposal will be responsible for preparing the detailed feasibility study and for paying a review fee to the receiving department.

The formal structuring of USPs represents a notable departure from the previous regulations, which lacked a clear and de ned process for handling such proposals. This new framework offers a more predictable and transparent pathway for private sector entities to bring forward innovative infrastructure project ideas. While the potential for recovering development costs is a positive step towards incentivising USPs, the conditions under which these costs may be forfeited, coupled with a perceived lack of clarity on the evaluation process for USP proponents compared to other bidders, could still introduce a degree of uncertainty for potential proponents.

Impact on projects valued at less than R2-billion

The amended Treasury Regulation 16 introduces a simpli ed approval process for PPP projects with an estimated total project cost of less than R2-billion undertaken by institutions, as de ned in the PFMA. These projects are now exempt from the

THE STRONG EMPHASIS ON ATTRACTING PRIVATE CAPITAL AND EXPERTISE UNDERSCORES THE GOVERNMENT’S RECOGNITION

THAT

PPPS

ARE

AN ESSENTIAL TOOL

FOR ADDRESSING SOUTH AFRICA’S INFRASTRUCTURE DEFICIT

requirement of obtaining Treasury Approval IIA (approval of procurement documentation) and Treasury Approval IIB (approval to appoint the preferred bidder) from the relevant treasury. Instead, the accounting of cer or accounting authority of the institution undertaking the project is empowered to authorise and sign off on the relevant project documentation.

Despite this signi cant streamlining, projects valued below R2-billion are still required to submit their procurement documents to the newly established PPP Advisory Unit for its views and recommendations before these documents are nalised and released for procurement purposes. The introduction of this threshold for simpli ed approvals is a key mechanism intended to reduce bureaucratic red tape and accelerate the implementation of smaller PPP projects. This change is particularly relevant for provincial and

Jackwell Feris

INITIATIVE ALSO SEEKS TO EASE THE STRAIN ON STRETCHED GOVERNMENT FINANCES BY SHIFTING SOME OF THE BURDEN OF

SECTOR.

APPLICABILITY ACROSS GOVERNMENT SPHERES

municipal entities, which may have previously found the comprehensive Treasury approval process overly burdensome for smaller-scale infrastructure developments. The continued involvement of the PPP Advisory Unit, even for these smaller projects, suggests a deliberate balance between simplifying the approval pathway and maintaining a level of expert oversight and quality assurance.

Impact on projects exceeding R2-billion

Based on the speci c exemptions granted to projects valued below R2-billion, it can be reasonably inferred that PPP projects with an estimated total cost exceeding this threshold, undertaken by institutions de ned in the PFMA, will remain subject to the more comprehensive Treasury approval processes that were in place under the previous regulations, including the requirements for Treasury Approval IIA and Treasury Approval IIB.

While the core approval stages for these larger projects might not have been signi cantly altered by the amendments, other changes introduced in the amended Treasury Regulation 16 will still apply. This includes the establishment and enhanced role of the PPP Advisory Unit, which is mandated to provide advice and support throughout the PPP project cycle, regardless of the project value. Additionally, the new framework for handling unsolicited proposals will also apply to projects exceeding R2-billion. The primary focus of the streamlining efforts appears to be on smaller projects, suggesting that larger, more complex infrastructure projects will continue to undergo a more rigorous and detailed scrutiny process. However, the enhanced support and guidance from the PPP Advisory Unit could potentially lead to greater ef ciency and potentially faster overall timelines for these larger projects as well.

Treasury Regulation 16 is the primary regulatory instrument governing PPPs at the national and provincial levels of government, operating under the framework of the PFMA. The recent amendments to Treasury Regulation 16 were drafted with consideration for all three spheres of government – national, provincial and local. However, the regulations governing PPPs at the municipal level, the Municipal PPP Regulation 309, which operates under the Municipal Finance Management Act 56 of 2003 (MFMA), are undergoing a separate amendment process. These amendments require more time for nalisation due to procedural requirements, including consultation with Parliament, and are expected to be nalised by June 2025. While the amended Treasury Regulation 16 establishes the PPP Advisory Unit with a mandate to support both national departments and municipalities, corresponding amendments to the municipal PPP regulations have not yet been enacted. This delay in nalising the municipal regulations could potentially create a temporary divergence in the regulatory landscape for PPPs across different spheres of government. Municipalities might continue to operate under the existing regulations or face a period of uncertainty until the amended Municipal PPP Regulation 309 is nalised. The long-term intention, however, appears to be the establishment of a more uni ed and coherent regulatory environment for PPPs throughout South Africa, as evidenced by the parallel efforts to amend both the national and municipal regulations.

DISTINCTION OF PRIVATE SECTOR PARTICIPATION FOR STATE-OWNED ENTITIEs

It is crucial to distinguish the PPP framework under the amended Treasury Regulation 16 from other forms of private sector participation, particularly concerning SOEs. It is important to note that Treasury Regulation 16 does not directly apply to Schedule 2 public entities. The amended Treasury Regulation 16 focuses on projects where the private sector performs an institutional function or uses state property on behalf of these institutions. The PSP frameworks that government is actively developing for strategic sectors managed by SOEs, while also aiming to attract private sector investment and expertise, may differ in their objectives, scope, and mechanisms from the traditional PPP model governed by THIS

Treasury Regulation 16. For instance, in the energy sector, the focus might be on independent power producers and private investment in transmission infrastructure. Similarly, in the transport sector, the emphasis is on private sector involvement in freight rail and port operations through concessions and other arrangements, while the infrastructure remains under state ownership. These PSP initiatives are often driven by sector-speci c policies and aim to address the unique operational and nancial challenges faced by SOEs in these critical areas. Therefore, while both PPPs under Treasury Regulation 16 and the emerging PSP frameworks seek to leverage private sector capabilities, they operate within distinct regulatory and policy contexts and target different parts of the public sector.

Building on this crucial distinction, the evolving PSP frameworks are particularly evident in strategic sectors under the direct legislative mandate of certain Schedule 2 public entities, which, unlike departments or other public bodies, are not directly governed by the Treasury Regulation 16 PPP framework. For instance, in the energy sector, the South African National Treasury, in collaboration with the Ministry of Electricity and Energy, issued a Request for Information (RFI) to gauge market appetite for Independent Transmission Projects (ITPs) under the National Transmission Company South Africa (NTCSA). This initiative directly responds to the immense investment backlog in transmission infrastructure and Eskom’s constrained balance sheet, signalling a move to attract private capital for expanding and strengthening the national grid. Such PSPs are developed within the speci c governance and legislative regime of Schedule 2 entities, which operate under the PFMA, but follow tailored mechanisms rather than TR16’s prescriptive procurement cycle. Furthermore, the recently enacted Electricity Regulation Amendment Act provides the enabling legislative environment for these changes, explicitly establishing NTCSA as the independent transmission system operator (TSO) and creating a framework that allows for private sector investment in transmission infrastructure development, even as the assets remain state-owned, thus departing signi cantly from the traditional PPP model.

RECOMMENDATIONS

The amendments to Treasury Regulation 16 represent a positive step towards revitalising the PPP landscape for institutions de ned under the PFMA in South Africa. By streamlining approvals for smaller projects and providing a clearer framework for unsolicited proposals, the government aims to attract greater private sector participation and investment in much-needed infrastructure within these institutions’ responsibilities. The establishment of a dedicated PPP Advisory Unit has the potential to signi cantly enhance the capacity of these public institutions to navigate the complexities of PPPs. However, certain challenges and areas for further attention remain. The delayed nalisation of the municipal PPP regulations could create short-term inconsistencies and uncertainties for local government PPP initiatives. Additionally, while the introduction of a development fee for unsolicited proposals is a welcome incentive, the conditions for its forfeiture and the lack of a fully transparent evaluation pathway for USP proponents warrant further clarity to maximise the effectiveness of this new framework. Furthermore, clear communication and co-ordination will be essential to ensure the distinction between PPPs under Treasury Regulation 16 and the separate PSP frameworks for SOEs is well understood by both the public and private sectors.

To fully realise the intended bene ts of these amendments and the broader strategy for private sector involvement, the following are key:

For the government

• Prioritise and expedite the nalisation of the amendments to the municipal PPP regulations to ensure a consistent regulatory environment across all spheres of government.

• Ensure the PPP Advisory Unit is adequately resourced with skilled personnel and the necessary capacity to effectively support the anticipated increase in PPP activity, particularly for projects below R2-billion within the de ned institutions.

• Develop and publicise clear and detailed guidelines on the evaluation process for unsolicited proposals under Treasury Regulation 16, including the criteria for

THIS NEW FRAMEWORK OFFERS A MORE PREDICTABLE AND TRANSPARENT PATHWAY FOR PRIVATE SECTOR ENTITIES TO BRING FORWARD INNOVATIVE INFRASTRUCTURE PROJECT IDEAS.

assessing innovation and strategic alignment, and the speci c procedures for the recovery of development fees.

• Provide clear and comprehensive information on the objectives, scope and mechanisms of the separate PSP frameworks being developed for SOEs, ensuring clarity on how these frameworks interact with the PPP regulations under Treasury Regulation 16.

For the private sector

• Actively explore the opportunities presented by the amended Treasury Regulation 16 for partnering with government institutions (as de ned in the PFMA), particularly the streamlined processes for projects under R2-billion and the new framework for submitting unsolicited proposals.

• Proactively engage with the PPP Advisory Unit to seek guidance and support during the development and submission of PPP proposals under Treasury Regulation 16.

• Carefully assess the risks and conditions associated with the development fee recovery mechanism for unsolicited proposals under Treasury Regulation 16 before committing signi cant resources.

• Stay informed about the development and implementation of the PSP frameworks for SOEs in sectors of interest and understand the speci c opportunities and requirements associated with these frameworks. By addressing these considerations, the public and private sectors can work collaboratively to leverage the amended Treasury Regulation 16 and the broader PSP strategy to drive sustainable infrastructure development and economic growth in South Africa.

AN OPPORTUNITY TO CONNECT

How Section 34 determination and draft regulations are paving the way for private sector involvement in new electricity transmission infrastructure. By ALECIA PIENAAR , counsel, Corporate & Commercial, and TESSA BREWIS , Joint Sector Head: Projects & Energy, and Director: Banking, Finance & Projects

The lack of adequate grid capacity is a critical risk that continues to signi cantly stall progress in the implementation of South Africa’s energy transition, especially regarding the uptake of renewable energy. The market rst came to understand the true extent of grid capacity constraints at the end of 2022, when only 1 000MW out of a possible 5.2GW was awarded under bid window 6 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

Various regulatory initiatives have since been introduced by Eskom to try to manage access to available grid capacity, including:

• The Interim Grid Capacity Allocation Rules.

• “The congestion curtailment framework, which was recently approved by the National Energy Regulator of South Africa (NERSA)”

• An application for grid capacity reservation/ preservation in favour of energy projects procurement in terms of a public procurement programme, which application was refused by NERSA

However, considering the latest iteration of the Transmission Development Plan (TDP) for the period 2025 to 2034, it is trite that ad hoc

PARTICIPATION OF THE PRIVATE SECTOR IN THE DEVELOPMENT AND OPERATION OF TRANSMISSION

INFRASTRUCTURE IS A NATIONAL STRATEGIC PRIORITY.

solutions will be insuf cient to cater for the 56GW of new generation capacity that will need to be integrated into the transmission network between 2025 and 2034. This requires over 14 500km of new transmission lines and 210 transformers to provide 133 000MVA of capacity – all of which is estimated to cost around R440-billion. With Eskom and the government’s balance sheets too constrained to address the issue unilaterally, participation of the private sector in the development and operation of transmission infrastructure is a national strategic

priority. As provided in the TDP: “Private sector participation through Independent Transmission Projects (ITPs) in transmission has been a focal point for enhancing ef ciency of implementation, increasing investment and promoting innovation in the energy sector”.

The commencement of the amendments to the Electricity Regulation Act 4 of 2006 (ERA) on 1 January 2025 was the rst real regulatory step taken to create an enabling legal framework for the uptake of independent, private transmission projects. Among other changes, section 34 of the ERA was amended to include provisions allowing for the Minister of Electricity and Energy to make a determination regarding the need for new electricity transmission infrastructure.

Alecia Pienaar

Further realising the potential for private participation, the minister recently published:

• A determination in terms of section 34 of the ERA for the procurement of new electricity transmission infrastructure to ensure the optimal supply of electricity in South Africa (determination) on 28 March 2025.

• Draft Electricity Transmission Infrastructure Regulations (draft regulations) on 3 April 2025.

THE DETERMINATION

In terms of the determination, 1 164km of 400kV transmission power lines and associated transformation infrastructure will be procured for the Northern Cape, North West and Gauteng provinces. Such infrastructure is to be procured from independent transmission providers by the Department of Electricity and Energy (Department), or its mandatory, in terms of a cost-effective, fair and equitable tendering process, with the National Transmission Company of South Africa (NTCSA) to act as buyer and enter into the associated transmission services and project agreements.

During a media brie ng on the determination, the Minister formally introduced the ITP programme and explained that the intention is to create “a dispensation where we are going to accommodate investments by private sector players on the transmission side”. He acknowledged that the country’s renewable energy assets are not being fully exploited due to transmission constraints and that the level of investment required mandates the involvement of the private sector.

As to the design of the ITP programme, the minister further con rmed:

new generation capacity with the 1 164km of transmission lines being broken up into various preselected and assessed corridors and projects. The list of seven preselected projects has been made publicly available.

• Through the ITP programme Request for Information (RFI), which was released in November 2024 and called for submissions by February 2025, the department sought to establish the market’s appetite for investing in transmission projects. Through their submissions, the market has shown a preference for the build-operate-transfer and build-operate-own-transfer models.

• It is anticipated that the request for quali cation will be published in July 2025 and will assess the credentials of those entities intending to participate, with the request for proposals to be released in November.

• The 1 164km of transmission lines to be procured in terms of this determination constitutes a pilot ITP programme, with more work to be done in terms of rolling this out on a medium- to long-term basis.

• Expropriation of private land for ITPs will remain a last resort where all other legal avenues to secure the land for such ITPs have been exhausted.

While only in pilot stage, it is worth noting that other grid-locked provinces, including the Western Cape and Eastern Cape, have not been included in the determination, thus still excluding those areas with the greatest capacity for new wind generation projects.

THE DRAFT REGULATIONS

The draft regulations aim to facilitate planning for the procurement and establishment of transmission capacity by private parties to expedite the establishment of new ITPs. In addition to certain governance and procedural matters, particularly around the issuance of determinations under section 34 of the ERA, the draft regulations also provide for:

• Determinations for cross-border transmission capacity and multicomponent energy infrastructure projects comprising of new generation capacity, electricity transmission infrastructure and other related infrastructure.

• The “value for money” transmission service agreements to be entered into between the ITP and the buyer, being the NTCSA.

• NERSA’s obligation to implement cost recovery mechanisms to ensure the NTCSA can recover costs associated with an ITP, transmission services agreement and matters relating thereto.

Nothing under the draft regulations will impact the NTCSA’s ability to establish or procure transmission infrastructure or capacity of its own accord.

It is worth noting that the determination was pre-emptively published before the nalisation of the draft Integrated Resource Plan 2023 and the draft regulations, which does potentially taint its validity from a procedural perspective.

The draft regulations were open for comment until 30 April 2025

OPENING THE WINDOW OF OPPORTUNITY

• It will be driven by the principle of “late-stage tender”, which essentially requires the government to ensure material regulatory hurdles have been cleared in advance to derisk the programme, including the formulation of regulations and securing certain permits in advance, such as servitudes and environmental authorisations for the transmission corridors.

regulations

• The intention is to unlock 3 222MW of

The minister did, however, stress that the NTCSA continues to implement other priority projects for the expansion of grid infrastructure. Looking at the TDP, several projects are noted to be underway or in an “execution” phase to alleviate grid congestion, including several projects in these Cape provinces.

NTCSA continues to implement other grid congestion, including several projects in these Cape provinces.

Signi cant strides are evidently being made by the department to try to remove the roadblocks that continue to stagnate the uptake of renewable energy, be it under REIPPPP or bilateral projects. While the ITP programme is only in its pilot phase, the TDP already re ects the vast extent of opportunity available for the private sector to get involved in the long term as the programme is set to ramp up over time.

THE INTENTION IS TO UNLOCK 3 222MW OF NEW GENERATION CAPACITY WITH THE 1 164KM OF TRANSMISSION LINES BEING BROKEN UP INTO VARIOUS PRESELECTED AND ASSESSED CORRIDORS AND PROJECTS.

Tessa Brewis

DOES A TIME-BAR CHALLENGE NEGATE AN ADJUDICATOR’S JURISDICTION TO DETERMINE A REFERRED DISPUTE?

KHAYA MANTENGU, director – Dispute Resolution and Construction and Engineering, and ZODWA MALINGA , associate – Dispute Resolution and Construction and Engineering, at Cliffe Dekker Hofmeyr, discuss jurisdictional challenges

Adjudication serves as a crucial dispute resolution tool in South African construction contracts, offering a rapid, interim solution to keep projects moving amid disagreements.

Increasingly integrated into major construction agreements, adjudication decisions are legally binding until overturned by arbitration, litigation or mutual agreement.

The recent case of Eskom Holdings SOC Limited v Babcock Ntuthuko Engineering (Pty) Ltd [2024] ZAGPJHC 990 (3 October 2024) sheds light on how our courts address the enforcement of adjudicators’ decisions when jurisdictional challenges are raised by litigants.

In this case, the full bench of the High Court (full bench), with leave of the Supreme Court of Appeal, was called upon to decide an appeal against the judgment of Makume J (the court a quo). In particular, the full bench had to decide whether the decision of the court a quo to enforce an adjudicator’s decision in favour of Babcock Ntuthuko Engineering (Pty) Ltd (Babcock) should be upheld despite objections from Eskom Holdings SOC Limited (Eskom), which argued that procedural delays and alleged errors rendered the adjudicator’s decision unenforceable.

BACKGROUND

Eskom and Babcock entered into an NEC3 Engineering and Construction Contract (April 2013 edition) (contract) for the construction of 400kV transmission lines.

The contract stipulated that disputes should rst be referred to adjudication and, if unresolved, to arbitration. The contract also set speci c time limits for notifying of a dispute arising in connection with the contract and referring it to adjudication.

The project manager rejected Babcock’s payment claims, and Babcock noti ed Eskom and the project manager that it disputed the project manager’s rejection of its payment claims. Peter Odell was appointed as the adjudicator and found in favour of Babcock (decision).

TIME-BAR DISPUTE AND SUBSEQUENT PROCEEDINGS

Babcock’s referral focused signi cantly on establishing that it was submitted within the required timeframe.

Eskom countered these submissions and argued that Babcock’s referral of the disputes was time-barred because Babcock failed to refer the disputes within the timeframes stated in the contract.

The adjudicator decided the matter in Babcock’s favour regarding the time-bar. The decision also required Eskom to pay speci c amounts to Babcock. Eskom noti ed its dissatisfaction with the decision and referred the dispute to the tribunal (that is, arbitration). In the interim, Babcock made application to the High Court to enforce the decision.

Khaya Mantengu

PRINCIPLES CONSIDERED BY THE FULL BENCH

On appeal, Eskom raised three arguments:

1. The adjudicator did not have jurisdiction, and the decision was thus unenforceable. In particular, Eskom alleged that Babcock failed to refer the disputes within the time periods stated in the contract.

2. The court a quo decided the matter on a basis other than the pleaded case.

3. The relief sought by Babcock did not constitute an enforcement of the decision, and it was not authorised by the contract. The full bench discussed the purpose of adjudication and the enforceability of the decision in the context of a referral to arbitration.

On the purpose of adjudication, the full bench cited Eyvind Finsen’s commentary in The Building Contract – A Commentary on the JBCC Agreements (second edition, page 229), noting that: “The purpose of adjudication being the quick, if possible temporary, resolution of a dispute and the granting of interim relief to the successful party, the whole purpose of adjudication would be frustrated if the successful party was unable to enforce the determination against the other party.”

On the question of enforceability, the full bench cited Stefanutti Stocks (Pty) Ltd v S8 Property (Pty) Ltd [2013] JDR 2441 (GSJ), and emphasised that: “The decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is nally determined by legal proceedings, by arbitration, or by agreement between the parties.”

INCREASINGLY INTEGRATED INTO MAJOR CONSTRUCTION AGREEMENTS, ADJUDICATION DECISIONS ARE LEGALLY BINDING UNTIL OVERTURNED BY ARBITRATION, LITIGATION OR MUTUAL AGREEMENT.

THE FINDINGS OF THE FULL BENCH

Eskom argued that the enforcement of the decision was wrongly granted as Babcock was time-barred, which, according to Eskom, meant that the adjudicator did not have jurisdiction to decide the dispute.

Eskom’s argument was premised on its interpretation of Framatome v Eskom Holdings SOC Ltd [2022] (2) SA 395 (SCA), in which the Supreme Court of Appeal stated: “It is trite that, if upon an application for enforcement of an adjudication decision, it is found that the adjudicator did not have the requisite jurisdiction, his decision will not be binding and enforceable.”

Eskom claimed that the adjudicator did not have the jurisdiction to decide the time-bar challenge and that the court a quo should thus have ruled in Eskom’s favour (as the time-bar challenge fell outside the scope of the papers).

is still binding if the adjudicator has con ned themselves to addressing the questions put before them.

The full bench found that the time-bar challenge was put before the arbitrator, and the arbitrator considered and decided it.

The full bench pointed out that although the adjudicator’s decision on the time-bar challenge was contentious, the adjudicator decided a matter before him and did not exceed his jurisdiction. Eskom had its remedy in arbitration, which was being pursued. Consequently, the full bench dismissed Eskom’s jurisdictional complaint.

In summary, the question of whether the adjudicator made an incorrect nding regarding the time-bar challenge was irrelevant, given that this matter was, in any event, before an arbitrator tasked with deciding this matter. The application to enforce the decision was in accordance with the terms of the decision. Accordingly, the full bench ultimately dismissed the appeal on all grounds.

TAKEAWAYS

ADJUDICATORS’ DECISIONS

ARE ENFORCEABLE IMMEDIATELY, PENDING FINAL RESOLUTION OF A DISPUTE THAT REMAINS UNRESOLVED (USUALLY IN ARBITRATION).

As a point of departure, the full bench referred to various English cases, including C&B Scene Concept Design Ltd v Isobars Ltd [2002] BLR 93 (TCC), where it was held that: “Enforcement of an adjudicator’s decision cannot be prevented whether it was caused by errors of procedure, fact, or law, unless the adjudicator has purported to decide matters that were not referred to him.”

The full bench stated that the asserted the principle that even where an adjudicator “fallen into an their decision

The purpose of adjudication is to provide a quick, interim solution for disputes, allowing projects to continue without being bogged down by prolonged litigation or arbitration. Adjudicators’ decisions are enforceable immediately, pending nal resolution of a dispute that remains unresolved (usually in arbitration).

decision in Framatome the principle that even has error,”

An adjudicator has jurisdiction to decide point in limine, in particular, whether the disputes have been referred within the prescribed period. The challenge, in and of itself, does not nullify the adjudicator’s jurisdiction, nor does a nding against the party that raised it.

The key consideration where a jurisdictional question is concerned is whether the adjudicator has made a nding on issues not pleaded by the parties. Challenges to an adjudicator’s decision will not typically prevent enforcement unless it is demonstrated that the adjudicator exceeded their jurisdiction. The proper forum for disputing the substance of an adjudicator’s decision remains arbitration or litigation.

Zodwa Malinga

THE TAO OF EQUITY CAPITAL

Finding a balance between dividend reinvestment plans and share buybacks. By NASTASCHA HARDUTH , head of Corporate Debt, Turnaround & Restructuring and designate – Dispute Resolution, YANIV KLEITMAN , director – Corporate & Commercial, and ZACHARY KOKOSIOULIS , associate designate – Dispute Resolution, at Cliffe Dekker Hofmeyr

Dividend reinvestment plans (DRIPs) are a popular option listed companies offer to their shareholders. A DRIP involves shareholders choosing to reinvest their cash dividends and receive additional shares instead of retaining the entire cash portion of their dividend. A DRIP is similar to a capitalisation share issue, with some technical differences that are not important for present purposes. From a company perspective, offering this structure has some material advantages.

1. Increased capital retention: when shareholders reinvest dividends through DRIPs in a company, the company retains more capital within the business that can be used for growth initiatives, research and development or debt reduction.

2.Potential for lower cost of capital: if a company consistently reinvests dividends through DRIPs into its operations, it may reduce its reliance on external nancing. This can lead to a lower overall cost of capital.

3. Stability and retention of shareholders: offering DRIPs demonstrates a commitment to shareholders and encourages long-term investment by allowing shareholders to reinvest dividends directly into a company, and this stability reduces the likelihood of sudden sell-offs during market downturns.

4. Lower transaction costs: by bypassing traditional brokerage channels, companies can save on transaction fees associated with dividend payments. This cost reduction bene ts both the company and its shareholders.

5. Protection: DRIPs can protect a company against hostile takeovers. If a hostile acquirer tries to gain control by purchasing shares on the open market, the company can counteract that by issuing additional shares through the DRIP. This makes it harder for the acquirer to achieve a controlling stake.

While DRIPs have their advantages, a downside is that they dilute issued shares, which can, in turn, result in a drop in share price. To counteract this effect, companies may want to take a closer look at their capital management plan and consider a repurchasing programme where they buy back a portion of their shares from shareholders.

WHILE DRIPS HAVE THEIR ADVANTAGES, A DOWNSIDE IS THAT THEY DILUTE ISSUED SHARES,

WHICH CAN, IN TURN, RESULT IN A DROP IN SHARE PRICE.

Nastascha Harduth

SUBSTANTIAL

BUYBACKS

HAVE BEEN GREATLY SIMPLIFIED, ESPECIALLY FOR A LISTED COMPANY.

In this regard, Apple appears to be a strong proponent of share buybacks as a means of neutralising the dilution of shares made available through a DRIP. In May 2024, it announced a share repurchase programme of over a hundred billion dollars. On the same day of announcing this, its shares saw an increase of six per cent. But, this is not a new trend. For example, the stated purpose of the repurchasing programme by ANZ Group Holdings Limited, a listed bank in New Zealand, was to neutralise the impact of its DRIP; and Barclays plans to return at least £10-billion of capital to shareholders between 2024 and 2026 through dividends and share buybacks, with a continued preference for buybacks.

Closer to home, almost three years ago, on 27 June 2022, Naspers issued an announcement that it was launching an open-ended, repurchase programme in respect of certain ordinary shares held by free- oat shareholders. On 7 January 2025, Naspers reported that for the period between 30 December 2024 and 3 January 2025, the Group purchased 141 071 Naspers shares for a total consideration of ZAR587 437 300 (US$31 293 961).

There are three major bene ts of share repurchase programmes, particularly in relation to DRIPs.

1. Capital allocation: share buybacks allow companies to allocate excess capital ef ciently. That is, instead of hoarding cash or paying a special dividend (a onetime payment), companies can repurchase their own shares, signalling con dence in their future prospects and creating greater and sustainable value for the remaining shareholders.

2. Flexibility: unlike dividends, which commit companies to regular payouts, share buybacks offer exibility. Companies can adjust the timing and amount based on market conditions. As Poole College of Management puts it: “[by] choosing big annual buybacks over larger dividends, Apple keeps things exible – it’s like having an option open rather than committing to ongoing payments that don’t respond to how well the business does each year.”

3. Protection: because the effect share buybacks have on the price of a company’s shares, hostile takeovers are less likely due to these companies’ valuations increasing signi cantly and quickly.

Before 27 December 2024, when the Companies Amendment Act 16 of 2024 (Amendment Act) partially took effect, when considering a share repurchase programme

in South Africa it had to be borne in mind that section 48(8)(b) of the Companies Act 71 of 2008 (Companies Act) applied, and a buyback of more than ve per cent in a transaction or “integrated series” (which was not always a fully understood concept) would qualify as a “ fundamental transaction”, which raised all kinds of technical issues. If the ve per cent threshold was crossed, the rules on schemes of arrangement would apply, a special resolution of shareholders and an expert’s report was required, dissenting shareholders had the ability to review the special resolution and/or exercise appraisal rights (namely the right to compel the company to buy their shares at fair value), and takeover law applied to the buyback as well – all in all it was a cumbersome regime.

However, the Amendment Act has altered this position and the highest requirement now for a buyback is a special resolution of shareholders, which itself is not even required if the buyback is pursuant to a pro-rata offer by the company (whether listed or unlisted) to all its shareholders or to a class of its shareholders, or, in the case of a listed company, the shares are bought back through the exchange. In other words, substantial buybacks have been greatly simpli ed, especially for a listed company. The JSE Listings Requirements will still need to be complied with by those companies, but at least they have comfort now that the scheme of arrangement debate ended with the December 2024 amendments.

It is clear that nding the Tao (the way) between the yin and yang of DRIPs and share repurchase programmes can be a ne line –one that should be considered carefully with trusted advisors to achieve a balance in the company’s capital structure.

Yaniv Kleitman

Zachary Kokosioulis

Engaging Inequality

NADEEM MAHOMED, director – Employment Law at Cliffe Dekker Hofmeyr, discusses legal pathways to equity and gender justice in South Africa

O ver at least the past 25 years, if not longer, the discourse around diversity, equity and inclusion (DEI) has evolved in varied contexts from a conceptual framework into a strategy for addressing systemic inequality. Many institutions adopted DEI as a guiding paradigm aimed at rectifying historic exclusions and imbalances in representation. Its emergence re ects a recognition that fair access and participation

DESPITE PROGRESSIVE LEGAL FRAMEWORKS, LIVED EXPERIENCES OF SOUTH AFRICAN WOMEN TELL A MORE SOBERING STORY.

in institutions must be cultivated actively. Closely linked to this approach is the legal theory of intersectionality, introduced by scholar Kimberlé Crenshaw, which highlights how various social identities – (such as race, gender, class, sexual orientation and ability) – interact to produce either discrimination or privilege.

This broader perspective has challenged the notion that eliminating overt biases like sexism or racism would naturally yield a fair and neutral legal and economic order. Instead, it has underscored the need for corrective measures to address the enduring effects of historical disadvantage.

In South Africa, the

Employment Equity Act (EEA) exempli es this approach: acknowledging that dismantling discriminatory laws alone does not automatically confer access or equality to historically excluded populations. The recent implementation of sector-speci c numerical targets for race, gender and disability, according to the Department of Employment and Labour, aims to accelerate workplace transformation, re ecting the slow progress observed since the EEA’s enactment. These initiatives, however, have provoked debate – particularly in light of shifting global political climates. Critics contend such measures risk fostering division, constraining freedom of expression and replacing merit with compensatory criteria. Nonetheless, proponents argue that these interventions are essential to achieving genuine equity, rooted in the lived realities of structural exclusion.

INEQUALITY DEEPLY ENTRENCHED DURING APARTHEID ERA

Gender inequality in South Africa has deep historical roots, rmly embedded in pre-1994 apartheid policies and practices. Women across racial lines were, at times, treated as legal minors, but black women bore the brunt of intersecting racial, gender and class oppressions. Before 1994, their position in society was de ned by a framework of codi ed patriarchal customary laws (such as the Black Administration Act and the codi cation of

Nadeem Mahomed

LAW ALONE CANNOT DISMANTLE ENTRENCHED SOCIAL NORMS AND ECONOMIC DISPARITIES. LEGAL INTERVENTIONS MUST BE MATCHED BY POLITICAL WILL, EDUCATION AND CULTURAL CHANGE.

male primogeniture in terms of inheritance), economic marginalisation and state-enforced racial segregation.

White women gained the right to vote in 1930, decades before universal suffrage, re ecting both progress and the exclusivity of white political privilege. However, legal advancements such as the Matrimonial Affairs Act of 1953, colloquially known as “Bertha’s Bill”, only allowed married women (predominantly white) to open bank accounts and sign contracts independently.

Under the Recognition of Customary Marriages Act (1998), reforms began to challenge patriarchal norms, but decades of dispossession meant that black women remained disadvantaged in property ownership. Legal scholarship and judicial opinion recognised that cultural practices could not override constitutional guarantees of gender equality.

CHANGING THE LAWS, BUT NOT THE REALITY

The 1996 Constitution marked a seismic shift in South African law, enshrining equality as a foundational value. Section 9 prohibits discrimination based on gender, sex and marital

status, among other characteristics, providing a strong basis for legal reform. Section 25 further protects property rights and mandates equitable land reform, critically relevant for rural women.

Several laws followed to actualise constitutional protections:

• Promotion of Equality and Prevention of Unfair Discrimination Act (PEPUDA), 2000: enforces equality, bans discriminatory practices and mandates proactive measures against unfair discrimination.

• Employment Equity Act, 1998: requires employers to eliminate discrimination and promote representation.

• Code of Good Practice on the Prevention and Elimination of Harassment in the Workplace (2022): expands protection against harassment, aligning with international labour standards.

Despite progressive legal frameworks, lived experiences of South African women tell a more sobering story. Gender-based violence remains endemic. Black women face compounded disadvantage due to racialised poverty and/or rural marginalisation. The disparity of earnings between men and women for equivalent

work is yet to be entirely abolished in practice and the under-representation of women in STEM (science, technology, engineering and mathematics) environments and leadership and over-representation in caregiving roles demonstrates continued gender inequity and prejudices.

South Africa remains a global leader in LGBTQI legal protections. The Constitution, at the time of its promulgation, was a visionary document globally in its prohibition of discrimination based on sexual orientation. Our legal framework has, over time in the post-1994 constitutional dispensation, expanded to provide more protections and rights to LGBTQI persons, including transgender individuals.

Nevertheless, social prejudice persists. Trans individuals, particularly black trans women, face a heightened risk of violence, employment discrimination and healthcare disparities. Enforcement of rights often falls short, highlighting the need for comprehensive public education and institutional accountability.

The South African legal landscape has laid a formidable foundation for gender justice but enforcement of rights often enough falls short, highlighting the need for comprehensive public education and institutional accountability. However, law alone cannot dismantle entrenched social norms and economic disparities. Legal interventions must be matched by political will, education and cultural change. Only then can the promise of the Constitution – a society founded on human dignity, equality and freedom – be fully realised for all, irrespective of gender, race or identity.

PERSONAL LIABILITY

COMPANY TAX DEBTS

HEINRICH LOUW , director – Tax & Exchange Control at Cliffe Dekker Hofmeyr, explains when SARS can hold individuals personally liable and what you can do about it

That the South African Revenue Service (SARS) can hold certain individuals personally liable for the tax debts of a company is old news by now. The Tax Administration Act 28 of 2011 (TAA) has been in effect for over a decade and so have the relevant provisions in the TAA that provide for such powers. However, SARS has not always made extensive use of these powers and has, for a long time, only used (or threatened to use) them in limited circumstances.

That appears to have changed. Over the past year or two, we have seen a remarkable increase in the number of notices of personal liability issued by SARS debt collectors against individuals in relation to companies defaulting on their tax obligations and attendant tax debts. The most common of these are issued to representative taxpayers (such as public of cers) or people responsible for the nancial management of companies (usually directors).

The representative taxpayer in relation to a company is usually the public of cer of the company, whether in relation to income tax, employee’s tax or value-added tax. Every company is obliged to appoint a public of cer. Such a representative taxpayer is generally only liable to SARS in respect of the tax obligations of the company in a representative capacity, and not in their personal capacity. However, in terms of section 155 of the TAA, a representative taxpayer can be held personally liable for the tax payable by a company if, while it remains unpaid, the representative taxpayer alienates or disposes of any amounts in respect of which the tax is chargeable. In addition, the person can be held liable if they dispose of funds or monies in their possession or which comes into their possession after the tax is payable if the tax could legally have been paid from or out of such funds or monies.

Heinrich Louw

Further, in terms of section 180 of the TAA, SARS can hold the individuals responsible for the nancial management of a company liable for the tax debts of the company in certain circumstances. Firstly, the person must control or be regularly involved in the overall nancial affairs of the company. This would usually

BEFORE SARS MAKES A FINAL DECISION

ON HOLDING AN INDIVIDUAL PERSONALLY LIABLE, IT MUST GIVE THE INDIVIDUAL AN OPPORTUNITY TO MAKE REPRESENTATIONS.

include directors, but it can also include senior nancial managers. Secondly, the person must have acted fraudulently or negligently in respect of the payment of the tax debts. Thirdly, such fraudulence or negligence must have caused the failure to pay the tax debts.

We note that the TAA also provides for shareholders, recipients of company assets or persons who assist in the dissipation of company assets to be held liable in certain circumstances, but we do not deal with these provisions in this article.

SARS’S RECOVERY POWERS AND DUE PROCES

In terms of section 184(1) of the TAA, SARS has the same powers of recovery against an individual held personally liable for the tax debts of a company as it has against the company. At the same time, the individual also has the same rights and remedies as the company has against SARS’s powers of recovery.

Further, in terms of section 184(2) of the TAA, before SARS makes a nal decision on holding an individual personally liable, it must give the individual an opportunity to make representations. However, if prior engagement will place the collection of debt in jeopardy, SARS may make a decision and give the person an opportunity to make representations as soon as is practical thereafter.

IS THIS CONSTITUTIONAL?

Upon considering these provisions, one might well ask whether they pass constitutional muster, speci cally in relation to the right of an individual not to be deprived of property, the

right to fair and reasonable administrative action and the right to access to courts.

In a recent High Court case (Greyvensteyn and Other v Commissioner of South African Revenue Service and Others (B2495/2023) [2025] ZAGPPHC 128, 12 February 2025) the court had to deal with, among other issues, the constitutional validity of sections 180 and 184(2) of the TAA in relation to the right to access to courts.

The court held that these provisions do not infringe the right to access to courts as enshrined in section 34 of the Constitution on the basis that the jurisdiction of the court is not ousted by them, and an individual would be entitled to bring a review application should they be aggrieved by SARS’s decisions or actions.

WHAT HAPPENS IN PRACTICE?

In practice, SARS debt collectors would identify companies with outstanding tax debts and then commence with the usual actions such as issuing demands, taking money from their bank accounts (by way of third-party appointments) and potentially obtaining civil judgment in a relevant court for execution by a sheriff. SARS, of course, has a host of available collection mechanisms.

Where, despite initial collection attempts, adequate payment is not forthcoming, SARS would consider giving notice to a public of cer or director under section 184(2) of the TAA, stating its intention to hold the individual personally liable, and giving them an opportunity to respond. Depending on the response, if any, SARS would proceed to give formal notice of personal liability. At this point, the collection mechanisms available to SARS against the company also become available to it in respect of the individual.

Sometimes it appears there are reasonable grounds for SARS to believe that the prescribed circumstances required for personal liability are present and that SARS of cials have applied their minds to the matter. However, sometimes it appears the circumstances are not necessarily present, that SARS personnel have not necessarily applied their minds to the matter and that SARS is perhaps just invoking the personal liability provisions against individuals involved in the company to turn up the pressure.

IF THE COMPANY DOES NOT DISPUTE THE MATTER, BUT DOES NOT HAVE THE FUNDS TO PAY, IT SHOULD CONSIDER MAKING PAYMENT ARRANGEMENTS WITH SARS OR APPLYING FOR A COMPROMISE OF THE TAX DEBT.

It is, of course, most expedient for SARS if the company pays voluntarily.

WHAT YOU CAN DO

When a public of cer or director of a company is faced with a personal liability notice, there are a few things to consider.

Ideally, one should try to manage the tax debt of the company. This is often easier said than done as there are many reasons why a company may have an unpaid tax debt in the rst place. If the company disputes the underlying assessments giving rise to the tax debt, it should follow the available dispute resolution remedies and apply for a suspension of the obligation to pay pending the outcome of the dispute. If the company does not dispute the matter, but does not have the funds to pay, it should consider making payment arrangements with SARS or applying for a compromise of the tax debt.

At the same time, an individual would be well-advised to exercise their right to make representations to SARS in terms of section 184(2) of the TAA with the assistance of an experienced tax practitioner. If, despite such representations, SARS makes a nal decision to hold the individual personally liable, then they could request SARS to reconsider its decision in terms of section 9 of the TAA.

Ultimately, where SARS sticks to its decision, the individual would have to bring a review application in an appropriate court in terms of the Promotion of Administrative Justice Act 3 of 2000. Should the individual not be successful and SARS has recovered any amounts from them personally, they may have a claim against the company for repayment.

TRANSACTING IN THE MINING SECTOR

CHANÉ STIEVENART, senior associate – Corporate & Commercial at Cliffe Dekker Hofmeyr, unpacks the security options when transacting with contract mining service providers or the holder of a mining right

When transacting with the holder of a mining right or a service provider who provides mining services (contract miner) in a transaction that requires security, there are certain security options available to the parties. A very brief outline of some of the security options is considered below. Before taking or providing security, several practical considerations should be taken into account to mitigate risk.

Once a decision has been made to take or provide security, the type of security most appropriate for the individual circumstances will need to be assessed. Some options when transacting with a mining right holder or contract miner include, but are not limited to a special notarial bond, a lien and a mortgage bond.

A SPECIAL NOTARIAL BOND

A special notarial bond is a notarial

A LIEN IS THE RIGHT TO RETAIN POSSESSION OF CERTAIN PROPERTY

BELONGING TO ANOTHER PERSON AS SECURITY FOR A DEBT OWED BY THAT PERSON OR CLAIM AGAINST THAT PERSON.

bond hypothecating corporeal movable property detailed and set out in the bond. The property must be recognisable, and the bond will be registered in terms of the Security by Means of Movable Property Act 57 of 1993.

Examples

When transacting with a contract miner, one may consider using a special notarial bond where the contract miner owns moveable property equal to the value of the debt, for example, mining equipment or machinery. Further, a mining right holder may consider hypothecating certain moveable stockpiles of product owned by it as a form of security. The counterparty would need to be

While one of the advantages of a bond is its enforceability against the debtor and other third parties, it may be a costly option to register.

A LIEN

A lien is the right to retain possession of certain property belonging to another person as security for a debt owed by that person or claim against that person.

Examples

A mining right holder may consider using a lien where its contract miner’s equipment remains on site as security for a claim against nonperformance by the contract miner under the relevant contract. The key to the exercise of a lien is possession of the property owned by the debtor.

Conversely, a contract miner providing mining services to a mining right holder may consider the use of a lien over the relevant product being mined by it as security for payment of its service fees by the mining right holder, where it retains possession of the product.

may hypothecate its mining right as a form of security with the consent of the Minister of Mineral and Petroleum Resources (as reconstituted from time to time), as contemplated in terms of section 11 of the Mineral and Petroleum Resources Development Act 28 of 2002. This regulatory consent is not required where a bank or any other nancial institution approved by the Registrar of Banks, on request by the minister, takes security by encumbering the mining right.

Example

A mortgage bond can be used where a third party is providing funding to the mining right holder for purposes of mining operations or projects. The bond will be executed and registered in accordance with the Mining Titles Registration Act 16 of 1967.

While one of the advantages of a bond is its enforceability against the debtor and other third parties, like with the special notarial bond, it may be costly to register.

IMPORTANT CONSIDERATIONS

All of the options above could be considered when preparing the relevant transaction agreements, having regard to the following:

•The value of the property in question, considering the relevant claim or debt.

A SPECIAL NOTARIAL BOND IS A NOTARIAL BOND HYPOTHECATING CORPOREAL MOVABLE PROPERTY DETAILED AND SET OUT IN THE BOND.

One of the advantages of a lien is that the terms of the lien will generally form part of the underlying contract between the owner of the property and the holder of the lien and no registration or registration costs will be incurred, unlike a bond which does not require the holder to be in possession of the property to exercise or enforce the bond. However, the lien holder would need to maintain possession of the property at all times, which may become impractical.

MORTGAGE BOND

A mortgage bond is an instrument used to hypothecate property. A mining right holder

• The essential requirements (regulatory or otherwise) that will need to be met for the special notarial bond, lien or mortgage bond to be enforceable.

• The advantages and disadvantages around enforcement of the security type.

•The risk appetite of the party who takes the security, speci cally having regard to the enforceability of the type of security.

•The costs of registration and enforcing the special notarial bond, lien or mortgage bond; the parties may also consider negotiating which transaction party pays for the registration costs.

comfortable with the risk associated with taking security over this form of moveable product, given that it may not be aware of the volume of the stockpile or value of the product when it enforces the security at a future date.

A MORTGAGE BOND CAN BE USED WHERE A

THIRD PARTY IS PROVIDING FUNDING TO THE MINING RIGHT HOLDER FOR PURPOSES OF MINING OPERATIONS OR PROJECTS.

Chané Stievenart

BALANCING ENERGY DEMANDS AND ENVIRONMENTAL GOALS

Breaking down the rigid dichotomy between South Africa’s constitutional environmental right and its energy landscape. By ALECIA PIENAAR , counsel – Corporate & Commercial at Cliffe Dekker Hofmeyr

With its entrenched dependence on fossil fuels for electricity generation, the South African energy transition narrative has long been dominated by the dif culty of balancing energy security, socioeconomic priorities and environmental protection. Even the draft Integrated Resource Plan released for comment in January 2024 failed to identify a new electricity generation pathway that would allow the country to serve its energy demands while meeting its decarbonisation targets committed to under the Paris Agreement.

However, recent developments seem to suggest that the balance is shifting with the introduction of more pragmatic solutions that could potentially break down the rigid dichotomy that has always existed between transitioning the country’s energy landscape and realising the constitutional right to an environment that is not harmful to people’s health or wellbeing.

More speci cally, on 31 March 2025, the Minister of Forestry, Fisheries and the Environment granted eight coal- red power stations limited exemptions from complying with the Minimum Emission Standards (MES) prescribed under the National Environment Management: Air Quality Act 39 of 2004 (NEMAQA). The MES are prescribed under NEMAQA for identi ed activities resulting in the emission of harmful substances that have a detrimental effect on the environment, including for combustion installations used for electricity generation.

While various timeframes for compliance are imposed under the legislation, several applications by different coal power stations for postponement for compliance with such timeframes have been made and granted in the past.

THE PATH TO A JUST ENERGY TRANSITION

However, acknowledging his mandate “to drive emissions reductions and ensure a just transition to a low-carbon economy”, the minister made the most recent postponement decision subject to several “rigorous” conditions, including:

• Strict mitigation measures to limit environmental impacts.

•Health and socioeconomic interventions to better support impacted communities.

• Enhanced transparency through the release of real-time emission data.

• Acceleration of renewable energy uptake by Eskom – which condition was followed by Eskom’s release of a tender on 14 April 2025 for the accelerated establishment of a separate renewable energy business through private-public partnerships.

The minister also encouraged several transitional steps to be taken by Eskom, including the establishment of a wholesale energy market and the establishment and implementation of the Independent System Operator.

Worth noting is that the minister’s decision came two weeks before a decision by the Supreme Court of Appeal (SCA) in what has been coined the “Deadly Air Case”, which

THE IMPOSITION OF PRACTICAL CONDITIONS THAT SPEAK MORE DIRECTLY TO SOCIOECONOMIC AND ENERGY MARKET NEEDS

centres around the minister’s obligation to develop and implement speci c regulatory measures to improve air quality in the severely polluted Highveld priority area – home to many of the coal- red power stations subject to the MES exemption decision. In dismissing the minister’s appeal, the SCA was critical of the previous minister’s “dragging of feet” and, in adopting a purposive, human rights-based approach, held that “in the face of ongoing high levels of air pollution, the minister was dutybound to act”.

“While the granting of further MES timeframe compliance exemptions” is by no means something to be welcomed, the imposition of practical conditions that speak more directly to socioeconomic and energy market needs while realising environmental protection is a welcome approach that stands in stark contrast to both the postponements granted in the past and the inaction that characterised the Deadly Air Case. It is a more integrated solution that will hopefully break through the “either/or” approach to better balance energy sector demands and environmental goals.

Alecia Pienaar