Legal June 2025

From artificial intelligence and virtual law firms to smart contracts and crypto taxation, disruption is no longer knocking – it’s firmly inside South Africa’s legal system.

The All-New Mercedes-Benz E-Class Where legacy meets the future

With 75 years of innovation behind it, the new 2024 Mercedes-Benz E-Class seamlessly fuses luxury, tech and design – redefining what it means to drive executive class, writes MARK RAINE, co-CEO of Mercedes-Benz south Africa

With over 16 million units produced since 1946, the E-Class has consistently set the benchmark for mid-range luxury vehicles. In 2024, Mercedes-Benz South Africa introduces a new chapter in this legacy: the all-new E-Class, a harmonious blend of timeless elegance and cutting-edge technology.

TIMELESS DESIGN MEETS MODERN INNOVATION

The exterior of the 2024 E-Class retains the classic proportions of a three-box saloon, featuring a short front overhang, a long bonnet and a greenhouse set well back. The “cab-backward” design is complemented by a well-proportioned rear overhang, creating a balanced and dynamic silhouette.

A black-panel surface connects the radiator grille to the headlamps, reminiscent of the Mercedes-EQ models. The three-dimensionally designed radiator grille offers a progressive or classic look, depending on the equipment line. Standard high-performance LED headlamps and optional digital light with projection functions enhance visibility and aesthetics.

Power domes accentuate the bonnet, while ush- tting door handles and two separate character lines on the side emphasise the car’s sporty character. At the rear, the two-section LED lights feature a new contour and star motif, providing a distinctive day and night design.

AN INTERIOR CRAFTED FOR THE FUTURE

Step inside, and the E-Class reveals a cabin that merges luxury with innovation. The dashboard features the MBUX Superscreen, a large glass surface extending to the central display. This tri-screen setup, including an optional front passenger screen, offers a seamless digital experience. The driver’s display appears visually detached, oating above the concave surface of the trim element.

Active Ambient Lighting illuminates the instrument panel, creating a generous feeling of space. The centre console is designed as a homogeneous unit, merging into the lower section of the dashboard, with integrated stowage compartments and cup holders. The door panels feature a free- oating control array, matching the look of the glass surfaces of the screens.

SPACIOUS COMFORT AND ADVANCED TECHNOLOGY

The E-Class offers enhanced comfort with increased interior space. The driver enjoys 5mm more headroom than in the preceding model. Rear passengers bene t from a 2cm longer wheelbase, providing increased knee and leg room. The rear elbow width has been expanded to 1 519mm, nearly matching S-Class levels. The luggage capacity reaches up to 540 litres, accommodating various needs.

The new electronics architecture is more software-driven, with computing functions of previously separate domains now taking place in a single processor. This integration improves performance and speed, enhancing the user experience.

IMMERSIVE ENTERTAINMENT AND CONNECTIVITY

The E-Class introduces Sound Visualisation, allowing occupants to experience music with three senses: hearing, feeling and seeing. The Active Ambient Lighting system synchronises with the Burmester® 4D surround sound system, creating a visual representation of the audio. The optional front passenger screen enables dynamic content viewing, with a camera-based privacy function reducing brightness to minimise driver distraction.

ADVANCED CLIMATE CONTROL AND SUSPENSION

The Thermotronic automatic climate control system offers digital vent control,

automatically adjusting the front air vents to a desired ventilation scenario. The Airmatic air suspension system with ADS+ continuously adjustable damping ensures a smooth and comfortable ride. Optional rear-axle steering enhances agility, reducing the turning circle by up to 90cm.

ENHANCED DRIVING ASSISTANCE AND SAFETY

The E-Class comes equipped with a suite of driving assistance systems, including Active Distance Assist Distronic, Attention Assist, Active Brake Assist, Active Lane Keeping Assist, Parking Package with reversing camera, and Speed Limit Assist. The Driving Assistance Plus package offers additional features such as Active Steering Assist and automatic lane-keeping assistance. The safety concept is based on a body with a particularly rigid passenger cell and speci cally deformable crash structures, ensuring occupant protection in various scenarios.

A LEGACY OF EXCELLENCE

The E-Class is the pinnacle of the executive saloon segment. For 75 years, Mercedes-Benz has perfected the recipe, and this latest model is proof that innovation is at the forefront of what the motor manufacturer does. The 2024 E-Class is the most advanced E-Class, retaining that unrivalled luxury appeal and dynamic driving experience. It is a window into the future of Mercedes-Benz.

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LAW IN MOTION

The law is not a xed monument – it’s a living, evolving framework that shapes how we live, work, govern and grow. In a world of constant change, the legal system must remain both rooted and responsive: rooted in justice, ethics and precedent, but responsive to new challenges, emerging technologies, and the shifting expectations of society.

This issue of Legal embraces that tension. It is a space for debate, for clarity, for looking at how the law adapts in real time to the complexities of our economy, our workplaces and our communities.

From the courtroom to the boardroom, the role of the legal profession is expanding – demanding not only legal expertise, but strategic thinking, innovation and cross-disciplinary collaboration.

As regulation grows more intricate and public accountability becomes more urgent, Legal offers a wide-angle view on how the law intersects with governance, business, human rights, technology and the environment. We aim to re ect a legal system in motion – questioning, evolving, and always striving for relevance and fairness.

Whether you’re in practice, policy, or simply passionate about the rule of law, this magazine is your platform for thought leadership, insight and forward-thinking discourse.

Trevor Crighton Editor

CPD in the Legal Profession: Why Coaching Works

EMMIE DE KOCK , a former practising attorney, qualified business coach, and founder of LawyerFirst ®, supports lawyers through tailored coaching and continuing personalised development-aligned learning. She explains that investing in coaching is important for any legal career

Unlike in many other professions, continuing professional development (CPD) is not mandatory for legal practitioners in South Africa. However, in a demanding and fast-changing legal landscape, staying current and competitive is essential, making CPD a valuable investment in any legal career. While traditional CPD activities such as seminars and courses are useful, professional coaching offers a highly personalised and results-driven approach. Coaching is structured, goal-oriented and tailored to the

unique challenges lawyers face – qualifying it as a powerful form of CPD.

Coaching supports the development of leadership, business acumen, communication, emotional intelligence and strategic thinking. These are the critical, non-technical skills legal education often overlooks, yet they are essential for running a successful practice and sustaining a ful lling career in law.

LawyerFirst ® specialises in coaching lawyers at all stages of their professional journey. The one-on-one coaching sessions

create a safe, focused space for re ection, planning and decision-making, helping clients navigate real-world challenges and drive meaningful progress in both their personal and professional lives.

Recognising the demands on legal practitioners’ time, and the number of lawyers practising on their own, LawyerFirst ® offers a self-paced online course, How to Start a Legal Practice, and other courses in development. These resources make it easier for lawyers to engage in practical, exible, and impactful CPD.

Whether launching a new practice, developing a new legal practice area or planning an exit, coaching can be your most strategic CPD investment, unlocking growth, clarity and long-term success.

To learn more about LawyerFirst ® coaching services and online courses for legal professionals, visit www.lawyer rst.co.za

THE OLD WAYS AREN’T THE ONLY WAYS: AI AND LAWYERS

What is AI’s place in legal practice in South Africa?

JAMES FRANCIS reports

Law practices are not shy about adopting new technologies. From telegrams to emails, the legal industry has participated across the history of innovation. Now, it is one of the industries actively nding uses for arti cial intelligence (AI).

However, AI introduces novel and unforeseen factors into the equation. As in other industries, it is radically transformative and thus also very risky. Some fear it could undermine or even replace lawyers. And yet, legal practices have to consider it if they want to remain competitive.

THE AI ADVANTAGE

For all the anxiety AI can cause, that competitive effect is undeniable. The relationship between AI and legal practices goes back decades. For example, a data management concept called e-discovery emerged in the early 2000s. Using predictive coding, or technology-assisted review, e-discovery analyses and catalogues information in reams of legal documents and is a common tool in modern law of ces.

Attorneys thrive on accuracy and reputation, and from a business perspective, they must also demonstrate ef ciency and provide value. AI helps achieve these goals, not least because modern clients expect it.

“We act for big corporations. In other business processes where they have professional service providers, they have seen AI in their own internal operations. They have seen AI in action. So they would expect that, as their lawyers, it’s something we’re thinking

about, and not for the sake of it, but thinking about it to be more ef cient when we render services to them,” says Sihle Bulose, director of corporate and commercial at CMS Law.

BEYOND LEGAL

This topic might create the impression of legal eagles hunched over ChatGPT – not entirely inaccurate since a third of United States law rms reported in 2024 to be using generative AI tools, according to the American Bar Association.

However, the main presence of legal AI tools is often more evident in other parts of practices, such as automated Know-Your-Customer processes, document management and research services.

Much of the adoption is also through third-party legal software providers that are adding AI features. Leading specialised legal software services, such as Thomson Reuters CoCounsel and Lexis+, incorporate AI features, including generative AI assistants. Even law of ces with a substantial internal capacity to develop and promote digital services, such as Webber Wentzel, use external providers strategically to create a hybrid model.

“With our hybrid approach, we buy third-party tech, but also build our own tools in narrow cases. But our current focus is on partnerships. We seek vendors with whom we can partner to build, tailor or modify products for our unique contexts, use cases, people and clients. We have a very lengthy procurement and evaluation programme

Fast fact

Due to the very regulated nature of the legal sector, it often cannot use open-source software. However, open-source software appeals to smaller and cash-sensitive practices. Vendors such as ArkCase provide open-source legal management software backed by support and security features to balance affordability with compliance requirements. Source: https://www.blackduck. com/resources/white-papers/ lawyers-open-source-licensingmanagement.html

process on the technology side, on how we engage with partners and how we select those partners,” says Aalia Manie, head of Webber Wentzel Fusion, a division inside Webber Wentzel that offers “NewLaw” solutions, a term coined in 2013 to describe practices that use tech, data, exible resourcing and new practices to augment and expand traditional law services.

THE HARD YARDS

Many lawyers are pro-technology because their jobs demand it. They must scrutinise

Sihle Bulose

Aalia Manie

thousands of pages of ne print, aligning it with past cases and opposing arguments. Therefore, time-saving systems like AI are highly appealing.

However, they can also go too far, a particular risk with AI. There have been several recent events where lawyers used generative AI to create legal citations, highlighting a key concern: could AI make attorneys lazy or rob junior practitioners of developing the intuition that underscores good legal decisions?

At a fundamental level, nothing has changed. AI might make lawyers more ef cient, but it doesn’t remove the need to check the work, says Bulose.

“Just like with the work that my candidate attorney or associate does – whenever it comes to me, I need to check it. I need to verify it. The same applies to anything a program would have generated for me. I need to question it.”

Additionally, law practices must appreciate that technology could erode the effectiveness of their practitioners, especially juniors –an effect that was very noticeable during COVID-19-era remote working. It requires time and effort learning research and poring over cases (the hard yards) to develop a keen legal intuition. Thus, rms should put in the effort to guide others through mentorship and creating decent policy.

LAWYERS AND AI

There was a time when legal professionals worried that AI would replace them. Today, though, the focus is more on how AI helps them increase value and save time, which they can spend on training others, honing talent, improving processes and – crucially –tending to clients.

LEGAL TECH’S HISTORY

Legal firms are enthusiastic technology adopters. An early example is 1973’s UBIQ terminal – a dedicated computer that connected to the Lexis legal databases. Lawyers were also among the early adopters of dictaphones in the 1950s and voice-to-text dictation software such as Dragon Dictate circa 1997.

Even though there was cultural resistance against using email as the main form of legal communication, that technology also became very popular among lawyers, as was the case for fax machines a decade earlier. Indeed, legal practitioners loved the BlackBerry phone because of its email and office management features.

Today, lawyers are using tools such as Premonition to predict case outcomes and Harvey to build specialised legal large language models.

Source: AutoLex

“Technology can help create a high-quality document with no errors in less time. Lawyers can spend more time with their clients, really understanding what the issues are, understanding the business and doing more research into the market to deliver even greater value,” says Manie.

Law rms ultimately use technology to expand the value they offer, so it’s an outright competitive advantage. However, many rms still avoid modernising because of concerns about costs and security. Digitisation is often expensive and cybersecurity is a consistent risk in heavily regulated industries.

“TECHNOLOGY CAN HELP CREATE A HIGH-QUALITY DOCUMENT WITH NO ERRORS IN LESS TIME. LAWYERS CAN SPEND MORE TIME WITH THEIR CLIENTS, REALLY UNDERSTANDING WHAT THE ISSUES ARE, UNDERSTANDING THE BUSINESS AND DOING MORE RESEARCH INTO THE MARKET TO DELIVER EVEN GREATER VALUE.” – AALIA MANIE

“AT A FUNDAMENTAL LEVEL, NOTHING HAS CHANGED. AI MIGHT MAKE LAWYERS MORE EFFICIENT, BUT IT DOESN’T REMOVE THE NEED TO CHECK THE WORK.”

However, rms must resist buying services off the shelf. Focusing on partnerships with software providers ensures lawyers and their teams get what will complement them the most. They should also create procurement frameworks, evaluate software on those needs and invest time to understand the offerings.

“What’s most important is to trial the software and see how it performs,” says Bulose.

Crucially, it’s still about humans. Firms must not underestimate the importance of training, change management, leadership support and policy in guiding the AI journey. In a way, AI in law is just like what de nes a good lawyer: knowledge, diligence and being able to move with change.

“Lawyers should embrace AI –strategically,” says Manie. “You should always add to, augment and improve how you deliver your services – not just to remain competitive or to keep pace with changes in technology. There’s more data to analyse. There is more work to be done in a day. There are more problems to solve. There are more ways you can engage with and advise clients. There are more roles attorneys ll in the world. The old ways are not the only ways.”

IFIRMS VERSUS COURTS

VIRTUAL RULE OF LAW

t’s impossible to speak about the potential for the establishment of virtual law rms without addressing the impact arti cial intelligence (AI) is having on the way the legal system operates – opening up the possibilities of moving away from brick-and-mortar rms.

UNDERSTANDING AI

Marciano Van Der Merwe, group legal advisor for a leading cloud solutions company, but speaking in his personal capacity, explains that AI can be divided into two main types: predictive and generative. “Predictive AI helps us understand and anticipate behaviour patterns, while generative AI creates new content based on existing data. Generative AI can be a powerful tool for research, relying on machine learning and using algorithms to simulate learning similar to the decision-making processes of the human brain. Based on the information it receives, it can generate entirely new content,” he says.

Van Der Merwe cites the recent Secretariat and ACEDS Artificial Intelligence Global Report, which indicates that AI integration in legal work is as high as 74 per cent. “Although most responses came from Canada, the United States and the United Kingdom, it is important to note the similarity in tasks for which AI is used in South Africa.”

TAKING LAW VIRTUAL

Van Der Merwe says Africa’s top law rms are using AI and machine learning (ML) to save up to 50 per cent of their lawyers’ time. “AI presents an opportunity for law rms to ‘leapfrog’ others based on how long AI has been embedded in their current processes. Such opportunities are evident in the use of AI tools such as Harvey and Luminance,” he explains.

Simon Dippenaar, founder and managing partner at Simon Dippenaar & Associates, says AI is becoming increasingly valuable in litigation. “AI can help an attorney prepare a case by analysing vast amounts of legal data in seconds, identifying relevant precedents, statutes and case law in a large le of similar cases, reviewing the contracts or other documents associated with the case, and so forth. AI systems can predict case outcomes based on historical data, offering lawyers valuable insights into the likely success of a case,” he says. “This helps in formulating strategies and advising clients with greater accuracy.”

That said, he stresses that the attorney has a duty of care to validate the information generated by AI and not simply take its conclusions at face value. “AI may identify a particular piece of data as meeting the query parameters when in fact there are subtle –and sometimes not so subtle – differences that are simply masked by common key terms,” says Dippenaar.

Van Der Merwe says while there isn’t a technological disconnect between rms and the courts, technology presents an opportunity for courts to advance. “It’s clear that technology presents a signi cant opportunity for the Department of Justice and Constitutional Development. It has the potential to make the justice system more ef cient, equitable and accessible. By improving operational processes and addressing inef ciencies in the court system, technology can drive modernisation and digitisation. Additionally, the strategic plans highlight that these ef ciencies can stem from leveraging AI tools for online dispute resolutions and virtual courts.”

Dippenaar says the court of the future is dependent on technology, from virtual hearings and videoconferencing to online dispute resolution, with the digital divide between law rms and courts not as wide as some would expect.

INTO THE FUTURE

“The digital future of law in South Africa looks exciting. Although there are many challenges ahead, technology presents multiple opportunities for South Africa if leveraged appropriately in an inclusive and ultimately bene cial manner,” says Van Der Merwe. Dippenaar says AI represents a fundamental shift in the practice of law, promising to reshape the legal landscape. “As we embrace this new frontier, we must do so with a keen awareness of the bene ts and the risks. By proactively addressing the challenges and harnessing the opportunities, we can work towards a future where AI enhances the legal system’s ability to deliver justice and serve the needs of all South Africans,” he says.

Follow: Marciano Van Der Merwe @ www.linkedin.com/in/marciano-van-der-merwe Simon Dippenaar @ www.linkedin.com/in/simon-david-dippenaar-24297140

With the rise of artificial intelligence, how close is the establishment of virtual law firms? By TREVOR CRIGHTON

Marciano Van Der Merwe

Simon Dippenaar

TIME FOR SOUTH AFRICA TO GET SMART

BEATRIX VAN DER SPUY, consultant attorney at Thomson Wilks Attorneys, explores the current state of smart contracts, the emerging opportunities and how they could reshape contract law and daily life in a developing context

For over a decade, self-executing agreements powered by blockchain technology, known as smart contracts, have generated excitement for their potential to offer transparency, ef ciency and reduced reliance on intermediaries. But how close are we to seeing this become a reality in South Africa?

To understand smart contracts, it helps to look at how electronic contracts have evolved. Early forms included click-wrap agreements, where users actively click a checkbox to accept terms, and sign-in-wrap agreements, where simply logging into a site implies consent. These methods rely on human action and interpretation. Smart contracts take things further: they automatically execute the terms without human intervention when prede ned conditions are met.

INTERNATIONAL ADOPTION

Although there has been much discussion about the potential of smart contracts in South Africa, concerns around adoption remain. Issues such as mistrust, fear of automated errors and the practicality of implementing such technology in areas with limited infrastructure are key obstacles. Instead of focusing on theoretical possibilities, let’s examine real-world examples of how smart contracts have been successfully implemented, including in other developing countries.

BY DEVELOPING A

COMPREHENSIVE LEGAL FRAMEWORK, SOUTH AFRICA CAN POSITION ITSELF TO EVOLVE ALONGSIDE GLOBAL TRENDS IN BLOCKCHAIN AND SMART CONTRACTS.

transactions. The platform enables farmers to sell their produce directly to buyers with automatic payment upon delivery, reducing the risk of nonpayment and increasing trust between parties. When a farmer delivers goods, the smart contract is triggered, ensuring payment is released once the goods are veri ed and accepted by the buyer, minimising fraud and ensuring timely payment.

Beatrix van der Spuy

In Kenya, AgriDigital uses blockchain and smart contracts to streamline agricultural

Similarly, platforms such as Aave and MakerDAO in Bangladesh offer decentralised lending services. By using blockchain and smart contracts, people can access microloans without the need for banks, reducing reliance on traditional nancial institutions. A smart contract is set up between

borrower and lender, and when conditions are met, the contract automatically disburses the loan. If the borrower fails to repay, the contract may trigger automatic penalties or debt collection without human intervention.

Estonia’s digital voting system is another example. It uses blockchain and smart contracts to ensure transparency and security in elections, particularly in regions with a history of election fraud. Voters register on the platform, and once they cast their vote, the smart contract ensures it is recorded accurately. Results are processed automatically, preventing tampering or alterations.

SMART CONTRACTS IN SOUTH AFRICA

In South Africa, major banks are beginning to adopt blockchain and smart contracts to improve the nancial sector. Nedbank, for instance, is planning to deploy smart contract technology within the next year, focusing on sectors like agriculture to automate processes such as trade and credit nancing. This could greatly reduce the time and costs associated with traditional methods. Absa has joined the Contour network to digitise trade nance by issuing fully digital letters of credit, streamlining cross-border transactions. These developments signal a growing recognition among South African banks of the potential bene ts of smart contracts in enhancing transparency, security and ef ciency in nancial services.

However, South Africa faces challenges in terms of legal recognition. While the country’s legal framework relies on traditional contract law, it has not formally addressed smart contracts. Existing legislation, such as the Electronic Communications and Transactions Act (ECTA), Consumer Protection Act and Protection of Personal Information Act, provides only limited coverage. ECTA, for instance, includes provisions for “automated transactions” and “electronic agents,” but these are broad and do not directly cater to the speci cs of smart contracts. As a result, smart contracts operate in a legal grey area, lacking a clear, uni ed legal framework.

This highlights the urgent need for updated legislation to ensure smart contracts are legally valid, fair and enforceable in South Africa. By developing a comprehensive legal framework, South Africa can position itself to evolve alongside global trends in blockchain and smart contracts, opening doors for new opportunities in business, agriculture and nance.

Follow: Thomson Wilks Attorneys @ www.linkedin.com/company/thomson-wilks-incorporated-attorneys Beatrix van der Spuy @ www.linkedin.com/in/beatrixvds

THE NEW LEGAL-ONLY OFFICE SOLUTION

How Cape Town Collective is transforming legal office space in Cape Town, a Q&A with co-founder JEFFREY KLEU

Cape Town’s legal sector is undergoing a quiet but signi cant transformation. At the centre of it is Cape Town Collective (CTC), a serviced of ce provider that has reimagined how legal professionals engage with their workspaces.

Q: What motivated the creation of Legal Chambers at CTC?

A: The idea emerged from an observed shift in how legal professionals operate post-pandemic. There is still a need for physical of ce space, especially for client consultations, court preparation and con dentiality, but many professionals no longer need a traditional, full-time of ce setup. At the same time, the expectations of of ce environments have evolved. People want ef ciency, exibility, connectivity and access to quality infrastructure without the unnecessary overheads. CTC was created to deliver exactly that.

Q: What makes it different from a standard serviced office?

A: Cape Town Collective – Legal Chambers is not a generic co-working solution. It is a fully serviced, legal-only workspace on the seventh oor of the Wale Street Chambers building, just a few minutes’ walk from the Western Cape High Court. Everything has been designed with legal practitioners in mind – from soundproof private of ces and formal boardrooms to our facial recognition 24-hour accessed security system and document handling services. We also offer amenities such as a court messenger service, high-volume printing, VOIP with call answering and a 1 000mbps bre line. The idea is to reduce operational friction so professionals can focus entirely on their legal work. There are also showers and a cafe on-site. We have created a community of over 50 individual law rms and attorneys who now work and refer work to each other.

CTC is also close to the High Court, so lawyers don’t have to wait around for their case to be heard – they can relax in their of ce, the lounges or the cafe and courtyards. We’ve created a space where business between lawyers is easily conducive and taken the hassle out of worrying about day-to-day building operational tasks.

Q: Who are you targeting with this offering?

Q: From a design and infrastructure standpoint, how did you ensure the space would meet professional expectations?

Jeffrey Kleu

A: We’re seeing a strong response from independent legal practitioners, small- to mid-sized law rms and advocates who need regular access to the High Court. We house individual attorneys, advocates from The National Bar Council and PABASA, and law rms. Many of our tenants don’t want the burden of long-term commercial leases or managing of ce infrastructure. They want a secure, well-maintained space that re ects the seriousness of their work yet offers exibility. With input from our interior designers, artists and brand designers, we designed a space that solves all the pain points of lawyers. We believe we’ve come up with a space that not only helps lawyers do what they need to, but also signals to their clients that they mean business.

Q: How do your virtual office packages fit into this offering?

A: They’re a key part of it. Not everyone needs a permanent physical of ce, but many still require a credible Cape Town address, mail handling, a dedicated phone line and occasional access to boardrooms. That’s where our virtual packages come in. We offer three tiers, depending on the services you require and the amount of access to those services. Almost as a pay-as-you-go offering. These packages are particularly attractive to out-of-town practitioners litigating in Cape Town or rms looking to expand their footprint without setting up full of ces. They can make use of our lounges while they wait for their matter to be heard on the roll. We’ve given them somewhere to work, use our printers, shower or network with other lawyers.

We worked closely with legal professionals during the planning phase. The of ces are private, secure and fully furnished with high-end nishes. We’ve incorporated bespoke design elements and professional interiors, so the space feels credible and client-ready. Functionality was non-negotiable, so every of ce includes backup power, high-speed connectivity and seamless access to shared services through our integrated client portal.

Q: What feedback have you received from the legal community?

A: It’s been overwhelmingly positive. Many legal professionals have told us this is a setup they’ve been waiting for. Something that offers both prestige and practicality. There’s a real appreciation for the focus on the legal industry speci cally. I think that focus is what makes the space feel both relevant and reliable. We thought the networking element would take off, but it has become a bigger part of the attraction than we realised. We have built the framework, now the lawyers are colouring the space.

For more information: +27 82 826 8796 – Jeffrey Kleu hello@capetowncollective.com www.capetowncollective.com 38 Wale Street, 7th Floor, Cape Town.

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Decrypting crypto regulation

How can South Africa balance innovation with consumer protection, enforce tax compliance in a decentralised world and seize the myriad economic opportunities of cryptocurrencies?

By ANTHONY SHARPE

The cryptocurrency market in South Africa has grown considerably and, according to the Chainalysis 2024 Global Crypto Adoption Index, now ranks 30th in the world. This growth has been driven by increasing institutional investment and involvement from banks, with technological innovations such as payments APIs and layer2 technologies facilitating the convergence of digital and traditional nance – along with enabling regulation.

KEEPING CURRENT

Luno’s South Africa country manager Christo de Wit says the South African Reserve Bank (SARB) published a position paper as early as 2014 on virtual assets, paving the way for regulatory inclusion of crypto and other virtual assets. “This culminated in crypto assets being declared a nancial product in October 2022, and the Financial Intelligence Centre declaring crypto asset service providers as accountable institutions. The South African Revenue Service (SARS) advised as early as 2018 that crypto assets and transactions are taxable.

Fast fact

The South African cryptocurrency market is expected to achieve revenue of more than R7-billion this year.

Source: Statista

“However, although many advancements have been made on the regulatory front to incorporate crypto assets within the traditional nancial framework, further work remains to be done. South Africa’s cryptocurrency regulatory framework remains patchwork with clarity on crucial topics such as exchange control and the listing of exchange-traded products still missing.”

De Wit believes South Africa’s once-pioneering position in cryptocurrency regulation has stagnated signi cantly since 2022, with the country now seeing implementation delays of critical recommendations from the Intergovernmental Fintech Working Group’s (IFWG) 2021 paper on digital assets, potentially causing South Africa to miss important economic opportunities despite regulators’ initial embrace of digital assets. “A signi cant step forward would be

a robust listing framework that de nes what constitutes a reasonable digital currency. By providing this, the government would protect consumers from unscrupulous operators without restricting nancial freedom. A clear framework for deciding which digital coins are worth holding and investing in is essential.”

THE GREY AREA

For the man in the street that lack of clarity presents some pertinent questions around taxation.

Jashwin Baijoo, associate director and head of crypto asset compliance at Tax Consulting South Africa, says what cryptocurrency represents in the hands of a South African individual or trading company is based on a factual inquiry.

“There are certain criteria that determine whether it quali es as a capital asset, or revenue/gross income,” says Baijoo.

“With trading, it’s normally deemed to fall under gross income. On the other hand, if it’s an investment that is held with long-term intent, and factually there has been

“SOUTH AFRICA’S CRYPTOCURRENCY REGULATORY FRAMEWORK REMAINS PATCHWORK WITH CLARITY ON

Christo de Wit

Jashwin Baijoo

no movement, then it’s more likely to be classi ed as a capital asset.”

This is important because these are taxed quite differently. “If a crypto transaction is treated as a capital disposal, you pay capital gains tax, which for an individual is eighteen per cent,” explains Baijoo. “However, if it is deemed gross income, then you are taxed at your marginal rate, which as an individual can go up to forty- ve per cent.”

The issue is that, in the absence of legislation clarifying exact parameters, this is determined on a case-by-case basis, says Baijoo. “With crypto being underlegislated, there is no black and white, so for ordinary investors, this distinction becomes much harder to make.”

Another key consideration is what quanti es a taxable event. Baijoo says a common misconception is that selling a crypto asset then moving the money from that sale into your bank account is the only event that incurs a tax or reporting obligation. “If you do a crypto-for-crypto swap, that’s a disposal event. If you sell crypto and keep the funds on the platform to buy other crypto, that’s a disposal and new acquisition event. The only event that is unlikely to be viewed as taxable is moving crypto into cold storage, which is the equivalent of moving money from your current account into your savings account.”

Baijoo says there are guidelines available to help investors and SARS is working on an explanatory memorandum, but no deadline has been given when this will be released.

ONSHORE OR OFFSHORE

One of the key advantages of cryptocurrencies is the ease with which transactions can be conducted, whether locally or internationally. However, this is being hindered by a lack of clear designation. “Currently, digital currencies

Fast fact

“CURRENTLY, DIGITAL CURRENCIES ARE NOT CLASSIFIED AS EITHER OFFSHORE OR ONSHORE ASSETS, MAKING IT CHALLENGING FOR INSTITUTIONAL INVESTORS TO ALLOCATE CAPITAL OR INVEST IN ASSETS LIKE BITCOIN.” – JASHWIN BAIJOO

are not classi ed as either offshore or onshore assets, making it challenging for institutional investors to allocate capital or invest in assets like bitcoin. To bene t from digital assets, utilise them as low-cost forms of payment and invest in them through exchange-traded products, cryptocurrencies need to be designated as onshore assets,” Baijoo explains.

Using Bitcoin to pay for goods isn’t viable if every payment is considered a cross-border transaction. “Moreover, if cryptocurrencies are listed as an offshore asset, pension funds that can only invest up to forty- ve per cent abroad will have limited funds left to allocate, meaning ordinary investors do not bene t from these increasingly mainstream digital assets.”

De Wit adds that this also complicates efforts to report cross-border transactions to SARB. “Currently, local crypto exchanges can’t report crypto cross-border transactions in South Africa because of the onshore/ offshore issues, and there is no reporting framework in place. Clear regulations de ning the designation of digital assets are essential for reporting to the SARB and for South Africa to exit the Financial Action Task Force’s grey list. Even with the implementation of the travel rule, which mandates sender and bene ciary information sharing for crypto transactions, compliance remains insuf cient without proper asset classi cation.”

More than 5.8 million South Africans hold a crypto asset, prompting the South African Revenue Service to clamp down on taxpayers not declaring these in full. The agency is collaborating with the Financial Sector Conduct Authority and local crypto exchanges to track registered crypto asset service providers and uncover relevant transaction details.

Source: South African Revenue Service (Oct 2024)

WORKING TOGETHER

The good news is that various groups are collaborating to facilitate crypto adoption – and regulation, says Lerato Lamola , partner at Webber Wentzel. Lamola cites the IFWG, comprising the Competition Commission, the Financial Intelligence Centre, the Financial Sector Conduct Authority, the Prudential Authority, the National Credit Regulator, SARS, SARB and National Treasury, which was established in 2016 to work together across disciplines to modernise the regulatory regime.

“The IFWG runs regulatory sandboxes to allow innovators in the nancial sector to test their new products and services. Its regulatory unit researches various ntech topics to determine whether or not legislative interventions need to be introduced.” She adds that the group also facilitates training and research to ensure regulatory bodies are equipped to deal with the growing digitalisation of nancial services.

Lamola believes the IFWG is doing a good job of staying on top of trends. “For South Africa to keep up with the world, it needs to complete updating our nancial sector regulatory regime to t into the Twin Peaks model of nancial regulation as decided by National Treasury following the 2008 nancial crisis. This includes nalising the enactment of the Conduct of Financial Institutions Bill, modernising South Africa’s payment system and amending the payments regulatory framework. It is critical for South Africa to complete these existing regulatory work streams, which all impact the ntech industry.”

Follow: Jashwin Baijoo @ www.linkedin.com/in/jashwin-baijoo-b0124811b Christo de Wit @ www.linkedin.com/in/christodigital

Lerato Lamola @ www.linkedin.com/in/lerato-lamola-esq-08462514

Lerato Lamola

STRUCTURAL INTERDICTS AND THE FIGHT FOR ENVIRONMENTAL JUSTICE

Faced with chronic sewage overflows and collapsing municipal services, civil society is turning to innovative legal remedies to defend environmental and constitutional rights, writes DANJELLE MIDGLEY, an attorney at the Centre for Environmental Rights

The small town of Villiers in the Mafube Municipality faces years-long sewage over ows impacting the quality of life of the local community. Mafube Muncipality’s dysfunctional treatment plants have resulted in pollution of one of South Africa’s key water sources, endangering both the environment and the livelihoods of communities dependent on the Vaal River.

On 25 March 2025, a full bench of the Free State High Court delivered a short but devastating judgement. The case involved the failure of the Mafube Municipality to maintain and run wastewater treatment works adequately. This resulted in pollution of the Vaal and Wilge rivers, which provide much-needed water supply to the broader Gauteng and Free State regions. The Wilge River is a tributary of the Vaal River and plays a role in the Tugela-Vaal Water Transfer Scheme.

The judgement was devastating in its critique of the actions of a long list of provincial and municipal parties involved in the sorry state of affairs. This included abandonment of constitutional duties, undermining of the rule of law, failure to comply with multiple previous court orders, dysfunction and nancial maladministration – all while the fundamental constitutional rights of residents are violated and raw sewage ows into rivers unabated.

UNDERSTANDING THE CHALLENGES

The case brings up foundational environmental, social and governance challenges with which many civil society organisations grapple. For instance, the role of local government in the provision of service delivery required for the realisation of fundamental human rights, legal mechanisms for effectively holding municipalities to account.

COURT ROLLS ARE FILLED WITH LITIGATION INVOLVING

New court judgements (such as the Supreme Court of Appeal’s recent DeadlyAir ruling) con rm constitutional environmental rights in South Africa are “immediately realisable” and not subject to the “progressive realisation” limitation that other socioeconomic rights have been found to be. Case law, scholarly literature and state and media reports continue to illustrate how municipalities are failing to provide residents with adequate water and sanitation services. Court rolls are lled with litigation involving the profound impacts of the dire state of wastewater treatment works on residents’

Danjelle Midgley

lives. These failings violate basic human rights and result in signi cant pollution of ecosystems.

STRUCTURAL INTERDICTS TO ADDRESS ENVIRONMENTAL RIGHTS VIOLATIONS

So, how are civil society organisations operating in this space using litigation to navigate these challenges? One emerging theme in this context is the continued use of structural interdicts and supervisory orders in socioeconomic rights litigation. Structural interdicts are court orders in which the court is involved in the compliance with its order.

The Mafube decision included such a remedy. The state respondents were ordered to report back to the court in two months detailing the steps they have taken to implement the order, prevent sewage spillages and proactively

maintain the sewage works – or explain in detail any reasons for noncompliance. Supervisory orders and structural interdicts are controversial because of their potential to violate the separation of powers principle, where the judiciary “usurps” the functions of executive state bodies. Many litigants advocating for socioeconomic rights have successfully sought such orders – notably in the litigation regarding the provision of antiretrovirals, eviction proceedings and in cases involving the provision of municipal water and sanitation service delivery for residents.

CONCOURT SUPPORT

The Constitutional Court has af rmed the use of structural interdicts and supervisory orders, holding that, “this approach is

THE LEGAL COMMUNITY WILL CONTINUE TO EXPLORE THE WIDE

POWERS OF COURTS IN CRAFTING CREATIVE AND EFFECTIVE REMEDIES IN TRYING TO HOLD STATE BODIES ACCOUNTABLE WHILE ADVANCING CONSTITUTIONAL RIGHTS.

Follow: Danjelle Midgley @ www.linkedin.com/in/danjelle-midgley-41a20474 Centre for Environmental Rights @ https://cer.org.za

valuable and advances constitutional justice, particularly by ensuring that the parties themselves become part of the solution”.

In the Mafube decision, the court was well aware of the separation of powers problem in making such an order. However, the facts of the case show the extreme lengths the parties had gone to try to hold the municipality to account (including going to court twice to get court orders to address the wastewater system, neither of which was complied with).

Judge Daffue, for the full bench, held, “having acknowledged the concern that courts should be careful not to overstep their boundaries, in my view this is a case where the mandatory and supervisory orders to be granted will do no more than to reinforce the foundational constitutional values of accountability, responsiveness and openness”.

It remains to be seen how the provincial and municipal parties will comply with this order. The respondents must report back to court by 25 May 2025 (if they don’t appeal the judgement). Moving forward, the legal community will continue to explore the wide powers of courts in crafting creative and effective remedies in trying to hold state bodies accountable while advancing constitutional rights.

JUDGEMENT

MAFUBE BUSINESS FORUM AND OTHERS V PREMIER OF FREE STATE PROVINCE AND OTHERS WHY THE #DEADLYAIR HIGH COURT JUDGMENT MATTERS

CONSTITUTIONAL COURT

Mafube Municipality’s sewage crisis.

BALANCING BUSINESS AND SUSTAINABILITY WITHIN SOUTH AFRICA’S ENVIRONMENTAL LAWS

Sustainability and profit often make for uncomfortable bedfellows. How does South Africa’s legal framework help balance this delicate dynamic, asks LISA WITEPSKI

The obligations of South Africa’s companies, in terms of the environment, are laid out by the National Environmental Management Act, which came into effect in 1998.

“This cornerstone legislation sets out various processes, compliance requirements and measures for the South African regulatory regime,” explains Luca Maraschin, senior associate: mining and environmental at NSDV.

A number of acts targeting speci c areas, such as water and waste management, air quality, protected areas and biodiversity, have since been promulgated. Some of the most recent environmental law developments include legislation around carbon tax and climate change.

THE VALUE OF COMPLIANCE

Maraschin notes the legislation is onerous, but adds that regulators have put in place several processes and targets to facilitate compliance. “Say, for example, there is an issue with pollution. Although a company found not to comply with legislation in this area may be issued with a directive to cease operations, several steps may be followed, such as actively engaging with the regulator, before it reaches this point.”

He adds that companies are required to consider how their actions will impact the environment and to nd ways to mitigate potential risks, even before they are granted a licence to operate, while internal and external audits are conducted regularly to ensure they uphold their obligations.

Fast fact

The most pressing environmental issues facing South Africa include biodiversity loss, air pollution, global warming, waste, desertification and deforestation.

Source:GreenEconomyJournal

More than this, however, most companies see the value of compliance. Noncompliance can be costly with punitive measures including nes of up to R10-million and stop orders, while company directors can be held personally responsible, facing prison terms of up to 10 years.

The reputational damage may also be signi cant, notes Lia Bolz, director at Malan Scholes Inc. “A company found to be noncompliant may not be able to access funds it depends on, especially if those funds are linked to compliance. They may also see a lack of investment and ultimately closure.”

CONSIDERING COMPLICATIONS

Despite the carrots and sticks encouraging compliance, adhering to regulations can be a tricky matter. “One of the greatest challenges is that most legislation was introduced only after 1998. Since then, there has been a barrage of legislation – but companies haven’t had much time to adjust,” Bolz notes. Consider, for instance, that most mining companies (arguably among the most greatly affected by environmental legislation) have mines that had already been in operation for many years before the legislation was enacted.

CONSTITUTIONAL GOVERNANCE

South Africa’s environmental legislation is in line with the Constitution, which states: “Everyone has the right to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that prevent pollution and ecological degradation [and] promote conservation.”

Furthermore, “everyone has the right to access to water”. The Constitution further provides that “the state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of these rights”.

Source: Centre for Environmental Rights

Ensuring compliance for such operations would have placed great strain on the company, Bolz points out.

The complications are exacerbated by the fact that some regulators are more rigorous than others. “Although the Departments of Minerals and Petroleum and Environmental Affairs are responsible at a national level, there are regional and even municipal regulators,” she explains, adding that the legislation itself may be interpreted differently by these entities. This means there is a lack of standardisation, creating a complex environment for companies.

LOOKING AHEAD

Maraschin believes the environment is set to become even more tightly regulated, with authorities likely to place greater emphasis on climate change. Bolz predicts the next area to receive attention will be the protection of agricultural areas.

“Companies should adopt a proactive stance by examining how other industries have adapted to the regulatory environment and applying the same principles,” Maraschin concludes.

Luca Maraschin

Lia Bolz

HOW DO WE PROTECT SOUTH AFRICA’S VITAL WHISTLEBLOWERS?

In 2021, the assassination of whistleblower Babita Deokaran shed a harsh light on the risks associated with “speaking up” in South Africa. Killed after exposing procurement irregularities in the public health sector, Deokaran’s case is particularly concerning in a country where corruption continues to undermine institutions.

In South Africa where whistleblowers play such a critical role in uncovering wrongdoing, is our legislation truly doing enough to protect them?

BLOWING THE WHISTLE

Whistleblowing refers to the act of disclosing information about misconduct or the risk thereof within an organisation to individuals or entities capable of taking corrective action.

In South Africa, the main piece of legislation pertaining to whistleblowers is the Protected Disclosures Act 26 of 2000 (PDA). For purposes of whistleblowing, the PDA ought to be read in conjunction with other pieces of legislation such as the Labour Relations Act of 1995, the Companies Act of 2008, the Protection from Harassment Act of 2011 and the Constitution inter alia.

Under the PDA, a protected disclosure is the act of reporting information that an employee reasonably believes shows or tends to show a criminal offence, a contravention of a legal obligation,

the miscarriage of justice, the endangerment of an individual’s health and safety, the damage of an environment or unfair discrimination.

The PDA applies to both the public and private sectors and encourages whistleblowing in the workplace by providing certain protections from occupational detriments such as dismissal, suspension, demotion, harassment or intimidation.

Additionally, these disclosures must be made in good faith and to appropriate authorities to qualify for legal protection. If a whistleblower suffers occupational detriment as a result, they may seek relief through the Commission for Conciliation, Mediation and Arbitration or the Labour Court.

GOING FURTHER

While the PDA provides a legal avenue for protection, it has come under increasing criticism for its limited scope and effectiveness, with critics querying whether it goes far enough. Despite the act’s best efforts, concerns are raised due to the lack of incentive to expose irregularities, little to no legal assistance, no nancial aid for disclosures that lead to an unfair dismissal as well as no certainty that the disclosure will lead to a criminal or civil

proceeding. The act also only makes provision for employees.

That being said, some initiatives offer cautious optimism for the future. In the rst quarter of 2025, an increased focus was placed on the implementation of the Whistleblower Protection Bill, which is expected to be introduced to Parliament this year. The bill seeks to strengthen the existing legislative framework by addressing inadequacies in the PDA while offering more practical safeguards.

In parallel, private sector initiatives have also emerged to support whistleblowers. One example is the CiiMS ReportIT platform. Inspired by the University of Cape Town and developed by Online Intelligence, it was created to address the under-reporting of gender-based violence. Designed to allow for anonymous reporting and the secure submission of supporting documentation, the platform has since evolved into a broader tool that facilitates ethical, anonymous disclosures of misconduct, crime and corruption.

BETTER TOOLS

While tools like these do not replace formal legal protections, they can play a complementary role in building a culture of accountability. By creating safe, accessible channels for disclosure, they help address some of the real-world barriers whistleblowers face such as fear of retaliation or uncertainty of who to turn to.

As it stands, whistleblowers are not afforded adequate protection by legislation. The PDA is a good foundational framework, but its limited scope and lack of practical support may leave many whistleblowers exposed and vulnerable. If whistleblowers are to remain at the forefront of exposing wrongdoing, South Africa’s legal framework must evolve to provide not just formal protections, but real, reliable safety both in principle and in practice.

Dino Koutsoudis

THE PROTECTION OF PERSONAL INFORMATION ACT, FIVE YEARS ON

POPIA has become an evolving compliance ecosystem whose successes and shortcomings will shape South Africa’s digital economy for the next decade, says

JODI POSWELLETSKI, partner

at

Fairbridges Wertheim Becker

When the Protection of Personal Information Act (POPIA) came into force fully in July 2020, sceptics predicted a long honeymoon of soft warnings and little else. Five years later, the act is neither a spectacular triumph nor a toothless failure. Instead, it has become an evolving compliance ecosystem whose successes and shortcomings will shape South Africa’s digital economy for the next decade.

BILL WITH BITE

The boldest evidence that POPIA now has bite is nancial. In 2023, the Information Regulator ned the Department of Justice R5-million for lax cybersecurity. Twelve months later, the Department of Basic Education incurred the same penalty after ignoring an enforcement notice about matric results privacy. That two national departments, rather than a handful of private rms, were rst in the dock signals that no institution is beyond reach.

Sanctions alone, however, do not make a privacy regime work. Behind the headlines sits a quieter cultural shift. Between April 2024 and March 2025, the Regulator recorded 980 security compromise noti cations. The spike certainly re ects rising cybercrime, but it also shows boards are treating rapid disclosure as good governance rather than self-incrimination.

Administration has improved, too. Just this month, the Information Regulator switched from an email reporting mechanism of incident data breach reporting to a mandatory

e-services portal that captures incidents through a structured online form and feeds them straight into a case management system. The portal obliges companies to supply root-cause data, enabling trend analysis and faster triage.

AT THE COAL FACE

Inside organisations, the law is changing behaviour. Information of cers now sit on risk committees, privacy impact assessments are built into new IT projects and staff training has moved from dull slideshows to live simulations – an overdue response to the fact that negligent employees, not anonymous hackers, remain one of the leading sources of nes.

Yet every advance exposes a weakness. The Information Regulator employs fewer than 150 people, a staf ng level that produced only seven enforcement notices in 2024 and left hundreds of complaints pending. Delay dulls deterrence: a ruling that arrives two years after a breach teaches few lessons.

PROSECUTING POPIA

Legal precedent is surprisingly thin. Many POPIA skirmishes settle or are struck from the urgent roll on procedural grounds, leaving phrases such as “reasonable technical and organisational measures” largely de ned by guidance notes rather than court rulings. Without case law, insurers struggle to price cyber-risk policies and companies hesitate about investing in security controls that may or may not satisfy a judge.

On 17 April 2025, the Information Regulator published amended regulations under the POPI Act. These serve to amend the existing

SECTOR-SPECIFIC CODES

regulations and propose broader data subject rights of erasure and portability. Moreover, a responsible party that wishes to process the personal information of a data subject for the purposes of direct marketing through unsolicited electronic communication is required in terms of section 69 (2) of POPIA to obtain written consent from a data subject. Parallel amendments to the Consumer Protection Act will create a national “do-not-contact” register and oblige direct marketers to renew their licences annually, aligning consumer marketing rules with POPIA’s consent regime. Sector-speci c codes for healthcare, credit, biometrics and automated decision-making are due later this year, and Treasury’s medium-term expenditure framework promises the Regulator a 30 per cent budget jump from 2026, earmarked for additional investigators and regional outreach of ces.

For now, boards should be elevating the information of cer, mapping every data ow – including backups and cloud vendors –rehearsing data breach drills, drafting POPIA policies, PAIA manuals, refreshing consent and supplier contracts and monitoring the fast-moving, rule-making docket.

POPIA is no longer a paper tiger, but neither is it fully grown. Early nes, rising data breach disclosures and a modern reporting portal show an Information Regulator nding its stride, while forthcoming amendments promise sharper tools. The decisive question for business is simple: will you act before the law tightens further or wait until your name joins the list of cautionary tales?

FOR HEALTHCARE, CREDIT, BIOMETRICS AND AUTOMATED DECISION-MAKING ARE DUE LATER THIS YEAR.

Jodi Poswelletski

IPS: WHAT SMES NEED TO KNOW

What business owners need to know to safeguard their intellectual property, according to an intellectual property expert. By

THANDO PATO

Innovation, ideas, concepts and intangible knowledge (know-how) are key drivers of success for many small and medium enterprise (SME) owners. In today’s competitive global and local markets, every effort must be made to ensure these valuable assets are protected. That’s why understanding South Africa’s intellectual property (IP) legal landscape, which offers established frameworks to safeguard information, ideas, products, brand names and services, is crucial.

KNOW YOUR RIGHTS

“There are various types of statutory and nonstatutory IP rights. These statutory intellectual property rights in South Africa include patents, registered designs, copyright and trademarks. The nonstatutory types of intellectual property, protected by way of common law, include know-how, trade secrets and con dential information,” explains Eugene Honey, partner at Adams & Adams.

Honey says most businesses hold at least three types of intellectual property: know-how, copyright and trademarks.

“Know-how and trade secrets encompass processes, methodologies, formulas, recipes, experience, expertise and more. These are typically protected through con dentiality agreements or clauses within contracts that ensure con dentiality.”

To ensure agreements are suf ciently detailed and business owners are protected, Honey recommends using an IP specialist attorney to draft con dentiality or non-nondisclosure agreements and any license agreements to commercialise IP.

TRADEMARKS

Registering a trademark protects business owners against third parties using an identical or similar mark for the same or similar products and services.

“It is easier to enforce one’s rights once you have a trademark registration certi cate. A trademark registration also enhances the

REGISTERING A TRADEMARK PROTECTS BUSINESS OWNERS AGAINST THIRD PARTIES USING AN IDENTICAL OR SIMILAR MARK FOR THE SAME OR SIMILAR PRODUCTS AND SERVICES.

value of the brand, in that the income streams from the use of the brand are protected. The proprietor is also in a better position to license and commercialise the brand, enhancing its value,” Honey explains.

“To successfully register a trademark, it must be inherently distinctive or distinguish the goods and services it represents from those of competitors. The rst step in protecting a trademark, especially a new one, is to conduct a trademark registrability and availability search at the South African Trademarks Registry to determine if the trademark is available for both use and registration.”

Under the Trade Marks Act 194 of 1993, a wide range of products and services can be successfully registered across the 45 international classi cations. These include devices (such as logos), names (including personal names), signatures, words (for example, Google, Adidas), letters (for example, 5FM, F1), numerals (for example, 702, 947), shapes, designs and con gurations (for example, the BMW grill), patterns and ornamentation (such as the Nike swoosh or Adidas 3 stripes) and the packaging/containers of goods.

COPYRIGHT

Honey explains that under South Africa’s current copyright laws, protection is granted to original works that meet speci c requirements, across the following categories:

A PATENT: WHAT YOU SHOULD KNOW

A patent is an exclusive right granted for an invention – a product or a process that introduces a new way of doing something or provides a novel technical solution to a problem.

In South Africa, patent protection gives the inventor the legal right to prevent others from commercially making, using, distributing or selling the invention without permission for a limited period of 20 years.

“You should apply for registration of a patent as early as possible,” says Honey. “If the invention is not new and inventive anywhere worldwide when the application is filed, the patent will not be valid and enforceable.”

• Artistic works – including photographs, logos, technical and design drawings and packaging.

• Literary works – reports, manuals and other written documents.

• Musical works – including CDs, DVDs and digital recordings.

• Films – DVDs and digital lm recordings.

• Sound recordings.

• Published editions – including books, textbooks and e-books.

• Computer programs – software, applications and operating systems.

Copyright protection is effective once an original work has been created, developed and xed in a tangible or material form; it is then granted protection for approximately 50 years, depending on the type of work.

A common copyright pitfall in South Africa is that, by default, the creator of an original work is considered its owner. “This means that if the creation or development of a copyrighted work is outsourced, the third party who produced the work may retain ownership, even if you paid them for it. To avoid this, it’s essential to have a written agreement that explicitly assigns the copyright to your business,” Honey says.

For more information, visit www.iponline.cipc.co.za or www.adams.africa

Follow: Eugene Honey @ www.linkedin.com/in/eugene-honey

Eugene Honey

AVOIDING the DEBT TRAP

Still reeling from the effects of the COVID-19 pandemic, South Africa’s companies now face a new era of turbulence thanks to the United States’ imposition of tariffs. With financial challenges ensuing for many, it’s critical to keep an extra eye on solvency, writes LISA WITEPSKI

It’s hard to imagine that a ourishing company can nd itself in a situation where liquidation is the only option – and yet there are plenty of cautionary tales about organisations that once dominated their industries but now no longer exist.

ROAD TO RUIN

The reason for the demise of these organisations is simple, say Sarah Roberts and Rob Thackwell of Thomson Wilks: “It all comes down to poor nancial planning.” Thackwell explains: “Companies may be overly aggressive around pro t margins or they may fail to conduct due diligence on their contracts. In such cases, a buyer who defaults on a payment may have a ripple effect, which is why

“COMPANIES NEED TO TAKE A PROACTIVE APPROACH TO MANAGING THEIR DEBT, LIQUIDITY RATIO AND CASH FLOW.”

– BRIDGET LETSHOLO

proper management of contractors is crucial. However, there may be other factors that contribute to problems with solvency, such as paying exorbitant salaries that ultimately place pressure on the company.”

Bridget Letsholo, director and head of business restructuring and insolvency at CMS South Africa, says it’s usually the failure to keep track of the effect such issues have on the solvency of a company that leads to nancial challenges. “It’s vital to keep track of both short- and long-term liabilities and to keep a close eye on how these compare to assets. Companies need to take a proactive approach to managing their debt, liquidity ratio and cash ow – the better you know your nances, the better equipped you are to avoid a crisis or respond should one arise.”

Letsholo adds it is important that the organisation’s leaders work closely with the nancial team in this regard. “It’s also crucial that you focus not only on the present. You need to be certain that you can pay salaries and meet your obligations to debtors in six or even twelve months’ time.”

pandemic, the recent announcement of tariffs is once again certain to place stress on companies and their operations – and organisations that have made nancial provision for any fallout will be better able to withstand the resulting turmoil.

Honesty about the company’s nancial position is equally important. Oliver Marshall of Kern, Armstrong & Associates, says the downfall of many companies may be traced to the directors’ reluctance to take action at the rst sign of a nancial red ag. “Often, directors are convinced they are just one deal away from turning things around. However, continuing to operate while knowing the company is unable to meet its obligations is not just risky; it may be regarded as reckless trading in law. If a company is commercially insolvent and directors fail to act, they expose themselves to personal liability.”

TRANSPARENCY AND PROACTIVENESS

“It’s at this stage – when a company is under pressure but not yet formally in default – that directors should reach out to creditors,” Marshall explains. “Most creditors want to recover their money, not push a business into liquidation. If you are transparent and proactive, they are often open to repayment plans or restructured terms.”

Plus, says Letsholo, although it is possible to reach an agreement with creditors before you are in arrears, once you have breached your agreement, they are bound to take action by, for example, issuing a letter of demand because of their own internal processes.

If you are transparent and communicate openly, you may nd several options are available. Marshall recommends that directors propose a clear, realistic repayment plan that acknowledges current constraints but shows commitment to resolution.

INFORMAL REMEDIES

Bridget Letsholo

HONEST ACCOUNTING

It’s a good idea to build and maintain a reserve that can keep the company buoyant in case of unexpected developments, says Roberts. For example, although no one could have anticipated the impact of the COVID-19

At the same time, companies may wish to investigate avenues that could help them return to a rmer nancial footing, starting with informal legal remedies. Informal restructuring is a case in point. “The rapid pace of digital evolution means many companies nd it dif cult to keep pace with changing customer demands.

“CONTINUING TO OPERATE WHILE KNOWING THE COMPANY IS UNABLE TO MEET ITS OBLIGATIONS IS NOT JUST RISKY; IT MAY BE REGARDED AS RECKLESS TRADING IN LAW.”

– OLIVER MARSHALL

Restructuring is an option that may help in cases where it is this, rather than poor nancial management, that has led to challenges,” Letsholo notes.

Informal restructuring is suggested in cases where a company’s assets still exceed its liabilities, but where it has become clear that pro ts are likely to be threatened in time. In this case, Letsholo recommends holding discussions with all stakeholders to agree on possible actions that may reduce the company’s expenses, such as retrenchments – but, bear in mind that this must be conducted in line with the provisions of the Labour Relations Act to ensure fair practices for employees.

A company turnaround is another potential solution. Here, the aim is to streamline processes that may be compromising pro tability.

Fast fact

BUSINESS RESCUE VERSUS LIQUIDATION

If informal legal remedies don’t work, it may be necessary to enter business rescue and appoint a business rescue practitioner, says PJ Veldhuizen of Gillan & Veldhuizen Inc. “Business rescue has a strict timeline: it is implemented when it becomes clear that a company will not be able to pay its debts or may go insolvent within the ensuing six months. From the date of appointment, the business rescue practitioner has 25 days to formulate a business rescue plan, which must be approved by creditors.” Creditors may extend this period if requested to do so.

Although it may feel as though business rescue is a last stop before the organisation’s funeral, many companies have successfully recovered after reaching this stage. South Africa has many highly experienced business rescue practitioners, standing companies in good stead. In addition, this process aids flailing businesses by placing a moratorium on creditors claiming monies owed.

If, however, the process is unsuccessful, the business rescue practitioner will convert the process to one of liquidation.

“Companies can protect themselves from reaching this stage by keeping meticulous financial records, which will be a help during business rescue. Directors also need to keep careful track of the organisation’s financial health and hold regular meetings to analyse its status. Finally, guard against anyone on the board pushing an agenda or behaving in a way that may be construed as reckless,” Veldhuizen advises.

In both cases, the company should consult an independent party that is able to provide an objective view of the organisation’s operations, along with factors such as short- and long-term debt, receivables and potential pitfalls.

“In all instances, it is vital to maintain transparency, keep open communication lines and take proactive legal and nancial steps,” Marshall says. “This not only increases the chances of working constructively with creditors, but also helps avoid a situation where directors are later accused of failing to act responsibly during nancial distress,” Marshall says.

According to Statistics South Africa (Stats SA), the country recorded 109 business liquidations in April 2025, bringing the total number of closures for the first four months of the year to 482. Notably, voluntary liquidations increased by 25.7 per cent year-on-year, indicating that more business owners are choosing to close their operations proactively amid economic challenges. Conversely, compulsory liquidations initiated by creditors due to unpaid debts declined by 29.4 per cent over the same period.

Follow: PJ Veldhuizen @ www.linkedin.com/in/pjveldhuizen Bridget Letsholo @ www.linkedin.com/in/bridget-letsholo-0471b582 Rob Thackwell @ www.linkedin.com/in/rob-thackwell-9bab1654 Sarah Roberts @ www.linkedin.com/in/sarah-catherine-roberts-2bb757137 Oliver Marshall @ www.linkedin.com/in/oliver-marshall-5705a9109

PJ Veldhuizen

NAVIGATING THE CONSUMER PROTECTION ACT

BUSANI MOYO explores the Consumer Protection Act, highlighting its role in empowering consumers and holding businesses accountable while identifying areas for improvement

In an era where consumerism reigns supreme, ensuring businesses act ethically and consumers can enforce their rights under the law is crucial. In this article, we examine the Consumer Protection Act 68 of 2008 (CPA) to identify what it attempts to achieve, where it could be improved and how it empowers consumers to hold corporate entities accountable.

FOR GOOD COMPANIES

The Consumer Protection Act serves as a vital framework designed to safeguard the interests of consumers while holding businesses accountable for their practices. This is a reality acknowledged by Odete Da Silva , a director at Pagel Schulenburg Inc., a Johannesburg-based law rm that advises and represents businesses and individual consumers on compliance with the CPA and dispute resolution.

She says: “The CPA attempts to strike a balance between advancing consumer rights and holding suppliers accountable without entirely restricting commercial enterprise. It codi es a range of fundamental consumer rights – from the right to fair and honest dealing and the right to safe, good quality goods to the right to fair, reasonable and just contractual terms.”

Nicky Campbell is an attorney at Campbell Attorneys. She argues that given that the customer is always right, companies really ought not to be compelled by legislation to instil customer service policies that place the customer rst and ensure clients are happy,

Odete Da Silva

before pro ts. “Successful long-standing companies already have such an ethos in place in corporate culture and had to make little adjustments to be compliant when the CPA was enacted. This means companies already committed to consumer protection will see the CPA as an instrument that provides “guidance in developing such an ethos and creating policies and procedures for effecting customer relations,” she says.

POTENTIAL AREAS FOR REFORM

Although the CPA has been lauded as an excellent tool for helping companies

“THE

establish a fair, accessible and sustainable marketplace, it still has some areas that need ne-tuning. In this regard, Steven van Wyk, an associate at Pagel Schulenburg Inc., who deals extensively with consumer protection and transactional and commercial law, suggests that “no-fault cancellations are undercatered for within the CPA”.

He adds: “No-fault cancellations refer to cancellations due to circumstances beyond the control of either the consumer or the supplier. This can include anything, such as inclement weather and global pandemics, dependent on the nature of the goods or service being provided. In practice, however, suppliers are generally expected to provide refunds in such circumstances, despite the fact that the failure to provide goods or a service is not due to any fault on the part of the supplier.”

ENFORCING CONSUMER RIGHTS

Da Silva notes that “awareness of consumer rights and the mechanisms available to enforce them remains a major obstacle” to consumers enforcing their rights. She advises that consumers have several rights under

CPA ATTEMPTS TO STRIKE A BALANCE BETWEEN ADVANCING CONSUMER RIGHTS AND HOLDING SUPPLIERS ACCOUNTABLE

WITHOUT ENTIRELY RESTRICTING COMMERCIAL ENTERPRISE. “ – ODETE DA SILVA

the CPA, including the right to lodge complaints directly with the supplier. If this route fails, “Consumer Goods and Services Ombud or another, industry-speci c Ombud, such as the Motor Industry Ombudsman, the National Consumer Commission or the relevant provincial consumer affairs of ce” can be approached.

ENFORCEMENT – THE ROLE OF THE NATIONAL CONSUMER COMMISSION

The National Consumer Commission (NCC) enforces consumer rights, promotes fair trading and educates consumers about their rights. It investigates complaints and ensures companies comply with the Consumer Protection Act. The NCC can take action against businesses engaging in unfair practices.

Follow: Odete Da Silva @ www.linkedin.com/in/odete-da-silva-74b3a6105 Nicky Campbell @ www.linkedin.com/in/nicky-campbell-attorney Steven van Wyk @ www.linkedin.com/in/steven-van-wyk-aa5889105

Steven van Wyk

CONSISTENCY IN THE REALM OF WORKPLACE DISCIPLINE

Consistency, also referred to as the parity principle, in essence, means that fairness demands that similar acts of misconduct should be treated similarly – and thus visited with the same consequences, writes specialist labour lawyer CRAIG BERKOWITZ of Berkowitz Attorneys, and an acting judge in the Labour Court of South Africa

Before delving into what consistency actually means in workplace discipline, there are some indispensable contextual fundamentals that will be useful in understanding where exactly consistency slots into our labour law.

Even somebody with only a smattering of legal knowledge will tell you two things. Firstly, in law, any black-and-white concept is infused deeply with a healthy dose of grey, and secondly, despite the hallowed legal principle in South African law of a precedent being binding (known as “stare decisis”, or for the handful who don’t speak Latin, “the decision stands”), the only real consistency in law is inconsistency!

MISCONDUCT AS A CONCEPT

Firstly, the issue at hand must be that of a misconduct. What this means is that you are dealing with an employee who has contravened a rule or standard regulating conduct in the workplace.

Secondly, there are the concepts of procedural and substantive fairness that pervade every aspect of labour law. To be fair, any action must be both procedurally and substantively fair.

Procedural fairness concerns the procedure to be followed when dealing with the matter at hand, while substantive fairness deals with the subject matter. By way of a simple example, if an employee is accused of stealing, procedural fairness concerns giving the employee a fair opportunity to respond to the allegations of theft, while substantive fairness deals with the act itself (that is, stealing) and the rule regulating such conduct in the workplace.

In regards to substantive fairness, Schedule 8 of the Code of Good Practice: Dismissal provides the following: “Any person who is determining whether a dismissal for misconduct is unfair should consider:

• Whether or not the employee contravened a rule or standard.

• If a rule or standard was contravened, whether or not:

• the rule was a valid or reasonable rule or standard;

• the employee was aware, or could reasonably be expected to have been aware, of the rule or standard;

• the rule or standard has been consistently applied by the employer; and

• dismissal was an appropriate sanction for the contravention of the rule or standard.” The requirement for the rule or standard to have been consistently applied by the employer is what gives rise to the question of consistency in regard to disciplinary action. While the same act of misconduct by one employee may be repeated by another employee, what will never be replicated is the circumstances of that misconduct, the circumstances of the employee or the mitigating and aggravating factors.

Accordingly, consistency is not a rule unto itself, but merely one factor to be considered.

Our courts have also said that an employee cannot merely allege names and penalties of other comparable offenders, but rather that a full record of the hearings, which resulted in those employees receiving lesser sanctions, would need to be provided so that the full merits of the cases can be compared.

CONSISTENCY IN PRACTICE

The Labour Appeal Court (LAC) recently had occasion to deal with the issue of consistency. The facts before the LAC were that a principal of a school was dismissed because of nancial mismanagement of the school, while his subordinate – who had signed the cheques and prepared the payment advices – was not disciplined at all. The LAC found that the subordinate did not have a managerial role in the school comparable to that of the principal, that he took instruction and guidance from the principal, and it could thus not be said that there was an inconsistent application of discipline.

An employee who therefore deserves to be dismissed for an offence cannot claim an unfair dismissal based solely on the fact that a similar act of misconduct did not also result in dismissal. It should be clear from what has been said above that for consistency to be applicable, all the facts and the factors have to be consistent.

Follow: Berkowitz Attorneys @ www.berkowitzattorneys.co.za Craig Berkowitz @ www.linkedin.com/in/craig-berkowitz-59b9a836

Craig Berkowitz

Your trusted legal advisors across Africa

40 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.

42 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.

45 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.

46 DRIVING CHANGE

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

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

48 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.

51 KNOWING WHAT TO DISCLOSE

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

By: Lebohang Mabidikane, director – Competition Law.

52 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.

56

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.

58

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.

60 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.

62 ENGAGING INEQUALITY

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

By: Nadeem Mahomed, director –Employment Law.

64 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.

66 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.

68 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.

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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 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 APPROACH DOCUMENT REVIEW.

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

Jackwell Feris

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

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

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.

WHILE

DRIPS

HAVE

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.

THEIR ADVANTAGES, A

DOWNSIDE IS THAT

THEY

DILUTE

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

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.

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.

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

Heinrich Louw

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 WHILE

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