Business Day
BU S I N E S S DAY.CO. Z A
Friday 30 October 2026
Business Law & Tax Review
Can an emoji seal a business deal? An emoji can carry legal weight even when the sender never meant it to
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By ISAIVAN NAIDOO & NDINAE RAMAVHOYA ENS
A thumbs-up on a WhatsApp thread, or a quick emoji sent to close out a negotiation, now regularly stands in for words like “agreed” and “noted” in business communication. Courts are increasingly being asked to determine what that shorthand means, and an emoji can carry legal weight even when the sender never meant it to. South African contract law requires consensus rather than a particular form, so whether an agreement is enforceable generally does not depend on how it was expressed. The Electronic Communications and Transactions Act, 2002 (Ecta) reinforces this for the digital context: section 11 gives data messages the same legal recognition as any other communication, and section 13 defines an electronic signature broadly enough to capture data a user intends to serve as one. Neither provision was drafted with emojis in mind, yet neither excludes them. The leading example is South West Terminal Ltd v Achter Land & Cattle Ltd, 2023 SKKB 116, where a Canadian court found that a farmer’s C, sent in reply to a photographed grain contract, constituted valid acceptance and bound him to deliver the flax. The court did not treat the emoji as meaningful in isolation, but had regard to the parties’ course of dealing, in which the same two individuals had previously confirmed contracts by texting “looks good” or “yup”. An objective bystander familiar with that pattern would have understood the thumbs-up in the same way.
Even the thumbs-up shows a generational divide, with some readers taking it as a neutral acknowledgement and others as dismissive An emoji is assessed like any other conduct in contract law: objectively, in context and against how the parties have dealt with each other before. No South African court has yet ruled on this issue, but the same objective test for contract formation, together with the recognition afforded to electronic communications under the Ecta, may suggest that a South African court could well reach a similar outcome.
Where the ambiguity compounds Emojis are not meaningless in law. The issue is that people read them differently. Even the thumbs-up shows a generational divide, with some readers taking it as a neutral acknowledgement and others as dismissive. A supplier who sends a C in response to a revised quote may think they have simply confirmed receipt. The counterparty may reasonably think a deal has been struck. Once a
Section 77 may gain ground as labour market pressures mount By JONATHAN GOLDBERG & JOHN BOTHA Global Business Solutions
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dispute is litigated, the sender’s private intention is not the test, and an honestly meant acknowledgement may still be found to constitute acceptance. The risk is greatest where procurement, sales or relationship teams settle commercial points over WhatsApp or Slack, often without a clear sense of who has authority to bind the business, or at what point consensus was actually reached.
● Course of dealing: bear in mind that a pattern of accepting informal confirmations, emoji included, may become the context in which a court later reads a future ambiguous message. ● Record-keeping: retain full message threads, not merely final confirmations, for anything commercially material, since courts have regard to context and not only the final message.
Marketing device, not contract term
Emoji-related contract disputes are a small but growing area of law, and informality is no shield against a court finding agreement. As negotiations continue to migrate onto messaging platforms, an emoji sent at the point where agreement is expected may well be read as agreement, whatever the sender meant. There is no need to formalise every WhatsApp exchange, but businesses should be deliberate about which channels and which people can bind them.
Some businesses use emojis to drive engagement in promotions, for example inviting customers to comment with an emoji to select which door of an online advent calendar opens next. That is fine in competition rules. The insurance policy, subscription agreement or service contract itself should still be drafted in ordinary legal language, because the ambiguity that makes emoji engaging in a competition is precisely what makes them unsuitable for defining rights, exclusions or price.
Practical safeguards ● Contract wording: extend entire agreement and non-variation clauses expressly to electronic and informal communications, reducing (though not eliminating) the risk that a stray emoji is later relied upon as amending or accepting a formal contract. ● Internal authority: set out in writing which staff members may conclude agreements over informal channels, and which platforms are treated as capable of doing so.
Looking ahead
An emoji is assessed like any other conduct in contract law: objectively, in context and against how the parties have dealt with each other before
South Africa’s trade unions are finding it increasingly difficult to mobilise workers for national protest action. Yet the economic and social conditions behind these protests suggest that section 77 of the Labour Relations Act could become more prominent in the years ahead. The question is how this mechanism will function as artificial intelligence (AI), changing employment arrangements and economic pressures, among others, reshape the workplace. Unions may increasingly use section 77 to raise national concerns, even where their ability to mobilise large numbers of workers has weakened.
Understanding section 77 Section 77 provides for protected protest action to support workers’ socioeconomic interests. It differs from conventional strike action, which generally concerns disputes arising from the employment relationship. This section addresses broader concerns affecting workers’ livelihoods, including unemployment, social protection, living costs and economic policy. The National Economic Development and Labour Council (Nedlac)’s 2022 Code of Good Practice helps distinguish legitimate socioeconomic concerns from collective bargaining matters and political issues. This distinction matters because the protection afforded to participating employees depends on the nature of the demands and compliance with the prescribed process. A registered trade union or federation must submit a notice to Nedlac explaining the reasons for the proposed action. Nedlac or another appropriate forum must then consider the matter to resolve it. If engagement fails, at least 14 days’ notice of the intention to proceed must be given. Employees participating in compliant action are protected against dismissal or disciplinary action occurring from their participation, regardless of union membership. Employers may apply the principle of no work, no pay, while employees in essential and maintenance services may not participate. The labour court can Continued on Page 3
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BusinessLaw&Tax
Friday 30 October 2026
‘I found it online’ does not mean ‘free to use’ By DARREN OLIVIER, LITA MITI-QAMATA, MAUREEN KIUGU, DANIËLLE VAN DEVENTER, MANDLA NGIDI & MAGGIE NEL Adams and Adams
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FSCA has no power to impose penalties jointly and severally Each penalty must be determined individually, on the basis of the statutory factors as they apply to the specific person concerned By ASLAM MOOSAJEE & ZAMEER OMAR ENS
In two recent decisions, the South African Financial Services Tribunal held that the Financial Sector Conduct Authority (FSCA) may not impose administrative penalties on two or more persons jointly and severally under section 167 of the Financial Sector Regulation Act, 2017 (FSR Act). The tribunal also emphasised that when a debarment period is selected, the FSCA must furnish reasons for its choice. A mere recitation of jurisdictional grounds for a debarment is insufficient. The matters concerned two investment clubs, Khanyazania Holdings (Pty) Ltd and Azania Investors (Pty) Ltd, that pooled members’ contributions and used some of the funds to trade shares and exchange-traded funds on the EasyEquities platform. Neither company held a financial services provider licence under the Financial Advisory and Intermediary Services Act, 2002 (Fais Act) to provide these services. Mr Manatha and Mr Hlatshwayo were directors of Khanyazania and after Khanyazania was wound up, Manatha went on to incorporate Azania as its sole director. Hlatshwayo’s involvement was confined to Khanyazania and spanned about seven months, after which he resigned. Following a complaint in July 2023, the FSCA investigated and found that there had been a contravention of section 7(1) of the Fais Act as financial advice and the provision of intermediary services was being given, without the required licence. In its notice of sanction dated March 17 2026, the FSCA debarred Manatha for 15 years and Hlatshwayo for 10 years. The FSCA also imposed administrative penalties of R200,000 each on a joint and several basis on Khanyazania, Manatha and Hlatshwayo, and another penalty also on a joint and several basis on Azania and Manatha. The tribunal had to determine whether section 167 of the FSR Act authorises the FSCA to impose a single administrative penalty on multiple persons, jointly and severally. The second question
before the tribunal was whether the FSCA had adequately exercised its discretion in selecting the debarment periods, and whether it provided reasons for the debarment periods. The FSCA also considered whether the penalty had been determined on the basis of an individualised assessment of each person’s conduct, as is required by section 167(2) of the FSR Act. The tribunal held, in what appears to be the first decision directly on the point, that an administrative penalty may not lawfully be imposed on two or more persons jointly and severally under section 167 of the FSR Act. The tribunal’s reasoning rested on several pillars: ● The statutory language is singular and personal: Section 167(1) authorises the imposition, “by order served on a person”, of an “appropriate” penalty “on the person” for that person’s contravention. The unit of liability is one person and one contravention. ● The statutory factors are irreducibly individual: the factors in section 167(2) — including
The selection of a debarment period is the exercise of a discretion that determines whether a person may earn a living in the financial services sector co-operation, submissions in mitigation, benefit derived, prior contraventions and whether the conduct was deliberate or reckless — require consideration in respect of each person individually. A single global figure fixed for several persons cannot be the product of that exercise. ● Chapter 13 does not confer the power to impose joint and several liability: joint and several liability is not a default incident of statutory liability, which must be specifically conferred, and the FSR Act does not make provision for joint and several liability. ● The broader statutory structure confirms this reading: Section 173, which permits for the remission of a penalty, contemplates an application by the individual person penalised. Section 174, which renders void any undertaking
to indemnify another person against an administrative penalty, presupposes a penalty personal to the person on whom it falls. The tribunal observed that the FSCA itself recognised materially different levels of culpability when it imposed debarment periods of 15 and 10 years, yet its penalty orders drew no distinction between the monetary liability of the respondents. In respect of Manatha, the tribunal set aside the 15-year debarment and remitted the matter to the FSCA for reconsideration. The tribunal found that the FSCA gave no reasons for the debarment period. The tribunal found that the FSCA’s decision devoted only two short paragraphs to section 153 and did no more than recite the jurisdictional grounds. It offered no explanation for why Manatha received 15 years and Mr Hlatshwayo 10 years, or why the periods originally proposed had been reduced. Hlatshwayo did not challenge his 10-year debarment in his application, which was directed primarily at the administrative penalty. The tribunal emphasised that the selection of a debarment period is the exercise of a discretion that determines whether a person may earn a living in the financial services sector. It therefore requires reasons. It also recorded that debarment protects the public rather than punishes, and that the FSCA’s own published decisions reserve the longest debarments for repeat offenders. Since administrative penalties are Chapter 13 decisions, the tribunal had the power to substitute its own order rather than merely remit the matter to the FSCA. For Manatha, the tribunal replaced the two joint and several penalties of R200,000 each with individual penalties of R60,000 in respect of Khanyazania and R100,000 in respect of Azania. For Hlatshwayo, the tribunal substituted the R200,000 joint and several penalties with an individual penalty of R40,000. These decisions establish important principles for the FSCA’s enforcement practice. The tribunal has made it clear that the FSCA cannot impose administrative penalties on a joint and several basis under section 167 of the FSR Act. Each penalty must be determined individually, on the basis of the statutory factors as they apply to the specific person concerned. Equally, when the FSCA exercises its discretion to debar, it must furnish reasons that explain the period selected, particularly where different periods are imposed on different individuals arising from the same investigation.
Last year, in our article Respecting the Lens: Copyright Infringement and the Rights of Photographers in South Africa, we addressed a common misconception: because photographs are freely accessible online, businesses assume they can use them without permission. When infringement is detected, the explanation is familiar. The image was found on Google, Facebook or LinkedIn. The business apologises, claiming it did not realise permission was required. A recent high court judgment, Mokima Music and Publishing (Pty) Ltd v Black Brain Pictures CC, reinforces that such explanations offer little legal protection. Although the case concerned a song used as television theme music, its reasoning has implications for photographic copyright disputes. At issue was section 24(2) of the Copyright Act, which allows a defendant to avoid damages if it proves that, when infringement occurred, it neither knew nor had reasonable grounds to suspect that copyright subsisted in the work. The defendant argued it believed it had acquired the necessary rights from a third party and was unaware the plaintiff owned the copyright. The court rejected this argument, drawing a crucial distinction. Section 24(2) concerns knowledge that copyright exists, not who owns it. Mistaken ownership assumptions do not establish ignorance of copyright itself. This distinction matters in photographic infringement disputes. Businesses seldom argue that photographs lack copyright protection. Instead, they claim the image was publicly available, widely shared, apparently free to use or that permission seemed unnecessary. These explanations reveal an assumption that obtaining permission was unnecessary, rather than ignorance of copyright. The Mokima judgment reinforces this distinction. Believing one has permission, or assuming it is unnecessary, does not establish ignorance of copyright’s existence. Commercial users also face difficulty claiming they had no reasonable grounds to suspect copyright protection. Copyright arises automatically in original photographs. Stock photography platforms operate licensing systems. Social media platforms process copyright complaints, while image licensing information is readily accessible. Businesses incorporating downloaded photographs into advertising, websites or corporate communications therefore cannot readily claim ignorance of copyright protection. Most understand that photographs belong to someone. What they neglect is identifying the rights holder and securing permission. Nor does the argument that “everybody does it” carry legal weight. Widespread infringement does not legitimise copying. Digital convenience does not confer legal entitlement. Copyright infringement generally operates on a strict liability basis. A defendant cannot escape liability merely by claiming ignorance of licensing requirements, mistaken assumptions about permission or widespread industry practices. Section 24(2) provides a narrow defence against damages where genuine ignorance of copyright subsistence, coupled with the absence of reasonable grounds for suspicion, is established. It is not a general good-faith defence, nor does it necessarily extinguish other remedies for infringement. For photographers, Mokima reinforces an important principle: creative work deserves protection against deliberate infringement and careless assumptions about online availability.
LATERAL THINKING
Why SA needs a faster route to business rescue
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outh African businesses are navigating an increasingly difficult operating environment. Rising costs, constrained funding, weak demand and external shocks, including volatile fuel prices, are placing even fundamentally viable companies under pressure. Against this backdrop, two important developments offer some encouragement: the growing sophistication of South Africa’s restructuring profession and the emergence of a more specialised judicial framework for dealing with corporate distress.
Specialist approach I recently attended an insightful Werksmans event featuring judges and practitioners involved in the dedicated Insolvency Court initiative within the high court. Piloted in Johannesburg in 2025 and subsequently extended to Pretoria in 2026, this specialist approach represents a welcome development in the administration of commercial justice. What impressed me was not simply
the commitment to improving turnaround times, but the thinking behind the court processes themselves. A carefully structured distinction between motion proceedings and matters requiring trial allows courts to deal more efficiently with issues capable of determination on affidavit, while identifying genuine factual disputes that require oral evidence. This matters enormously. Historically, insolvency and business rescue litigation has too often been characterised by a flood of urgent applications, many dismissed for lack of urgency. Some proceedings appeared calculated primarily to delay the inevitable rather than advance a credible rehabilitation strategy. The resulting congestion has consequences beyond the courtroom. Creditors face uncertainty, employees remain exposed and businesses lose value while disputes drag on. There is undoubtedly room for further refinement, but dedicated judges, clearer procedures and greater consistency should improve both efficiency and predictability. Importantly, this can strengthen
EVAN PICKWORTH EDITOR — LAW & TAX REVIEW
stakeholder confidence in a system intended not merely to resolve disputes, but also to facilitate viable business rehabilitation. This judicial progress coincides with interesting changes in the restructuring advisory market. In a recent Business Law Focus interview, I spoke to Chris Rey, CEO of the newly established Maven House, which emerged from the restructuring practice previously housed within BDO. Its emergence reflects a broader international trend towards independent specialist advisory firms, as regulatory pressures, potential conflicts of interest and changing market economics reshape traditional multidisciplinary practices.
Restructuring is, after all, a discipline that sits at the intersection of law, finance, operations and stakeholder management. Technical expertise alone is insufficient. Rey makes an important observation: financial distress does not necessarily indicate poor management. A viable business may simply have an inappropriate funding structure, insufficient working capital or an operating model that has failed to adapt to changing conditions. The challenge is identifying these problems before they become existential. Research prepared for the Turnaround Management Association Southern Africa suggests that business rescue can preserve substantial economic value. Yet proceedings can still take about 18 months, reinforcing the importance of both earlier intervention and judicial efficiency.
Too little, too late In my view, one of South Africa’s greatest weaknesses remains the tendency to seek business rescue too late, frequently when liquidity has been exhausted and meaningful
restructuring options have narrowed. Equally concerning is the use of rescue proceedings as a mechanism to postpone insolvency without a realistic prospect of recovery. For directors and C-suite executives, the lesson is clear. Restructuring should form part of proactive governance and risk management, not merely an emergency response. Boards should interrogate cash-flow forecasts, debt sustainability, creditor exposure and operational vulnerabilities long before financial distress becomes irreversible. South Africa needs businesses capable of surviving domestic constraints and increasingly unpredictable global shocks. A stronger restructuring profession, supported by specialist courts and disciplined corporate leadership, can help preserve productive capacity, employment and creditor value. Ultimately, effective business rescue is not about prolonging failure. It is about recognising viable businesses worth saving, acting early and giving rehabilitation a fair opportunity to succeed.
BusinessLaw&Tax
Friday 30 October 2026
Section 77 may gain ground
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Company disputes and the future of private arbitration in South Africa
Continued from Page 1
intervene where procedural requirements have not been satisfied and may limit protection or duration in appropriate circumstances. These requirements give employers and employees a degree of certainty. However, the process also depends on Nedlac’s ability to facilitate constructive engagement.
The decline in participation Recent protest actions illustrate the difficulties confronting organised labour. The August 2022 national shutdown attracted considerably fewer participants than anticipated, while Cosatu’s 2025 decent work march in Cape Town reportedly drew about 500 people. Employment & labour department figures showed an almost 11% reduction in registered union membership to 3.96-million in the year ending March 2023. Although union density in the formal private sector has remained relatively stable, many employees remain outside organised labour. Financial circumstances are an important consideration. For workers struggling to meet household expenses, sacrificing a day’s wages is a significant decision. High unemployment and job insecurity also discourage participation. The composition of the workforce is changing. Younger employees, platform workers and those engaged through outsourcing or temporary arrangements often have weaker connections to established trade union structures. Rivalry between federations can fragment mobilisation and reduce the impact of national calls to action. Declining attendance provides an incomplete picture of worker dissatisfaction. Some grievances may instead emerge through community protests, informal stayaways and online mobilisation.
Why notices may increase The conditions likely to generate section 77 notices are becoming more complex. About 8.5-million South Africans were unemployed in the second quarter of 2026, while pressure on household incomes continues to sharpen concerns about employment security and living standards. AI and automation are already affecting administrative, financial and customer service occupations. The consequences extend beyond individual employers. They raise questions about how workers will acquire new skills, what happens to those whose jobs disappear and if existing social protection arrangements are adequate. These questions require responses across industries and government departments. Changing employment models present similar challenges. Platform work and other non-standard arrangements have created categories of workers whose interests are not always adequately represented through conventional collective bargaining. Their concerns may increasingly be expressed as demands for regulatory reform and broader protection. Persistent structural constraints also remain important. Energy and logistics failures, trade disruption and the transition away from coal threaten employment in affected industries and communities. Fiscal pressures on public services add to the strain experienced by households. In these circumstances, section 77 offers unions a means of bringing wider employment concerns before government and organised business. A notice can initiate national engagement even when the eventual march is small. It is therefore plausible that the number and range of notices will grow despite declining participation.
Making engagement count This possibility places greater responsibility on everyone involved in the section 77 process. Nedlac should seek measurable commitments, clearly allocated responsibilities and regular reporting on progress. Government should ensure that representatives attending engagements have the authority to make decisions or secure timely responses from the departments concerned. Organised labour can strengthen its influence by presenting specific, evidence-based proposals, especially on technological change, skills development and employment protection. It must also find ways to represent workers whose employment arrangements leave them outside traditional union structures. Employers must continue to prepare properly for protected protest action. This includes checking compliance with the statutory requirements, communicating clearly with employees and applying no work, no pay consistently where appropriate. Their longer-term contribution lies in identifying employment risks before retrenchment becomes unavoidable. Reduced order volumes, rising costs, automation plans and expiring contracts should prompt discussions with employee representatives well before a section 189 process begins. A standing job-preservation mechanism linked to broader engagement could help the parties intervene earlier and assess whether agreed measures are genuinely saving jobs.
Looking ahead Section 77 remains an important part of South Africa’s labour relations framework, particularly when economic developments affect workers across sectors. Smaller marches may change how its influence is measured but they do not remove the need for a credible forum in which socioeconomic concerns can be addressed. The challenge for Nedlac, government, organised labour and employers is to ensure that engagement leads to practical decisions and visible progress. That will determine whether workers continue to see value in the formal process as the world of work changes.
By JONATHAN RIPLEY-EVANS Herbert Smith Freehills Kramer
Alternative dispute resolution (ADR) has long been favoured in commercial contexts for its flexibility, confidentiality and party autonomy. Section 166 of the Companies Act 71 of 2008 reflected these objectives, allowing parties to resolve disputes arising under the act through various ADR mechanisms, including arbitration. Concerningly, amendments effective from May 22 2026 have materially altered party autonomy, potentially allowing one party to compel another to “arbitrate” disputes before the Companies Tribunal without any agreement to arbitrate. Such “arbitration” lacks its foundational characteristic: consent. The amendments therefore raise significant questions about legitimacy, enforceability and constitutionality, potentially damaging South Africa’s reputation as a pro-arbitration jurisdiction. Previously, the Companies Tribunal had two distinct roles: adjudicating specified disputes and facilitating voluntary resolution through mediation, conciliation or arbitration. Parties could refer disputes to the tribunal or independent arbitral institutions, preserving their freedom to choose the forum, arbitrator and procedure. The amended act fundamentally changes this. It provides for preliminary non-binding mediation or conciliation, followed, if unsuccessful, by final and binding “arbitration” before the Companies Tribunal. This creates a statutory right to invoke binding arbitration without the other party’s consent, removing the gateway through which parties could agree on their preferred forum. South African law recognises the possibility of statutory arbitration, even in the absence of an arbitration agreement. For example, the Commission for Conciliation, Mediation and Arbitration model is sometimes cited in support of “statutory” arbitration. However, that model operates in a narrow employment context where constitutional considerations and employee vulnerability justify intervention. By contrast, the changes to the Companies Act target commercial parties who are capable of and entitled to the
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independent negotiation of their preferred dispute resolution arrangements and who, in many cases, have already done so. Where commercial parties have already made alternative arrangements, the amendments create potential conflict with existing arbitration agreements because the Companies Tribunal is now the only available forum for arbitration of disputes arising under the act. A party could compel its counterparty to appear before the tribunal despite an agreement to arbitrate elsewhere. The act provides no clear mechanism for resisting referral, nor must the tribunal defer to existing agreements. International disputes are particularly exposed where parties have agreed to a foreign seat, potentially resulting in parallel proceedings and incomplete outcomes. These concerns are compounded by the tribunal’s apparent ambition to expand its jurisdiction at private arbitration’s expense. At a parliamentary portfolio committee meeting on May 31 2023, its chairperson described private commercial arbitration as a “privatisation of the legal system” and expressed an objective of substantially increasing cases determined by the tribunal.
Uncertainty also surrounds what constitutes a dispute “arising under the act”. Commercial disputes frequently combine statutory, contractual and common-law issues, allowing parties potentially to characterise disputes strategically to circumvent private arbitration agreements, without a clear statutory safeguard. Procedural gaps add further uncertainty. The framework does not specify arbitration procedures or applicable evidence rules. Mandatory preliminary mediation or conciliation may prejudice parties requiring urgent relief. Tribunalappointed arbitrators remove parties’ freedom to select specialist expertise, while no general challenge procedure exists for alleged lack of impartiality. Although awards are described as “final and binding”, their relationship with appeal and review rights under administrative, domestic and international arbitration laws remains unclear. International enforcement presents possibly the greatest concern. The New York Convention requires evidence of an arbitration agreement and compliance with the agreed procedure. Unilateral statutory referrals are unlikely to satisfy these requirements. Awards made without consent, or contrary to existing arbitration agreements, therefore risk non-recognition abroad. The central problem remains the absence of consent. The act effectively creates compulsory quasi-judicial determination before a statutory body, at the request of one party, with serious consequences for existing agreements and, consequently, international enforceability.
Focus of court scrutiny South Africa has invested considerably in becoming a credible international arbitration seat, notably through the International Arbitration Act 15 of 2017. These amendments place the principles of consent and party autonomy at risk and will no doubt be the focus of court scrutiny in the near future. Until either the legislature or the courts have clarified how these amendments interact with existing arbitration agreements, parties will need to remain alive to these challenges, particularly in relation to international enforceability of awards.
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BusinessLaw&Tax
Friday 30 October 2026
Business rescue — creditors must act before it is too late Legal advice should be taken about outstanding invoices and further dealings before the rescue plan is published By DR ERIC LEVENSTEIN, AMY MACKECHNIE & CLIO PATRICIOS Werksmans
The notice is usually brief. Your customer has entered business rescue, a business rescue practitioner has been appointed, and creditors will shortly be invited to submit their claims. What the notice does not tell you is whether you should stop supplying goods or services, what happens to the invoices already outstanding, whether you can cancel your supply contract, or whether the next order you fulfil will ever be paid. Those decisions should not be deferred until the business rescue plan is published. By then, you may have supplied another month’s goods or services, missed an opportunity to exercise an important contractual right, or discovered that your claim has been recorded incorrectly. When a customer enters business rescue, your unpaid account is only the beginning of the enquiry.
Business rescue is a game-changer for recovery Business rescue is intended to rehabilitate a financially distressed company by temporarily placing it under the supervision of a business rescue practitioner and allowing a plan to be published and approved by affected persons. The plan may seek to preserve the company as a solvent business. Alternatively, it may propose a restructuring that achieves a better return for creditors than an immediate liquidation. For creditors, one of the most significant consequences is the general moratorium under section 133 of the Companies Act 71 of 2008 applies. While the rescue continues, legal proceedings and enforcement action against the company, or in relation to property belonging to or lawfully possessed by it, generally cannot be commenced or continued without the practitioner’s written consent or the leave of the court. The moratorium provides the company with breathing space. It does not extinguish your claim and it does not necessarily suspend your contractual rights. A creditor exposed to a customer in business rescue may, depending on the circumstances, retain existing rights allowing it to enforce against security held, such as a cession of debtors, a notarial bond registered against the company’s moveable assets or a mortgage bond registered against immovable property. In addition, a suretyship, the application of set-off, reservation of ownership of goods or a valid right to cancel an agreement will have to be considered if applicable. The Supreme Court of Appeal has confirmed that cancellation of an agreement does not, without more, constitute enforcement action prohibited by section 133. However, the existence and proper exercise of a right to cancel must still be considered against the terms of the relevant contract and the facts. The critical point is that the words “business rescue” should not result in immediate action or complete inaction. Legal advice should be taken so that rights are not waived or squandered.
Distinguish the old debt from the next order (continuation of trade) Claiming an existing outstanding amount owed when business rescue commenced and any new exposure incurred subsequent to the commencement of business rescue (post commencement debt), have different legal consequences. The pre-rescue claim must be reconciled as at
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the commencement date of business rescue. Invoices should be checked against payments, credit notes, delivery records and any existing disputes relevant to the supply of goods and services. The claim should then be submitted to the practitioner with the relevant agreements and documentation supporting the claim. It is equally important to establish the manner in which the practitioner has classified the claim. A creditor holding security, relying on a reservation of ownership clause or a third-party suretyship may be in a materially different position from an ordinary concurrent creditor. Claims must be accurately recorded when submitted for proof to the practitioner, as it can affect the proposed treatment of the claim and the creditor’s voting interest.
● Has the practitioner approved it? ● From what funds will the new invoices be paid? ● Can payment be made in advance, on a cash basis, on delivery or against agreed milestones? ● What protection is available if the company defaults again? Whatever occurs should be recorded in writing and where the rights of the party providing the goods and services are carefully dealt with. Claims arising after date of commencement are deemed to be post-commencement finance and may be treated (with the written consent of the practitioner) differently from pre-rescue debt, but that does not mean every new invoice automatically enjoys priority or is guaranteed to be paid.
Generally, business rescue plans are published some months after the date of commencement of the rescue
Treat the rescue plan as an investment proposal
Then comes the more difficult question: should you continue trading with the company? Business rescue does not automatically release either party from rights recorded in an existing contract of supply. Section 136 also gives the practitioner certain powers to suspend or cancel contractual obligations of the company, subject to the provisions of the Companies Act. A supplier or service provider should therefore not assume that it may simply stop performing. The ability to do so depends on the terms of the agreement, any existing breach and the steps taken by the practitioner. At the same time, there is no commercial sense in continuing to supply goods and services to a company in business rescue or allowing further credit to accumulate without considering the prospects of receiving payment. Careful consideration must be given to the following issues: ● Who has authorised the further work or supply of goods and services? ● Is such supply in terms of an existing agreement?
The practitioner must convene the first meeting of creditors within 10 business days of appointment and advise whether there is a belief that there is a reasonable prospect of rescuing the company. The business rescue plan must ordinarily be published within 25 business days of the practitioner’s appointment, unless the required extension is obtained. Generally, business rescue plans are published some months after the date of commencement of the rescue, provided the consent of creditors for an extension has been obtained by the practitioner. When the plan is published, one should not only focus on the proposed dividend to be paid on the outstanding debt. A promise to pay 60 cents (for example) in the rand is not meaningful without understanding the mechanics of the business rescue plan. First, one has to consider if the plan is workable and whether it will be approved by creditors. Second, when will the payment be made and where will the money come from? Is the proposal dependent on the sale of an asset, a new investor, litigation proceeds or improved future trading? Has funding been secured, or is it merely anticipated? What happens if the transaction is delayed or the assumptions prove incorrect? The plan should also compare the proposed business rescue outcome with the estimated return in liquidation. That comparison must be considered critically. A rescue proposal should not be supported merely because it produces a higher percentage on paper. The proposed return must be
credible, properly funded and achievable within a commercially acceptable period. Once the business rescue plan has been published, creditors are entitled to participate, by asking questions and proposing amendments to the plan. This matters because an adopted plan binds creditors regardless of whether they attended the meeting, voted against it or proved their claims. Silence is therefore not a neutral position and can have consequences.
Remain informed and act timeously The business rescue process can be complex, and one needs to act on an informed basis before it is too late. On receiving a business rescue notice, establish the commencement date of the rescue process, quantify the exposure and review the relevant underlying contracts. In addition, it is necessary to review existing supply agreements, identify your claim and any security held, review supporting documentation (such as invoices and credit notes), suretyships held, and any rights of reservation in goods supplied. Importantly, has the filing for rescue breached any ongoing rights to supply goods and services? Take legal advice so that no mistakes are made in the process. Most importantly, decide whether further trade remains commercially viable and, if so, on what terms. Engage with the practitioner before the plan is put to a vote. The correct response will depend on the size and nature of the pre-commencement claim, the importance of the ongoing relationship with the company in the future, and the rights contained in the relevant supply agreements. What should remain consistent is the timing. The best opportunity to take legal advice in order to protect a creditor’s position is often at the commencement of the rescue. Advice should be taken before further exposure is incurred and before the proposed treatment of the claim becomes embedded and approved in the plan.
Once the business rescue plan has been published, creditors are entitled to participate, by asking questions and proposing amendments to the plan
CONSUMER BILLS
Shenzhen offers blueprint for AI-assisted justice
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henzhen is China’s equivalent of Silicon Valley as the national centre of their electronic information industry in a megacity of about 20-million permanent residents. In China, like everywhere else, there is an ever-rising caseload in the courts and finite judicial resources to resolve the disputes. The Shenzhen Intermediate People’s Court has issued a lengthy White Paper how their paperless case handling, online litigation services and knowledge management work. Under China’s litigation system, when a party brings a case, the court conducts a formal review of the filing materials, traditionally done manually and item by item. The electronic system checks the parties’ statements for consistency and logic, sets out facts not in dispute, analyses the nature of the dispute and organises facts and law
so that what previously took a full day of pre-hearing work can now take 10 minutes. Every legal position and reference case must be drawn from the authoritative knowledge base. There is a clear boundary of responsibility. The system supplies analysis; the judge decides the case. Electronic access to justice is happening in many places. The American Arbitration Association relies on prior artificial intelligence (AI) analysis of the documents in construction disputes, with input from the parties, leaving it to the arbitrator to make the final decision on the submitted facts and law. Millions of eBay disputes are decided electronically every year either by putting the buyer and seller together with an analysis of the facts, or by letting the decision be made electronically on their behalf. There is no reason why most of the disputes
PATRICK BRACHER COLUMNIST
AI costs money but so does slow access to justice problems because of overcrowded courts that are brought before the Small Claims Court could not be decided by properly trained AI.
The massive Road Accident Fund backlog can be helped considerably by proper AI assistance. There is seldom anything novel about the RAF motor accident disputes that needs court adjudication. There are other systems that allow disputing parties to put their respective cases to an AI system and get a preliminary finding. That often persuades the parties to come to terms. The party on the back foot will soon realise that the case is not worth taking forward. If we start with the smaller cases, confidence and demand will build up into the larger disputes. The frequent reservation expressed is that the judges and arbitrators might come to rely too much on AI and not do any fact or law checking themselves. The problem can be solved by having the AI analysis put to the parties for comment before it goes to the judge. The parties can then point out any errors of fact or law that they
want to bring to the attention of the decision-maker. Many lawyers and many clients are putting legal problems and legal documents through large language models for answers. There are a number of legally trained and legally competent AI systems helping to resolve legal problems, or at least to guide those making the decisions in the right direction. Why should judges and arbitrators not do the same? AI costs money but so does slow access to justice problems because of overcrowded courts. Most people want their disputes resolved soon so that they can get on with their lives or their businesses. Let us hope the Shenzhen White Paper will be studied by the right people who can make the right expenditure. Consumers of justice would welcome real progress. -Patrick Bracher (@PBracher1) is a director at Deneys
BusinessLaw&Tax
Friday 30 October 2026
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What bank-led digital-asset custody means for SA’s financial institutions Its arrival shows digital assets are moving from the fringes of financial services into their core infrastructure whether reporting duties have been met. Custody would then serve both to protect assets and to link digital-asset markets to the regulated financial system.
By ANGELA ITZIKOWITZ, ERA GUNNING & DYLAN MARTHEZE ENS
Discussion of digital assets tends to centre on trading, speculation and price swings. A more practical question for financial institutions often gets missed: if these assets are to enter mainstream finance, who will hold them safely? South African banks now have a local example to consider. Absa has reportedly become the first bank in Africa to offer digital-asset custody to South African institutional clients, including asset managers, non-bank financial institutions and corporates. The service reportedly covers safekeeping, administration and transfers, has South African regulatory approval and currently supports bitcoin, XRP, ethereum and USDC.
Why custody matters Custody matters because it is far more than a back-office function. In conventional markets, custodians allow investors to hold, settle, transfer and administer assets with confidence. With digital assets, control usually depends on private keys. If a key is lost, stolen or mishandled, the loss can be immediate and difficult to reverse. Institutional custody is therefore vastly different from retail crypto access. An individual may be content to keep assets on an exchange or in a personal wallet. An asset manager, corporate treasury or bank needs much tighter controls, covering governance, approval limits, segregation of duties, cybersecurity, audit trails, reconciliation, disaster recovery, insurance, financial crime and regulatory accountability. The launch is best read as a sign digital assets are becoming part of regulated finance. Not every institutional client will start holding crypto assets soon. What has changed is regulated infrastructure is now being built for assets that have mostly sat outside the banking system, and other South African banks are well placed to follow. The way the service has been set up is also instructive. It was announced in 2025 as a partnership between a South African bank and Ripple, with Ripple supplying the institutional custody technology used to store tokenised assets, including cryptocurrencies. Other banks considering custody are likely to
What this means for the market
123RF — MELPOMEN
use a similar model. Few will build all of the technology themselves. More often, a bank will work with a specialist provider while keeping responsibility for the client relationship, governance, risk management and compliance. This opens the door to new business, but it also raises questions about outsourcing, operational resilience and third-party risk that boards and regulators will expect to be answered.
The regulatory framework Any bank entering this space will do so in a market where crypto assets are already regulated. In October 2022, the Financial Sector Conduct Authority (FSCA) declared crypto assets to be financial products under the Financial Advisory and Intermediary Services Act, 2002 (Fais). As a result, anyone providing financial services in relation to crypto assets may need to be authorised under Fais, depending on what they do. Anti-money laundering (AML) obligations are equally relevant. The Financial Intelligence Centre Act, 2001 (Fica) lists, as accountable institutions, persons who execute certain crypto-asset activities for or on behalf of clients. These include exchanging crypto assets for fiat currency or other crypto assets, transferring crypto assets, and the safekeeping or administration of a crypto asset or of an instrument enabling control over a crypto asset. This has real consequences for custodians. A custodian does more than store an asset; it often
controls the point at which value moves. Institutional clients may value exactly that. Regulators, in turn, will expect sound processes for customer due diligence, beneficial ownership, source of funds, sanctions screening, suspicious transaction reporting, transaction monitoring and record-keeping.
Cross-border questions Banks with operations elsewhere in Africa will also be thinking about cross-border expansion, and reports suggest the first custody offering may be extended to other client groups and other African countries, subject to regulatory approval. That is attractive commercially but complicated legally. Digital assets may cross borders easily, yet the rules on custody, transfers, exchange control, tax reporting and financial crime still differ from country to country. South Africa’s own rules on cross-border crypto activity are still being developed. Reuters recently reported that draft rules published by National Treasury and the South African Reserve Bank would, for the first time, set out when moving crypto assets across borders becomes a regulated and reportable event, including transfers from a local authorised provider to an offshore provider or to a private noncustodial wallet. These rules would give regulated custodians an even bigger role. A bank acting as custodian could help clients and regulators see where assets are held, when they move, who controls them and
For asset managers, non-bank financial institutions and corporates, bank-led custody could make digital-asset exposure easier to manage in practice. Many have stayed away not for lack of interest, but because the custody, governance and compliance arrangements were unfamiliar. Banks that can match digital-asset safekeeping to the risk, audit, reporting and control standards these clients already expect may find real demand. For the wider market, the arrival of bank custody shows that digital assets are moving from the fringes of financial services into their core infrastructure. Trading platforms and crypto-asset service providers will still matter. However, future growth may depend less on retail interest and more on whether trusted banks and other financial institutions can provide the systems institutional clients need.
Regulated infrastructure is now being built for assets that have mostly sat outside the banking system The real regulatory issue, then, is not whether digital assets are speculative or innovative. It is whether the financial system can put in place the custody, governance, AML, operational-resilience and cross-border frameworks needed to support them safely. South Africa’s first bank custody offering leaves some regulatory issues open, but it signals the direction of travel clearly. Banks and other financial institutions considering a similar service should start assessing their licensing, AML, outsourcing and cross-border positions now, because custody is likely to become a cornerstone of institutional digital-asset activity.
IN YOUR COURT
Too many cases, too little time at high court
I
t is common cause among lawyers that the case load of the Gauteng Division of the High Court has now reached unmanageable levels. The state of the civil trial rolls, in particular, is a source of serious concern: civil trial dates are currently issued as far ahead as 2031/32 — so six years in the future. In consequence of this unacceptable backlog, timeous access to justice, within the meaning of the Constitution, is unachievable.
Mandatory mediatian directive of the Judge President The Office of the Judge President of the Gauteng Division on April 22 2025 issued a directive introducing mandatory mediation in the Gauteng Division, in an effort to separate the majority of cases on the civil trial roll, which, in its view, are inherently capable of resolution through mediation, settlement or other alternative dispute resolution means. The directive points out that statistics of cases accommodated on the civil trial roll of the Gauteng Division demonstrate that up to 85% of such cases are settled on the morning of the trial date.
In essence then, the directive is designed to filter the case load to provide that only those cases warranting judicial attention be enrolled. Those cases capable of settlement should be settled. To achieve this filtering process, ALL matters must undergo a process of mediation at an early stage, which would likely lead to the unclogging of the roll by the removal from the roll of those matters which are settled in consequence of the mediation procedure. The directive requires that the mediation procedure be governed by professional mediators who are accredited with recognised mediation organisations. This new directive has taken some time to achieve traction but, obviously, as time passes it will become common to all trial matters. Supplementing the directive is a mediation protocol for the Gauteng Division which sets out in some detail the consequences of the directive and the methodology to be followed by lawyers in the implementation of the directive.
The teeth in the directive With effect from the date of the
PETER BLANCKENBERG COLUMNIST
The task of the mediator is to persuade parties to reach a settlement agreement directive (April 22 2025), no case shall be issued a trial date unless the request is accompanied by a report on the mediation held, as contemplated in the mediation protocol. This effectively ensures that at the time, at very latest, of the closing of all pleadings relevant to a case, no further progress can be made without a mediation having been carried out and a mediation report having been issued. Further, the directive and the
mediation protocol lay down various conditions which effectively require that the mediation is not merely a tick box exercise, and that it is substantive in its procedure and, at very least, serious in its nature and endeavours. Its purpose is clear: it must so far as possible deflect out of the court roll all matters capable of being settled, and parties to the trial are obliged to participate in a meaningful fashion in the mediation procedure.
The nature of mediation Mediation is not in its nature a form of court proceedings or arbitration proceedings in that the mediator has no authority, having completed the mediation procedure, to make an order on the matter before the mediator. The task of the mediator is to persuade parties to reach a settlement agreement and, failing that, to persuade the parties to at least narrow the issues in their dispute for the purposes of reducing court time required in due course. It could be argued the omission of an authority to make an order renders the mediation process of little worth: there is, however, substantial evidence in global jurisdictions (and also local jurisdictions in certain specific areas of
our law) that this view is erroneous and that the process of mediation is ever more likely in the modern legal fraternity to be a fundamentally important procedure in the assistance of providing justice to the public within a reasonable period of time. Further to the above, achievement of settlement at an early stage in litigation shall generally ensure a substantial saving in the cost of such litigation, by removing trial days, and the consequent cost of expensive lawyers, and by removing opportunity to appeal matters and thereby continue the cycle of litigation in a matter which may well have been settled at an earlier stage. It seems clear that the introduction of mandatory mediation, and its growing influence in the process of litigation, for the time being only in the Gauteng Division, is to be welcomed as an intelligent and proactive approach towards what is currently an unworkable situation. It would not be surprising if the initiative set by the Office of the Judge President of the Gauteng Division is not followed shortly by other divisions of the High Court of South Africa. -Peter Blanckenberg is a Director at Blanckenberg & Associates Inc