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Business Law & Tax Review

Prediction markets test crypto rulebook

There is still uncertainty where a crypto-linked product starts functioning less like a token and more like a contract on an event

By ANGELA ITZIKOWITZ, ALTAIR RICHARDS, ARNAAZ CAMAY, ERA GUNNING, AMELIA WARREN & DYLAN MARTHEZE ENS

Prediction markets expose an awkward gap in South Africa’s current crypto-regulatory framework.

The difficulty is not simply that they involve digital assets. It is that they sit at the intersection of at least three legal regimes at once: crypto regulation, exchange control and, potentially, the law of derivatives. That makes them harder to classify than ordinary crypto trading products.

South Africa has already taken meaningful steps to regulate crypto assets, but in a layered way. In 2022, the Financial Sector Conduct Authority (FSCA) declared crypto assets to be financial products for purposes of the Financial Advisory and intermediary Services Act (Fais), which brought financial services in relation to crypto assets within the conduct-regulatory perimeter.

That was an important step, but it did not answer every downstream classification question. It particularly did not resolve how more complex crypto-native products should be treated where they begin to resemble instruments traditionally associated with financial markets rather than simple spot exposure to a token.

That is where prediction markets become difficult. A prediction-market product typically allows participants to take a position on whether a future event will occur. In economic substance, that can start to look less like holding a crypto asset and more like entering into a contract whose value turns on an external event. Once the product is framed in that way, the Financial Markets Act (FMA) becomes relevant.

Section 3(2) of the FMA is especially important. It provides that any law or the common law relating to gambling or wagering does not apply to any activity regulated by or under the act. That means the crucial question is not merely whether a prediction-market contract looks like a bet.

The prior question is whether it can be characterised as an activity regulated by or under the FMA in the first place. If it can, the ordinary gambling-law analysis may not be decisive. If it cannot, that gambling-law analysis remains very much alive.

That makes the derivative question central. South African financial-markets regulation already contemplates derivatives and over the counter (OTC) derivatives as part of the broader regulatory architecture, and the act itself is aimed at regulating financial markets and market infrastructure, while the regulations under it recognise OTC derivative providers.

The gambling side of the issue therefore remains relevant. The National Gambling Act regulates bets and wagers, and section 4 uses broad language that includes staking money or anything of value on a contingency. On its face, a market built around positions on event outcomes naturally raises that issue. The position is made more uncertain by the fact that the National Gambling Amendment Act, which aimed, among

other things, to regulate interactive gambling, still records its commencement as “to be proclaimed.”

So, South Africa is left with an incomplete fit between older gambling concepts and newer market-based digital products.

Crypto adds a further layer. National Treasury s draft Capital Flow Management Regulations would bring crypto assets more squarely into the exchange-control framework, including in relation

Treasury has said expressly that the draft regulations are intended to address gaps in the current framework in relation to cross-border crypto asset transactions

to cross-border crypto asset transactions. Treasury has said expressly that the draft regulations are intended to address gaps in the current framework in relation to cross-border crypto asset transactions and to complement existing FSCA and Financial Intelligence Centre (FIC) oversight. That is significant for any event-based crypto product with offshore legs, offshore collateral or

cross-border settlement.

But exchange-control treatment still does not answer the prior classification question under the FMA. It regulates the movement of value, not necessarily the legal character of the product itself.

That is the real gap. South Africa has moved some distance in regulating crypto assets as financial products and in drawing crypto into exchange-control supervision. But prediction markets reveal that there is still uncertainty where a crypto-linked product starts functioning less like a token and more like a contract on an event. At that point, the FMA and section 3(2) become highly relevant, because they sharpen the question of whether the product belongs in the world of regulated market activity or remains vulnerable to being characterised more simply as a wager.

For businesses and market participants, that uncertainty is not academic. Classification determines which regulator may have jurisdiction, what licences may be required, which conduct standards apply and whether the product can lawfully be structured or offered in South Africa at all.

Until that question is answered more clearly, prediction markets will remain one of the more interesting fault lines in South Africa’s evolving crypto framework.

Beware the information overregulator A

t the end of March 2026 the Information Regulator addressed all information officers and deputy information officers of private bodies (who will be the CEO or equivalent or their delegee) to submit their annual reports to the regulator. The letter from the regulator called for private bodies (all natural and juristic persons carrying on any trade, business or profession) to submit reports about any requests for access to records received and processed by the private body. However, the annual report that is referred to in the Promotion of Access to Information Act is the annual report that the regulator is obliged to submit to the National Assembly regarding the regulator s activities. Their annual report must include particulars of requests for access to information made to public bodies. Nothing is said about private bodies. The head of a private body “may” furnish the regulator with information about requests for access to their records if requested to do so.

At the end of April 2026, the regulator sent out a threatening email to information officers of private bodies which has no legal basis. According to the email, the annual report of the private body addressed is still outstanding and has to be submitted by June 30 2026 for the current reporting period , of which there is none except for the regulator’s required annual report to the National Assembly about public bodies.

The email claims that submitting an annual report is a statutory obligation in terms of the act. The private bodies are warned against noncompliance which, says the regulator, may result in further regulatory processes in line with the act.

The form of reporting itself requires the information officer of a private body to populate a nine-question template. The questions include details required of requests for information that are already in the regulator’s possession and vague questions about the number of applications made to every court and any appeal court decisions. You will find the questionnaire on the regulator s website. If you open the website you will immediately be faced with a countdown in days, hours, minutes and seconds until the alleged deadline for remaining compliant.

When will regulators learn that an efficient and successful economy does not thrive on threats and bureaucratic overreach? The preamble to the act, in recognising our right to privacy, refers to “the need for economic and social progress

That phrase should be printed in large letters, framed and hung in every regulator s office. For the rest of us, there is no such thing as a compulsory annual report by private bodies.

-Patrick Bracher (@PBracher1) is a director at Deneys

African competition authorities and the regulation of digital markets

There appear to be a number of paths open to African regulators, but more decisive action will likely be required

By STEWART PAYNE Herbert Smith Freehills Kramer South Africa

Digital markets are a priority enforcement area for consumer and competition enforcement in Africa, but questions remain as to how best to regulate them.

Around the world, competition authorities are ramping up enforcement in digital markets through dedicated legislation (for example, the EU Digital Markets Act (DMA)), amended competition laws (such as Germany) or new enforcement units (such as India and Japan).

But what of Africa? On the continent, there has been much talk and some movement especially in South Africa but enforcement remains largely within the confines of traditional competition and consumer law regimes.

Focus on vertical restraints and dominance

Vertical restraints are currently a key focus for enforcement by African competition law authorities. “Most Favoured Nation” (MFN) clauses, for example, are increasingly being viewed as automatically (or at least presumptively) anticompetitive. This was evident during the South African Competition Commission s (SACC) Online Intermediation Platforms Market Inquiry (OIPMI) and, more recently, in its enforcement guidance for online intermediation platforms. Similarly, in Egypt, MFN clauses are described in the new vertical guidelines among the categories of vertical agreements that are most harmful to competition and potentially per se prohibited. Price or service parity clauses are also among the practices prohibited for gatekeepers under the new Comesa competition and consumer protection regulations.

The focus on vertical restraints is linked to a broader concern around abuse of dominance. Alongside competition authorities from other emerging economies, African authorities such as the SACC have expressed the need to regulate the conduct of large international tech companies, based on a perception that these firms are harming competition in local economies. However, prosecuting these firms under traditional abuse of dominance provisions raises issues of market definition and market power that can be difficult for regulators to overcome.

This perhaps explains the lack of enforcement proceedings so far, as well as regulators efforts to

find easier paths to achieve the same outcomes.

Adapting existing tools

Significant question marks therefore remain as to the most appropriate and effective way to regulate digital markets in Africa going forward. The most common approach so far has been to apply and, in many cases, stretch existing enforcement tools. Authorities with a dual competition and consumer mandate have sought to rely on consumer enforcement rather than competition enforcement. This can allow for easy wins by a regulator where the conduct is perceived as

New frameworks take time to develop, and their effectiveness remains unclear. Reliance on existing, slightly adapted frameworks may be the most effective option

unfair and involves consumer harm. This trend has been observed in practice across a number of African countries.

An alternative approach has been to erode the established legal standards applied in traditional competition law enforcement frameworks. This has been pursued in South Africa through (i) the reliance on market inquiry powers and (ii) issuing enforcement “guidance” that suggests a dilution of legal thresholds of market power and identifies certain unfair business conduct that extends

beyond traditional competition law prohibitions.

A number of jurisdictions have taken steps to tweak their existing competition legislation so that they are better suited to address the complexities of digital markets in general, or to address specific conduct that has attracted regulatory scrutiny around the world. Kenya, for example, amended its Competition Act in 2024 to include specific provisions dealing with “digital activities”

Some authorities have set out on a third, arguably more ambitious, pathway with the introduction of new legal frameworks specifically designed to regulate digital markets. Examples include the DMA-style provisions applicable to designated gatekeepers, as introduced by the recent amendments to the Comesa regime and contemplated under the AfCFTA Competition Protocol. The latter is yet to be clearly articulated and appears to have stalled pending further observation of the experiments playing out in Europe and other jurisdictions.

But this path risks continental regulation being left behind, as it may be too late for effective intervention by the time the necessary tools have been put in place. It also means continued legal uncertainty for firms operating on the continent. Will they face materially different consumer and competition law challenges in Africa compared to those that they are currently attempting to resolve in other jurisdictions?

African regulators today face a pressing choice in how they go about regulating digital markets. While consumer enforcement may provide an avenue for quick (and often important) interventions to prevent consumer harm in digital markets, broader structural questions will have to be answered through more nuanced enforcement

of competition laws (within existing or slightly adapted frameworks) or through purpose-built ex ante regulation. But entirely new frameworks take time to develop and adopt, and their practical effectiveness remains unclear. Reliance on existing and slightly adapted frameworks may therefore be the most effective option particularly if the objective is for African regulators to play a meaningful role in the shaping and development of digital markets in their respective jurisdictions. The hope is that this can be done without undermining legal certainty and the objective, evidence-based approach to regulation that has historically been a hallmark of traditional competition law enforcement.

Digital markets remain a priority for African regulators

Digital markets continue to be highlighted as a priority area for enforcement by African regulators, perhaps second only to basic food and agriculture. There are a number of ongoing discussions and initiatives among national and regional African authorities, often also in collaboration with US and European regulators, that are focused expressly on this topic.

In March 2024, the Africa Heads of Competition Authority Dialogue meeting focused on digital markets and included a presentation by the US Federal Trade Commission (FTC) on its experience and challenges on competition enforcement in digital markets. The SACC also shared its experience on competition enforcement in digital markets.

In June 2024, the Comesa Competition Commission (as it then was) held a capacitybuilding conference, during which two of the five days were dedicated to FTC training on digital markets. In early 2025, the Ecowas Regional Competition Authority published a report on its own cross-country digital market study. This report emphasised the importance of enhancing competition in digital markets but identified inadequacies in competition, consumer protection, the regulatory framework and infrastructure among member states.

The road ahead

It remains to be seen how these efforts translate into concrete enforcement activity, and whether they give rise to further evolution of Africa s competition law regimes particularly as they relate to digital markets. As mentioned above, there appear to be a number of paths open to African regulators, each of which has been pursued to varying degrees across the continent so far. More decisive action will likely be required if the objective is for African regulators to play a meaningful role in the shaping and development of digital markets in their respective jurisdictions.

Why South Africa still needs business rescue

More than a decade after the introduction of business rescue into South Africa s corporate framework, debate persists over whether the regime is delivering on its promise.

Critics often cite low success rates, prolonged proceedings and high-profile failures as evidence that the system is broken. Yet such criticism risks overlooking an important reality: despite its flaws, business rescue remains one of the most important mechanisms in South Africa’s legal and economic landscape.

The challenge is not whether business rescue should exist. The challenge is whether it is implemented early enough, strategically enough, and by practitioners with the commercial capability to execute complex turnarounds.

Statistics from the Companies and Intellectual Property Commission (CIPC), covering the first decade of business rescue up to the end of 2021, offer a revealing snapshot. Of the 4,215 cases in which proceedings formally commenced:

● 310 were declared a nullity;

● 938 were terminated;

● 766 were substantially implemented through a Notice of Substantial Implementation;

● 511 ended directly in liquidation;

● 32 were set aside by the courts; and

● 1,658 remained ongoing in rescue proceedings.

The figure most frequently cited is 766 substantially implemented cases, which implies an approximate success rate of 18%. On the surface, that appears disappointing. However, business rescue should not be assessed purely through the narrow lens of whether every company survives in its original form. A separate graph in the CIPC data indicates the volume of Notice of Termination

for commenced business rescue proceedings (the 938 number above).

This shows that 283 of these ultimately ended in liquidation, with 35 where the plan was not accepted among the key reasons; however, it also shows that as many as 517 processes were terminated because the companies were not distressed in the first place. That last stat is interesting for its scope, as it is notable that most of these filings seemed to happen in the earlier years for example, 100 in 2015-16 and have since stabilised in recent years at below 20 a year.

In many cases, the process preserves jobs, stabilises creditor recoveries, enables asset sales at higher values than immediate liquidation would allow, or protects strategically important sectors from sudden collapse. In a country grappling with slow economic growth, rising corporate distress, infrastructure constraints and constrained consumer demand, the absence of business rescue would likely have produced even more destructive outcomes.

Importantly, South Africa has achieved meaningful success stories. Ster-Kinekor remains one of the clearest examples of a business successfully navigating severe distress and emerging with a viable operational future.

The company faced enormous pressure during the Covid-19 pandemic, as lockdowns devastated the entertainment industry globally. Yet through restructuring, operational adaptation and a rescue process that balanced commercial realities with long-term viability, the business was able to continue operating and preserve a significant part of its footprint and workforce.

Similarly, South African Airways demonstrated that even highly distressed and politically exposed entities can, under the right conditions, undergo substantial restructuring. While debate continues over the

SA’s economy is becoming increasingly volatile and more companies are likely to face distress in the coming years

broader cost and policy implications of SAA, the process illustrated that business rescue can provide a framework for operational reset, debt restructuring and strategic repositioning, where liquidation may have carried even greater economic and reputational consequences.

At the same time, the market increasingly recognises that business rescue should not always be the default or sole restructuring tool considered.

In many cases, companies are exploring alternatives earlier in the distress cycle, before value destruction accelerates. These may include informal creditor workouts, section 155 compromise arrangements, strategic equity injections, managed asset disposals, operational restructurings or targeted refinancing solutions.

This shift is important because formal business rescue can be highly complex, expensive and timeconsuming, particularly when stakeholder disputes, litigation exposure and funding pressures intensify. In some cases, a consensual

restructuring outside formal proceedings may preserve greater stakeholder confidence and operational continuity while avoiding the reputational damage often associated with a rescue filing.

There is also growing recognition that boards must engage with financial distress far earlier than has historically been the case in South Africa. Too often, companies enter rescue only after liquidity has collapsed, governance concerns have escalated and suppliers, employees and lenders have already lost confidence. By then, the rescue process is attempting to stabilise a business that may already have suffered irreversible value erosion.

This is particularly relevant in complex sectors such as retail, property, mining, manufacturing and aviation, where businesses require sophisticated operational interventions rather than purely legal restructuring. Increasingly, restructuring professionals, turnaround specialists, financiers and legal advisers are collaborating to assess whether informal restructurings, hybrid turnaround models or partial asset separations may yield better outcomes than full-scale rescue proceedings.

Yet there are also cautionary tales. Tongaat Hulett has become emblematic of the dangers that arise when financial distress is intertwined with governance failures, accounting irregularities, excessive debt burdens and prolonged operational decline. In such situations, business rescue often begins too late when value destruction is already deeply entrenched and stakeholder trust severely eroded.

This is a critical distinction that is often overlooked in public debate. Business rescue is not a miracle cure. It cannot reverse years of governance failure, fraud, strategic missteps or operational deterioration overnight. Nor can it compensate for businesses

entering rescue with no realistic funding runway or recovery strategy.

The complexity of modern restructurings also means that legal expertise alone is no longer sufficient.

Today’s rescue practitioner must be far more than a technical insolvency specialist. They must understand corporate finance, operational restructuring, stakeholder management, labour dynamics, capital allocation, litigation risk, governance remediation and industry-specific commercial realities. In large or strategically significant rescues, practitioners effectively become interim CEOs, negotiators, crisis managers and restructuring strategists at the same time.

This is where the system s future credibility may ultimately be determined.

South Africa’s economy is becoming increasingly volatile, with pressure mounting from energy instability, global geopolitical tensions, weak growth, logistics failures and rising financing costs. More companies are likely to face distress in the coming years. As a result, business rescue will remain an essential component of the corporate ecosystem.

But for the framework to evolve successfully, three things are essential: earlier intervention by boards and management teams; stronger commercial and operational expertise among rescue practitioners; and greater accountability for execution timelines and outcomes.

Business rescue was never intended to guarantee survival in every case. Its purpose is to maximise value, preserve viable economic activity where possible, and provide structured alternatives to immediate collapse. In many cases, it continues to do so.

The real question facing South Africa is not whether business rescue works perfectly, but whether the country can afford not to have it.

Where to now for GAAR?

ENS Tax Team

Several important questions were addressed by the Constitutional Court in Absa Bank Ltd and Another v C:Sars.

The first question was the jurisdictional requirement relating to the existence of an impermissible avoidance arrangement as contemplated in section 80A of the Income Tax Act. The court stated that “the jurisdictional requirement is the existence of an avoidance arrangement whose sole or main purpose is to obtain a tax benefit, and which is abnormal. This is an objective enquiry.

The court also noted that the amendments to the GAAR provisions in 2006 constituted a “move away from a subjective approach to an objective analysis by expanding the purpose requirement to include an objective assessment of the purpose of an avoidance arrangement. This objective enquiry occurs through a reasonable consideration of the arrangement in light of the relevant facts and circumstances.”

The court held that the finding that the jurisdictional requirement (for example the existence of an impermissible avoidance arrangement) entails an objective enquiry is fortified by section 80G. This section requires the party obtaining the tax benefit to prove that, reasonably considered in the light of relevant facts and circumstances, obtaining a tax benefit was not the sole or main purpose of the avoidance arrangement. The court held that this “wording is indicative of an objective test as the focus is not on the taxpayer s stated intent or purpose, but on the reasonable prevailing facts and circumstances . The court held that this is a

This section requires the party obtaining the tax benefit to prove that obtaining a tax benefit was not the sole or main purpose of the avoidance arrangement

fundamental change from section 103(1) of the act, which the courts, and in particular the Supreme Court of Appeal in the Conhage case, interpreted to relate to the taxpayer’s subjective purpose.

The objective enquiry in relation to purpose as enunciated by the court will, however, necessarily involve an analysis of the subjective intention of the relevant parties reasonably considered in light of the relevant facts and circumstances. As per the statement of the Appellate Division (as it then was) in Secretary for Inland revenue v Gallagher 1978 (2) SA 463 (A), which the court refers to, and quotes from, in footnote 52 of the judgment, if the purpose of a party is treated as an objective matter which is to be analysed as such, there is no need for an impermissible avoidance arrangement to have a purpose requirement as contemplated in section 80A, thereby rendering the purpose requirement superfluous. This is so since the effect of a transaction/arrangement, objectively determined, is dealt with in terms of the concept of a tax benefit which is distinct from the purpose requirement.

It is interesting to note that an analysis which takes into account the subjective intention of a party would not be inconsistent with Sars’ approach that the purpose is test is a now a more objective test under the GAAR since Sars approach allows for an analysis of the subjective intention of a party against a reasonable consideration of the relevant facts and circumstances.

The court held that the facts in the present instance constitute an impermissible avoidance arrangement.

Our analysis of this important judgment will be concluded next month, with a final analysis of the concept of party and tax benefit

Beyond the headline: Absa GAAR judgment explained

Significant implications for the application of SA’s General Anti-Avoidance Rules

ENS Tax Team In a recent decision, the Constitutional Court delivered a judgment in Absa Bank Ltd and Another v C:Sars that has significant implications for the application of South Africa s General AntiAvoidance Rules (GAAR).

Absa Bank Ltd (and its subsidiary United Towers) subscribed for preference shares in PSIC Finance 3 and received tax exempt dividends on these preference shares. PSIC 3 then subscribed for preference shares in PSIC 4. PSIC 4 then made a capital contribution to a foreign trust. The foreign trust lent the funds to MSSA, Macquarie’s brokerage entity in South Africa.

The foreign trust also invested in Brazilian government bonds and vested and distributed the income arising from the Brazilian government bonds to PSIC 4. Such interest income was exempt from South African tax in terms of the double tax agreement between South Africa and Brazil.

PSIC 4 was therefore not taxed on such interest income. PSIC 4 used the income arising from the interest on the Brazilian government bonds to declare and pay dividends to PSIC 3, which, in turn, declared and paid dividends to Absa Bank. These dividends were exempt from tax.

Absa launched a review in the high court together with a request for a direction under section 105 of the Tax Administration Act (TAA) arguing that assessments by the South African Revenue Service (Sars) under the general anti taxavoidance provisions in the Income Tax Act, 58 of 1962 (act) in terms of which it re-characterised the tax exempt dividend income received by Absa from PSIC 3 as taxable interest income were flawed due to two legal errors.

First, that Absa could not be said to have been a party to the arrangement as it was unaware of the full structure, particularly the parts generating

the alleged tax benefit and, second, that Absa did not obtain a tax benefit from the arrangement, both of which are requirements for the GAAR.

The high court found these to be issues of law in respect of which it had jurisdiction and set aside the assessments (Absa Bank Ltd v Commissioner for the South African Revenue Service 2021). Sars then appealed to the Supreme Court of Appeal (SCA).

The SCA held that the effect, purpose and normality of a transaction are factual questions. The dispute therefore did not constitute the

The Supreme Court of Appeal held that the effect, purpose and normality of a transaction are factual questions

exceptional circumstances required in terms of section 105 of the TAA. The high court should thus not have granted a direction under that section and should not have entertained the review and therefore set aside the high court s orders. The Constitutional Court granted leave to appeal to Absa and confirmed the high court’s jurisdiction under section 105 of the TAA, finding that the SCA erred in characterising the issues as factual. The remaining issues for determination by the Constitutional Court were whether the assessment should be set aside on review as a result of the alleged legal errors.

The Constitutional Court held that there were two central issues on the merits. First, a twofold enquiry with two interrelated questions, namely, whether the transactions constituted an impermissible avoidance arrangement as contemplated in section 80A of the act and, relatedly, what constitutes a party under section 80L of the act and, in particular, whether this requires knowledge of all the steps of an avoidance arrangement (the party issue ).

Second, whether Sars can invoke the GAAR provisions against the taxpayer who is alleged not to have obtained a tax benefit but merely received financial returns from other parties’ tax benefits (the tax benefit issue).

● See a detailed analysis of what the Constitutional Court found on these issues alongside this article.

Why advisory is the fastestgrowing business imperative

Firms cannot wait for certainty before making decisions. They must develop the capacity to operate amid uncertainty

By MATTHEW BERGER PKF Octagon South Africa

At the start of each financial year, South African businesses review budgets, adjust forecasts and instinctively examine non-essential expenditure.

Advisory services have traditionally fallen into the category of helpful but optional.

That framing is now not just outdated but also strategically perilous.

In 2026, the operating environment for midmarket and privately-owned businesses is characterised not by isolated risks but by overlapping complexities. Regulatory changes intersect with global shifts. Cash flow pressures clash with rising compliance burdens.

Growth opportunities become increasingly cross-border, digital and capital-intensive. In this environment, compliance alone does not create resilience. Nor does it release growth.

The ongoing transformation is clear: companies are redefining advisory as a vital part of the boardroom.

The limits of compliance in a complex economy Audit, tax compliance and regulatory reporting are fundamental. They are vital for governance, credibility and stakeholder trust. However, they are inherently retrospective. They inform you whether you were compliant yesterday but do not effectively guide you on how to approach tomorrow.

For many mid-market businesses, especially those lacking large internal strategy teams, this creates a structural gap. Boards are increasingly faced with decisions that carry legal, financial, reputational and operational implications simultaneously.

● Should we restructure to retain cash or position for growth?

● How do we respond to regulatory scrutiny without triggering broader risk exposure?

● Is expansion into new African markets an opportunity or a compliance minefield?

● How do we integrate tax efficiency with ESG expectations and stakeholder scrutiny?

These are not audit questions. They are advisory questions. And they cannot be answered in silos.

The rise of integrated advisory

The most urgent business priority is not increased reporting but improved decision-making. This is where integrated advisory is transforming the role of professional services firms.

Forward-looking businesses are no longer seeking fragmented inputs from separate tax, legal, risk and communications advisers. They are seeking coordinated insight, advice that reflects the full spectrum of implications before decisions

are made.

Integrated advisory combines financial expertise, covering cash flow, capital structuring and valuation with regulatory and tax strategies that balance compliance and optimisation. It also includes risk and administrative frameworks designed to proactively address scrutiny, along with strategic and operational input grounded in practical execution. The value is not in any one of these disciplines but is in their integration.

Mid-market businesses are leading the shift

While large corporates have long embedded advisory capability internally, it is the mid-market, South Africa’s economic backbone, that is driving the most major shift.

These businesses are:

● Scaling rapidly, often without commensurate governance infrastructure

● Expanding into new jurisdictions under AfCFTA and regional trade frameworks

● Facing increasing regulatory scrutiny from tax authorities and sector regulators

For this segment, advisory is not a luxury but a force multiplier. It enables founder-led and privately-owned businesses to access board-level thinking without building oversized internal teams. It allows them to move with speed and structure.

Advisory as a growth enabler, not just a risk mitigator

There is a persistent misconception that advisory is primarily about avoiding downside risk. In reality, its greatest value lies in enabling upside opportunity.

Consider the businesses that are successfully navigating today s environment. It is not the ones that are merely compliant, it s the ones that are:

● Structuring capital efficiently to fund expansion

● Entering new markets with a clear understanding of regulatory and fiscal implications

Advisory is not a luxury but a force multiplier. It enables founder-led and privately-owned businesses to access board-level thinking

● Anticipating policy alterations and positioning ahead of them

● Embedding management structures that support, rather than slow down growth

These outcomes do not occur by chance. They are the result of intentional, well-informed decisions, backed by integrated advice. Advisory, at its best, does not tell businesses

IN YOUR COURT

what they cannot do. It shows them how to do what they should do safely, strategically and sustainably.

From service provider to key partner

This development also requires a redefinition of the role of professional services firms. The traditional model where advisers are engaged episodically, often after decisions have been made, is giving way to a more embedded, partnership-driven approach.

It requires depth across disciplines, as well as the ability to translate complexity into clear, actionable insight. It requires proximity to clients decision-making activities, not just their financial statements. Critically, it requires a mindset shift from reporting on the past to crafting the future.

A new boardroom imperative

As 2026 unfolds, one truth is becoming clearer: complexity is not cyclical. It is structural. Firms cannot wait for certainty before making decisions. They must develop the capacity to operate amid uncertainty.

In this context, advisory is no longer optional. It is a fundamental part of governance. A driver of growth. A safeguard against unintended risk and a competitive advantage. The question for boards and executives is no longer whether they can afford advisory. It is whether they can afford to operate without it.

SCA clarifies scope of public participation

Arecent Supreme Court of Appeal case, South Durban Community Environmental Alliance & Another v The Minister of Forestry, Fisheries and the Environment and Others (479/2023) [2025] ZACA 134, set out, at some length, a number of important principles dealing with the interpretation of the National Environmental Management Act 107 of 1998 (Nema), in particular, and its closely associated legislation, namely, the Constitution and Promotion of Administrative Justice Act 3 of 2000 (Paja).

In April s Business Law & Tax Review, Part A of this article was published. What follows hereafter is Part B and, in June’s edition, Part C of the article will be published.

Public participation

The court held that public participation in environmental decision making is rooted in section 24 of the constitution, which provides for the right to an environment that is not harmful and a corresponding obligation on the state to protect and fulfil that right. Dambuza JA (on behalf of a unanimous bench) stated the following: Public participation is pivotal to the fulfilment of the right to an environment that is not harmful to health and wellbeing. To be effective, public consultation must be conducted in good faith, through culturally appropriate measures and procedures. The court went on to hold that public participation is an open-textured programmatic right which is “flexible and open to experimental reformulation and which changes in the light of ongoing national experiences. This means that flexibility in a public participation process is essential in achieving meaningful consultation.

The court then referred to the Guideline on Public Participation issued by the minister in terms of section 24J of Nema, which the court held “highlights the importance of public participation. To this extent public participation is the only process in the environmental authorisations mechanism of which there is no exemption.”

The court emphasised that in terms of the guidelines the minimum requirements set out in the EIA regulations for public participation may not be adequate for all applications. In this regard Dambuza JA held “that public consultation is an integral part of the fairness process because a decision cannot be fair if the administrator did not have full regard to precisely what happened during the consultation process in order to determine whether the consultation was sufficient.

In a matter before it, the court held that the public participation process had not been carried out fairly and, for that reason alone, the court held that the environmental authorisation must be reviewed and set aside.

Inadequate assessment of climate change impacts

South Durban argued that both the Chief Director and the minister had failed to consider expert evidence to the effect that generation of electricity, using wind, solar and/or other sources of renewable energy, was a reasonable and feasible alternative to the construction and operation of a power plant. In consequence, they argued that the decisions of the Chief Director and then the minister did not comply with section 24O of Nema and that the environmental authorisation should be reviewed and set aside.

The respondents in reply placed at the forefront their obligations under the National Energy Act and the

Integrated Resource Plan.

Dambuza JA, in her recognition of the tension between the provision of electricity and the protection of the environment, referred to the Constitutional Court case Fuel Retailers Association of Southern Africa v Director General: Environmental Management, Department of Agricultural Conservation and Environment, Mpumalanga Province, and others [2007] ZACC 13, which described this predicament as follows: The need to protect the environment cannot be gainsaid. So, too, is the need for social and economic development. How these two compelling needs interact, their impact on decisions affecting the environment and the obligations of environmental authorities in this regard, are important constitutional questions. What is immediately apparent from s 24 [of the constitution] is the explicit recognition of the obligation to promote justifiable ‘economic and social development’. Economic and social development is essential to the wellbeing of human beings. This court has recognised that socioeconomic rights that are set out in the

Promotion of development requires the protection of the environment

constitution are indeed vital to the enjoyment of other rights guaranteed in the constitution. But development cannot subsist on a deteriorating environmental base. Unlimited development is detrimental to the environment and the destruction of the environment is detrimental to development. Promotion of development requires the protection of the environment. Yet the environment cannot be protected if development does not pay attention to the costs of environmental destruction. The environment and development are thus inexorably linked.”

Dambuza JA held that, in this context as set out above, the principles laid down in Nema provide crucial guidance in the examination of the factors which are relevant, and which must be practically integrated into those processes. She held that: On a plain reading of section 24(O)(1) of Nema the climate change impacts of a listed activity must be considered when assessing applications for environmental authorisations.

Dambuza JA then turned to the issue of the assessment of alternatives to a listed activity in relation to which an environmental authorisation is sought. She held that section 24(4)(a)(iv) of Nema requires an investigation of potential consequences for or impacts of the activity on the environment and an assessment of the significance of those potential consequences or impacts. In addition to that, section 24(4)(b)(i) requires that an investigation be conducted by an environmental assessment practitioner (EAP) into the potential consequences of alternatives to the listed activity on the environment and an assessment must be done on the significance of those potential consequences or impacts, including the option of not implementing the activity.” Following on from the above,

Dambuza JA then considered the consequences of EIA Regulation 18 which provides, inter alia, that a competent authority “must have regard to section 24O and section 24(4) of [Nema], the need and desirability of the undertaking of the proposed activity, the requirements of the regulations and any protocol or minimum information requirements identified and gazetted by the minister …”

Dambuza JA then considered Section 23(2)(b) of Nema, which provides that one of the objectives of integrated environmental management is to identify, predict and evaluate the actual and potential impacts of an activity as well as the risk consequences, alternatives and options for mitigation. In this regard, Dambuza JA held that the regulations do not only allow, as was contended by the respondents, an assessment of the preferred alternative and the no-go alternative . On the contrary:

“They mandate an assessment of reasonable and feasible alternatives to a proposed project, including location, design, technology and the no-go option . The preferred alternative must be the final choice after comparing the social, environmental, technical and economic impacts of all the considered options. Importantly, sustainable development remains the goal.

Accordingly, Dambuza JA dismissed the conclusion by the minister that the minister had a wide discretion to make a decision based on strategic policy considerations or based on the Integrated Resource Plan.

The third and final part of this article shall deal with the headings “Failure to consider the cumulative effect of listed activities, need and desireability , and The remedy

-Peter Blanckenberg is a Director at Blanckenberg & Associates Inc.

● Look out for Part C of this article next month.

Tanzania: the end of probationary employees?

By BRIAN MAMBOSHO & MOHAMMED ZAMEEN

NAZARALI Bowmans Tanzania

Probation has always been understood as a trial period. The employee is being assessed. Nothing is guaranteed. If things do not work out and the right process is followed, they part ways cleanly.

The established position reflected that reality. If an employer terminated a probationary employee without following proper procedure, it compensated them for the remaining probation period not the whole contract. That was proportionate.

The court of appeal has now changed that through its decision in Tanzania Social Action Fund (TASAF) and Another vs Ludovicka LS Tarimo (Civil Appeal No 247 of 2024) [2026] TZCA 480 (May 5 2026).

What happened

TASAF hired an employee on a two-year contract at $4,355 per month with a six-month probation. Her supervisor never met with her, never told her there were concerns and filled in her appraisal form alone, without her, before recommending she be let go.

She was terminated on December 22 2014.

The court found the procedure under rule 10 of the Labour Code of Good Practice was not followed. The compensation awarded: $52,260 12 full months of salary for the remainder of the contract.

The problem

That measure of compensation was previously reserved for confirmed employees (ie employees who have successfully completed probation). A probationary employee who had not yet earned confirmation was treated differently and rightly so. The court has now collapsed that distinction. Breach procedure during probation on a fixedterm contract, and the rest of the contract must be paid. Not the rest of probation. The whole contract. Probation was supposed to mean something

It existed precisely because confirmation was not guaranteed. The employer needed time to assess. The employee understood that. The jurisprudence respected that balance by limiting exposure during that assessment window. This decision dismantles that balance.

A probationary employee who is procedurally incorrectly assessed now recovers the same, sometimes more, than a confirmed employee wrongfully dismissed. There is no longer a meaningful financial distinction between the two. If the risk is identical, the category is redundant.

What this means for business

Businesses that hire an employee on a three-year contract with six months’ probation, and let them go in month four without proper documentation, are potentially exposed to 30 months of salary. The financial risk is the same as firing a confirmed employee.

Breach procedure during probation on a fixed-term contract, and the rest of the contract must be paid. Not the rest of probation.

Need for transparency in class action funding in SA

Do victims actually receive justice even when their claim is successful?

By ROSS KUDO Commercial Litigation Attorney

In recent years, South Africa has witnessed a rise in class action lawsuits that have brought hope to ordinary citizens seeking justice.

From the Tiger Brands case, in which 218 people died and more than 1,000 were sickened by contaminated polony a matter in which Tiger Brands has only recently agreed to settle certain claims after seven years of litigation to the miners’ cases where workers are seeking redress for occupational lung diseases (most notably the landmark gold miners silicosis class action and the more recent coal miners proceedings), these collective legal actions have the potential to empower vulnerable and marginalised people who otherwise may not have had such access to the courts.

However, as we applaud these efforts to help the injured, a pressing question arises: do these victims actually receive justice even when their claim is successful?

As laudable as these class actions sound in principle, victims may receive only a fraction of the compensation they deserve.

In many instances, it s unclear how much money class action claimants actually receive after all deductions are made. Lawyers are legally permitted to charge up to 25% contingency fees meaning they may receive up to a quarter of the final payout, while legal fees, litigation funder fees and interest can significantly reduce what claimants receive.

The lack of transparency surrounding funding agreements raises concerns about shadowy actors that have a financial interest in the outcome and yet are not visible to the other parties, not even the judge, in the court room. A further concern is that claimants are often not fully informed about the key terms in a funding deal including what they must repay before earning a payout. It leaves lawyers and funders benefiting from a rise in legal actions at the expense of the people they claim to represent.

Litigation financing is gaining traction in South

Africa, yet it remains a barely spoken of and an unregulated practice.

Litigation funders, including foreign hedge funds or local investors, bankroll court cases. Outside funding can be required as cases can take years to be certified as legitimate class actions and then wind through the courts for a few more years.

As necessary as funders may be, in South Africa it is not required that it be disclosed that they are involved and how much of the final payout they will take home.

This raises the question: do we need regulation for litigation financing? In several US states, courts require funding agreements be disclosed, ensuring claimants are protected and well informed about the financial arrangements that impact their compensation. This level of transparency is crucial in building trust in the legal system and protecting the rights of claimants.

In June 2025, the UK s Civil Justice Council published a major report on litigation funding. It recommended that in collective legal cases including class actions funded parties should get independent advice from a King’s Counsel (the

UK equivalent of a Senior Counsel) before signing any funding agreement, and that these agreements should also be disclosed to and approved by the court.

These recommendations have not yet been enacted into law the UK government is currently considering them but they represent an important marker of the direction of travel in comparable jurisdictions.

In South Africa, where the complexities of class actions and the associated funding arrangements are not well understood, it is imperative that we advocate for similar regulations. Transparency in funding agreements would not only empower victims but also promote accountability among financial backers and legal representatives. It would also give direction over whether financial backers can have influence over the case or whether they are required, as in the case in some US states, to remain outside of legal decisions. Investors wanting a maximum return are not incentivised to reach settlements and their involvement in legal cases could drag them out at an increasing cost to claimants and overcrowded courts.

There is a real risk that class actions will increasingly be pursued for commercial gains, not the pursuit of justice. In a country like South Africa, where courts are already overburdened by an enormous case load, we need to be extremely careful to make sure we do not incentivise additional cases that are driven by the narrow financial interests of litigation funders.

The media often praises class actions as facilitating access to justice, but we must also confront the reality of inadequate protections for claimants. It is often lawyers and funders who stand to gain the most from filing class actions.

The hope of a fair settlement shouldn’t be overshadowed by the complexities of legal fees and funding. It s time for South Africa to follow examples of other countries globally and establish a regulatory framework that prioritises the rights of victims, ensuring they are informed and protected about funding in their pursuit of justice.

SA’s quiet shift to a two-tier workplace

By JONATHAN GOLDBERG & JOHN BOTHA Global Business Solutions

South Africa’s proposed labour law reforms are introducing a debate that goes far beyond technical legal changes.

At the centre is the Labour Law Amendment Bill 2026, which includes a provision that could significantly alter how unfair dismissals are handled for high-income earners. Many other countries have protection for different employees with those more vulnerable getting more protection.

The proposal introduces an earnings threshold of about R1.8m per year. Employees above this level may no longer qualify for reinstatement as a remedy for unfair dismissal. In its place, compensation may become the default outcome.

Practically, this means even where a dismissal is ruled unfair, a senior employee may not be able to return to their position and may not receive more than R1.8m compensation for an unfair dismissal.

This raises an important question: are we moving toward a two-tier labour system?

A significant shift in approach

For decades, South African labour law has been built on the idea that all employees are entitled to protection against unfair dismissal, regardless of seniority or salary. Reinstatement has traditionally been the preferred remedy, with compensation used only in limited circumstances.

The proposed reform signals a clear shift in approach. At senior and higher-income levels, it acknowledges that reinstating the employment relationship is not always workable.

Case for change: business practicality

Supporters of the proposal say it reflects how senior roles actually work. At that level, jobs are built on trust and alignment with leadership. Once trust breaks down, it is often unrealistic to expect someone to return to the same role and carry on as before. In those situations, a financial payout is seen as a more practical solution than forcing both sides back into a relationship that no longer works.

The risk of a two-tier system

However, the proposal has also raised concerns about fairness specifically, whether employees are being treated equally under the law.

Traditionally, the same rules applied regardless of how much someone earned. Under this proposal, two people could be unfairly dismissed in identical circumstances, yet have very different outcomes simply because one earns more than the other. For many, that challenges the idea workplace protections should apply equally to everyone.

Linking labour protections to income levels introduces the possibility that employees may not be treated equally under the law.

This leads to important questions:

● Should a higher salary result in reduced legal protection?

● Could this make it easier to remove senior employees with fewer legal consequences?

● What does this mean for the broader workforce over time?

There is also a longer-term consideration.

While the current proposal applies to high earners, thresholds and definitions can evolve.

A broader policy shift

This development forms part of a wider effort to recalibrate South Africa’s labour framework.

Policymakers are increasingly trying to balance three competing priorities:

● Protecting employees

● Enabling business flexibility

● Supporting economic growth and job creation

Achieving this balance is complex and each adjustment carries trade-offs.

What this means in practice

If implemented, the proposal will require both employers and executives to adjust their approach.

Employers should consider:

● Reviewing executive contracts and termination clauses

● Reassessing dispute and risk management strategies

● Preparing for changes in how unfair dismissal cases are approached.

Executives may need to:

● Make sure your employment contract clearly protects you especially when it comes to how you can be dismissed and what you ll be paid if you leave.

● Pay attention to what happens if the job ends including notice periods and what you’ll be paid.

● Be aware you may not have the same options as other employees if you are treated unfairly.

A debate that will continue

The proposal is still being debated, and there’s room for input. However, it raises questions about what fairness really looks like at work and whether the system is starting to treat people differently depending on where they sit. The real test will be whether these changes strike the right balance between protecting individuals and allowing organisations to function.