Enabling business through legal excellence, transforming complexity into opportunity, and helping organisations invest with confidence, grow sustainably, and shape South Africa’s future.
www.cliffedekkerhofmeyr.com
48 REPLACEMENT POLICIES UNDER THE REGULATORY SPOTLIGHT
By CHARL WILLIAMS, director, PARUSHA CHETTY, associate, and JULIA ROELOFSE, candidate attorney –Corporate & Commercial
50 ARTIFICIAL INTELLIGENCE AND ACCESS TO JUSTICE IN SOUTH AFRICA
By CALINKA MURRAY, director – Dispute Resolution and Knowledge Management, and SAFEE-NAAZ SIDDIQI, professional support lawyer – Knowledge Management
53 GREEN BUILDING AND THE WAY FORWARD FOR DEVELOPMENTS
By FATIMA GATTOO, director, MUNEERAH HERCULES, senior associate, and ISABELLA AFONSO, candidate attorney – Real Estate & Conveyancing
56 IMMIGRATION POLICY OUTLOOK
By IMRAAN MAHOMED, director, LEE MASUKU, senior associate, and TARYN YORK, senior associate –Employment and Immigration Law
58 LIFTING THE VEIL ON PAY
By YANIV KLEITMAN, director – Corporate & Commercial, NADEEM MAHOMED, director – Employment Law, and ROXANNE BAIN, director – Corporate & Commercial
60 AMENDMENTS TO DISMISSAL LAW FOR HIGH-INCOME EMPLOYEES
By NADEEM MAHOMED, director, and SASHIN NAIDOO, associate –Employment Law
62 “THE LAW IS AN ASS” By NASTASCHA HARDUTH, head –Corporate Debt, Turnaround & Restructuring and director – Dispute Resolution, and DENZIL MHLONGO, associate – Dispute Resolution
64 NEW COIDA REGULATIONS NOW PUBLISHED
By FIONA LEPPAN, director, and KGODISHO PHASHE, senior associate –Employment Law
66 INFLATION KEEPS PRESSURING HOUSEHOLD BUDGETS
By LEBOHANG MABIDIKANE, director, MMAKGABO MOGAPI, senior associate, and CHRISTOPHER KODE, associate –Competition Law
68 OUT OF THE GREYLIST AND INTO THE LIGHT
By THATO SENTLE, senior associate, KGABI MOENG, associate, and LEVY LEKGANYANE, candidate attorney – Banking, Finance & Projects
70 UNPACKING SOUTH AFRICA’S CHANGE FROM EXCHANGE CONTROL TO CAPITAL FLOW
By STEPHAN SPAMER, director, and KGANTSHO RAMAPHALA, candidate attorney – Tax & Exchange Control
72 THE SOCIAL COST OF CORRUPTION
By ANNEMARI KRUGEL, director, and RIMO BENJAMIN, forensic practitioner –Corporate & White-Collar Investigations and Dispute Resolution
74 IN THE SOUTH AFRICAN CONTEXT, CHAPTER 9 INSTITUTIONS ARE INDISPENSABLE
By JACQUIE CASSETTE, head, and GIFT NKOSINATHI XABA, senior associate – Pro Bono & Human Rights
76 SIGN OF THE TIMES
By IAN HAYES, head, KERAH HAMILTON, associate, and THAPELO TLALA, candidate attorney – Corporate & Commercial
78 PRIME RATE UNDER PRESSURE
By MICHAEL BAILEY, senior associate, and STHEMBISO CHAUKE, candidate attorney – Banking, Finance & Projects
84 UNPACKING IRP2025: PROGRESS IN MOTION
By ALECIA PIENAAR, counsel –Environmental Law, JACKWELL FERIS, head – Industrials, Manufacturing & Trade and director – Dispute Resolution, TESSA BREWIS head – Projects & Energy and director – Banking, Finance & Projects, and KHUTSO MONGADI, associate –Banking, Finance & Projects
88 THE TRANSFORMATION OF RAIL
By VIVIEN CHAPLIN, director, and GABY WESSON, senior associate –Corporate & Commercial
WHEN YOU HAVE AN ISSUE WITH AN ISSUE
By IAN HAYES, head, YANIV KLEITMAN, director, KEAGAN HYSLOP, associate, and RIDWAAN HASSAN, candidate attorney – Corporate & Commercial
KING V PROVIDES A BLUEPRINT FOR BOARDS NAVIGATING CORPORATE DISTRESS
By NASTASCHA HARDUTH, head – Corporate Debt, Turnaround & Restructuring and director – Dispute Resolution, ANDRÉ DE LANGE, director –Corporate & Commercial and head – Agriculture, Aquaculture & Fishing, and AKHONA MGWABA, associate –Corporate & Commercial
88 84 66
Over the past year, the insurance industry has seen an increasing number of decisions from the Financial Services Tribunal (FST) and settled complaints from the Financial Advisory and Intermediary Services Ombud (FAIS Ombud) (collectively, the authorities) re ecting enhanced regulatory scrutiny and oversight applied in relation to nancial services providers’ (FSPs) compliance with their duties in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act) and the General Code of Conduct for Authorised Financial Services Providers and Representatives, 2003 (FAIS Code).
This article highlights the signi cant pronouncements and related guidance issued by the authorities regarding the import, materiality, scope and assessment of FSPs’ advice, disclosure and record-keeping obligations in terms of FAIS Code and what this could mean in the context of replacement policies.
Key notes for financial service providers, by CHARL WILLIAMS , director, PARUSHA CHETTY, associate, and JULIA ROELOFSE , candidate attorney – Corporate & Commercial at Cliffe Dekker Hofmeyr
THE REGULATORY FRAMEWORK GOVERNING REPLACEMENT POLICIES
Replacement policy advice is primarily regulated by the FAIS Act and the FAIS Code (FAIS Regulatory Framework), read together with the Policyholder Protection Rules applicable to insurers (PPR). A “replacement policy” arises where a FSP recommends that a policyholder terminate or vary an existing policy to take out a new policy, whether with the same or a different insurer. As this process may materially affect the policyholder’s rights and bene ts, the FAIS Regulatory Framework imposes heightened disclosure, advice and record-keeping obligations on FSPs, which operate in tandem with the Insurance Act 18 of 2017 by imposing complementary and/ or “dovetailed” duties on FSPs and insurers respectively to ensure policyholder protection. With the aim of ensuring that policyholders fully understand the risks associated with a particular replacement policy recommended by an FSP and are able to provide informed
IF A FSP FAILS TO DISCLOSE THAT A TRANSACTION CONSTITUTES
A REPLACEMENT POLICY,
THIS
MAY TRIGGER REPORTING OBLIGATIONS AND
POTENTIAL
SCRUTINY BY THE FAIS OMBUD AND/OR OTHER SUPERVISORY AUTHORITIES.
REPLACEMENT POLICIES UNDER THE REGULATORY SPOTLIGHT
consent in relation thereto, the FAIS Code builds in speci c safeguards via the imposition of mandatory compliance obligations on FSPs, including, but not limited to, the obligation to:
• Act honestly, fairly, with due skill, care and diligence, and in the interests of clients and the integrity of the nancial services industry.
• Provide policyholders with appropriate and adequate information, including disclosure of all material risks, obligations and limitations associated with a nancial product.
Charl Williams
THE FAIS CODE BUILDS IN SPECIFIC SAFEGUARDS VIA THE IMPOSITION OF MANDATORY COMPLIANCE OBLIGATIONS ON FSPs.
• Disclose not only the actual and potential nancial implications of the replacement policy, including costs and front-end charges, but also the differences in cover (including exclusions, waiting periods, excesses and retroactive dates) and any circumstances in which bene ts may not be provided under the replacement policy.
• Ensure that the advice given is appropriate to each policyholder’s speci c nancial needs and objectives, based on accurate and complete information.
• Provide a documented comparison schedule of the terminated product and the replacement product, including other requisite information.
• Maintain a proper record of advice provided to the policyholder.
In addition to the FAIS Code, PPR Rule 19 introduces further safeguards via the imposition of obligations on insurers to ensure appropriate procedures are established to identify replacement transactions and obtain con rmation that appropriate disclosure and advice processes were followed by FSPs when attending to a replacement transaction. If a FSP fails to disclose that a transaction constitutes a replacement policy, this may trigger reporting obligations and potential scrutiny by the FAIS Ombud and/or other supervisory authorities, depending on
the nature and materiality of the FSP’s (mis)conduct in question. It should, however, be noted that in certain instances, it is possible for an insurer to be exempted from the provisions of PPR Rule 19.
PRACTICAL LESSONS FROM FAIS OMBUD SETTLED COMPLAINTS AND FST DECISIONS
Recent FAIS Ombud settled complaints and FST decisions illustrate the frequency and practical consequences/implications of FSPs’ noncompliance with FAIS Code obligations and what this could mean in the context of replacement policies.
The FAIS Ombud has found that FSPs breached their respective FAIS Code obligations where FSPs had failed to, inter alia:
• Exercise reasonable care, skill and diligence, and in the interests of the policyholder when providing nancial services.
• Explain the bene ts that would be lost upon cancellation of the existing policy and/ or failed to disclose exclusions, waiting periods and/or any restrictions in respect of a recommended policy to the policyholder.
• Properly assess the policyholder’s actual circumstances and needs.
• Maintain an adequate and consistent record of advice.
• Produce documentary proof that the required disclosures had been made and that the policyholder properly understood those disclosures.
These ndings are drawn from various settled complaints by the FAIS Ombud, namely:
• FAIS-89422-24/25 GP 4.
• FAIS-79818-24/25 KZ 1.
• FAIS-50254-23/24 WC 6.
• Obtain appropriate information about a client’s nancial situation and ensure affordability by, for example, obtaining proof of income.
• Conduct an analysis based on that information before providing advice to ensure sustainability in the policy.
Given the authorities’ regulatory spotlight focusing on compliance breaches, FSPs are advised to take heed of the authorities’ cautionary pronouncements issued in terms of the recent FST decisions and FAIS Ombud’s settled complaints to ensure compliance with their mandatory FAIS Code compliance obligations.
• FAIS-93742-24/25 WC 4
FAIS-93742-24/25 WC 4
2026 FST decision of
These principles were reinforced in the recent 2026 FST decision of Dube v Accolade Financial Planning Services (Pty) Ltd (FSP57/2025) wherein the FST pronounced upon FSPs’ FAIS Code obligations to:
•
• Act with honesty and integrity by not acting with commission-driven intent or by deliberately misrepresenting a client’s income.
Julia Roelofse www.linkedin.com/in/julia-roelofse-724748274
contact: www.cliffedekkerhofmeyr.com
Julia Roelofse
Parusha Chetty
ARTIFICIAL INTELLIGENCE AND ACCESS TO JUSTICE IN SOUTH AFRICA
CALINKA MURRAY, director – Dispute Resolution and Knowledge Management, and SAFEE-NAAZ SIDDIQI , professional support lawyer –Knowledge Management, Cliffe Dekker Hofmeyr, discuss the pros and cons of artificial intelligence usage in the legal sector
South Africa’s justice system faces a profound challenge. Despite constitutional guarantees that every person has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court, the reality for millions of South Africans is that legal redress remains practically inaccessible. The barriers are manifold: prohibitive legal costs, geographic remoteness from courts and legal services, lengthy delays in case resolution and a shortage of legal practitioners willing or able to serve lower-income communities.
litigants appear without legal representation, these capabilities could prove transformative.
Yet the integration of AI into justice systems raises fundamental questions that merit careful examination. Can algorithmic decision-making satisfy constitutional requirements of fairness? How do we ensure that technological ef ciency does not compromise the essential human elements of adjudication? Can unsecured AI systems compromise the legal privilege afforded to individuals through common law principles? What safeguards are necessary to prevent AI systems from perpetuating or amplifying existing biases? These questions are not merely academic; they will shape whether AI serves as a bridge to justice or creates new barriers in its stead.
THE GLOBAL PICTURE: AI ENTERS THE COURTROOM
The question of whether machines should decide cases is no longer hypothetical. Across the globe, judicial systems are grappling with AI’s expanding role. Estonia is piloting AI adjudication of small claims disputes below EUR7 000. China has declared the integration of AI into judicial processes a national priority, deploying precedent recommendation systems that formulate judgments based on prior decisions. In the United States, algorithmic risk assessment tools already inform bail and sentencing decisions in numerous jurisdictions, though typically in an advisory rather than determinative capacity.
The United Kingdom (UK) offers a particularly instructive comparative reference. In October 2025, the UK judiciary issued updated guidance on AI use by judicial of ce holders, establishing principles for responsible deployment. The guidance emphasises that any use of AI must be consistent with the judiciary’s overarching obligation to protect the integrity of the administration of justice. It cautions that publicly available AI chatbots do not provide answers from authoritative databases, but rather generate text based on statistical predictions. This text may be inaccurate, incomplete, misleading or biased. Judicial of ce holders are reminded that they remain personally responsible for material produced in their name, and that AI tools cannot replace direct judicial engagement with evidence.
This cautious approach re ects broader concerns about AI’s limitations. Academic research has demonstrated a perceived “human-AI fairness gap”: experimental studies show that ordinary citizens evaluate AI-led judicial proceedings as less procedurally fair than those conducted by human judges. This gap persists across different legal contexts,
Into this landscape arrives arti cial intelligence (AI), a technology that proponents herald as capable of democratising access to legal information and services. The potential is considerable given that AI tools can now draft legal documents, summarise complex case materials, conduct preliminary legal research, and provide guidance on procedural matters at a fraction of traditional costs. For a jurisdiction where a signi cant proportion of ENTHUSIASM FOR AI’S POTENTIAL MUST BE TEMPERED BY CLEAR-EYED ASSESSMENT OF ITS LIMITATIONS. THE RISKS ARE NEITHER SPECULATIVE NOR MERELY
THEORETICAL; THEY ARE ALREADY MANIFESTING IN COURTROOMS ACROSS THE WORLD, INCLUDING IN SOUTH AFRICA.
from consumer arbitration to criminal sentencing. Importantly, however, the research also indicates that this fairness gap is neither irreducible nor absolute; it can be mitigated through what scholars term “algorithmic offsetting” by providing litigants meaningful hearings and ensuring AI decisions are interpretable and transparent.
OPPORTUNITIES FOR SOUTH AFRICA
For South Africa, AI presents a compelling opportunity to address entrenched access to justice barriers. The technology’s most immediate promise lies in its capacity to reduce the cost of legal services. Scholars have noted that AI tools sharply reduce the costs of generating legal materials, potentially allowing many more people to access justice. Legal sociologists identify multiple barriers that prevent individuals from pursuing legitimate claims. These include not only the cost of lawyers, but also dif culties in recognising that a grievance constitutes a legal wrong, understanding available remedies and navigating procedural requirements. AI can assist at each of these stages.
Consider the practical applications already emerging. In the arbitration context, the Association of Arbitrators (Southern Africa) issued AI guidelines in May 2025, recognising that AI tools are already embedded in South African arbitration proceedings. These tools assist with collating and sequencing complex case facts and chronologies, managing documents and expediting the reviewing of large volumes of content, conducting legal
research and sourcing precedents, drafting submissions and procedural documents, and facilitating real-time translation or transcription during hearings.
The potential ef ciency gains are substantial. One analysis suggests that AI could enable legal aid organisations to serve signi cantly more clients with existing resources, with some projections indicating capacity increases of 26 to 50 per cent or more. For a country where legal aid resources are stretched thin, such gains could meaningfully expand access to representation. South Africa’s investment in AI infrastructure, including the establishment of Africa’s rst operational AI factory and extensive data centre capacity, positions the country to develop locally contextualised legal AI solutions.
Integration into judicial administration offers particular promise. AI systems can assist with document summarisation, allowing judges to process voluminous case materials ef ciently. They can support case management through intelligent scheduling and prioritisation. For overburdened courts, such tools could help address backlogs without compromising the quality of individual case consideration. As one scholar observes, the goal should be to leverage technology to scale up and improve the delivery of justice without sacri cing justice in individual cases.
THE RISKS: BIAS, TRANSPARENCY AND THE HUMAN ELEMENT
Enthusiasm for AI’s potential must be tempered by clear-eyed assessment of its limitations. The risks are neither speculative nor merely theoretical; they are already manifesting in courtrooms across the world, including in South Africa.
The phenomenon of “hallucinations”, where AI systems generate plausible-sounding but entirely fabricated information, including ctitious case citations, has emerged as a signi cant concern. South African courts have already encountered submissions containing AI-generated ctitious legal authorities.
In a June 2025 matter involving Northbound Processing and the South African Diamond and Precious Metals Regulatory Authority, AI-generated errors were identi ed in court documents. Similar incidents have occurred globally, prompting courts to impose sanctions on legal practitioners who failed to verify AI outputs. The Legal Practice Council has begun receiving referrals concerning practitioners’ use of AI in preparing court materials.
Algorithmic bias presents a more insidious challenge. AI systems are trained on historical data, and that data inevitably re ects the biases and inequities embedded in past human decisions. As one commentator has noted, the risk is “bias in, bias out”. In a jurisdiction still confronting the legacy of systemic discrimination, this concern takes on particular urgency. An AI system trained predominantly on data from other jurisdictions may embed assumptions and legal frameworks ill-suited to South Africa’s constitutional order and societal context.
Perhaps most fundamentally, scholars have articulated concerns about a “right to a human decision”. This argument posits that certain decisions affecting individual rights and liberties should be made by human beings capable of moral reasoning, empathy and accountability.
As Professor Aziz Huq has argued, there are contexts where human judgment possesses qualities that cannot be replicated algorithmically. The constitutional right to a fair hearing arguably encompasses not merely formal procedural compliance, but substantive engagement by a decision-maker capable of genuinely understanding the litigant’s position. Experimental research provides empirical grounding for these concerns. Studies demonstrate that people generally perceive human judges as procedurally fairer than AI judges. This perception matters given that research in legal psychology establishes a relationship between perceived fairness and legal compliance. If citizens regard AI-assisted
Safee-Naaz Siddiqi
Calinka Murray
decisions as less legitimate, they may be less inclined to accept and comply with those decisions, potentially undermining the very objectives the technology is meant to serve.
THE REGULATORY LANDSCAPE
South Africa’s regulatory framework for AI remains nascent, but is evolving. The draft National Arti cial Intelligence Policy Framework, developed by the Department of Communications and Digital Technologies, completed its consultation phase in 2025, proceeded to Cabinet, and was published for public comment on 10 April 2026. However, it was withdrawn on 26 April 2026 following the discovery of fabricated citations in its reference list, an ironic illustration of the risks AI outputs can pose. Once nalised, the framework is intended to align with international standards, drawing on the United Nations Educational, Scienti c and Cultural Organization’s Recommendation on the Ethics of AI, the Organisation for Economic Co-operation and Development’s AI Principles, and the Council of Europe’s AI Treaty. It emphasises fairness, transparency, accountability, privacy, safety, human oversight and cultural values.
A distinctive feature of South Africa’s approach is its emphasis on local cultural and societal values as standards for AI regulation, recognition that AI systems developed without consideration for African contexts and priorities may exacerbate existing inequalities rather than remediate them. The policy acknowledges that when it comes to AI regulation, there is no one-size- ts-all approach, and African states will need to tailor-make their AI legal frameworks to t each country’s speci c context.
At present, AI in South Africa is primarily regulated through existing data privacy legislation, namely the Protection of Personal Information Act 4 of 2013 (POPIA). While POPIA provides some guardrails, particularly concerning the collection and processing of personal data, it was not designed to address the full spectrum of AI-speci c risks. It does not comprehensively cover the AI life cycle from development to deployment, nor does it address concerns such as algorithmic transparency or explainability, which are increasingly central to responsible AI governance.
Legal practitioners operating in this environment must navigate a patchwork of applicable laws, including POPIA, the Electronic Communications and Transactions Act 25 of 2002, and professional conduct rules. In the absence of dedicated AI legislation, practitioners bear signi cant responsibility for ensuring AI tools are used ethically and that outputs are independently veri ed. The legal profession’s existing duties of competence and diligence apply with equal force to AI-assisted work.
RECOMMENDATIONS
For clients and business leaders
Before deploying AI in legal and compliance functions, organisations should establish governance frameworks that include clear usage policies, human oversight requirements and verification protocols to prevent errors. Where personal information is involved, POPIA obligations apply, and vendor contracts should address data sovereignty, confidentiality and liability.
For legal practitionersFor policymakers and the judiciary
Fictitious AI-generated citations in South African courts highlight the need for independent verification of all AI outputs. Every case, citation and legal proposition must be confirmed. AI is a secondary tool, not a substitute for professional judgment. Practitioners should understand AI’s limitations, remain accountable for all material produced and never enter confidential information into public AI systems.
The integration of arti cial intelligence into South Africa’s justice system is not a question of whether, but how and when. The technology is already here, and it is being used by legal practitioners, arbitrators, and increasingly by members of the public seeking to understand their rights. The question before policymakers, the judiciary and the legal profession is whether AI’s deployment will be guided by thoughtful planning or left to ad hoc adoption with all its attendant risks.
The stakes are high. AI offers genuine potential to democratise access to legal services and extend the reach of justice to those currently excluded by cost, geography or information barriers. Yet that potential will be realised only if deployment is accompanied by robust safeguards against bias, meaningful human oversight and transparency in algorithmic decision-making.
The use of AI in arbitration and dispute resolution may support justice, but it cannot replace those who are tasked with safeguarding it. South Africa stands at a crossroads. The choices made in the coming
Proactive AI integration is preferable to reactive adjustments that historically narrow rights or raise procedural barriers. The judicial system should pilot AI tools in controlled settings, develop guidance similar to the UK’s approach and train judicial officers and court staff. The aim is to enhance judicial capacity while preserving the quality of case consideration and the human elements of adjudication.
years in developing AI policy, establishing judicial guidance, training legal practitioners and educating the public will shape whether AI serves as an instrument of greater justice or introduces new forms of exclusion and error. What we gain in access to justice, we must not lose in the delivery of justice. The path forward demands both ambition and caution: ambition to harness technology in service of constitutional ideals, and caution to preserve the human elements that give those ideals meaning.
VISIT WEBSITE
GREEN BUILDING AND THE WAY FORWARD FOR DEVELOPMENTS
FATIMA GATTOO , director, MUNEERAH HERCULES , senior associate, and ISABELLA AFONSO , candidate attorney – Real Estate & Conveyancing, Cliffe Dekker Hofmeyr, unpack the City of Johannesburg Green Building Policy and the benefits of pursuing formal green building certification
As environmental considerations and their long-term implications continue to receive increased attention, participants in the property development industry are increasingly required to consider and address their environmental impact. In South Africa, this shift is reinforced by a growing regulatory and policy framework aimed at improving the sustainability of the built environment.
This development must be understood within the broader legal landscape governing construction and development in South Africa, including the Constitution of the Republic of South Africa, 1996 and the National Building Regulations and Building Standards Act 103 of 1977. Together, these instruments empower municipalities to regulate building standards and development within their jurisdictions, including the introduction of policies addressing environmental performance.
Against this backdrop, the City of Johannesburg (CoJ) introduced the City of Johannesburg Green Building Policy: New Buildings, June 2021 (policy), which provides a framework to guide the development and refurbishment of buildings in a manner that promotes reduced carbon emissions and improved resource ef ciency. Importantly, the policy requires compliance at the earliest stages of the building plan approval process, thereby embedding sustainability considerations into development planning from inception.
THE CITY OF JOHANNESBURG GREEN BUILDING POLICY: NEW BUILDINGS
The policy applies to all new buildings and major refurbishments that require building plan approval by the CoJ, and is integrated directly into the building-plan approval process. Recognising the material contribution of the built environment to carbon emissions and resource consumption, the CoJ has prioritised the transition towards more sustainable building practices within its jurisdiction.
The policy establishes a compliance target of 2030 and an ultimate objective of achieving net-zero carbon performance by 2050. It guides developments towards improved performance across four key areas: energy ef ciency, water ef ciency, waste management, and low-carbon transport.
The CoJ is not alone in this regard. Other metropolitan municipalities, including Cape Town, eThekwini and Tshwane, are participating in broader initiatives aimed at transitioning to low-carbon buildings, including the C40 South Africa Buildings Programme. This re ects a broader national trend towards embedding sustainability considerations into urban development frameworks.
While the policy establishes a clear direction of travel, its implementation remains an evolving process, particularly in relation to the integration of sustainability requirements into existing approval systems and the monitoring of building performance over time. This underscores the importance of proactive engagement with the policy at an early stage of the development process.
NONCOMPLIANCE
Full compliance with the policy is a prerequisite for building plan approval. The consequences of noncompliance are signi cant and include the following:
• Building plan approval may be refused, resulting in delays and increased development cost.
• Where a building has been completed, the occupation certi cate may be withheld until compliance is demonstrated, which may delay occupation by tenants or end users.
• Where incentives were granted as part of the land use application process, and the required performance is not achieved at the approval or occupation stage, penalties may be imposed.
From a development perspective, these risks have direct implications for project timelines, nancing arrangements and commercial outcomes. Compliance with the policy should therefore be addressed as a core component of project planning, rather than as a secondary or technical consideration addressed later in the process.
From a legal and transactional perspective, compliance with the policy is increasingly a core development risk consideration. It may affect not only building plan approval and occupation certi cation, but also nancing arrangements, development conditions, leasing timelines and, in some cases, environmental, social and governance-linked funding or tenant requirements.
GREEN BUILDING CERTIFICATION: GOING BEYOND COMPLIANCE
While compliance with the CoJ policy is mandatory for applicable developments, many developers elect to go further by pursuing formal green building certi cation. Certi cation provides a structured framework for measuring sustainability performance, assessing outcomes against recognised benchmarks and demonstrating environmental credentials to tenants, investors and other stakeholders.
WHAT IS A GREEN BUILDING?
In the South African context, the Green Building Council South Africa (GBCSA) de nes a “green building” as a building that, in its design, construction or operation, reduces or eliminates negative environmental impacts and can create positive impacts for the natural environment and building users.
At the forefront of green building design are energy ef ciency, responsible resource use, environmental sustainability, improved occupant wellbeing and long-term asset performance. These factors contribute to reduced environmental impact and improved operational resilience and asset quality. Importantly, green buildings are not limited to a particular type or scale of development.
COMMON RATING TOOLS IN SOUTH AFRICA
Several tools are used in South Africa to assess whether a building quali es as a green building. The most commonly applied are Green Star, Net Zero and Excellence in Design for Greater Ef ciencies (EDGE), each of which is typically administered or facilitated through the GBCSA.
• Green Star: Green Star is the primary South African rating system administered by the GBCSA, assessing buildings across multiple sustainability categories and life cycle stages.
WHILE THE POLICY ESTABLISHES A CLEAR DIRECTION OF TRAVEL, ITS IMPLEMENTATION REMAINS AN EVOLVING PROCESS, PARTICULARLY IN RELATION TO THE INTEGRATION OF SUSTAINABILITY
REQUIREMENTS INTO EXISTING APPROVAL SYSTEMS AND THE MONITORING OF BUILDING PERFORMANCE OVER TIME.
Muneerah Hercules
Fatima Gattoo
• Net Zero: Net Zero certi cation recognises buildings achieving net-zero environmental outcomes based on measured or modelled performance.
•EDGE: EDGE requires minimum resource-ef ciency thresholds, typically including at least a 20 per cent reduction in energy, water and embodied carbon in materials.
COMMERCIAL AND OPERATIONAL ADVANTAGES OF CERTIFICATION
Green building certi cation offers a range of commercial, operational and sustainability-related advantages, which may be categorised as follows:
Alignment with regulatory frameworks
Certi cation frameworks assist developers in aligning projects with evolving environmental legislation, building standards and municipal requirements. In the context of the CoJ policy, this alignment can support compliance with applicable performance standards and facilitate engagement with approval authorities, although certi cation does not replace the requirement to comply with mandatory standards.
Enhanced reputation and market value
Certi cation signals a demonstrable commitment to sustainability, which is increasingly valued by tenants, investors and other stakeholders. This contributes to enhanced market perception and may strengthen long-term asset performance, with certi ed buildings often bene tting from improved positioning within an increasingly sustainability-conscious market.
Reduced operating costs and tax efficiency
Green buildings are designed to reduce energy and water consumption, resulting in lower operating costs over the life of the asset. In South Africa, these ef ciencies may be supported by section 12L of the Income Tax Act 58 of 1962, which provides a tax deduction for veri ed energy-ef ciency savings achieved. The extension of this incentive to 31 December 2030 underscores continued governmental support for
energy-ef cient development. Together, these nancial bene ts may enhance overall project returns and improve life cycle value.
Health, environmental and broader sustainability benefits
Green buildings deliver bene ts that extend beyond the asset itself to its occupants, surrounding communities and the broader environment. Improvements in indoor environmental quality, including enhanced air quality, natural lighting and thermal comfort, contribute to healthier and more productive spaces. At the same time, reduced energy consumption, emissions and waste generation support climate-change mitigation objectives and reduce pressure on municipal infrastructure, including water, electricity and waste systems.
THE WAY FORWARD
Sustainability considerations are becoming increasingly embedded within the legal, regulatory and commercial framework governing property development in South Africa. The CoJ Green Building Policy represents a clear example of this shift, demonstrating how municipalities are integrating environmental performance requirements into the development approval process.
Developers, investors and industry stakeholders are encouraged to approach sustainability as a fundamental component of development strategy. This includes early engagement with applicable policies, careful distinction between mandatory and promoted standards and consideration of whether formal certi cation may add strategic and commercial value to a project.
THE FOREFRONT OF GREEN BUILDING DESIGN ARE ENERGY EFFICIENCY, RESPONSIBLE RESOURCE USE, ENVIRONMENTAL SUSTAINABILITY, IMPROVED OCCUPANT WELL-BEING AND LONG-TERM ASSET PERFORMANCE.
In the South African context, green building is no longer merely a matter of best practice. It is increasingly a component of regulatory compliance, development feasibility and long-term asset performance. Developers who engage with these requirements proactively are likely to be better positioned to manage approval risk, meet evolving market expectations and future-proof their developments in an increasingly sustainabilitydriven environment.
South Africa’s immigration framework is changing dramatically, and employers must ensure they are compliant with the new regulations.
Cliffe Dekker Hofmeyr’s IMRAAN MAHOMED , director, LEE MASUKU , senior associate, and TARYN YORK , senior associate – Employment and Immigration Law, unpack the key developments
In February 2026, following the State of the Nation Address (SONA), both President Cyril Ramaphosa and the Minister of Employment and Labour (Minister) highlighted several aspects related to South Africa’s immigration laws and policies and how these would be shaped going forward. Since then, signi cant developments have played out in the world of migration in South Africa.
To understand the current developments, it is necessary to place the SONA in context and highlight the following key points:
• The Electronic Travel Authorisation (ETA) is to be rolled out to all countries that require a visa, enabling visa applications for tourists to be processed digitally within 24 hours. Key border posts are to be redeveloped, and the use of the ETA is to be extended to all international airports and the busiest land ports of entry.
• Additional steps will be taken to secure the country’s borders. Funding to strengthen border security will be prioritised, covering infrastructure, technology and people. Drones and other technology are already being used to greater effect along the country’s borders.
• Illegal immigration affects security, stability and economic progress. As a result, the South African Police Service (SAPS), the Department of Home Affairs (DHA) and labour inspectors will enforce immigration and labour laws. Employers hiring foreign nationals without visas will be prosecuted, and enforcement measures will increase, with 10 000 new labour inspectors to be appointed. The intention is to increase and strengthen enforcement, protect vulnerable workers and promote fair labour
practices with more inspectors to tackle non-compliance and unlawful employment while supporting a stable labour market.
• The DHA will launch a Digital ID to enable the safe and secure use of digital services for all South African citizens. All these services will be made available on the MyMzansi platform. In addition, more bank branches are set to offer Smart ID and passport services.
• Addressing foreign national employment, the Department of Employment and Labour (DEL) will continue to work with other agencies like the DHA and SAPS to deal with undocumented migrants.
• The DEL nalised the National Labour Migration Policy and the framework on the regulation of immigration, which would, if adopted, empower the Minister to:
• Prescribe employment quotas for foreign nationals in speci c sectors.
• Ring-fence certain sectors wholly or partially for the employment of South Africans.
• In relation to the agricultural sector, the Minister noted that given the sector’s reliance on vulnerable workers and its economic importance, the DEL classi ed agriculture as a high-risk sector from an enforcement perspective. What this means is that the DEL has intensi ed all pillars of its intervention in the agricultural sector –advocacy, inspections and enforcement. The Minister stated that the DEL will continue to
THE EMPLOYMENT OF 10K LABOUR INSPECTORS TO INCREASE ENFORCEMENT EFFORTS.
work closely with employers and organised formations, such as AgriSA, to strengthen compliance and protect workers.
Following the SONA, the developments have accelerated materially based on the publication of the Employment Services Amendment Bill (ESAB) for consideration by the National Assembly, a recent June 2026 address by President Cyril Ramaphosa and an announcement by the Minister of Justice and Constitutional Development in the face of growing and violent xenophobia.
ESAB PUBLICATION
The ESAB was published on 29 May 2026 for consideration by the National Assembly. Among other things, the ESAB proposes repealing sections 8 and 9 of the Employment Services Act 4 of 2014 and inserting a new Chapter 3A, which deals comprehensively with the employment of foreign nationals. Key provisions of the ESAB include a power for the Minister, after consulting the Employment Services Board, to specify by notice in the Government Gazette a maximum quota for the employment of foreign nationals in any economic sector, speci c occupation or geographical area with no carve-out for critical skills positions (employers who wish to exceed an applicable quota would need to apply for an exemption from the intended quota system).
Imraan Mahomed
CORPORATES ARE ENCOURAGED TO AUDIT THE COMPOSITION OF THEIR WORKFORCES, EVALUATE THE LIKELIHOOD AND IMPACT OF SECTORAL QUOTAS IN THEIR WORKPLACE, AND ACTIVELY PARTICIPATE IN ANY PUBLIC CONSULTATION PROCESSES.
Companies should monitor the ESAB’s progress through Parliament closely, as it will require a fundamental reassessment of practices relating to the employment of foreign nationals. Prior to the implementation of the ESAB, corporates are encouraged to audit the composition of their workforces, evaluate the likelihood and impact of sectoral quotas in their workplace, and actively participate in any public consultation processes.
PRESIDENTIAL ADDRESS OF 7 JUNE 2026
On 7 June 2026, President Ramaphosa outlined a comprehensive government approach to illegal immigration and migration management, as approved by Cabinet, and endorsed by the President’s Co-ordinating Council. The key measures announced include:
• A concerted crackdown on violations of immigration, labour and other laws, through strengthened immigration laws and policies, and intensi ed inspections by the DHA, Border Management Authority, SAPS and DEL to identify undocumented migrants, with speci c attention placed on targeting employers of undocumented workers.
• The active recruitment of 10 000 new labour inspectors to assist with ongoing compliance inspections and enforcement.
• The imposition of increased penalties, including imprisonment, for employers who contravene the Immigration Act 13 of 2002.
• The prevention of the illegal entry of undocumented migrants into South Africa through strengthened border security, and the establishment of dedicated immigration courts to support the speedy deportation of undocumented migrants.
• The progressive discontinuation of the green ID book, which has enabled identity theft, and the establishment of an Intelligent Population Register containing biometric data for every person in South Africa, as the foundation for a Digital ID.
ANNOUNCEMENT OF 9 JUNE 2026
The Minister of Justice and Constitutional Development also announced that a decision was made to establish a dedicated immigration court in Kempton Park,
situated near OR Tambo International Airport. This is intended to speed up the deportation of undocumented migrants.
WHAT TO LOOK OUT FOR
South Africa’s immigration framework is undergoing its most signi cant transformation since the transition to democracy. The presidential address reiterates that enforcement will intensify substantially in the short term, and employers should expect increased labour inspections with the prospect of criminal liability (not merely nes) for hiring undocumented workers and stricter enforcement of existing visa conditions.
The introduction of the ESAB in Parliament signals that the legislative framework will follow suit, with new obligations around labour market testing, skills transfer plans, employment quotas and tighter penalties for noncompliance. Finally, the announcement of the dedicated immigration courts will accelerate deportation proceedings and reduce the time within which undocumented workers identi ed during workplace inspections are deported from South Africa.
Employers are therefore encouraged to conduct an urgent review of their foreign national workforce to ensure compliance with existing obligations under existing immigration legislation, as well as monitoring the ESAB’s parliamentary progress closely, given the
signi cant additional compliance obligations it will impose. Immigration compliance has never been more critical.
What to make of the 30 June 2026 “March and March” campaign? The reality is that a great deal has already happened through institutional processes to provide a comprehensive review of the legal framework regulating the rights of foreign nationals. A refresh of the law is already in the making.
For more information contact: www.cliffedekkerhofmeyr.com
Taryn York
Lee Masuku
LIFTING THE VEIL ON PAY
Cliffe Dekker Hofmeyr’s YANIV KLEITMAN , director – Corporate & Commercial, NADEEM MAHOMED , director – Employment Law and ROXANNE BAIN , director – Corporate & Commercial, explain the Companies Act amendments and remuneration disclosure
South Africa’s recent Companies Act 71 of 2008 (Companies Act) amendments mark a deliberate shift towards greater openness on executive pay, anchored in the conviction that excessive remuneration, particularly at the highest levels of a company, is a matter of great concern internationally. The international literature on this topic, as well as on the inequity of signi cant pay gaps between the top and bottom levels of a company, is signi cant. By introducing a structured remuneration report regime, the amendments seek to bring South African company law in line with these international developments.
EXPLANATORY MEMORANDUM PROVIDES INSIGHT
The reform rests on a clear policy rationale, as contained in the explanatory memorandum on the Bill. The provisions relating to transparency on the pay gap and the reasonableness of remuneration provide an objective benchmark to assist the public dialogue on this topic. That dialogue carries weight because the factors giving rise to these concerns are,
THE AMENDMENTS OBLIGE PUBLIC AND STATE-OWNED COMPANIES TO PREPARE A DIRECTORS’ REMUNERATION REPORT AND TO DISCLOSE THE PAY GAP BETWEEN DIRECTORS AND WORKERS.
Yaniv Kleitman
THE AMENDMENTS STOP SHORT OF PRESCRIBING OUTCOMES. THEY DO NOT SEEK TO PROPOSE WHAT THE RATIOS BETWEEN EXECUTIVE AND WORKER PAY SHOULD BE; INSTEAD, THEY PROPOSE TRANSPARENCY AND EMPOWER SHAREHOLDER VOTING TO BE MORE EFFECTIVE THAN CURRENTLY IS THE CASE.
to an extent, responsible for the signi cant levels of inequity in society. Conventional wisdom is that these levels of inequity are unsustainable, and it seems that the government holds the view that this concern has even greater resonance in South Africa. To address this, the amendments make provision for augmentation in the levels of disclosure of executive remuneration.
According to the explanatory memorandum on the Bill, disclosure is a powerful regulatory mechanism for several reasons. First, it provides shareholders with an effective means of responding to dissatisfaction over excessive remuneration. Second, it has a shrinking effect, inducing boards and senior executives to refrain from awarding and receiving excessive remuneration for fear of the adverse reputational consequences. To give these mechanisms teeth, the amendments oblige public and state-owned companies to prepare a directors’ remuneration report and to disclose the pay gap between directors and workers, including details of the highest and lowest paid employees, average and median remuneration, and the gap between
the top ve per cent and bottom ve per cent of earners. The remuneration implementation report must be approved by ordinary resolution at the annual general meeting, with consequences where approval is not obtained.
These measures emerged from negotiated compromise. The explanatory memorandum highlights that during discussions at the National Economic Development and Labour Council, the matter of wage ratios and the status of remuneration reports was raised and a number of proposals were made. The discussions focused on what an appropriate package of measures would entail, providing for disclosure of information coupled with greater rights for shareholders at annual general meetings, without placing an undue burden on small businesses. Based on the outcome of discussions with representatives of business and labour, the amendments were drafted.
FOCUS ON TRANSPARENCY
Importantly, the amendments stop short of prescribing outcomes. They do not seek to propose what the ratios between executive and worker pay should be; instead, they propose transparency and empower shareholder voting to be more effective than currently is the case. This is signi cant, according to the explanatory memorandum on the Bill, given that this kind of inequality underpins much of the well-known workplace con ict in South Africa.
For collective bargaining, the implications are practical rather than prescriptive. By placing veri able data on wage differentials in the public domain, the disclosures hand trade unions an objective benchmark to inform their negotiating positions, allowing them to ground demands in published
THE DISCLOSURES HAND TRADE UNIONS AN OBJECTIVE BENCHMARK TOINFORM THEIR NEGOTIATING POSITIONS.
median and ratio gures rather than estimates. This signals how unions are likely to deploy these gures at the bargaining table. While the amendments confer no new bargaining rights, the transparency they create is likely to sharpen negotiation over the reasonableness of pay at both ends of the scale.
For more information contact: www.cliffedekkerhofmeyr.com
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Nadeem Mahomed
Roxanne Bain
AMENDMENTS TO DISMISSAL LAW FOR HIGH-INCOME EMPLOYEES
NADEEM MAHOMED , director, and SASHIN NAIDOO , associate –Employment Law at Cliffe Dekker Hofmeyr, examine the proposed amendments to sections 193 and 194 of the Labour Relations Act
The Labour Relations Amendment Bill, 2025 (2025 Bill), published on 26 February 2026, proposes changes to the remedies available to high-earning employees in unfair dismissal disputes. This article examines the proposed amendments to sections 193 and 194 of the Labour Relations Act 66 of 1995 (LRA), compares them with two earlier legislative attempts to restrict the dismissal rights of high-income individuals, and analyses whether the current proposals bar high earners from challenging their dismissals or merely limit the remedies available to them.
THE CURRENT POSITION
Under current law, section 193 provides that reinstatement is the primary remedy for unfair
dismissal. Section 194 caps compensation at 12 months’ remuneration for ordinary unfair dismissals and 24 months for automatically unfair dismissals. These remedies apply equally to all employees, regardless of remuneration.
PAST ATTEMPTS TO AMEND THE LAW
HIGH EARNERS RETAIN THE RIGHT TO CHALLENGE DISMISSALS AND CLAIM COMPENSATION, BUT THEY CANNOT SEEK REINSTATEMENT FOR ORDINARY UNFAIR DISMISSALS.
The 2010 Bill proposed a new section 187A, which provided that an employee earning above a prescribed threshold could not refer disputes to the Commission for Conciliation, Mediation and Arbitration (CCMA) in respect of the right not to be unfairly dismissed (section 185), the meaning of dismissal and unfair labour practice (section 186), the requirements for a fair dismissal (section 188), dismissals for operational requirements (section 189), large-scale retrenchments (section 189A), and transfers of a business as a going concern (section 197). The effect was that high earners would have been entirely excluded from challenging unfair dismissals. The rationale was framed in terms of CCMA capacity, with the memorandum stating the amendment would ensure “vulnerable employees are not prejudiced because of the delays caused by the volume of complaints from employees who can afford to approach the courts”.
PREVENTION OF DUPLICATE CLAIMS
THE NEW SECTION 196 REQUIRES EMPLOYEES TO ELECT BETWEEN A FAIRNESS CLAIM UNDER THE LRA OR AN UNLAWFULNESS CLAIM AT COMMON LAW – THEY MAY NO LONGER PURSUE BOTH IN RESPECT OF THE SAME DISMISSAL.
The 2012 Bill proposed a new section 188B, which took a different approach. Rather than preventing access to the CCMA, it deemed the dismissal of a high earner to be substantively and procedurally fair, provided three months’ written notice or payment in lieu was given. The rationale shifted from CCMA capacity to the “disproportionate cost, complexity and impact on an employer’s operations” of dismissing senior employees whose removal may not fall neatly within the fair reasons speci ed in section 188. The memorandum indicated that uniform protection for all employees “fails to recognise the signi cant difference in bargaining power” between lower-paid and highly paid employees. Neither proposal was enacted.
THE 2025 PROPOSAL
The 2025 Bill takes a different approach. It proposes a new section 193(2A), providing that reinstatement and re-employment do not apply to employees earning above a prescribed threshold, unless the dismissal was automatically unfair. Clause 38 further caps the earnings used to calculate compensation for such employees. The threshold is R1.8-million per annum, adjusted annually for in ation.
The rationale relies on Article 12 of the International Labour Organization’s
Convention 158, which the memorandum says “allows for the differentiation in the treatment of higher-paid employees”. However, Article 12 deals with severance allowances, not dismissal remedies. The more relevant provisions are Articles 2(4) and 2(5), which permit exclusion based on the nature of employment rather than salary level.
THE CRITICAL DISTINCTION
The 2025 amendment does not prevent high earners from referring unfair dismissal disputes. The 2010 Bill would have barred CCMA access entirely. The 2012 Bill would have deemed dismissals fair, stripping employees of the right to challenge fairness altogether. The 2025 Bill does neither: high earners retain the right to challenge dismissals and claim compensation, but they cannot seek reinstatement for ordinary unfair dismissals. Reinstatement remains available for automatically unfair dismissals. The 2012 amendment was accordingly far more restrictive, as it would have extinguished the right to challenge fairness entirely, whereas the 2025 Bill merely limits the remedy.
However, the right not to be unfairly dismissed lies at the very heart of individual labour law, encompassing the right to security of tenure, the primary expression of which is reinstatement when one is unfairly dismissed. It remains uncertain whether the proposed amendments would withstand constitutional scrutiny if challenged, or whether they are excessively restrictive of the right to fair labour practices enshrined in section 23 of the Constitution.
The 2025 Bill also proposes amendments to sections 195 and 196. Currently, section 195 provides that compensation under Chapter VIII is in addition to any other amount owed to the employee, which permits employees to pursue both a statutory unfair dismissal claim and a common-law unlawful dismissal claim. The new section 196 requires employees to elect between a fairness claim under the LRA or an unlawfulness claim at common law – they may no longer pursue both in respect of the same dismissal. This is particularly signi cant for high earners whose statutory remedies may be curtailed, as it forecloses the possibility of supplementing a capped statutory award with a concurrent common-law claim.
IMPLICATIONS
Employers must still ensure dismissals of high earners are fair, as employees retain the right to challenge fairness and claim compensation. However, the removal of reinstatement as a remedy signi cantly reduces the practical consequences of an adverse nding. The 2025 Bill is open for public comment and will proceed through Parliament before enactment.
For more information contact: www.cliffedekkerhofmeyr.com
Nadeem Mahomed
Sashin Naidoo
“THE LAW IS AN ASS”
NASTASCHA HARDUTH , head – Corporate Debt, Turnaround & Restructuring and director – Dispute Resolution, and DENZIL MHLONGO , associate – Dispute Resolution at Cliffe Dekker Hofmeyr, refl ect on void dispositions and restitution
The Supreme Court of Appeal (SCA) recently delivered an important judgement on the operation of section 341(2) of the Companies Act 61 of 1973 (Act), as read with item 9 of Schedule 5 of the Companies Act 71 of 2008, in Blue Label Distribution (Pty) Ltd v St Clair Cooper N.O. and Others [2026] ZASCA 61 (29 April 2026).
BACKGROUND
Blue Label Distribution (Pty) Ltd (Blue Label) is a distributor of prepaid virtual products (such as airtime, data, electricity, among others) (products) supplied by third parties (suppliers). Blue Label contracted with Cape Basic Products (Pty) Ltd (CBP) to enable CBP to sell those products to end customers through their terminal devices. Under the contractual arrangement, CBP was required to deposit funds into Blue Label’s bank account in advance, which
created a credit balance, and Blue Label loaded corresponding credit for the suppliers’ products onto CBP’s terminal devices. As customers purchased products from CBP, they paid CBP directly for those products (customer payments). At the end of each day, Blue Label’s system generated invoices for products sold. The value of those sales was debited from CBP’s credit balance and transferred to Blue Label’s trading account. Blue Label then paid the equivalent amounts to the suppliers from that trading account. Blue Label earned commission from suppliers and paid a portion of that commission to CBP. In this case, CBP was placed under provisional liquidation on 2 March 2020 and nally liquidated on 30 June 2020. Between these dates – speci cally after the provisional order, but before the appointment of liquidators – CBP made eight payments to Blue Label, totalling R347 531.81.
The liquidators of CBP sought to recover these payments as void dispositions under section 341(2) of the Act, and the High Court upheld their claim. Blue Label then appealed to the SCA. The SCA had to deal with two central questions: 1. Whether the liquidators of CBP were entitled to rely on section 341(2) of the Act when the amounts were effectively repaid to CBP, through the transaction outlined above, before the application to declare the payments void had been instituted, and, if so 2. whether Blue Label was the true recipient of the disposition or whether it was merely acting as a collecting agent for its suppliers.
Nastascha Harduth
Section 341(2) of the Act
Section 341(2) provides as follows: “341 Dispositions and share transfers after winding up void … (2) Every disposition of its property (including rights of action) by any company being wound up and unable to pay its debts made after the commencement of the winding up, shall be void unless the Court otherwise orders.”
It is important to note, in this regard, that in terms of section 348 of the Act, winding-up commences on the date that the liquidation application is presented to court.
THE REPAYMENT ISSUE
Blue Label argued that CBP’s estate was not diminished by the deposit CBP had paid to Blue Label, because the customer payments effectively replenished CBP’s estate. In substance, Blue Label contended that, given the transaction described above, there had been no real loss to CBP’s estate.
The SCA rejected this argument because it endorsed a wide interpretation of “disposition”, drawing from the de nition in the Insolvency Act 24 of 1936, and which is not limited to transactions that diminish the debtor’s estate in a net sense.
It held that as soon as a provisional liquidation order is made, CBP’s estate was in the hands of the Master, and CBP was incapable of carrying out its contracts. In these circumstances, once a disposition falls within section 341(2), voidness arises automatically and is not contingent on whether the estate was diminished or subsequently restored.
The SCA held that once winding-up proceedings begin, the default position is one of strict invalidity: any such dispositions are void ab initio and treated as though they never occurred. A recipient of a void disposition is immediately obliged to perform restitution of such amount to the company in liquidation because such recipient has no right to retain the disposed funds.
Accordingly, the SCA held that the liquidators were entitled to rely on section 341(2) of the Act to recover the payments from CBP to Blue Label.
RECIPIENTS OF PAYMENTS
ARE OBLIGATED TO REPAY ANY DISPOSITIONS RECEIVED TO THE INSOLVENT ESTATE, AS LIABILITY ARISES IMMEDIATELY UPON RECEIPT.
THE TRUE RECIPIENT ISSUE
Blue Label further argued that it acted merely as an intermediary or collection agent for the suppliers and was therefore not the true recipient of the funds. It argued that it merely facilitated the transmission of funds ultimately from a retail outlet, such as CBP, to the supplier and that it never acquired ownership of the products or the proceeds of the sale.
The court rejected this characterisation, nding that the contractual framework created a debtor-creditor relationship between CBP and Blue Label, rather than one of agency.
There was no direct contractual relationship between CBP and the suppliers, and Blue
Label was the counterparty to CBP. As such, when CBP made payments to Blue Label, the true recipient of the funds could only be Blue Label.
PRACTICAL IMPLICATIONS
The judgement has signi cant implications for commercial counterparties dealing with entities that are subject to liquidation proceedings. Once an order is made, the liquidation (winding-up) is deemed to commence on the date that the liquidation application was presented to court and section 341(2) of the Act kicks in. As a result:
•Any payment received after the commencement of winding-up is at risk of being clawed back, irrespective of commercial fairness or subsequent balancing of accounts.
•Even if the commercial counterparty has rendered substantial performance and the estate appears unaffected, the statutory voidness operates automatically.
•Recipients of payments are obligated to repay any dispositions received to the insolvent estate, as liability arises immediately upon receipt.
•Attempts to characterise arrangements as agency or conduit relationships will be closely scrutinised against the underlying contractual reality.
This case exempli es Dickens’ phrase “The law is an ass” from Oliver Twist, highlighting how the application of the law can require clawbacks of funds even when the insolvent estate suffers no net loss, potentially resulting in additional payments to the insolvent estate in respect of a single transaction.
Denzil Mhlongo
NEW COIDA REGULATIONS NOW PUBLISHED
FIONA LEPPAN , director, and KGODISHO PHASHE , senior associate –Employment Law at Cliffe Dekker Hofmeyr, write that the Rehabilitation Framework is taking shape
On 6 March 2026, the Minister of Employment and Labour published several sets of regulations under the Compensation for Occupational Injuries and Diseases Act 130 of 1993, as amended (COIDA), in Government Gazette No. 54273. In our previous alert, we reported on the commencement of the COIDA amendments brought into operation by Proclamation Notice 306 of 2026, including the new statutory rehabilitation framework introduced by section 70A. The detailed regulations governing the implementation of the rehabilitation and return-to-work programmes have been published and are effective immediately.
The new regulations are published in four separate sets, dealing respectively with prescription of claims, inspection compliance and enforcement, rehabilitation, reintegration and return-to-work, and the registration of third parties transacting with the Compensation Fund. Of particular signi cance to employers are the Rehabilitation, Reintegration and Return-to-Work Regulations, which give practical effect to the statutory framework inserted by the recent amendments to COIDA, which imposes substantial new obligations on employers, the Compensation Fund and licensees.
These rehabilitation regulations adopt a comprehensive, person-centred approach with the aim of assisting the employee who suffered a workplace injury or illness to be able to recover and return to work. These regulations encompass early intervention, holistic rehabilitation programmes, sustainable reintegration, provision of assistive devices, reasonable workplace accommodation, vocational rehabilitation intervention, and ongoing support to optimise the affected employee’s physical, psychological and social wellbeing during their journey to recovery.
EMPLOYER OBLIGATIONS
Critically, employers would now be required to designate or appoint an employee health and wellness representative to act as a liaison of cer between the employer and the Compensation Fund or licensee on all rehabilitation, reintegration and return-to-work matters. Such representative must have the necessary knowledge, skill and competencies to discharge this function, including co-ordinating the provision of assistive devices, monitoring return-to-work programmes, and maintaining con dential case les.
Employers face a wide range of new obligations under these regulations. They must facilitate access to rehabilitation for injured employees or those who have suffered a disease to assist their reintegration into the workplace as far as reasonably practicable. This includes providing reasonable accommodation and transitional or temporary work, which may
EMPLOYERS WOULD NOW BE REQUIRED TO DESIGNATE OR APPOINT AN EMPLOYEE HEALTH AND WELLNESS REPRESENTATIVE TO ACT AS A LIAISON OFFICER BETWEEN THE EMPLOYER AND THE COMPENSATION FUND OR LICENSEE ON ALL REHABILITATION, REINTEGRATION AND RETURN-TO-WORK MATTERS.
involve the possibility of changing aspects of the physical environment, adjusting work schedules, modifying job tasks or transferring the employee to an alternative position. Employers who participate in the rehabilitation programmes are also required to incorporate rehabilitation, reintegration and return-to-work provisions into their human resources policies, which must be freely accessible and communicated to all employees. Of particular note to employers is the prohibition on terminating the services of an employee based on incapacity or reducing an employee’s remuneration due to an injury sustained on duty or where the employee contracts an occupational disease, without adhering to the prescripts of the relevant employment legislation.
BENEFITS FOR EMPLOYEES
The regulations also set out the rehabilitation bene ts employees would be entitled to receive. These include clinical rehabilitation for physical, cognitive, sensory and psychosocial recovery; vocational rehabilitation to assist in preserving, obtaining or regaining employment through vocational counselling and reskilling; social rehabilitation aimed at restoring independence and social integration; and the provision of assistive devices and assistive technology as part of an agreed
Fiona Leppan
return-to-work plan. The costs of clinical rehabilitation, social rehabilitation and assistive devices for employees with permanent or temporary total disablement are borne by the Compensation Fund. However, for employees who have already returned to work, the costs of the vocational rehabilitation will be borne by the employer. The provision of rehabilitation bene ts and the resumption of work by an affected employee does not mean that they are disquali ed from receiving the prescribed compensation bene ts otherwise payable under COIDA. Employees undergoing rehabilitation shall not mean a forfeiture of any compensation bene ts potentially due to them.
COIDA AMENDMENTS NOW IN FORCE: A NEW ERA FOR WORKPLACE INJURY COMPENSATION IN SOUTH AFRICA
On 23 January 2026, the President of South Africa published Proclamation Notice 306 of 2026, bringing into operation several key provisions of the Compensation for Occupational Injuries and Diseases Amendment Act 10 of 2022 (Amendment Act). The Amendment Act introduces signi cant changes to the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA), including enhanced employee protections, new enforcement mechanisms and a statutory rehabilitation framework. The amendments are implemented in phases: 23 January 2026, 1 February 2026 and 1 April 2026.
The Amendment Act, published on 17 April 2023, was assented to by the President on 6 April 2023 but required a Presidential proclamation to bring its provisions into operation. That proclamation has now been published, prompting a phased implementation of the amendments. Employers must take careful note of the speci c effective dates and the corresponding compliance obligations that arise on each date.
The Amendment Act introduces several notable changes. Perhaps most signi cantly, post-traumatic stress disorder (PTSD), formally recognised as an occupational disease under COIDA. This reinforces the position adopted in recent case law that employees who develop PTSD as a result
THESE AMENDMENTS REPRESENT THE MOST SIGNIFICANT MODERNISATION OF SOUTH AFRICA’S OCCUPATIONAL INJURY AND DISEASE COMPENSATION FRAMEWORK.
of workplace incidents are entitled to compensation. This is a development that re ects growing awareness of mental health issues encountered in occupational settings. Additionally, injuries sustained during work-related training conducted in furtherance of the employer’s business now fall within COIDA’s protective scope.
COIDA’s scope of application has also been extended to cover accidents that occur when transport is provided by the employer to enable employees to commute to or from the workplace (conveyance is deemed to commence when an employee reaches the designated pick-up point and continues until the employer’s designated drop-off point), which is a practical extension that addresses the realities of modern-day commuting arrangements.
A change that will affect the management of claims is the prescription period for compensation claims, which has been extended from 12 months to 3 years from the date of the accident. Employers should review their record-keeping practices accordingly.
A new Chapter VIIA inserted in COIDA establishes a statutory rehabilitation and reintegration framework. This places positive obligations on the Compensation Fund, employers and licensees to provide facilities, services and bene ts aimed at rehabilitating employees who have suffered occupational injuries or diseases.
The goal is clear: namely to return injured employees to productive work where this is possible. It is important to note that while the statutory framework for rehabilitation (section 70A) is now in operation, the Minister of Employment and Labour has published several sets of regulations under COIDA in Government Gazette No. 54273, governing the implementation of the return-to-work and rehabilitation programmes.
CONCLUSION
These amendments represent the most signi cant modernisation of South Africa’s occupational injury and disease compensation framework. The phased implementation provides a window of opportunity for the necessary preparatory steps to be taken, but with certain key provisions already in force, the time for action is now. Employers should review their current policies, update their record-keeping systems, and prepare and implement their rehabilitation framework.
For more information contact: www.cliffedekkerhofmeyr.com
Kgodisho Phashe
INFLATION KEEPS PRESSURING
HOUSEHOLD BUDGETS
The Competition Commission has released the second iteration of a report on the cost of living. LEBOHANG MABIDIKANE , director, MMAKGABO MOGAPI , senior associate, and CHRISTOPHER KODE , associate –Competition Law at Cliffe Dekker Hofmeyr, unpack the findings and impact on South African households
The Competition Commission (Commission) recently published its second Cost of Living Report (report), building on the ndings of its inaugural report released in September 2025. The latest report, released on 1 April 2026, tracks changes in the prices of essential goods and services affecting South African households. The report con rms that cost-of-living pressures remain structurally embedded, with essential goods and services continuing to increase at rates above the overall consumer price index (CPI), even as headline in ation has moderated.
CONTINUED DIVERGENCE IN ADMINISTERED PRICES
Prices for electricity and water continue to signi cantly outpace general in ation. From 2020 to January 2026, cumulative electricity prices rose by approximately 85 per cent and water prices by approximately
68 per cent, compared to overall in ation of just over 30 per cent. A further concern is that electricity prices are expected to increase by approximately 18 per cent over the next two years, following an error by the National Energy Regulator of South Africa (NERSA) which led to an undercalculation of Eskom’s costs by approximately R54-billion.
Electricity price formation in South Africa occurs across two interconnected regulatory stages. At the generation level, tariffs are determined through Eskom’s Multi-Year Price Determination framework, a “cost-plus” regulatory model, enabling Eskom to recover
approved expenditure, including primary energy costs, debt servicing, maintenance and capital investment, through consumer tariffs. At the retail level, municipalities purchase electricity in bulk from Eskom and set their own tariffs, subject to NERSA approval, often incorporating mark-ups that re ect local scal pressures, ageing infrastructure and cross-subsidisation of other municipal services. This dual-layered structure has contributed to cumulative electricity in ation of approximately 85 per cent over ve years, signi cantly outpacing headline CPI.
INTEREST RATES, RENTALS AND HEALTHCARE
Cumulative bond-repayment in ation has begun to moderate, re ecting the lagged transmission of monetary policy decisions by the South African Reserve Bank following rate increases between 2022 and 2023. Rental in ation for both ats and houses has increased by only 15 per cent since 2020, well below headline in ation, and has not been
COST-OF-LIVING PRESSURES REMAIN STRUCTURALLY EMBEDDED, WITH ESSENTIAL GOODS AND SERVICES CONTINUING TO INCREASE AT RATES ABOVE THE OVERALL CONSUMER PRICE INDEX, EVEN AS HEADLINE INFLATION HAS MODERATED.
Lebohang Mabidikane
a signi cant contributor to the cost-of-living crisis. In healthcare, GP consultation costs have risen above overall in ation, with 2026 tariff adjustments expected to align broadly with medical in ation of approximately 4.2 per cent.
TRANSPORT, EDUCATION AND INTERNET COSTS
Petrol prices have stabilised, following earlier volatility, and taxi fares have converged with petrol prices. However, the report cautions that recent instability in the Middle East has already pushed oil prices higher, likely feeding into higher fuel and transport costs from April 2026 onwards.
Education costs continue to outpace general in ation: between 2020 and January 2026, public primary school fees increased by 37 per cent and public secondary school fees by 42 per cent, against a 30 per cent rise in headline in ation. There are indications that public school fees for 2026 have increased by approximately 10 per cent, largely due to operational costs not suf ciently covered by government funding.
Internet costs remain below headline in ation, with wired internet stable at just below 15 per cent and wireless internet averaging around 2 per cent cumulatively. However, the report highlights that the overall cost of data still has room to decrease, noting that South Africa is ranked the 31st most expensive country for the price of a monthly 1GB mobile data package out of 45 African countries.
DEVELOPMENTS IN ESSENTIAL FOOD PRICES
The report monitors food prices across the value chain, revealing a mixed picture for consumer affordability. In certain markets, such as canned pilchards and brown bread, margins
are compressed and price increases broadly tracked costs. However, in several key staples, retail prices remained elevated or continued to increase despite stable or declining upstream costs. The following was observed:
• Egg producer prices fell from R13.32 to R11.69 (June–November 2025), yet retail prices dropped only marginally from R23.84 to R23.02, suggesting delays in passing savings to consumers.
• Individually quick frozen chicken producer prices remained stable at approximately R45, yet retail prices rose from R96.38 to R101.56 (June–December 2025).
• White maize prices fell from R22.16 to R14.49 (May–December 2025), but maize meal producer prices did not decrease proportionately, with the producer-to-retail spread reaching 37 per cent in November 2025.
• Sun ower oil retail prices responded to producer price increases, but did not adjust downwards when producer prices fell, displaying concerning price stickiness.
CONCLUSION
The report reinforces the ndings of the Commission’s rst Cost of Living Report and underscores that improving supply conditions alone will not resolve affordability challenges. Notably, the report highlights that the majority of cost increases affecting households stem not from external market shocks, such as uctuations in oil prices, but rather from structural issues within the country, including administered pricing mechanisms and inef ciencies across key value chains.
Access Cliffe Dekker Hofmeyr’s (CDH) webinar recording on the “Cost-of-Living pressures and Competition Law: Implications for markets and regulators.” Watch CDH experts in an engaging discussion on cost-of-living pressures and competition law, set against the backdrop of broader global and domestic economic developments. The panel explores how these forces are shaping markets, regulatory priorities and outcomes for businesses and consumers.
The report speci cally states: “Addressing the cost of living requires greater scrutiny of administered price-setting mechanisms [being water and electricity], enhanced transparency and accountability in tariff determinations and targeted protection for vulnerable households.” The Commission has indicated that it will continue to monitor pricing dynamics across the value chain to promote transparency, competitiveness and household food security.
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Christopher Kode www.linkedin.com/in/christopher-kode-904b10194
Mmakgabo Mogapi
Christopher Kode
OUT OF THE GREYLIST AND INTO THE LIGHT
Cliffe Dekker Hofmeyr’s THATO SENTLE , senior associate, KGABI MOENG , associate, and LEVY LEKGANYANE , candidate attorney – Banking, Finance & Projects, discuss South Africa’s removal from greylists and emphasise the importance of continuous improvement
On 9 January 2026, the European Union (EU) announced the removal of South Africa, along with ve other African countries (Burkina Faso, Mali, Mozambique, Nigeria and Tanzania), from its list of “High-Risk Third Country Jurisdictions” (EU list). This decision follows South Africa’s earlier delisting on 13 October 2025 from the Financial Action Task Force (FATF) greylist (countries under increased monitoring) and the United Kingdom’s list of countries with a high-risk propensity for money laundering and terrorism nancing.
The decision to delist South Africa re ects our country’s continued progress towards improved nancial transparency and strengthening its Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) framework. The decision to delist South Africa took effect on 29 January 2026.
SOUTH AFRICA COMMITTED TO A JOINT ACTION PLAN WITH THE FATF, OUTLINING 22 SPECIFIC STEPS TO ADDRESS STRATEGIC DEFICIENCIES IN ITS AML/CFT SYSTEM. NATIONAL TREASURY CO-ORDINATED THIS REFORM PROCESS, WHICH INVOLVED MULTIPLE GOVERNMENT DEPARTMENTS.
Thato Sentle
THE EU’S DECISION TO DELIST SOUTH AFRICA IS EXPECTED TO REDUCE COMPLIANCE PRESSURE IN CROSS-BORDER TRANSACTIONS AND RESTORE INVESTOR CONFIDENCE.
BACKGROUND
In February 2023, South Africa was placed on the FATF greylist due to signi cant de ciencies in its AML/CFT framework. A 2021 FATF evaluation highlighted that the country failed to meet 20 out of the 40 recommendations relating to the investigation and prosecution of nancial crimes. This greylisting had serious implications, affecting cross-border transactions, banking relationships and investor con dence across the Southern African Development Community region.
In August 2023, as a result of the greylisting, South Africa was added to the EU List in terms of Article 9(1) of Directive (EU) 2015/849, which mandated stricter scrutiny of transactions involving South Africa. Financial institutions faced enhanced due diligence requirements, leading to increased transaction costs and delays.
COMMITMENT TO REFORM
In true South African “maak ‘n plan” spirit, South Africa committed to a joint Action Plan with the FATF, outlining 22 speci c steps to address strategic de ciencies
in its AML/CFT system. National Treasury co-ordinated this reform process, which involved multiple government departments and regulatory agencies. Over two years, South Africa successfully implemented all 22 action items, demonstrating signi cant progress in combatting money laundering and terrorism nancing.
ECONOMIC IMPACT OF DELISTING
The EU’s decision to delist South Africa is expected to reduce compliance pressure in cross-border transactions and restore investor con dence. During the greylisting period, the South African Reserve Bank reported that foreign counterparties imposed stringent measures on domestic institutions, leading to higher transaction costs and slower deal execution.
Financial markets had anticipated the delisting, as evidenced by the stability of the rand and government bond yields during 2024–2025. Even while greylisted, South Africa attracted steady direct foreign investment, suggesting that its economic fundamentals remained strong.
LOOKING AHEAD
Even though South Africa has been removed from the FATF greylist and the EU List, it is important to note that the removal does not mean that all South Africa’s AML/CFT challenges have been resolved. Continuous focus is essential to enhance compliance systems, ensuring that improvements are not merely temporary xes. As South Africa prepares for a new round of evaluation by the FATF, it is crucial to incorporate lessons learned from the previous evaluation process. The nal report from this evaluation is expected in October 2027, and maintaining high standards will be essential to avoid potential relisting.
EVEN WHILE GREYLISTED, SOUTH AFRICA ATTRACTED STEADY DIRECT FOREIGN INVESTMENT, SUGGESTING THAT ITS ECONOMIC FUNDAMENTALS REMAINED STRONG.
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Levy Lekganyane www.linkedin.com/in/mlevylekganyane
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Kgabi Moeng
Levy Lekganyane
UNPACKING SOUTH AFRICA’S CHANGE FROM EXCHANGE CONTROL TO CAPITAL FLOW
South Africa has had exchange control for 65 years. If you evaluate its formation and craft, it becomes clear why reform is inevitable.
By STEPHAN SPAMER , director, and KGANTSHO RAMAPHALA , candidate attorney
– Tax & Exchange Control at Cliffe Dekker Hofmeyr
Our regulations were built for a different economy; one where capital was tightly controlled, labour was relatively inexpensive and cross-border activity was subject to scrutiny and assessment by the South African Reserve Bank (SARB) and Financial Intelligence Centre. At the heart of this system is a crippling theme of no movement of capital without approval. This is evident throughout the Exchange Control Regulations, 1961 (current regulations).
To explain, a South African resident company (or individual) that wishes to invest offshore must rst obtain approval from an authorised dealer before they may transfer funds. The transaction must be justi ed and fall within the relevant approvals or allowances. These serve the mandates of the Currency and Exchanges Act 9 of 1933 (Act) and the current regulations, most recently amended in 2012.
Luckily, after several World Cups, a global pandemic and more than a few rounds of load shedding, the legislature has nally tabled draft regulations to the Act, which seek to repeal the current regulations through the proposed Capital Flow Management Regulations, 2026 (proposed regulations).
FROM CONTROL TO MANAGEMENT
When assessing the proposed regulations, one can easily identify a shift in regulatory
philosophy regarding the movement of nancial capital beyond our borders. Our current framework mimics a “blanket prohibition”, where transactions are restricted unless speci cally permitted. Instead, the proposed regulations introduce a more nuanced, risk-based approach supported by the concept of a “determined threshold”. By way of example, consider Regulation 12 of the proposed regulations, which provides that goods may not be exported above the determined threshold where no corresponding payment is received in the Republic. By contrast, the current regulations (Regulation 10(1)(a)) adopt a more rigid approach, setting a xed monetary limit (R20) above which exports are prohibited (unless permission is granted, of course).
Importantly, the threshold itself is not xed within the draft regulations. As per Regulation 31, these thresholds will be set by the Minister of Finance and may be amended at any time. There is a clear intention from the legislature to move from outdated, arbitrary limits towards something more practical. However, it’s not without issues. Leaving the thresholds to be determined (and changed) by the minister introduces a level of uncertainty that businesses will have to live with. You do not quite know where the line is until it is drawn, and it can move. While the shift is directionally sensible, it comes at the cost of predictability, which is something the current, more rigid system offered.
IN THE CONTEXT OF EXCHANGE CONTROL, THE INCLUSION OF CRYPTO DOES NOT CREATE A SEPARATE OR LIGHTER REGIME FOR CRYPTO.
IT APPLIES THE SAME CORE EXCHANGE CONTROL RULES TO A NEW ASSET CLASS.
THERE IS A CLEAR INTENTION FROM THE LEGISLATURE TO MOVE FROM OUTDATED, ARBITRARY LIMITS TOWARDS SOMETHING MORE PRACTICAL.
INTRODUCTION OF MUNICIPAL-SPECIFIC CONTROLS
For the rst time, a targeted regulatory framework for municipalities and municipal entities has been introduced to the exchange control system. Presently, while the current regulations brie y require National Treasury’s consent for offshore borrowing, the new regime introduces a far more integrated and structured process.
The proposed regulations introduce a formal role for National Treasury in the
Stephan Spamer
process. A municipality may only apply for authorisation to raise a loan offshore if it includes written comments from National Treasury, and authorised dealers are required to take those comments into account before making a decision. This effectively embeds National Treasury oversight into the approval process, ensuring that municipal borrowing aligns with broader scal and macroeconomic policy considerations.
This is particularly relevant in light of well-documented failures in municipal nancial management, such as VBS Mutual Bank, and persistent governance issues in the eThekwini and City of Johannesburg municipalities.
ADMINISTRATIVE RELIEF
Regulation 24 of the current regulations provides a relatively structured voluntary disclosure process whereby a person may “regularise” a contravention by making a full disclosure, typically before any investigation has commenced. This position has been slightly reconsidered by the proposed regulations, per Regulation 30.
If one looks closely, the proposed Regulation 30 is not as radical a departure from the current Regulation 24. Both provisions follow the same basic idea that if you have contravened a rule, you can come forward, make a full disclosure and ask the regulator to regularise your position.
Where the real difference comes in, and where the proposed regulations are noticeably stricter, is what happens after the fact. If it later emerges that your disclosure was incomplete or inaccurate in any material respect, the approval can be withdrawn. The regulator is then entitled to rely on the very information you disclosed in pursuing further action against you. Regulation 24 expressly prohibits the authorised dealer or SARB from using such information against you. This introduces a much sharper risk element to the process.
Practically speaking, this will likely make businesses more cautious about when and how they approach disclosure. There has to be a greater emphasis on internal investigations before any approach is made to the regulator.
THE SHIFT TO THRESHOLDS, BROADER DEFINITIONS AND
PLUGGING OBVIOUS GAPS LIKE CRYPTO POINT TO A LEGISLATURE THAT IS TRYING TO KEEP UP WITH THE FINANCIAL TIMES.
Voluntary disclosure remains useful, but it is no longer low-risk. It becomes a more strategic call where you are not just asking: “Should we disclose?”, but “Are we con dent enough in what we are disclosing to live with the consequences if it is later challenged?”
CRYPTO ASSETS
One of the more meaningful (and overdue) developments is the formal treatment of crypto assets within the exchange control framework. Crypto has sat in an awkward space, as everyone knew it could be used to move value
across borders. The proposed regulations deal with that directly by de ning crypto assets and bringing them within scope. This development also aligns with what we’re seeing more broadly from a regulatory perspective in South Africa, such as General Notice 1350 of 2022 issued by the Financial Sector Conduct Authority, which declared crypto assets as “ nancial products”.
In the context of exchange control, the inclusion of crypto does not create a separate or lighter regime for crypto. Instead, it applies the same core exchange control rules to a new asset class. Crypto is not being liberalised; it is being absorbed into the existing system.
Unfortunately, crypto can no longer be viewed as a workaround to traditional exchange control. If anything, its inclusion signals that the regulator is catching up to how capital actually moves today and closing off one of the more obvious gaps in the system.
CONCLUSION
If there is one takeaway from the proposed regulations, it is that we are currently living in an evolving system, which is possibly becoming a bit stricter where it matters. The shift to thresholds, broader de nitions and plugging obvious gaps like crypto point to a legislature that is trying to keep up with the nancial times.
For corporate South Africa, this means less box-ticking and more thinking. There is a bit more exibility, sure, but also a lot less certainty. That said, it is still early days. These were draft regulations and were open for public comment until 30 June. 2026.
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THE SOCIAL COST OF CORRUPTION
Understanding the social impact of corruption in South Africa.
By ANNEMARI
KRUGEL , director, and RIMO BENJAMIN , forensic practitioner – Corporate & White-Collar Investigations and Dispute Resolution at Cliffe Dekker Hofmeyr
Incidents of corruption in South Africa, which include economic crimes, such as fraud and money laundering, are well-documented in both the media and other publications. Corruption can be understood as an “economic crime” due to its wide impact across South African society. The effect of corruption across societies globally, including South Africa, includes:
• Weakening in social morality and values: corruption normalises unethical behaviour and cultural acceptance of corruption becomes the norm.
• Worsening inequality: corruption bene ts af uent and connected individuals and groups, leading to poorer communities becoming even more marginalised.
• Declining quality and accessibility of public services: in South Africa, major corruption scandals have been uncovered in, among others, the healthcare sector; trends in lack of electricity and water supply are ever-growing; and our roads are deteriorating at a rapid rate.
• Increasing criminal activity: criminal networks are thriving through bribing of cials. The Madlanga Commission is a case in point; a public commission aimed at investigating allegations of corruption, political interference and collusion within the criminal justice system, particularly involving the police and the judiciary.
• Erosion of trust in public institutions: corruption undermines citizens’ con dence in the state, the justice system, law enforcement and public services. Annemari Krugel
THE ZONDO COMMISSION
This is not an exhaustive list, but the impact of corruption with regard to the increase of economic and other crimes and South Africa’s response are worth delving deeper into. The Zondo Commission (Commission) provided an account of corruption in South Africa, especially grand corruption known as state capture. The Commission was established in 2018 to investigate allegations of widespread corruption and state capture pursuant to a report drafted by the Public Protector.
State capture was de ned as “the systematic manipulation of state institutions and resources by private individuals or entities for personal gain”. The Commission found that: “State capture in the South African context evolved as a project by which a relatively small group of actors, together with their network of collaborators inside and outside of the state, conspired systematically (criminally and in de ance of the Constitution) to redirect resources from the state for their gain. This was facilitated by a deliberate effort to exploit or weaken key state institutions and public entities, including law enforcement institutions and intelligence services. To a large extent, this occurred through strategic appointments and dismissals at public entities and a reorganisation of procurement processes. The process involved the undermining of oversight mechanisms and the manipulation of the public narrative in favour of those who sought to capture the state.”
Interestingly, one of the key ndings in the Commission’s report referred to the socioeconomic impact of corruption, indicating that the adverse effects of state capture on South Africa’s economy and society are extensive, with a detrimental impact on public service delivery, job creation, investment and social cohesion. It further found that the misallocation of resources (that is, the looting of state funds) increases the socioeconomic divide, perpetuating inequality and hindering the development of South African society as a whole.
COMMISSION RECOMMENDATIONS
The Commission made various recommendations, including investigating and prosecuting (where evidence was found) individuals for their involvement in state capture, mostly concerning charges of fraud, corruption, money laundering, contravention of the Public Finance Management Act 1
ONE OF THE KEY FINDINGS IN THE COMMISSION’S REPORT REFERRED TO THE SOCIOECONOMIC IMPACT OF CORRUPTION, INDICATING THAT THE ADVERSE EFFECTS OF STATE CAPTURE ON SOUTH AFRICA’S ECONOMY AND SOCIETY ARE EXTENSIVE, WITH A DETRIMENTAL IMPACT ON PUBLIC SERVICE DELIVERY, JOB CREATION, INVESTMENT AND SOCIAL COHESION.
of 1999, the Prevention and Combating of Corrupt Activities Act 12 of 2004 and the Prevention of Organised Crime Act 121 of 1998, and racketeering.
There is strong public sentiment, with which we agree, that to remove corruption from South Africa, effective investigation needs to be conducted to lead to successful prosecution. This sentiment especially refers to all the matters investigated during the Commission, and recommended for investigation by the Commission. Along with the South African Police Service and Hawks’ investigations, asset forfeiture should play a more visible role as perpetrators and their
relatives should not be allowed to enjoy the proceeds of crime.
Post the publication of the Commission’s report, criminal investigations and prosecution of corruption-related matters have moved slowly, and some cases have encountered legal hurdles, such as the Nulane matter in the Free State, in which the accused were acquitted. The Supreme Court of Appeal overturned the Nulane accused’s acquittal and ordered a retrial. Other signs of the elephant of corruption being addressed in South Africa include the current criminal legal prosecutions relating to alleged fraud and corruption at Transnet and Denel. These matters are before court, and the accused are out on bail.
Implementation of the Commission’s recommendations is ongoing. In July 2025, the President reported that R11-billion in stolen assets has been recovered, with 218 active investigations and high-pro le trials scheduled for 2025–2026. However, successful convictions remain limited.
The recent appointment of the National Deputy Director of Public Prosecutions will make inroads into the prosecution of the corruption cases and will move and, in time, remove the elephant of corruption from South Africa, with the ultimate goal of economic growth and prosperity for all.
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Rimo Benjamin www.linkedin.com/in/rimo-benjamin-cfe-67684239
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Rimo Benjamin
IN THE SOUTH AFRICAN CONTEXT, CHAPTER 9 INSTITUTIONS ARE INDISPENSABLE
The mandates and functions of Chapter 9 institutions are crucial for implementing the rule of law and upholding South Africa’s constitutional vision and ideals. By JACQUIE CASSETTE , head, and GIFT NKOSINATHI
XABA , senior associate – Pro Bono & Human Rights at Cliffe Dekker Hofmeyr
The distinct role of Chapter 9 institutions, as independent watchdogs, is indispensable in attaining the Constitution’s transformative ideals and vision. This fact was made abundantly clear by the Constitutional Court recently in its judgment in the matter of South African Human Rights Commission v Agro Data CC and Another [2026] ZACC 16, where it was called upon to pronounce on the nature and scope of the powers of the South African Human Rights Commission (SAHRC) under section 184 of the Constitution read with section 13(3) of the South African Human Rights Commission Act 40 of 2013 (SAHRC Act).
Given the signi cance of their constitutional mandate and functions, Chapter 9 institutions and the work they perform should always occupy a position of signi cance in our collective consciousness. Far from being a peripheral issue, the question of the legal status of the SAHRC’s directives has national signi cance for at least three reasons: it is material to the nature and ambit of the SAHRC’s institutional powers; it impacts
The SAHRC conducted an investigation and found that the occupiers’ rights to access to water and dignity had been violated. It issued directives requiring that their access to water be restored, that the parties engage with each other and that the respondents disclose relevant information to the occupiers to allow for meaningful engagement between the parties. The respondents failed to comply, prompting the SAHRC to approach the High Court to seek an order that its directives issued in terms of section 184 of the Constitution were binding and that the speci c directives it had issued in this case were binding.
the rights of complainants who depend on the SAHRC’s assistance in asserting and vindicating their constitutional rights; and it is material to the legal position of parties subject to the SAHRC’s compliance processes.
This important judgment, which originated from a legal challenge that began in the Mpumalanga Division, Mbombela (High Court) in 2022, where the SAHRC sought an order declaring its directives automatically binding, raised three signi cant legal issues directly at the heart of the powers conferred on the SAHRC by the Constitution.
THE FACTUAL MATRIX
The matter arose from a complaint lodged with the SAHRC in 2018 by occupiers of Doornhoek farm in Mpumalanga. The occupiers alleged that the respondents, Agro Data CC and its sole member, Mr Boshoff, had restricted their access to (borehole) water.
The SAHRC contended that by ignoring its directives, the respondents had undermined the rule of law and interfered with its functioning, in violation of section 181(4) of the Constitution.
In opposing the application, the respondents denied that the SAHRC has the power to issue binding directives to which private individuals have to automatically adhere.
On 2 March 2022, the High Court handed down judgment and held that the SAHRC exercises co-operative control, which is facilitative and proactive, rather than coercive. It also held that the SAHRC could not be
Jacquie Cassette
equated with the Public Protector, holding that the constitutional and statutory powers of the two institutions are distinguishable – with the latter enjoying a higher status in the hierarchy of Chapter 9 institutions. It dismissed the declaratory relief sought – that the SAHRC’s powers are generally binding.
The SAHRC appealed to the Supreme Court of Appeal (SCA) against the High Court’s dismissal of the declaratory relief that its directives were generally binding. It argued that if its directives were ignored, it would be unable to ful l its constitutional obligations effectively.
In its judgment, the SCA agreed with the High Court that section 184 of the Constitution read with section 13(3) of the SAHRC Act empowers the SAHRC to assist affected persons to secure redress, and that it falls on a court or tribunal to make a binding nding based on the evidence before it. It found that the word “assist” in section 13 of the SAHRC Act was indicative of the SAHRC’s function to act in a supportive or enabling role, rather than to issue binding directives itself.
It concluded that the SAHRC’s powers are persuasive rather than coercive and that the SAHRC lacks authority to make binding decisions under section 13 of the SAHRC Act. However, it rejected the High Court’s nding that Chapter 9 institutions’ different roles and powers implied a vertical hierarchy between them.
AT THE CONSTITUTIONAL COURT
The SAHRC appealed the SCA’s nding that it lacks authority to make binding directives to the Constitutional Court. In its appeal, it relied on the Constitutional Court’s judgment in Economic Freedom Fighters v Speaker of the National Assembly [2016] ZACC 11 (where it was held that remedial action taken by the Public Protector may, at times, have binding effect) to argue that decisions taken under constitutional authority must be complied with unless set aside by a court. The SAHRC
GIVEN THE SIGNIFICANCE OF THEIR CONSTITUTIONAL MANDATE AND FUNCTIONS, CHAPTER 9 INSTITUTIONS AND THE WORK THEY PERFORM SHOULD ALWAYS OCCUPY A POSITION OF SIGNIFICANCE IN OUR COLLECTIVE CONSCIOUSNESS.
THE CONSTITUTIONAL COURT STRESSED IN ITS DETERMINATION THAT THE FACT THAT THE SAHRC’S POWERS ARE NONBINDING DOES AND SHOULD NOT DIMINISH THE CONSTITUTIONAL IMPORTANCE OF THE SAHRC OR RENDER ITS WORK INEFFECTUAL.
contended that the Constitution and the SAHRC Act could be broadly interpreted to mean that its directives were binding. It submitted that the matter raises three important constitutional issues: whether its directives may be disregarded by persons against whom they are directed; what recourse it has when its directives are ignored; and whether the SAHRC must in every case approach the courts to give its ndings binding effect.
The appeal to the Constitutional Court was unopposed. Three amici curiae were admitted – the Centre for Applied Legal Studies (CALS), AfriForum NPC and ProBono.Org. CALS supported the SAHRC and argued for a broad interpretation of its powers, aligned with international law and which promoted effective access to remedies. ProBono.Org submitted that the SAHRC’s decisions have legal effect, but accepted that enforcement requires court proceedings. AfriForum opposed both positions, submitting that the SAHRC has no binding powers at all.
In a unanimous decision, the Constitutional Court found that the wording of section 184 and the SAHRC Act, read in context and in light of its purpose and legislative history, did not support an interpretation that the SAHRC has the power to issue binding directives, nding that the powers of the SAHRC are distinguishable from those of the Public Protector.
It held that the latter is empowered to “take remedial action” which may, at times, be binding, but that the SAHRC is limited to “taking steps to secure appropriate redress”. However, and of great signi cance, the Constitutional Court stressed in its determination that the fact that the SAHRC’s powers are nonbinding does and should not diminish the constitutional importance of the SAHRC or render its work ineffectual. Rather, it remains an important institution that promotes human rights through investigation, advocacy and the facilitation of access to justice.
CONCLUSION
Chapter 9 institutions are crucial to South Africa’s constitutional democracy. Their mandate is pivotal for the sustained implementation of the rule of law and South Africa’s commitment to its constitutional vision. Accordingly, it is in the interest of all citizens that these institutions remain functional and effective. It is therefore an important and welcome step that the apex court stressed that the nonbinding nature of the SAHRC’s directives does not undermine its constitutional role.
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Gift Nkosinathi Xaba www.linkedin.com/in/gift-nkosinathi-xaba-59046b57
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Gift Nkosinathi Xaba
SIGN OF THE TIMES
When directors sign without authority
The importance of board resolutions and director authorisation. By IAN HAYES , head, KERAH HAMILTON , associate, and THAPELO TLALA , candidate attorney – Corporate & Commercial at Cliffe Dekker Hofmeyr
Arecent Supreme Court of Appeal (SCA) judgement serves as a stark warning to counterparties that blindly enter into contracts without rst ascertaining whether their counterparty has the necessary authority to conclude such a contract. In SACTWU Investments Group (Pty) Ltd v Sekunjalo Independent Media (Pty) Ltd and Another (915/2024) [2026] ZASCA 39 (26 March 2026), a subordination agreement was declared void because the director who signed it lacked the authority to do so. The board resolution he relied upon did not speci cally authorise the signing of the subordination agreement, and the SCA refused to interpret it as a blanket mandate. The court emphasised that a director has no inherent authority to bind the company as they wish, and rather authority must be conferred either expressly or by implication from a speci c board resolution. The consequences were signi cant, with the debtor being ordered to pay approximately R458.6-million. This case underscores that parties must be diligent
in ensuring all parties to a contract are duly authorised to conclude the contract prior to entering into the contract.
BACKGROUND
SACTWU Investment Group Proprietary Limited (SIG), an investment vehicle of the Southern African Clothing and Textile Workers Union, sought to exit its loan to Sekunjalo Independent Media Proprietary Limited (SIM) in 2017, when SIM had not made any interest payments over the seven-year term. An exit strategy was agreed, and SIG’s loan claim and shares in SIM would be sold in exchange for shares in Sagarmatha Technologies Limited, a company due to list on the JSE. On 22 November 2017, SIG’s
board passed a resolution authorising the sale agreement and empowering any director to sign any documents that were “reasonable and necessary” to give effect to the transaction.
Nine days later, a director of SIG, Mr Kriel, was presented with and signed a subordination agreement at SIM’s of ces, which inde nitely subordinated SIG’s claim until SIM’s auditors certi ed the company as solvent. Critically, this subordination agreement had never been discussed at board level, was not referenced in the sale agreement nor the November 2017 resolution, and had not been vetted by SIG’s advisors. When the Sagarmatha listing failed in April 2018, SIM sought to rely on the subordination agreement to block SIG from claiming repayment of its loan.
THE COURT EMPHASISED THAT A DIRECTOR HAS NO INHERENT AUTHORITY TO BIND THE COMPANY AS THEY WISH, AND RATHER AUTHORITY MUST BE CONFERRED EITHER EXPRESSLY OR BY IMPLICATION FROM A SPECIFIC BOARD RESOLUTION.
Ian Hayes
COMPANIES SHOULD ESTABLISH INTERNAL PROCEDURES TO ENSURE THAT ANY DOCUMENT PRESENTED TO A DIRECTOR FOR SIGNATURE IS FIRST CHECKED AGAINST A LIST OF BOARD-APPROVED AGREEMENTS AND REVIEWED BY THE COMPANY’S ADVISORS.
KEY FINDINGS
Overturning the decision of the HIgh Court, the SCA held that Mr Kriel lacked actual authority to bind SIG to the subordination agreement. The court held that the November 2017 board resolution was not an “open sesame” for directors to sign any agreement they saw t. The directors’ authority was limited: they were empowered to do or cause “all such things to be done, to sign and le all documents as may be reasonable and necessary” to give effect to the sale agreement – and that was the resolution’s sole purpose.
Critically, the SCA noted that both the sale agreement and the resolution were signed on the same day (22 November 2017), and a subordination agreement presented to Mr Kriel nine days later could not have been within the board’s contemplation when the resolution was passed. There was no mention of the subordination agreement in the sale agreement, and an open-ended subordination persisting inde nitely, even if the listing failed, was not “reasonable and necessary” to implement a transaction whose entire purpose was to enable SIG to exit the loan through the listing.
The court further found that ostensible authority was not established, as SIM’s own representative, Mr Hove, admitted he had never seen the board resolution and could not have relied on it as a representation of authority.
This judgement carries critical lessons for any party entering into a contract. Before signing, counterparties must verify that the individual executing the agreement has actual authority to bind the company. The failure to do so in this case proved fatal to SIM’s reliance on the subordination agreement: Mr Hove admitted he had never seen the resolution authorising Mr Kriel to sign, and had SIM requested it, it would have discovered that the subordination agreement fell outside its scope. The lesson is clear: never assume authority exists.
A WAKE-UP CALL FOR CORPORATE GOVERNANCE
The SACTWU v Sekunjalo judgement is a cautionary tale and a wake-up call for any party entering into a commercial contract. The SCA’s message is clear: a director has no inherent authority to bind the company, and authority must be conferred either expressly or by implication from a speci c board resolution. Broadly worded resolutions will not cure a lack of speci c authorisation, and resolutions authorising “reasonable and necessary” documents will be interpreted narrowly in light of the transaction they were intended to effect.
Counterparties should be aware that board resolutions must be interpreted contextually, having regard to the text, purpose and surrounding circumstances. Broad language, such as “reasonable and necessary”, will not suf ce if an agreement was never contemplated by the board. The sole purpose of the November 2017 resolution was to exit the loan via the sale agreement, and the SCA refused to extend this mandate to cover an unrelated subordination agreement. A counterparty reviewing that resolution with a critical eye would have identi ed this gap.
Finally, companies should establish internal procedures to ensure that any document presented to a director for signature is rst checked against a list of board-approved agreements and reviewed by the company’s advisors. In this case, the subordination agreement was not shown to or vetted by Mr Govender, SIG’s advisor on business and investment matters, even though he had been at the same of ces an hour earlier to vet all documents relating to a separate transaction.
Hamilton www.linkedin.com/in/kerah-hamilton Thapelo Tlala www.linkedin.com/in/thapelo-tlala
Counterparties should make it a point to always verify the authority of their counterparty to conclude the contract before entering into such a contract. Companies should review their board resolution templates and signing protocols to ensure that directors are never placed in a position where they sign agreements beyond their mandate. The cost of getting this wrong, as this case demonstrates, can run into hundreds of millions of rands.
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Kerah Hamilton
Thapelo Tlala
PRIME RATE UNDER PRESSURE
SARB signals a shift in South Africa’s lending reference rate framework.
By MICHAEL BAILEY, senior associate, and STHEMBISO CHAUKE , candidate attorney – Banking, Finance & Projects at Cliffe Dekker Hofmeyr
The prime lending rate has long occupied a central, if increasingly misunderstood, position in South Africa’s lending landscape. In its February 2026 consultation paper, the South African Reserve Bank (SARB) proposes bringing this era to an end by replacing the prime lending rate with the SARB policy rate as the primary reference point for loan pricing. This article considers the rationale for the proposed reform, the mechanics of the transition and the key implications for lending documentation and market participants.
SARB’s consultation paper on the cessation of the prime lending rate (prime rate), published on 16 February 2026, signals an important step in the evolution of South Africa’s interest rate framework. The proposal would see the prime rate replaced with the SARB policy rate (that is, the repurchase rate) (repo rate) as the primary reference point for lending, continuing the broader reform agenda
that has followed the transition away from JIBAR to the risk-free rate of ZARONIA.
While the prime rate has been xed to 3.5 per cent above the repo rate, the proposal is not expected to alter the economics of loan pricing itself, but it has important implications for how lending rates are structured, referenced and communicated across retail and commercial markets.
WHY PRIME IS NO LONGER FIT FOR PURPOSE
The prime rate occupies a unique position in South Africa’s lending landscape. Although it is widely perceived as the baseline for loan pricing for home loans, car loans and other credit transactions, its role has long
been administrative rather than economic. Since 2001, the prime rate has operated at a xed spread above the repo rate, serving as a convenient reference point rather than a rate that necessarily re ects funding costs, a funder’s risk appetite or borrower risk.
This disconnect has created a persistent misunderstanding. The prime rate is frequently viewed as the starting point for negotiating lending rates, and the xed spread above the repo rate is often assumed to re ect lender margins. In reality, lending rates are determined independently, based on a combination of funding conditions, risk assessment and commercial considerations, with the prime rate serving merely as a quoting convention. There is no requirement for lenders to quote for loans using the prime rate. To this end, as at 31 December 2025, there is over R77-billion worth of mortgages linked to JIBAR instead of the prime rate as the reference rate.
The SARB’s consultation paper makes it clear that this disconnect has become increasingly problematic, obscuring how monetary policy decisions ow through to borrowing costs and undermining transparency in the pricing of credit.
A DIRECT LINK TO MONETARY POLICY
Against this backdrop, the SARB proposes replacing the prime rate with the repo rate as the reference rate for lending. Under this approach, loans would be priced directly as a spread above the repo rate, rather than as a margin relative to the prime rate.
From a pricing perspective, the SARB is at pains to emphasise that nothing changes. The existing xed relationship between the two rates would be preserved through an equivalent spread, ensuring continuity and avoiding any unintended transfer of economic value between lenders and borrowers.
THE SARB’S CLEAR PREFERENCE IS FOR THE POLICY RATE TO BE USED IN
The difference lies in transparency: the repo rate would be clearly identi ed as the anchor, with the lender’s margin explicitly re ecting risk and funding considerations. Although alternative benchmarks such as ZARONIA are acknowledged, particularly for wholesale markets, the SARB’s clear preference is for the policy rate to be used in retail and mainstream lending, given its stability, simplicity and direct link to monetary policy.
THE SCALE OF THE TRANSITION CHALLENGE
The proposed reform is not without complexity. The prime rate is deeply embedded in South Africa’s nancial system, with millions of existing contracts referencing it across mortgages, vehicle nance, personal loans and commercial facilities. As at 31 December 2025, the SARB estimates that prime rate-linked contracts exceed R3-trillion in value and more than 12 million prime rate-linked contracts.
Recognising this, the consultation paper outlines a gradual transition strategy. This includes enhancing fallback language in new prime rate-linked contracts, issuing new contracts that reference the repo rate directly, and developing mechanisms to transition legacy contracts over time. To minimise disruption, fallback spreads would replicate the existing prime-to-policy-rate relationship.
Given the operational and legal challenges of amending large volumes of retail contracts, the SARB also anticipates legislative support in the form of safe-harbour provisions to facilitate the transition and reduce litigation risk.
SINCE 2001, THE PRIME RATE HAS OPERATED AT A FIXED SPREAD ABOVE THE REPO RATE, SERVING AS A CONVENIENT REFERENCE POINT RATHER THAN A RATE THAT NECESSARILY REFLECTS FUNDING COSTS, A FUNDER’S RISK APPETITE OR BORROWER RISK.
TIMING AND MARKET READINESS
Importantly, the SARB does not envisage an immediate move away from prime. Active transition is expected only after the completion of the JIBAR cessation process, with 2027 identi ed as the earliest realistic start date. In the interim, the consultation process is intended to allow lenders, borrowers and other stakeholders to assess exposure, identify operational dependencies and prepare for a gradual shift.
WHAT THIS MEANS FOR CLIENTS
The shift away from the prime rate has implications for lenders and borrowers alike.
For lenders:
• The proposal is a clear signal to begin assessing prime rate-linked exposure across loan books, systems and documentation.
• Since it may not be practical to amend existing prime rate-linked loans, there may be changes to legislation that facilitate the transition and minimise legal costs for lenders and borrowers.
• Taking the lessons learnt from the cessation of JIBAR, the need to incorporate appropriate fallback language upon the cessation of the prime rate in any new prime rate-linked loans provided to its clients.
• To consider how future lending products may be structured around the repo rate. For borrowers, the shift is unlikely to affect borrowing costs in practice, as the margin will also incorporate the differential between the repo rate and prime rate, but it may change how those costs are presented and
understood based on costs, a funder’s risk appetite or borrower risk.
More broadly, the consultation paper highlights the direction of travel in South Africa’s broader benchmark reform agenda: fewer legacy reference rates, greater transparency and a closer alignment between monetary policy and market pricing. Clients engaging in new lending, re nancings or portfolio reviews should factor this trajectory into their documentation, pricing strategy and long-term planning.
IAN HAYES , head, YANIV KLEITMAN , director, KEAGAN HYSLOP, associate, and RIDWAAN HASSAN , candidate attorney – Corporate & Commercial at Cliffe Dekker Hofmeyr, unpack noncompliance with section 41(1) of the Companies Act
The Companies Act 71 of 2008 (Companies Act) is no stranger to the possibility that the board of a company and its shareholders may not always see eye to eye.
While the board is given the responsibility and power to operate the company, certain protections are afforded to the shareholders in respect of fundamental matters. For instance, the board is empowered by the Companies Act to issue shares, but subject to the limitations contained in section 41. One such limitation is that an issue of shares must be approved by a special resolution of the shareholders if the shares are issued to a director of the company (present or future), prescribed of cer (present or future) or a person related or inter-related to the company or a director/prescribed of cer. This does not apply to all issues of shares, as some are exempted from compliance, such as an issue of shares in the exercise of a pre-emptive right or an issue that is in proportion to existing holdings.
An issue of shares that falls within section 41(1) requires approval by way of a special resolution of the company’s shareholders.
However, in a scenario where a board has gone rogue, what happens if no approval is given prior to the issue? Can the issue of shares be rati ed? Is the issue automatically void?
CAN THE ISSUE OF SHARES BE RATIFIED AFTER THE FACT?
Section 41 does not contain any language that suggests the issue may be rati ed, and accordingly, prior approval of the shareholders is most probably required. While the starting point in law is that rati cation is generally as good as prior approval, the particular statutory provision needs to be considered in context. If rati cation were allowed under section 41, it would raise the conundrum as to whether the subscriber (the director) could vote as a shareholder on that resolution.
Ian Hayes
WHILE THE BOARD IS GIVEN THE RESPONSIBILITY AND POWER TO OPERATE THE COMPANY, CERTAIN PROTECTIONS ARE AFFORDED TO THE SHAREHOLDERS IN RESPECT OF FUNDAMENTAL MATTERS.
It follows that it is unlikely that the legislature’s intention was to allow rati cation.
ARE THE SHARES ACTUALLY ISSUED IF SHAREHOLDER APPROVAL WAS NOT OBTAINED?
The more intriguing question is whether an issue of shares in the circumstances contemplated in section 41(1), without shareholder approval or subsequent unanimous assent, is in fact issued or whether the entire transaction would be void from the outset.
Certain sections of the Companies Act, such as those relating to nancial assistance, speci cally provide that the action of the board is void if approval of the shareholders is not obtained beforehand.
However, that is not the case with section 41 and, moreover, section 218(1) states that unless the Companies Act speci cally renders an action void, no agreement or resolution that is prohibited, voidable or unlawful in terms of the Companies Act may be declared as void unless a court has made a declaration to that effect. Accordingly, the issue of shares would not automatically be void, but would need to be declared as void by a court.
The question then becomes whether the court would declare the issue of shares void or whether it would award other remedies to the affected shareholders. Lessons may be learned from case law regarding contraventions of section 41(3) (that is, the voting power of the shares issued equals or exceeds the voting power of the same shares that were held by the shareholder immediately before the transaction or series of transactions).
A contravention of section 41(3) renders the issuance void for the following reasons:
• Section 41(3) protects shareholders from excessive dilution without their consent by limiting the power of directors to issue shares without the approval of the shareholders beyond the 30 per cent limitation.
• Section 41(3) thereby gives effect to section 7(i) by balancing the rights and obligations of shareholders and directors within companies.
• An issue of shares in contravention of section 41(3) ought to be deemed void so that the section can serve its purpose of protecting shareholders.
• The remedies set out in section 41(5) and section 218(2) (personal liability of directors) provide inadequate relief in instances of a breach of section 41(3).
WHILE THE STARTING POINT IN LAW IS THAT RATIFICATION IS GENERALLY AS GOOD AS PRIOR APPROVAL, THE PARTICULAR STATUTORY PROVISION NEEDS TO BE CONSIDERED IN CONTEXT.
in different circumstances to section 41(3), an issue in contravention of that section also ought to be declared void by a court for similar reasons as those above. Neither the remedies set out in section 41(5) and section 218(2) nor damages would provide adequate relief to the shareholders affected, and damages would not be a suf cient deterrence to prevent the board from acting in noncompliance.
• Damages are also an inadequate form of remedy for shareholders where a person’s shareholding is unlawfully diluted.
• Noncompliance with section 41(3) would also not be discouraged if shareholders were only allowed to claim damages in such instances.
Section 41(1) serves a different purpose as it – together with section 75 (which requires disclosures of personal nancial interests by directors) – protects shareholders from issues of shares that favour directors or controlling shareholders, which could tilt the balance of power towards the board and away from certain shareholders (particularly minority shareholders). Nevertheless, for section 41(1) to serve its purpose of protecting shareholders
For more information contact: www.cliffedekkerhofmeyr.com
Keagan Hyslop
Ridwaan Hassan
Yaniv Kleitman
KING V PROVIDES A BLUEPRINT FOR BOARDS NAVIGATING CORPORATE DISTRESS
The release of the King V Code on Corporate Governance for South Africa, 2025, is more than a regulatory update; it’s a framework for survival. By NASTASCHA HARDUTH , head – Corporate Debt, Turnaround & Restructuring and director – Dispute Resolution, ANDRÉ DE LANGE , director – Corporate & Commercial and head – Agriculture, Aquaculture & Fishing, and AKHONA MGWABA , associate – Corporate & Commercial at Cliffe Dekker Hofmeyr
In the current economic climate, the line between strategic turnaround and terminal decline is thinner than ever. For boards and management teams navigating corporate distress, the release of the King V Code on Corporate Governance for South Africa, 2025 (King V) (generally effective from 1 January 2026) provides a framework for survival.
While earlier iterations of the King Code were often viewed through the lens of compliance, King V can be considered a manual for high-stakes decision-making. These decision-makers are the “governing body” of an organisation, de ned in King V as: “The organisational structure that has primary authority and accountability for the governance and performance of the organisation. Depending on context, it includes, among others, the board of directors of a company, the board of a retirement fund, the accounting authority of a state-owned entity and a municipal council.”
Furthermore, “members of the governing body” (also referred to as “those charged with governance duties”) “include, for purposes of King V, those who are duly appointed to serve on the governing body and/or its committees”.
Notwithstanding the examples provided, this de nition of “governing body” is broad enough to include anyone seized with the governance and performance of the organisation, in other words, anyone who has full management control of the business, including, as a further example, business rescue practitioners in the context of nancially distressed companies during their business rescue proceedings.
In the case of a company, King V is also instructive as to the standard of care, skill and
KING V CONSOLIDATES THE PRINCIPLES OF ETHICAL AND EFFECTIVE LEADERSHIP, INTEGRATING THE SOUTH AFRICAN PHILOSOPHY OF UBUNTU.
in distress, this is not a mere sentiment; it is a shift from shareholder primacy to stakeholder inclusivity.
In times of crises, regrettably, those stakeholders are often con ned to only the loudest or the largest creditors. King V, however, suggests that to maintain long-term viability, decisions must account for the broader ecosystem, including employees and even small-scale suppliers. Where the organisation concerned is a company, this accords with section 7(k) of the Companies Act, which states that one of the purposes of the Companies Act is to provide for the ef cient rescue and recovery of nancially distressed companies in a manner that balances the rights and interests of all relevant stakeholders.
STREAMLINED GOVERNANCE: FROM 17 PRINCIPLES TO 13
diligence that would be expected of that company’s board of directors as envisaged in section 76(3) of the Companies Act 71 of 2008 (Companies Act), or its business rescue practitioners as envisaged in section 140(3)(b) of the Companies Act.
ETHICAL LEADERSHIP AS A RISK MITIGATION STRATEGY
King V consolidates the principles of ethical and effective leadership, integrating the South African philosophy of Ubuntu. For a company
Clarity and ef ciency are the currency of a successful turnaround. King V has simpli ed the governance framework by reducing the core principles from 17 to 13. This consolidation emphasises that governance outcomes –ethical culture, performance, conformance (effective control) and legitimacy – are the ultimate metrics of success.
By focusing on ethics in Principle 1 (dealing with ethical and effective leadership) and Principle 2 (dealing with governance of ethics), King V clari es that a company’s governing body is the
André de Lange
Natascha Harduth
primary custodian of the company’s integrity. In a distress scenario, this clarity prevents the diffusion of responsibility that can lead to further corporate decline. To the extent that the relevant organisation is a company and the governing body is the company’s board of directors, this aligns perfectly with the principles set out in section 66 of the Companies Act regarding the management of the business and affairs of a company by its board, and, where the governing body is a business rescue practitioner, with the principles set out in section 140(1)(a) of the Companies Act. This section empowers a business rescue practitioner with full management control of a company in substitution for its board and pre-existing management during business rescue proceedings.
A NEW DISCLOSURE FRAMEWORK: TRANSPARENCY AS A SHIELD
One of the most signi cant shifts is the introduction of a standardised King V Disclosure Framework.
Distressed organisations often default to vague, boilerplate disclosures to avoid signalling weakness. King V now requires speci c, qualitative narratives. Although it may seem revealing, explicitly articulating how the governing body is meeting governance objectives under nancial limitations enables leadership to document their good faith efforts to preserve the organisation in real-time. The King V Disclosure Framework should be a living document rather than a year-end hurdle, which could serve as a shield for management and the governing body.
PROVIDING AN “OUTSIDE-IN” PERSPECTIVE
King V introduces more rigorous standards for board independence to ensure that management is being effectively challenged. For example, King V includes the following factors, among several others, when categorising its non-executive members as independent or not:
•The nine-year rule: tenure is now an explicit factor in independence assessments, rather than a mere suggestion.
•Cooling-off periods: stricter rules apply to former executives transitioning into
PERHAPS THE MOST PRACTICAL ADDITION IS THE EXPLICIT INTEGRATION OF PROPORTIONAL APPLICATION. THE PRACTICES RECOMMENDED IN KING V ARE REGARDED AS LEADING PRACTICES, AND SHOULD BE TAILORED
BY ORGANISATIONS.
non-executive roles, and King V recommends a three-year cooling-off period during which there is no signi cant involvement in the organisation in any capacity.
For a management team, a refreshed and independent board provides the “outside-in” perspective necessary to identify approaching nancial decline before it becomes an irreversible legal liability.
TECHNOLOGY AND AI: THE NEW FRONTIER OF GOVERNANCE
In the modern era, corporate distress is frequently tied to technological obsolescence or data mismanagement. It is unsurprising,
therefore, that King V focuses on the principles of data, information and technology governance, and risk and compliance.
Boards are now expected to treat technology not as an operational “IT issue”, but as a strategic asset. For companies undergoing restructuring, the ethical use of arti cial intelligence and the protection of data assets are often the key drivers of the entity’s ultimate valuation. King V sets a benchmark for what constitutes reasonable care and skill in managing these digital assets and associated risks.
EMPHASIS ON PROPORTIONAL APPLICATION
Perhaps the most practical addition is the explicit integration of proportional application. The practices recommended in King V are regarded as leading practices, and should be tailored by organisations according to their particular circumstances, such as the size of their operations and the nature of their business, and that would also include any operational and nancial constraints. A key requirement for proportional application of King V is that ultimately the objectives described in each principle are achieved.
Where an organisation is in distress, it ensures the governing body can focus on critical turnaround actions without being paralysed by a one-size- ts-all compliance burden.
The bottom line is that by shifting the focus to impact-driven leadership, King V provides the tools to build a resilient, sustainable organisation. Following these principles is no longer just about being a good corporate citizen; it is about ensuring that decisions stand up to the scrutiny of the market, the regulators and the law.
Akhona Mgwaba
UNPACKING THE IRP2025: PROGRESS IN MOTION?
The IRP2025 is a complex energy transition plan aimed at improving energy supply, but its success depends on effective implementation amid several challenges. Cliffe Dekker Hofmeyr’s ALECIA PIENAAR , counsel –Environmental Law, JACKWELL FERIS , head – Industrials, Manufacturing & Trade and director – Dispute Resolution, TESSA BREWIS , head –Projects & Energy and director – Banking, Finance & Projects, and KHUTSO MONGADI , associate – Banking, Finance & Projects, unpack the progress and critical issues
Following a media brie ng on 19 October 2025, the Minister of Electricity and Energy (Minister) gazetted the Integrated Resource Plan 2025 (IRP2025) on 28 October 2025, which sets out the electricity generation capacity expansion plan up to 2050. However, the real test of the IRP2025 lies not in the plan itself, but in its implementation. Since being gazetted, the IRP2025 has moved from policy announcement to early implementation, with notable developments, including improved Eskom eet performance relative to the
IRP2025’s 60 per cent energy availability factor (EAF) threshold and further renewable energy procurement under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). These developments are encouraging, but they also sharpen the central question: Is implementation keeping pace with the plan?
IRP2025 OVERVIEW
Having considered various scenarios across different government policy objectives (Reference Case, Gas at Risk Case, Nuclear
SINCE BEING GAZETTED, THE IRP2025 HAS MOVED FROM POLICY ANNOUNCEMENT TO EARLY IMPLEMENTATION, WITH NOTABLE DEVELOPMENTS.
Case, Aggressive Battery Learning, and Delayed Shutdown), the IRP2025 adopts a “Proposed Balanced Plan” (balanced plan), derived from characteristics of both the Gas at Risk and Nuclear Case scenarios, which scored highest in the evaluation matrix. It provides detailed capacity planning across the three horizons: medium term (up to 2030), transition (2031–2040), and long term (beyond 2040), with speci c recommendations up to 2042 and exibility beyond 2040 to accommodate technological advancements. Delivery of the projected balanced plan is premised on certain critical levers, as identi ed in the IRP2025. These include:
• Sustaining Eskom’s eet performance at EAF levels above 60 per cent, as any levels below this will result in a fragile power system
• unable to absorb negative contingencies or support economic growth aspirations.
• Commissioning 6GW of Combined Cycle Gas Turbine (CCGT) capacity by 2030, which is crucial for maintaining security of supply when 8GW of baseload coal- red stations is shut down, with a minimum load factor of 50 per cent necessary to anchor upstream gas processing infrastructure.
• Demonstration of clean coal technologies by 2030 to explore potentially cheaper and ef cient options to signi cantly reduce both global and local emissions, which may in uence country policy on the sustainable use of coal to power.
•Rollout of committed generation capacity, including renewables, peaking gas and storage.
• Implementation of long-lead time generation resources, including nuclear (with demonstration of multiple purpose nuclear reactors by 2032) and water pumped storage, as outlined in the Nuclear Industrialisation Plan.
• Implementation of transmission grid infrastructure as per the Transmission Development Plan (TDP).
Unlike the Draft IRP2023, more details are provided in respect of the modelling approach and input assumptions, with the IRP2025 incorporating a comprehensive analysis of power system adequacy, challenging dynamics of the national grid, domestic legislative frameworks, economic and energy trends, and the costs and performance characteristics of evolving generation technologies.
CRITICAL ISSUES AND NOTABLE DEVELOPMENTS
Phased coal shutdown and clean coal demonstration plan
While no new generation capacity from coal is proposed under the IRP2025, the decommissioning of coal- red power stations as envisaged in Eskom’s Generation Continued Operations shutdown plan is subject to certain contingencies, namely:
• Up until 2030, the retirement of 8GW of coal generation capacity is dependent on the successful implementation of the gas procurement programme, with 6GW of CCGT power required to come online by 2030. The Gas at Risk scenario in the IRP2025 demonstrates that without this gas capacity, the system would require approximately 3.5GW of CCGT between 2031 and 2035, highlighting the immediate need for mid-merit gas options to maintain security of supply.
THE
IRP2025 ASSUMES A PHASED SHUTDOWN OF THE COAL FLEET STARTING IN 2029, WITH A SIGNIFICANT REDUCTION OF 8GW IN COAL CAPACITY BETWEEN 2029 AND 2030, FOLLOWED BY A FURTHER DECLINE OF 15GW BETWEEN 2034 AND 2042. THE TOTAL COAL CAPACITY IS PROJECTED TO DECLINE FROM THE CURRENT APPROXIMATELY 42GW TO 28GW BY 2034.
• Potential delay in the retirement of coal- red power plants, depending on the outcome of clean coal technologies’ demonstration by 2030, where positive results could “in uence country policy on the sustainable use of coal to power”. The Delayed Shutdown scenario considers extending the operation of Kendal, Majuba, Lethabo, Matimba and Tutukabeyond their 50-year life by an additional 10 years, with maintenance and emission-abatement retro ts to enable compliance with the National Environmental Management: Air Quality Act 39 of 2004 (NEMAQA). However, this scenario results in higher total system costs and reduced rate of CO2 emissions reduction compared to the reference case.
The IRP2025 assumes a phased shutdown of the coal eet starting in 2029, with a signi cant reduction of 8GW in coal capacity between 2029 and 2030, followed by a further decline of 15GW between 2034 and 2042. The total coal capacity is projected to decline from the current approximately 42GW to 28GW by 2034. More recently, Eskom has indicated that it will decide by the end of September 2026 whether to proceed with the orderly shutdown, repowering or repurposing of ve older coal- red power stations, namely Camden, Grootvlei, Hendrina, Arnot and Kriel. These stations have been granted Minimum Emission Standards exemptions, allowing continued operation until 31 March 2030. The timing of any retirements will be assessed against whether replacement capacity from renewables, gas and storage can be contractually secured and commissioned in time, with Eskom warning that a shortfall stations, in time, with Eskom warning that a shortfall
in delivered renewable projects and delays in dispatchable gas-to-power capacity could create supply adequacy risks around 2029–2030. This development reinforces the IRP2025’s central tension: coal retirements remain necessary for emissions reduction, but their timing is increasingly dependent on replacement capacity, grid readiness, air-quality compliance and socioeconomic transition planning.
Nuclear
The proposed balanced plan envisages 5 200MW of new nuclear generation capacity coming online from 2036 and continuing through 2039. The IRP2025 indicates that a case for 10GW of nuclear rests on the economic viability of re-establishing the nuclear fuel cycle using nuclear for both power and industrial applications (nonpower), which will be elaborated further in the Nuclear Industrialisation Plan to be developed.
In November 2025, the National Nuclear Regulator approved a 20-year licence extension for Koeberg Nuclear Power Station Unit 2 (Koeberg Unit 2), allowing it to operate until 9 November 2045. Koeberg Unit 2 was synchronised to the national grid on 30 December 2024, following an extensive maintenance outage that included the replacement of three steam generators, comprehensive inspections and refuelling activities. These developments support the continued operation of South Africa’s existing nuclear capacity while the Nuclear Industrialisation Plan is developed.
Alecia Pienaar
While nuclear does constitute a cleaner generation technology from an emissions perspective, several concerns have been raised regarding its role as part of South Africa’s future energy mix, including high capital costs, unclear nancing strategies, opportunity cost of crowding out cheaper alternatives and uncertainty over deployment of nuclear technology.
Gas to power
The signi cant gas-to-power allocation of 18 250MW (comprising 6 000MW committed by 2030 and an additional 12 250MW between 2031 and 2042) faces material implementation risks: securing competitive gas supply and pricing; developing import, regasi cation and pipeline infrastructure (including potential links from Mozambique and coastal terminals); and ensuring transmission readiness at receiving nodes. The IRP2025’s Gas at Risk scenario quanti es system impacts if the gas build stalls, underscoring vulnerability should 6 000MW of CCGT not be operational by 2030.
Recent litigation – including a Supreme Court of Appeal decision setting aside an environmental authorisation – also illustrates permitting and regulatory risk pro les for gas projects (which judgment we discussed in detail in our alert available here).
Since the IRP2025 was gazetted, gas-to-power has remained one of the least progressed and highest-risk components of the plan. The rst bid window under the Gas Independent Power Producer Procurement Programme, intended to procure 2 000MW of new gas-to-power capacity, was amended and the bid submission deadline extended to 29 May 2026. The amendments sought
to address environmental authorisation requirements, revised minimum load commitments, fuel pricing and project-onproject risks, particularly for projects dependent on LNG import, storage and regasi cation infrastructure at uMhlathuze. While these changes align the procurement more closely with the IRP2025’s assumption that initial gas projects will require a 50 per cent minimum load factor, the revised timetable raises questions about whether the IRP2025 target of 6 000MW of CCGT capacity by 2030 remains achievable.
Dependency
Unlike previous iterations of the IRP, the IRP2025 explicitly models transmission constraints via a linearised DC OPF formulation, bringing locational realism into capacity expansion results. Nonetheless, the scale and pace of planned generation – especially wind/ solar in the Cape corridors and coastal gas – risk outpacing both available capacity and current build schedules.
The TDP Plan 2024 identi es 14 494km of new lines and 132 730MVA of transformer capacity by 2034. Practical delivery is challenged by servitude acquisition and environmental approvals, global equipment lead times, capital intensity requiring cost-re ective tariff determinations and EPC capacity.
ONE
OF THE CRITICAL LEVERS IDENTIFIED IN THE IRP2025 IS SUSTAINING ESKOM’S FLEET PERFORMANCE AT AN EAF ABOVE 60 PER CENT.
approvals, long-lead equipment, capital funding, EPC capacity and the need to materially accelerate historical transmission construction rates.
Emission reduction and air quality
Since the IRP2025 was gazetted, the transmission reform has moved from policy design into early procurement implementation. The Independent Transmission Infrastructure Procurement Programme has advanced, with seven prequali ed bidders announced for the rst stage of the Independent Transmission Projects procurement in December 2025. Phase 1 targets approximately 1 164km of new transmission lines and associated substation infrastructure across seven corridors, with a request for proposals expected in the second half of 2026. The National Energy Regulator of South Africa approved the NTCSA’s Market Operator licence on 27 November 2025. The NTCSA has continued implementing the 2025–2034 TDP, which requires approximately 14 500km of new transmission lines, new substations and around 210 transformers. The NTCSA and the Industrial Development Corporation have also signed a Memorandum of Understanding to support localisation, project execution and industrial nancing for veri ed suppliers and contractors involved in transmission expansion. These developments are positive, but grid delivery remains a critical execution risk for the IRP2025, given ongoing constraints around servitudes, environmental
The IRP2025 af rms the commitment to achieving a net-zero electricity sector by 2050 without compromising future security of supply, proposing CO2 emission reductions from 168Mt in 2030 to 142Mt in 2035 (a 22 per cent reduction), which aligns with anticipated sectoral emission targets under the Climate Change Act 22 of 2024. The electricity sector is projected to contribute 168Mt (approximately 40 per cent) of the total 420Mt CO2-eq Nationally Determined Contribution (NDC) target in 2030. When applying the natural disturbance provision as per NDC accounting rules, total net greenhouse gas emissions are projected to be approximately 408–418Mt CO2-eq by 2030, falling within the NDC target range of 350–420Mt CO2-eq.
The IRP2025 nevertheless assumes continued partial compliance with the Minimum Emission Standards (MES) published in terms of the NEMAQA, without impact on capacity as provided by Eskom. This will, however, presumably be subject to the conditions imposed by the Minister of Forestry, Fisheries and the Environment in granting eight coal- red power stations limited exemptions from complying with the MES, as discussed by us here.
Tessa Brewis
Jackwell Feris
Role of green hydrogen
The IRP2025 acknowledges the role of green hydrogen as outlined in the Cabinet-approved Hydrogen Society Roadmap (HSRM) of 2021, which envisions an inclusive, sustainable and competitive hydrogen economy by 2050.
Green hydrogen is identi ed as a pivotal tool to decarbonise “hard-to-abate” sectors that cannot be directly electri ed, including heavy industries, such as iron and steel production, cement and chemicals manufacturing and heavy-duty transport. The Department of Electricity and Energy will work in close collaboration with other departments to ensure the successful realisation of the HSRM, with green hydrogen offering a pathway to cut emissions by replacing coal, gas or oil in high-temperature processes and fuel applications. However, while the IRP2025 focuses primarily on green hydrogen’s role in Power-to-X applications for industrial decarbonisation, it does not appear to acknowledge the potential role green hydrogen could play in power-to-power applications for electricity grid balancing and storage
Impact on electricity tariffs considered
The IRP2025 represents a R2.23-trillion investment plan, with total system costs exceeding R2-trillion across all scenarios studied. When questioned about electricity price path implications during the minister’s brie ng on the IRP2025, it was noted that tariff determination falls outside the IRP2025’s modelling scope. The plan acknowledges that it is “not an overall system cost technology plan but seeks to minimise the least-cost, taking into account the impact on the economy” while balancing multiple policy objectives, including energy security, environmental considerations, and economic impact.
Eskom fleet performance and load shedding
One of the critical levers identi ed in the IRP2025 is sustaining Eskom’s eet performance at an EAF above 60 per cent. Eskom reported on 13 March 2026 that South Africa had reached 300 consecutive days without load shedding at midnight on 12 March 2026. Eskom reported the EAF at 65.85 per cent for the nancial year 1 April 2025 to 12 March 2026 and noted that the generation eet had achieved or exceeded the 70 per cent EAF milestone on 83 occasions during that period. More recent updates indicate that the EAF remains above the IRP2025’s 60 per cent threshold, although it had moderated to 63.24 per cent by 12 June 2026. This supports the IRP2025’s
THE
IRP2025
PRESENTS AN AMBITIOUS BUT COMPLEX ENERGY TRANSITION PLAN THAT SEEKS TO BALANCE MULTIPLE POLICY OBJECTIVES, INCLUDING ENERGY SECURITY, ENVIRONMENTAL CONSIDERATIONS,
AND ECONOMIC IMPACT.
near-term assumption that improved plant performance is essential to system stability, although continued reliability remains dependent on sustained maintenance, reduced unplanned outages and timely commissioning of replacement capacity.
Renewable energy procurement
Renewable energy procurement has also advanced under the REIPPPP. In December 2024, eight solar PV projects totalling 1 760MW were appointed as preferred bidders under REIPPPP Bid Window 7. In July 2025, a further six solar PV projects totalling 1 290MW were announced following the reallocation of unutilised onshore wind capacity to solar PV. On 15 December 2025, the Minister of Electricity and Energy announced four additional preferred bidders to deliver 890MW of solar PV capacity, bringing total capacity procured under Bid Window 7 to approximately
3 940MW across 18 solar PV projects. The absence of wind awards under the initial round nevertheless underscores the continued importance of grid availability, pricing and locational constraints in procurement outcomes.
CONCLUSION
The IRP2025 presents an ambitious but complex energy transition plan that seeks to balance multiple policy objectives, including energy security, environmental considerations and economic impact. While measurable progress has been made since the IRP2025 was gazetted, implementation remains the central challenge, particularly given the substantial capital requirements, transmission infrastructure dependencies and technology deployment risks.
The success of the IRP2025 will depend on whether these early gains translate into sustained delivery. This includes maintaining Eskom plant performance above the 60 per cent EAF threshold, timely implementation of the gas-to-power programme, accelerated transmission build-out, bankable market rules, the credible delivery of gas-to-power, nuclear, and other long-lead technologies. The contingencies and policy adjustments embedded in the IRP2025 also reinforce the need for adaptive implementation, regular review and alignment with evolving technological, regulatory and economic conditions.
Building the legal framework for a competitive and effective rail sector in South Africa. By VIVIEN CHAPLIN , director, and GABY WESSON , senior associate – Corporate & Commercial, Cliffe Dekker Hofmeyr
South Africa’s rail sector is undergoing its most signi cant transformation in decades.
The government has con rmed third-party access to South Africa’s rail network (Network), bringing an end to years of Transnet’s exclusive control of South Africa’s rail.
Central to this transformation is the Rail Network Statement (Network Statement), rst published in 2024. The Network Statement introduced a formal structure governing third-party access to the Network, including capacity allocation, tariffs and operational rules, and operationalised the National
Rail Policy (2022) and the Freight Logistics Roadmap (2023), marking South Africa’s decisive shift towards open access and private participation in rail.
On 13 May 2026, the Transnet Rail Infrastructure Manager (TRIM) announced that it had nalised Rail Access Agreements (RAAs) with 11 train operating companies (TOCs), which is a watershed moment for the country’s freight logistics industry. Accordingly, South Africa is now actively implementing a comprehensive programme to increase rail freight volumes from approximately 180 million tonnes to 250 million tonnes by 2030. The formal appointment of TOCs has the potential
THE GOVERNMENT HAS CONFIRMED THIRD-PARTY ACCESS TO SOUTH AFRICA’S RAIL NETWORK, BRINGING AN END TO YEARS OF TRANSNET’S EXCLUSIVE CONTROL OF SOUTH AFRICA’S RAIL.
to reinvigorate South Africa’s economy by improving freight capacity, supporting industrial users and creating a more competitive logistics environment. That potential, however, depends on more than market appetite and operational readiness. It also requires a clear and coherent legal framework capable of translating policy into implementation, supporting accountable
institutions and giving operators, customers and funders the con dence to invest in the sector. South Africa’s domestic reforms are also well-timed against broader international developments that encourage private-sector participation in rail, with positive implications for rail investment and integration across the continent.
This article examines the key developments shaping South Africa’s rail industry:
• the capacity constraints and investment requirements driving reform;
• the separation of infrastructure management and operations through TRIM;
• transparent economic regulation through the Economic Regulation of Transport Act, No. 6 of 2024 (ERTA) and the Transport Economic Regulator (TER);
• the conclusion of RAAs with private TOCs;
• legislative developments to support safety and operational ef ciency; and
• the international nancing framework now available to investors and private sector participants (PSPs).
CAPACITY CONSTRAINTS AND INVESTMENT REQUIREMENTS
The opening of Transnet’s Network comes against the backdrop of signi cant underutilisation. The Draft National Rail Master Plan (NRMP), released for comment on 1 April 2026, estimates that rail carried approximately 150 million tonnes of freight in 2022, despite an estimated viable market of approximately 262 million tonnes – a shortfall representing an unrealised economic opportunity exceeding R1-trillion in cargo value.
Rail freight volumes have steadily improved from 151.7 million tonnes in 2023/24 to 160.1 million tonnes in 2024/25 and a projected 168 million tonnes in 2025/26. However, this remains substantially below the government’s 2030 target of 250 million tonnes. Commodities prioritised for the shift to rail include coal, manganese, chrome, iron ore, general freight and automotive cargo, with discussions ongoing with the agriculture, forestry and sugar production industries.
THE PROTOCOL CREATES, FOR THE FIRST TIME, AN INTERNATIONAL REGISTRY, PUBLICLY ACCESSIBLE 24/7 THROUGH THE INTERNET, FOR SECURITY INTERESTS IN RAILWAY ROLLING STOCK.
The scale of investment required is substantial, and the NRMP estimates that approximately R1.9-trillion is needed to restore rail infrastructure over a decade. Regarding rolling stock nancing, the NRMP recognises that rolling stock investment will remain principally the domain of private sector operators, with support from development nance institutions where required. This policy direction further underscores the importance of the nancing reforms dealt with below.
TRIM
A central element of rail industry reform in South Africa is the separation of rail infrastructure management from rail operations within Transnet. This separation is designed to ensure independence and non-discriminatory access to Transnet’s rail Network for multiple operators.
TRIM was established to manage access to the Network independently from train operations. Transnet has lodged its Public Finance Management Act prenoti cation application to establish TRIM as a subsidiary, signalling near-completion of this institutional separation.
TRIM has allocated train slots to the TOCs and is progressing towards establishing the Network as functioning with many operators, both public and private. The rst private rail operators are anticipated to begin operations before year-end 2026, with remaining operators expected to follow progressively during 2027.
DOMESTIC ECONOMIC REGULATION FRAMEWORK
The progress towards a multi-operator Network is underpinned by ERTA, which establishes the legal foundation for economic regulation of rail infrastructure and services. ERTA creates the framework for the TER to regulate access to rail infrastructure and
THE PROGRESS TOWARDS A MULTI-OPERATOR NETWORK IS UNDERPINNED BY ERTA, WHICH ESTABLISHES THE
determine the tariffs, fees and charges payable by TOCs for the use of the Network. Given that the TER is not yet fully operational, interim arrangements apply. Under ERTA, the Interim Rail Economic Regulatory Capacity (IRERC) has been established within the Department of Transport to exercise regulatory functions until the TER is fully constituted. The IRERC is responsible for overseeing rail access pricing and Network access during this transitional period. The charges payable by TOCs under the RAAs are currently determined in accordance with the Network Statement issued in 2024 and are subject to review and adjustment once the TER assumes its full regulatory mandate. This regulatory architecture is intended to ensure transparent, cost-re ective and non-discriminatory pricing that balances the interests of infrastructure managers, operators and users of the Network.
TOCs AND RAAs
The 11 TOCs that have concluded RAAs with TRIM are ARC South Africa, The Railway Corporation, TLD Marine, MENAR, Sharp Logistics, Barberry Holdings, Grindrod, Minrail, IRACEMA, Motheo Logistics and Interlinks. This represents a signi cant milestone in opening the Network, re ecting a competitive rail market taking shape through contractual agreements that enable genuine private-sector involvement and investment.
Vivien Chaplin
All RAAs are currently structured as 10-year agreements with renewal options. These TOCs will serve critical sectors, including coal, manganese, containers, fuel and general freight across ve key corridors and are expected to contribute approximately 24 million tonnes of additional annual freight capacity initially, with potential growth to 52 million tonnes within ve years. All TOCs are currently working to nalise the contractual arrangements needed to reach nancial close for their signi cant capital outlay and to serve their proposed customers ef ciently and effectively in accordance with the principles in the RAA, read with the Network Statement. Additionally, in December 2025, TRIM announced the Ad Hoc Slot application, which allows operators to apply for capacity outside the annual allocation cycle. TRIM has since announced that it has received 25 applications through annual and ad hoc processes, with 12 either approved or under consideration.
In 2026, the South African government also signalled upcoming concessioning and PPP processes for infrastructure rehabilitation and investment, which will be supported by the legislative reforms discussed below.
OTHER APPLICABLE POLICY AND LEGISLATIVE DEVELOPMENTS
Railway Safety Act, No. 30 of 2024
The National Railway Safety Regulator Act 16 of 2002 (old RSR Act) originally established South Africa’s rail safety framework by creating an independent Railway Safety Regulator (RSR) to set safety standards, issue permits, monitor compliance and investigate railway incidents, while placing primary responsibility for safe operations on railway operators.
This framework governed the sector for over two decades, focusing on protecting people, property and the environment through oversight and enforcement mechanisms.
In December 2024, a modernised regime was introduced through the Railway Safety Act 30 of 2024 (new RSR Act), which repeals and replaces the old RSR Act, strengthening governance, introducing a national railway safety information and monitoring system, and enhancing enforcement and accountability across the sector. The new RSR Act provides the safety architecture within which TOCs and other operators must function.
National Rail Bill
Complementing the new RSR Act, the National Rail Bill (Rail Bill), seeks to give effect to the National Rail Policy. The Rail Bill appears to form the key legislation applicable to rail sector operations and is currently expected to be submitted to Cabinet by TRIM in September 2026.
Network Statement Version 4
A fourth iteration of the Network Statement is nearing completion. This version has been stated by TRIM to address bankability for lenders that is absent in the current version and crucial for private investment. This focus on bankability directly supports the international nancing framework discussed below.
NRMP
In addition to the above, the NRMP has also set out a key governance framework (in the form of a “Rolling Stock Statement”) for rolling stock on the Network. The current requirements are sparse, standards apply only to incumbent state-owned entity operators, and there is a need to account for new rolling stock coming onto the Network. This framework is proposed to include mandatory requirements and guidelines for how rolling stock should enter the rail Network, remain in service, be redeployed or removed from service, and be renewed over time, as well as requirements for route and interface compatibility. PSPs should expect national requirements for entry, continued operation, recovery, redeployment and decommissioning of rolling stock, as well as a certi cation system in the near future, to be overseen by a proposed South African Rail Industry Standards Body (SARISB).
Another key intervention under the NRMP is the train performance and monitoring framework and the imposition of train control systems, which is signi cant for PSPs as it seeks to provide that train performance will be measured using a key performance indicator (KPI) framework addressing operational ef ciency, capacity utilisation, nancial performance, safety, customer satisfaction, asset management, environmental impact and rolling stock reliability, as well as certain speci c KPIs for freight operations. Additionally, the NRMP seeks to implement a rail traf c control system to optimise safety on the rail Network, as well as various information systems for data retention to support ef cient operations.
INTERNATIONAL FINANCING FRAMEWORK
Complementing these domestic reforms, private sector participation in Africa’s rail sector is being propelled by a new international legal framework that streamlines and reduces the cost of nancing railway rolling stock.
The Luxembourg Rail Protocol (Protocol), adopted in 2007 under the auspices of UNIDROIT and in force since 8 March 2024, establishes an internationally recognised legal framework for security interests in railway rolling stock. Its purpose is to make the nancing and leasing of locomotives, wagons and other rail equipment easier, more secure and potentially cheaper by giving creditors a harmonised system for recognising, registering and enforcing their rights across contracting states.
COMPLEMENTING
THESE DOMESTIC REFORMS, PRIVATE SECTOR PARTICIPATION
IN AFRICA’S
RAIL
SECTOR IS BEING PROPELLED BY A NEW INTERNATIONAL LEGAL FRAMEWORK THAT STREAMLINES AND REDUCES THE COST OF FINANCING RAILWAY ROLLING STOCK.
The protocol is currently rati ed by six states (Gabon, Luxembourg, Paraguay, South Africa, Spain and Sweden) and the European Union in relation to its competences. British accession is currently going through the United Kingdom Parliament, and many other states, including France, Germany, Italy, Mozambique, Botswana, the Democratic Republic of Congo, Eswatini, Mauritius and Zimbabwe, are also considering adoption. In Africa, this places Gabon and South Africa at the forefront of adoption, with the DRC’s accession expected to enter into force on 1 October 2026. This growing regional uptake is signi cant for cross-border corridors and for PSPs seeking to nance rolling stock capable of operating across multiple African networks. As further countries adopt the protocol, the advantages of structuring nance deals in compliance with its terms will increase, given that creditors
can only enforce their remedies under the protocol where the debtor (typically the PSP) is domiciled in a contracting state.
Two related developments are particularly relevant for PSPs and nanciers. First, South Africa’s Export Credit Insurance Corporation (ECIC) has announced a risk premium discount of up to 20 per cent for qualifying protocol-compliant rolling stock nancings. Secondly, the United Nations (UN) has adopted Revision 3 of the global Model Rules on the Permanent Identi cation of Railway Rolling Stock (UN Model Rules), which supports the use of permanent identi cation and digital tracking solutions for railway rolling stock. Together, these developments strengthen the commercial case for structuring rolling stock nance in alignment with the protocol.
ECIC discount
On 27 August 2025, the ECIC announced that it would apply a discount of up to 20 per cent to its risk premium when underwriting rolling stock nancings where the protocol is in force in the state of the debtor or lessee. The discount is subject to the ECIC’s minimum South African local content requirements, compliance with the protocol and other underwriting conditions. For PSPs, this may improve project economics by reducing nancing costs; for nanciers, it adds a further incentive to structure transactions in a protocol-compliant manner. The discount therefore serves as an important practical bridge between South Africa’s domestic rail reform programme and the international creditor-protection framework created by the protocol.
Protocol
The protocol creates, for the rst time, an international registry, publicly accessible 24/7 through the internet, for security interests in railway rolling stock – covering rolling stock wherever manufactured, whether new or used and whatever gauge or operability standards apply. The de nition of rolling stock is broad and applies to “vehicles movable on a xed railway track or directly on, above or below a guideway”, including inter-urban and urban rolling stock, specialist boring and other rail-mounted “yellow” rail equipment, metro and light rail trains and trams, monorail trains and cable cars, people movers and shuttles at airports, hyperloop pods and cranes and gantries at ports. The protocol also allows for registration of notices of sale, which provides important protection against fraud.
Gaby Wesson
Central to this framework is the Unique Rail Vehicle Identi cation System (URVIS), whereby a unique 16-digit identi cation number is allocated by the International Registry in Luxembourg to each item of rolling stock. The URVIS number must be permanently marked on the equipment via a physical marker in accordance with the UN Model Rules.
UN Model Rules and URVIS
In November 2025, the UN, through its Economic Commission for Europe, adopted the UN Model Rules, which came into force in February 2026. Most signi cantly, this revision introduced Appendix 3, which establishes a framework for creditors and others, such as insurers, to access digital platforms showing the real-time status of rolling stock by reference to its URVIS number.
This provides nanciers with transformative advantages, including: tracking of location and use of nanced assets; the ability to use geo-fencing agreements with alert systems if rolling stock moves outside approved zones; easier repossession in the event of debtor default or insolvency; predictive maintenance based on utilisation rather than time; enabling “pay-as-you-go” pricing structures in lease agreements based on per-kilometre usage; and potentially lower insurance premiums given improved tracking capabilities. Adoption of the digital solution is voluntary and must be agreed in writing between creditor and debtor. However, the physical URVIS marker remains mandatory for any registration of security interests and enforcement of creditor rights, taking precedence in the event of any con ict with the digital solution.
ADOPTION OF THE DIGITAL SOLUTION IS VOLUNTARY AND MUST BE AGREED IN WRITING BETWEEN CREDITOR AND DEBTOR. HOWEVER, THE PHYSICAL URVIS MARKER REMAINS MANDATORY FOR ANY REGISTRATION OF SECURITY INTERESTS AND ENFORCEMENT OF CREDITOR RIGHTS.
THERE IS A SIGNIFICANT OPPORTUNITY FOR PSPs, INVESTORS AND FINANCIERS, GIVEN THAT SOUTH AFRICA IS CREATING THE INSTITUTIONAL AND
FINANCIAL CONDITIONS REQUIRED FOR LONG-TERM PRIVATE INVESTMENT.
Protocol clauses to be included in
financing agreements
Notwithstanding that the protocol is not yet binding as a matter of South African domestic law (though domestication work is under way), it is important for nanciers to incorporate protocol provisions into their security agreements now. Key provisions include: obtaining the URVIS number for each item of nanced rolling stock; recording the debtor’s undertaking to comply with the UN Model Rules for permanent marking; and recording the debtor’s agreement to digital tracking requirements under the new Appendix 3. Where the debtor is not domiciled in a contracting state, agreements should include obligations to register pre-existing security interests at the international registry and, at the creditor’s option, to re-execute documentation when the protocol enters into force locally.
Practical implications
PSPs engaging with nanciers on rolling stock nancing should ensure that their funding arrangements are structured to comply with the protocol and that manufacturers or suppliers mark the rolling stock with URVIS numbers on delivery. This enables PSPs to bene t from the ECIC discount (where applicable) and enhanced creditor protections, leading to lower funding costs. The transition rules in the UN Model Rules provide exibility for equipment already in use: where rolling stock is already marked with running numbers and the protocol has been adopted, URVIS markers must be permanently af xed within 12 months of signature of the relevant credit agreement. In exceptional circumstances where equipment
is physically inaccessible, this period may be extended to up to three years.
Finally, there will usually be a bene t as a matter of domestic law for parties to register security interests and notices of sale (by reference to URVIS numbers) even where the protocol does not yet apply.
CONCLUSION
South Africa’s rail reform programme has moved beyond policy and intention into the implementation phase. The establishment of TRIM, the development of economic regulation through ERTA and the TER, and the conclusion of RAAs with 11 TOCs collectively represent a fundamental shift towards private participation in the rail sector. These institutional reforms, supported by the legislative framework being developed through the NRMP and Rail Bill, create the foundation for a modern and competitive rail market.
The international nancing framework, comprising the protocol, ECIC discount and URVIS compliance, provides PSPs and nanciers with compelling tools to reduce funding costs and enhance creditor protections. There is a signi cant opportunity for PSPs, investors and nanciers, given that South Africa is creating the institutional and nancial conditions required for long-term private investment. However, success will depend on aligning operational participation with the emerging regulatory framework and adopting nancing structures capable of supporting this transformation.
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