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LEGAL SHAPING BUSINESS THROUGH LAW

UNDER THE RULEBOOK

www.businessmediamags.co.za | 2026

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IN PARTNERSHIP WITH MERCEDES-BENZ SOUTH AFRICA

STEP INSIDE, AND THE CABIN IMMEDIATELY REVEALS ITSELF AS A HIGHLY PRODUCTIVE, HYPER-CONNECTED EXECUTIVE SANCTUARY.

The Mercedes-Benz E-Class epitomises excellence in the executive saloon segment, writes MERCEDES-BENZ SOUTH AFRICA

he legal profession demands an interesting duality from its practitioners: an unyielding respect for precedent, balanced by an acute ability to navigate rapid evolution. For over 75 years, the Mercedes-Benz E-Class has mirrored this exact philosophy within the executive automotive sector. With more than 16 million units delivered globally since 1946, it has long been established as the definitive vehicle for Africa’s legal elite and corporate leaders. Today, Mercedes-Benz South Africa introduces the latest iteration of this historic legacy, presenting a vehicle engineered to seamlessly bridge timeless professional prestige with next-generation digital intelligence. For a discerning corporate audience, a vehicle is much more than a tool for transit; it is a physical extension of professional standards. The exterior of the latest E-Class maintains the commanding proportions of a traditional three-box saloon, defined by a short front overhang, an elongated bonnet and a sophisticated “cab-backward” silhouette. This classic stance is modernised by a high-gloss black panel surface that connects the radiator grille with the high-performance LED headlamps, drawing a visual parallel to the progressive Mercedes-EQ range. Flush-fitting door handles and crisp character lines accentuate its athletic profile, while the rear features distinctive two-section LED taillights integrated with a striking star motif. Step inside, and the cabin immediately reveals itself as a highly productive, hyper-connected executive sanctuary.

The centrepiece of this interior architecture is the optional MBUX Superscreen. This continuous glass surface extends seamlessly across the dashboard, consolidating the vehicle’s infotainment and vehicle controls into an intuitive, visually stunning interface. A new software-driven electronics architecture consolidates previously separate computing domains into a single, high-performance processor, drastically increasing data transmission speeds and responsiveness.

ENHANCED EXPERIENCE, EFFORTLESS CAPABILITY This digital refinement directly enhances the passenger experience. Sound Visualisation allows occupants to experience audio through hearing, feeling and seeing, as the Active Ambient Lighting system synchronises directly with the premium Burmester 4D surround sound system. Recognising the paramount importance of confidentiality in the legal sector, an intelligent camera-based privacy function automatically dims the front passenger screen if driver distraction is detected, protecting sensitive information from view. Furthermore, a two-centimetre longer wheelbase translates into expanded rear knee and legroom, bringing cabin comfort exceptionally close to S-Class dimensions. The E-Class utilises the AIRMATIC air suspension system with ADS+ continuously adjustable damping, ensuring the vehicle glides over road imperfections with complete composure. For navigating tight urban spaces, historical court precincts

DRIVING ASSISTANCE AND SAFETY Executive luxury is incomplete without an uncompromising approach to safety. Built upon an exceptionally rigid passenger cell with engineered, deformable crash structures, the E-Class features an advanced suite of standard driver assistance technologies designed to mitigate risk on South African roads. These include Active Distance Assist DISTRONIC, Active Brake Assist, Active Lane Keeping Assist, and ATTENTION ASSIST, alongside a comprehensive Parking Package. As Mercedes-Benz South Africa notes, the E-Class remains the pinnacle of the executive segment because the formula has been perfected over seven decades. This latest generation represents the most technologically advanced E-Class ever built –retaining its unrivalled luxury appeal while offering a distinct window into the future of automotive innovation. It remains the ultimate choice for those who appreciate the weight of tradition yet refuse to be left behind by the future.

VISIT WEBSITE

SCAN TO GO TO THE MERCEDES-BENZ SOUTH AFRICA WEBSITE

For more information contact: www.mercedes-benz.co.za www.linkedin.com/company mercedes-benz-south-africa

Images: Supplied

A NEW ERA IN EXECUTIVE LUXURY

and tight parkades, the optional rear-axle steering reduces the turning circle by up to 90 centimetres, delivering unexpected agility. Climate comfort is equally personalised through the THERMOTRONIC automatic climate control, which features Digital Vent Control to automatically adjust the front air vents to pre-set ventilation profiles via precision electric actuators.

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UNDER THE RULEBOOK

ur theme for this issue of Legal is “Under the Rulebook”: a reflection of the growing weight of regulation across South Africa’s economic and social landscape. From boardrooms to borders and data to energy, the rules are actively reshaping it. Our writers engage leading legal specialists to unpack the frameworks governing business, labour, technology and trade. The focus is not only on what the law says, but also on how it is applied, enforced, and, in some cases, contested. Compliance has become more complex, more costly and more heavily monitored. As scrutiny intensifies, we ask whether organisations, institutions and the courts themselves are keeping pace. We examine shifting workplace dynamics, the pressure on dispute resolution systems, the realities of corporate accountability and the broader question of who the system ultimately serves. There is much here to unpack, challenge and debate. Trevor Crighton

LEGAL PUBLISHED BY

Trevor Crighton

CONTENTS 6 GOVERNANCE AND COMPLIANCE 24 PROPERTY LAW Governance failures now carry real financial and reputational consequences.

10 LABOUR LAW

The balance of power is shifting.

14 BUSINESS RESCUE

The role of the business rescue practitioner is undergoing a shift.

19 DISPUTE RESOLUTION

Are alternative dispute resolutions relieving the pressure on our courts?

20 ENERGY LAWS

South Africa’s energy transition is legal and technical.

Land expropriation: where are we and where are we headed?

28 CYBERSECURITY

Legal, IT and boards need to work together to address cybersecurity risks.

32 WORKPLACE SAFETY

Workplace health and safety laws are under pressure in high-risk sectors.

38 CROSS-BORDER REGULATIONS

Local companies operating across borders face overlapping legal regimes.

44 A NEW DEAL

Mergers and acquisitions amid stricter competition and public-interest rules.

DESIGN Head of Design: Jayne Macé-Ferguson Senior Design: Mfundo Archie Ndzo Project Designer: Anja Hagenbuch

A proud division of Arena Holdings (Pty) Ltd Hill on Empire, 16 Empire Road (cnr Hillside Road), Parktown, Johannesburg, 2193 PO Box 12500, Mill Street, Cape Town, 8010 www.businessmediamags.co.za EDITORIAL Editor: Trevor Crighton Content Manager: Raina Julies rainaj@picasso.co.za Contributors: James Francis, Rosalind Lake, Vukani Magubane, Thando Pato, Vanessa Rogers, Anthony Sharpe, Lisa Witepski

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Copyright: No portion of this magazine may be reproduced in any form without written consent of the publisher. The publisher is not responsible for unsolicited material. Legal is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/ advertorials have been paid for and therefore do not carry any endorsement by the publisher.

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COMPLIANCE IN THE CROSSHAIRS

Businesses are under increasing pressure to meet ethical and regulatory standards. ANTHONY SHARPE asks experts if they are up to the task

outh African companies are navigating an increasingly complex compliance landscape where governance failures now carry real financial and reputational consequences. The South African Revenue Service and the Financial Sector Conduct Authority have stepped up their enforcement activities, while the Companies and Intellectual Property Commission (CIPC), responsible for registering companies and intellectual property rights, promoting and enforcing compliance, is also tightening oversight of companies. “The CIPC is utilising its powers to issue compliance notices as a proactive enforcement tool rather than only reacting to specific complaints,” says CIPC commissioner Rory Voller. “The Beneficial Ownership enforcement initiative is driven proactively, and a number of companies have already been issued with compliance notices as part of this process.” Where entities fail to comply with the issued compliance notices, says Voller, the CIPC applies the Compliance Status mechanism, which results in endorsements being placed on disclosure or registration certificates of noncompliant entities. “This

Fast fact

The Financial Sector Conduct Authority issued R119 829 523 in administrative penalties during the 2024/25 financial year. This marked a significant drop from the previous year’s R943 370 568, much of which was related to penalties issued in the wake of the Steinhoff International fraud scandal. Source: Financial Sector Conduct Authority

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mechanism serves to alert stakeholders, including regulators, financial institutions and the public, to the compliance levels of identified legal entities and their adherence to statutory requirements.” Voller says that a significant number of companies nevertheless file their annual financial statements (AFS) late. “We have also noticed a fair number of companies failing to rotate their auditors and the audit firm that performs their audits. Where the filings are on time, recurring findings from AFS reviews include nondisclosure or deficient disclosure of director remuneration and boilerplate or template-based notes that don’t fully connect with the primary AFS.”

MIND THE GAP South Africa is often praised for having world-class governance codes, but criticised for lacklustre enforcement. Professor Parmi Natesan, CEO of the Institute of Directors in South Africa (IoDSA), echoes this sentiment, citing inconsistent application, disclosure and accountability as common issues. That’s where King V comes in. King V is the fifth iteration of the King Report on Corporate Governance for South Africa, released by IoDSA and the King Committee on 31 October 2025. “King V tries to address this by simplifying the code and standardising disclosure, so that stakeholders, regulators, funders and shareholders can more easily assess whether governance is being applied in substance rather than merely asserted,” explains Professor Natesan. “The Johannesburg Stock Exchange, among other regulatory and industry bodies, has already indicated support for this standardised

disclosure approach through endorsement of the King V disclosure framework.” King V replaces King IV in its entirety, streamlining the latter’s 17 principles into 13 to reduce overlap and make the code more accessible across different sectors. Probably the greatest change is to the aforementioned disclosure framework, which now includes a mandatory, standardised template for disclosure. This represents a conscious move away from narrative reporting towards a more rigorous, evidence-based approach, requiring boards to prove that their practices have actually achieved the four governance outcomes: Ethical Culture, Performance and Value Creation, Prudent Control and Legitimacy. However, with more governance requirements being hard-coded into law (particularly regarding environmental, social and governance (ESG) and beneficial ownership), is there a risk King IV could become secondary to statutory tick-box exercises?

“THE CIPC IS UTILISING ITS POWERS TO ISSUE COMPLIANCE NOTICES AS A PROACTIVE ENFORCEMENT TOOL RATHER THAN ONLY REACTING TO SPECIFIC COMPLAINTS.” – RORY VOLLER

Rory Voller

GOVERNANCE AND COMPLIANCE

Professor Natesan thinks not. “Law sets the minimum standard; governance codes should help organisations achieve ethical, effective and sustainable outcomes beyond mere legal compliance. King V’s simplified principles and required disclosure framework are intended to make governance more practical, comparable and decision-useful, rather than more burdensome. Market pressure, stakeholder expectations and regulatory interest all reinforce the need for substantive governance, not tick-box compliance.”

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ESG REPORTING GETS SERIOUS Despite headwinds from the United States, the world continues to move towards mandatory ESG reporting, putting pressure on local businesses to comply or risk becoming uncompetitive. The CIPC has taken steps to help standardise these disclosures for South African companies, says Voller. “In October 2024, we rolled out an ESG and sustainability reporting entry point as part our annual taxonomy updates. Professor Parmi Natesan This was to allow early adopters of the International Sustainability Standards Board’s (ISSB) standards to start reporting their sustainability reports in a standardised manner, underpinned by the ISSB’s global baseline.” In 2025, the CIPC participated in the Department of Trade, Industry and Competition’s Steering Committee for a Regulatory Impact Assessment around adopting ISSB standards, and conducted a market sentiment survey in collaboration with Alexforbes. “Late last year, in collaboration with the African Development Bank, we produced a comprehensive supplementary policy rationale paper for adopting the ISSB standards,” says Voller. “Thereafter, we set up an Adoption Readiness Working Group (ARWG), which serves as a technical, consultative and advisory platform to: • Provide input into the development of the national adoption roadmap, backed by policy-driven imperatives. • Ensure coherence with existing regulatory and supervisory frameworks.

• Provide guidance on materiality and assurance. • Co-ordinate various stakeholder engagements. • Assess reporting capacity and skills readiness across sectors. • Build consensus on the phased implementation approach.” Voller adds that as part of the development of a national sustainability adoption roadmap, the ARWG will consider capacity-building intervention to aid companies in conforming to the envisaged reporting requirements and mapping where government can assist in limiting the teething challenges that come with mandatory reporting requirements. “Our efforts are underpinned largely by sustainable development to attract sustainable, transition and climate finance, and build value chain resilience for domestic businesses.” Professor Natesan cautions that boards should avoid treating ESG as separate from performance. “King V positions sustainable value creation within the organisation’s economic, social and environmental context. The board’s role is to ensure that strategy, risk, performance and sustainability are integrated, so that short-term decisions do not undermine long-term resilience.”

GOVERNANCE TRENDS With new regulatory frameworks to navigate, technology disrupting almost every function and investors demanding more, South African boardrooms face a business landscape in upheaval. The Chartered Governance Institute of Southern Africa identifies these as key trends reshaping governance. • The rise of AI-driven decision-making. • ESG integration becoming non-negotiable. • Cybersecurity moving beyond IT departments. • Board diversity driving strategic advantage. • The continuing evolution of regulatory frameworks. • More interactive stakeholder engagement. • Financial planning embracing scenario testing. • Global standards adapting to local contexts. • Shifts to real-time risk management. • Governance structures becoming more adaptive.

WE NEED PROFESSIONALS Considering this increased regulatory pressure, it’s clear that the role of the board is more important than ever for corporate South Africa, but is the current model of experience-based appointments still fit for purpose? Company directorship should be treated as a profession, says Professor Natesan, because directors carry serious duties and must exercise informed judgement in complex environments. “IoDSA has long advocated for the professionalisation of directorship, supported by its South African Qualifications Authority-recognised certified director and chartered director

designations, both of which are underpinned by a director competency framework.” She says the point is not to create unnecessary barriers, but rather to ensure that the competence, ethics and accountability of directors can be assessed and maintained. “Professional designation also provides assurance to the market, as directors are formally assessed against defined competencies, required to undertake continuous professional development, bound by a code of conduct, and subject to oversight and potential sanction by a professional body where standards are not met.”

Follow: Rory Voller www.linkedin.com/in/rory-voller-600a36100 Professor Parmi Natesan www.linkedin.com/in/parmi-natesan-064a2154

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LABOUR LAW

THE CHANGING WORKPLACE CONTRACT Labour law amendments stoke fear of compliance issues, explains JAMES FRANCIS

MORE GUIDANCE FOR DISMISSALS Late last year, the Minister of Employment and Labour published the 2025 Code of Good Practice on Dismissal, which creates more clarification and guidance on dismissal rights and procedures. “The real shift is a greater emphasis on certain things, such as substantive fairness and reasonableness, and engaging more with your employees rather than rigid procedural formalism,” says Merlisha Haripal, Cowan-Harper-Madikizela (CHM) chairperson and executive in the firm’s employment practice. “In practice, it doesn’t increase the compliance burden for employers that already have structured HR processes. It’s more a refinement rather than an overhaul.” Fair procedure sits at the heart of the changes. Notably, some changes are trying to steer away from the rigid formality that characterises employee-related procedures. “Even though the law never asked for this, we’ve seen a legal-esque character dominate things like misconduct interactions,” says Lucinda Hinxman,, head of employment and labour at CMS South Africa. “We talk about charges, hearings, evidence and cross-examinations. We expect rigid, formalised engagements. But the law never said that you had to do it like that.” This rigidity can overshadow fairness by emphasising bureaucracy beyond what the law requires. The renewed focus is on dismissal

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Merlisha Haripal

being substantively fair with valid reasons, and procedurally fair to include proper investigation, opportunity to respond and the right to representation.

PROTECTION FOR ZERO HOUR EMPLOYEES Another notable change is more fairness for “zero hour” on-call employees who don’t have guarantees for minimum work hours. Previously, there were no limitations on how employers could apply these measures. The Labour Law Amendment Bill 2025 aims to improve job security, promote fairness and extend fundamental rights to vulnerable and previously excluded categories of workers. It requires employers to specify maximum hours per period, availability expectations and reasonable notice periods. Employers must note these changes as they will affect factors such as reasonable availability for their operations and whether employees can moonlight in other jobs, says Hinxman. “The management of these contracts is going to be important. There must be an arrangement on minimum call notice because you can’t expect these employees to always be available at the drop of a hat.”

PROACTIVITY IS CHEAPER The Code’s amendments largely affirm established principles, while providing greater clarity on dismissal processes.

Fast fact

CHM has free webinars on its YouTube site (@Cowan-Harper-Madikizela) covering the dismissal code amendments, and CMS hosts regular webinars at https://cms.law/ en/zaf/events The most accessible action for all companies is to educate key staff on these laws. There are free resources that unpack the changes in useful detail, such as webinars and blogs. It’s also worthwhile to have a small retainer with a labour lawyer, if only for a few hours per month. Hinxman warns against relying solely on labour consultants and brokers, saying they “offer advice, not legal opinion, and are not always correct.” Proactivity is the cheapest route. Making mistakes, especially around dismissals, can be very expensive, Haripal cautions: “A 12-month compensation order can cripple a small business. Be proactive about understanding the laws and how they affect your policies and contracts. Just being able to get a legal opinion can be the difference between smooth compliance and painful penalties.”

Follow: Merlisha Haripal www.linkedin.com/in/merlisha-haripal-167a6b49 Lucinda Hinxman www.linkedin.com/in/lucinda-hinxman-a6204a52 Lucinda Hinxman

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roposed amendments to South African labour laws are stirring concern among local businesses. But are these changes as dramatic as they seem? Is labour compliance becoming more strenuous for organisations? Legal experts don’t see it that way.

It introduces a more flexible approach, particularly benefitting smaller businesses through reduced formality, and offers clearer guidance on areas such as dismissals for incompatibility. Separate legislative developments, including expanded parental rights, reflect broader shifts in the labour law landscape. From a compliance perspective, not much is changing. Companies must still display employment laws accessibly, have disciplinary and harassment policies and codes of conduct and maintain paperwork reflecting employee engagements as well as support substantive and procedural fairness. “If organisations are struggling with compliance under the new [dismissal] code, it often indicates that underlying compliance gaps already existed under the previous framework,” says Haripal.

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ACCOUNTABILITY IN BUSINESS RESCUE

Fifteen years on, VANESSA ROGERS asks whether business rescue practitioners’ shift from turnaround experts to scrutinised fiduciaries is truly justified

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here is broad consensus in South Africa that tighter regulation and clearer accreditation standards for business rescue practitioners (BPRs) are very much warranted,” says Lauren Fine, legal director, Clyde & Co. “However, the prevailing sentiment favours refinement and professionalisation, rather than sweeping legislative overhaul.” South Africa’s current regime relies on Companies and Intellectual Property Commission (CIPC) licensing, membership of accredited professional bodies and experience-based categorisation. “Research has highlighted fragmentation within this system and the absence of a single, coherent professional accreditation framework. This situation has resulted in uneven practitioner competence rates and inconsistent rescue outcomes,” she advises.

GOODBYE UNCLEAR BILLING One of the visible pressure points is the issue of fees, reveals Nicolene Schoeman-Louw, managing director at SchoemanLaw Inc. “Creditors are becoming less tolerant of vague billing practices, disproportionate fees relative to outcomes and a rescue process that appears to benefit practitioners more than stakeholders. This concern is not merely commercial; it has become judicial.” In Diener NO v Minister of Justice and Constitutional Development, Louw says the Constitutional Schoeman-Louw Court of South Africa reinforced the principle that fairness must underpin the business rescue (BR) framework. Similarly, in Oakdene Square Properties (Pty) Ltd v Farm Bothasfontein Nicolene Schoeman-Louw (Kyalami) (Pty) Ltd,

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the Supreme Court of Appeal made it clear that BR is not an open-ended process. “It must be grounded in a reasonable prospect of success – a standard that challenges prolonged proceedings and escalating fees without tangible outcomes. The message from the courts is clear: value must be demonstrable,” she explains.

TOO MANY HATS TO MENTION Koos Benadie, director at Barnard Incorporated, suggests a BRP needs to be more than a referee. “A credible BRP,” he says, “is often required to do at least four things well.” • Stabilise the company quickly by understanding its immediate financial and operational pressure points. • Communicate clearly with affected stakeholders, especially where mistrust, fatigue or uncertainty are already present. • Exercise independent commercial judgement rather than merely prolonging a process that no longer serves a rescue purpose.

• Produce a plan that can survive real scrutiny, that is, from creditors and funders. This all sounds more like a turnaround leader than a procedural referee, he advises. At the same time, the comparison has limits. “A BRP is not a freestanding CEO with unrestricted power to do whatever appears

Fast fact

Stefan Steyn, a senior business rescue practitioner and member of the Turnaround Management Association of Southern Africa, reveals that although the Companies Act envisions a three-month timeline for a business rescue case, successful rescues often take significantly longer to complete: 19 months, on average. Source: www.saipa.co.za/ newsletters-resources/duration-ofsuccessful-business-rescues-in-south-africa

Dr Eric Levenstein

Koos Benadie

Lauren Fine

BUSINESS RESCUE

LESSONS FROM HIGH-PROFILE CASES “SAA was a unique business rescue (BR) case and the first state-owned enterprise to enter the process, just before COVID-19. With air travel shut down globally, revenue collapsed, forcing a difficult restructuring supported by approximately R10-billion in government funding,” reveals Dr Eric Levenstein, director and head of the insolvency and business rescue department at Werkmans Attorneys. The BR plan was approved in 2020, and SAA exited in April 2021 after 17 months, with major job cuts and

commercially attractive. The role remains a statutory office shaped by duties, voting rights, stakeholder participation, court oversight and legislative timelines. The Companies Act also requires ongoing reporting when BR extends beyond three months, which reflects an expectation of momentum and accountability – rather than drift.” A better way to describe the role, he believes, is that the BRP sits at the intersection of law, governance and turnaround management, and requires volumes of both legal and commercial intelligence.

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DIVERGENT SUCCESS RATES Another emerging theme is the uneven success rate of BR across economic sectors, Schoeman-Louw notes. “Retail businesses struggle due to high overheads and shifting consumer patterns, with even high-profile rescues delivering only partial relief. Construction companies, which are heavily reliant on project pipelines and cash flow, frequently fail to achieve sustainable turnaround. Mining presents a more nuanced picture; asset-backed operations can be stabilised, but regulatory and capital constraints remain significant.” This raises an important question: are some industries structurally resistant to rescue? “While rescue is theoretically available to everyone, its practical success is highly dependent on the underlying commercial realities of the sector in which that business has been trading.”

reduced capacity. “It now continues operating on a smaller scale, with signs of stabilised profitability. Despite concerns over recent board appointments, passenger revenue reached R7.7-billion by the end of 2025, indicating sustainability post-BR.” Levenstein’s take is that large BR cases in South Africa generally perform well, often resulting in asset or business sales to new buyers. “While these deals reduce staff numbers, they preserve more jobs than liquidation would,” he advises.

On this matter, Dr Eric Levenstein, head of insolvency and business rescue at Werksmans Attorneys, reveals that smaller enterprises are highly sensitive to delays in the process and cases when BR costs become unsustainable. “Any company undergoing this process must be able to ‘wash its own face’ and continue trading throughout. If ongoing trading expenses, including the costs of the BRP, cannot be sustained, the company is a candidate for liquidation. The process is generally a good fit for medium to larger companies, plus those listed on the JSE.” These developments point to a redefinition of the BRP’s role. Today’s practitioner is not only expected to be commercially astute and legally accountable, but also transparently aligned with stakeholder interests. The days of operating under minimal scrutiny are over. BRP decisions must withstand judicial, regulatory and creditor examination.

PATH TOWARDS COMMERCIAL RESPONSIBILITY Fifteen years ago, Benadie reminds us, BR was understood in strongly procedural terms. A company would enter rescue, a moratorium would take hold, the practitioner would assume control, and attention would turn to notices, meetings, voting thresholds and the rescue plan.

Those mechanics are still important, he believes. “But, over time, commercial pressure has pushed the role beyond procedure. Creditors, shareholders, employees and funders are less likely to be satisfied with a practitioner who merely supervises a distressed process and produces a technically compliant plan. What they increasingly want is commercial judgement, speed, credibility and a genuine strategy for rehabilitation.” That shift, Benadie explains, is consistent with the structure of the Companies Act. “A BR plan is not meant to be a placeholder document. It must explain the background to the company’s distress, set out the proposals for rescue, and indicate the expected return to creditors compared with liquidation. The legislation points to substance, not form, as the real test of the process.”

PROFOUND RESPONSIBILITY Fine has witnessed BR proceedings where BRPs “not only delegated their operational control to a company accountant without any operational experience, but also published a plan without viable options to save the business. This is a common reality in such proceedings”. While the Companies Act and its regulations establish formal eligibility criteria and experience-based categories for BRP appointments, she adds, they often fall short of ensuring that practitioners possess the industry-specific expertise, operational competence and commercial insight needed to manage the business under rescue. “The practical realities of BR demonstrate that ill-considered delegation of control, inadequate appreciation of commercial dynamics and poorly conceived rescue plans can exacerbate rather than ameliorate the financial distress – to the detriment of creditors and the broader economy.” Enhanced regulation and more rigorous accreditation requirements should better align the practitioner’s qualifications with the profound responsibilities of the role, and promote the statutory objective of achieving a genuine and sustainable rescue, she concludes.

Follow: Lauren Fine www.linkedin.com/in/lauren-fine-53ba2a17 Nicolene Schoeman-Louw www.linkedin.com/in/nicolene-schoeman-%E2%80%93-louw-6965162b Koos Benadie www.linkedin.com/in/koos-benadie-24109b37 Dr Eric Levenstein www.linkedin.com/in/eric-levenstein-60b5ab53

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DISPUTE RESOLUTION

JUSTICE DELAYED?

ndile Nikani, CEO of The Arbitration Foundation of Southern Africa (AFSA), South Africa’s only dedicated arbitral centre and administrator, says that between 2023 and 2025, its caseload grew by at least 45 per cent. “One could speculate as to why this is; it could be that the legal culture is changing, and that South Africans are accepting that alternative dispute resolution is the way to go before you bother the courts. Alternatively, it could be that the caseload for courts is too burdensome – it takes on average five to seven years for a matter to be heard, and it may not be ideal for parties to wait that long,” he explains.

HISTORICAL SHIFT Historically, the construction sector dominated AFSA’s caseload. Today, according to Nikani, the commercial sector dominates cases, with financial matters now representing the largest share of cases, followed by the logistics and transport sectors. The shift towards arbitration is evident at the contract-drafting stage too, says Clement Mkiva, partner and co-head of international arbitration at Bowmans. “The trend towards using arbitration for commercial disputes has crystallised over the last two decades. The choice between arbitration and litigation is usually made when the parties negotiate and sign a contract,” he says.

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THE MANDATORY MEDIATION EXPERIMENT In April 2025, the Gauteng High Court introduced a mandatory mediation directive, requiring parties to attempt mediation before their matters proceed to trial. AFSA is one of approximately 14 Recognised Mediation Organisations (RMOs) authorised to train mediators and administer cases under the protocol. To date, AFSA has trained over 400 mediators to the court’s standards. Mkiva offers a nuanced assessment of how corporate clients are responding. “Unless the parties are willing to revisit the potential settlement of the dispute, the mediation can often be perceived as a procedural tick-box exercise. There are also instances where

Why are companies turning to private arbitration and mediation instead of litigation? And, who does this system benefit? THANDO PATO finds out

the parties have never attempted to resolve the dispute amicably, and the mandatory mediation offers them an opportunity to do so.” He notes it has been particularly Andile Nikani effective in joint ventures and business partnerships where the parties intend to maintain their relationship going forward. For Nikani, the directive is philosophically overdue. “Our entire approach to dispute resolution is wrong in South Africa. We should have been taught, right from law school, how to mediate. Everything about law as it is taught and practised is adversarial.” His vision is a tiered system in which mediation is the first resort, arbitration the second, and courts are reserved for matters of genuine public importance.

WHO CAN AFFORD JUSTICE? While arbitration is undeniably faster, AFSA resolves the average commercial dispute in twelve months or less, depending on the availability of the parties and a judge, compared to the seven years that it may take a High Court matter to reach trial. However, speed has a price.

“If you compare it to court, yes, arbitration is expensive. When you go to court, you don’t pay for the judge. When you go to arbitration, you pay for the arbitrator. Over a period of seven years, your matter can be very expensive compared to a matter resolved in one year. What’s expensive? You must ask yourself what the value proposition is,” argues Nikani. Mkiva adds that confidentiality – one of arbitration’s most prized features for corporate clients – carries a systemic cost of its own. “The resolution of complex commercial disputes in confidential arbitration proceedings does hurt the development of South Africa’s jurisprudence, particularly in new and emerging industries. Arbitral awards are generally not made public. They create binding precedent only for future cases between the same parties, which limits their contribution to the development of legal principles.”

SOUTH AFRICA IS ON THE INTERNATIONAL ARBITRATION MAP The Arbitration Foundation of Southern Africa recently won a competitive bid – against Delhi, Seoul, Dubai, The Hague, Kigali, and Auckland – to host the 2030 International Council for Commercial Arbitration (ICCA) Congress, the global arbitration community’s most prestigious gathering, which draws over 3 000 delegates from around the world.

Source: https://www.linkedin.com/ posts/afsa-icca2030-arbitration-share-

Clement Mkiva

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Follow: Clement Mkiva www.linkedin.com/in/clement-mkiva-38a7a334 Andile Nikani www.linkedin.com/in/andile-nikani-3b568129

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IN PARTNERSHIP WITH LIGHTHOUSE LAW

CONTRACTS UNDER PRESSURE Navigating supply chain risk in a geopolitically fractured world. By LINKI SMIT, managing associate, and CAITLIN HARVEY, senior associate, at Lighthouse Law

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n early March 2026, Iranian forces declared the Strait of Hormuz closed, and within hours, war-risk insurance premiums quadrupled, QatarEnergy invoked force majeure, and shipping lanes carrying a fifth of the world’s oil fell silent. Through 2025, United States tariffs had already driven South African automotive exports into sharp decline. For businesses with cross-border supply chains, such episodes have become the texture of the operating environment itself. Drawing on our experience advising on both sides of these arrangements, we offer the following observations. 1. Force majeure: tested, and often found wanting For decades, force majeure clauses have occupied a curious position – present in nearly every commercial agreement, rarely tested, and quietly assumed to function. COVID-19 stressed that assumption; Hormuz has Linki Smit tested it again. Many parties have discovered that the protection they assumed was not what the clause delivered. The legal threshold remains demanding: performance must be genuinely impossible rather than merely more costly, and a disruption doubling a freight bill or requiring a Cape rerouting will not ordinarily satisfy it. A more searching question is whether the event was truly unforeseeable – a contract concluded in 2023, against the backdrop of an already destabilised Red Sea, may struggle on that front. The drafting response is to leave less to assumption: identify trigger events with

care, address supply chain disruption explicitly, and set out the procedural framework – notice, mitigation, consequences – for the clause’s operation. 2. The clauses that matter now, and how to balance them In volatile conditions, every protective clause cuts in two directions: the protection extended to one party is, by definition, a constraint on the other. Drafting that endures anticipates both perspectives. • Material adverse change clauses, familiar from mergers and acquisitions, provide an exit mechanism when conditions deteriorate significantly. Buyers tend to prefer narrowly defined triggers with cure periods and carve-outs for market-wide conditions; suppliers require triggers cast widely enough to capture genuinely existential disruption. • Hardship clauses compel renegotiation where the commercial foundation has materially shifted. Suppliers reach for them when input costs spike or routing costs double, meaning buyers should ensure the drafting operates symmetrically. Three elements, in our view, are non-negotiable: clearly defined triggers, a structured renegotiation process subject to time limits, and a neutral fallback if the parties cannot reach agreement. • Price escalation and reduction mechanism have become a standard expectation in

agreements involving raw materials, freight or energy. Open-ended indexation tends to favour whichever party is currently bearing less risk; agreed caps, downward obligations and manipulation-resistant benchmarks keep the agreement viable as markets move. • Termination and cure rights require careful calibration where geopolitical events are in contemplation. Shorter notice favours the party seeking exit; longer notice protects the party needing time to find alternatives. It is also critical to consider which events should trigger accelerated rights, and in whose favour. 3. Liability up and down the chain When a tier-2 component supplier in the Gulf, or a subfreight carrier rerouted via the Cape, comes under geopolitical pressure, the primary agreement may afford the buyer little meaningful recourse. The indemnity chain holds until the subsupplier invokes its own force majeure or proves insolvent. Insurance can mitigate exposure when Caitlin Harvey carefully structured in advance: political risk, trade disruption, and cargo cover all merit scrutiny against the supply chain’s actual risk profile. In our experience, businesses that have most successfully navigated recent disruptions are, generally, those that maintain engaged supplier relationships and therefore receive early warning – an advantage worth embedding contractually through information-sharing obligations, supplier audit rights and business continuity reporting requirements.

THE NEW BASELINE Geopolitical uncertainty is not, in our view, a temporary disruption to be managed until conditions normalise. The era of frictionless global commerce – affordable freight, stable routing, predictable tariff regimes – is gone. The contracts that will serve South African businesses well in the years ahead are those drafted not for the world as it was, but for the world as it is.

Follow: Linki Smit www.linkedin.com/in/linki-scholtz-27280593 Caitlin Harvey www.linkedin.com/in/caitlinharvey783 www.lighthouse.law

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POWERING FLEXIBILITY

outh Africa’s energy market is no longer defined only by security of supply. It is increasingly shaped by flexibility, commercial innovation and long-term strategic risk management. For businesses entering into power purchase agreements (PPAs), the challenge is no longer simply securing renewable energy; it is ensuring those arrangements remain commercially sustainable in a rapidly evolving environment. The energy landscape is entering a new phase of sophistication. Regulatory reform, the growth of private generation and the anticipated development of mechanisms such as the South African Wholesale Electricity Market are creating opportunities for greater market participation and pricing flexibility. At the same time, businesses are under pressure to meet sustainability commitments while preserving operational agility. This creates a fundamental tension within long-term PPAs. Historically, many renewable energy transactions relied heavily on long-term minimum offtake commitments and rigid take-or-pay mechanisms to support project bankability. While these structures may still be appropriate in certain contexts, businesses today operate in an environment where both energy markets and corporate operations can change significantly over a 10- to 20-year contract term. Production requirements shift. Facilities close or relocate. Technology evolves.

New trading frameworks emerge. Businesses also increasingly require flexibility to adapt procurement strategies as market conditions develop. For business leaders, the key question is therefore no longer simply whether a PPA delivers energy cost savings today, but whether the agreement will continue to create value throughout its life cycle. This is where strategic legal structuring becomes critical.

BALANCING BANKABILITY WITH FLEXIBILITY At Lighthouse Law, we work closely with our clients to balance bankability with commercial flexibility. Increasingly, businesses are exploring mechanisms that soften traditional take-or-pay exposure, including portfolio-balancing arrangements, trader structures, flexible volume tolerances, shorter contractual terms and market-linked pricing models. We advise clients across the full life cycle of energy and sustainability projects, combining deep commercial contracting expertise with

practical market insight. Our experience spans multiple energy technologies, including solar, wind, biomass and combined heat and power, as well as a broad range of PPA structures, including on-site embedded generation, wheeling arrangements, bilateral PPAs and trader power purchase agreements. What differentiates our practice is our practical understanding of how these deals operate beyond signature. We have extensive experience advising on trader deals from both the buyer and trader perspective; a capability that has become increasingly valuable as energy trading and market aggregation models continue to emerge in South Africa. The continued growth of virtual wheeling and trading structures is also reshaping how businesses approach renewable energy procurement. These arrangements can create opportunities for improved flexibility, geographic diversification and energy optimisation, but they also introduce new layers of contractual, regulatory and operational complexity. Our experience navigating these evolving structures allows us to help clients manage risk while unlocking Jaime Gray strategic value. Importantly, our role does not end once the contract is signed. Energy projects are long-term relationships, and the real commercial challenges often emerge during implementation and operation. Our hands-on experience managing post-signature contractual issues enables us to proactively resolve disputes, manage change and preserve value throughout the contract lifecycle. As South Africa’s energy transition accelerates, businesses require legal advisors who understand not only the law, but also the commercial realities driving the market. Our team helps clients navigate this dynamic landscape with commercially focused legal support designed to enable sustainable growth, operational flexibility and long-term resilience.

Follow: Jaime Gray www.linkedin.com/in/jaime-gray-00b501150 Lighthouse Law www.lighthouse.law

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Navigating long-term energy procurement in South Africa’s evolving market. By JAIME GRAY, senior associate at Lighthouse Law

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THE ILLUSION OF CONTROL IN AI GOVERNANCE

proposed use case. If a customer service chatbot connects to internal knowledge bases, the organisation must understand which repositories it can access, whether it preserves existing permissions, how prompts and outputs are retained, and whether it could expose personal information or confidential documents to unauthorised users. That assessment should determine whether contractual, technical or operational controls are sufficient.

CONFIGURATION, OWNERSHIP AND MONITORING

Default settings should not be assumed to reflect the controls an organisation needs. Why AI governance starts with data governance. By LISA VAN NIEKERK, Whether training on enterprise data is disabled, senior associate – Commercial & Data Privacy | CIPP/E at Lighthouse Law prompt retention switched off, access scoped and logs available may determine whether a tool stays within acceptable risk. t is 2026, and there is now an raised the stakes of getting it Some settings can be changed AI-enhanced solution for most wrong. Reliability, accuracy later; others cannot. Once operational problems. As organisations and fairness – core pillars personal information has been race to adopt artificial intelligence (AI), of AI governance – absorbed into training, it may legal and compliance teams have raced depend on the quality of no longer be separable from to govern it. the organisation’s data the model, and correction The result is a familiar compliance pattern: governance. Without or deletion may become governance has followed adoption, rather than mapping and assessing impossible to honour, whatever preceding it. Privacy lawyers are now being the underlying data, the contract says. asked to close the operational gaps created by an organisation cannot Lisa van Niekerk Governance must also enable that sequence. determine whether that safe adoption because a policy data may lawfully be used that cannot be followed pushes AI into for the proposed AI use case, AI HAS MADE DATA GOVERNANCE uncontrolled environments. That means whether it can support reliable AI FAILURES VISIBLE approved tools, clear rules on what data may be outputs, or increase the risk of producing unfair Before an AI system can generate an output, entered, practical guidance on anonymisation or misleading outcomes. it must be trained on, prompted with, integrated and training that enables responsible AI-use in with or granted access to data. The legal and daily work. Further, each approved use case operational risks often arise before anyone PROCUREMENT AS A LINE OF GOVERNANCE should have a business owner accountable for reaches the questions of model performance Most organisations are not building AI systems; keeping the tool within its approved use case, or output quality. they are buying products from suppliers configuration and data access controls. The issues now confronting privacy teams who control the model, draft the terms and Finally, governance must respond to change: illustrate this. Employees upload customer decide whether customer data improves the AI use cases, models and underlying datasets complaints, employee records or confidential service. The business remains accountable for change. Without continued monitoring and clear contracts into public AI tools. HR teams test the personal information, yet may have little ownership, an AI policy becomes a record of recruitment tools without knowing whether visibility over the technology it depends on. intention, not evidence of control. applicant data will train the model. Customer A governance programme must therefore service teams deploy AI assistants without equip procurement to treat AI tools differently confirming whether prompts and outputs from ordinary software. Tailored vendor are retained. These are data governance assessments should establish, early, whether VISIT WEBSITE failures first, leading to AI governance prompts and outputs are retained, whether SCAN TO GO TO THE failures downstream. customer or employee data will train the model, LIGHTHOUSE LAW WEBSITE This is where POPIA compliance should have whether that use can be disabled, where better prepared organisations. Its conditions data is hosted, and whether the supplier can for lawful processing already set the framework support data subject rights in practice. for data governance, requiring organisations to These questions are central to assessing know what personal information they hold, why, the risk of an AI tool in the context of its where it flows, who can access it, and how long it is kept. Data governance is therefore not a new discipline, but the scale and complexity Follow: Lisa van Niekerk www.linkedin.com/in/lisa-van-niekerk-634619129 of data processing made possible by AI have Lighthouse Law www.lighthouse.law

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LAND EXPROPRIATION

WHERE ARE WE, AND WHERE ARE WE HEADED? Land reform has always been a hotly contested issue in South Africa, with tensions around the topic increasing after new legislation around expropriation was passed in 2024. LISA WITEPSKI investigates the implications

ne of the definitive turning points in South Africa’s relationship with the United States was President Donald Trump’s announcement that his country would halt aid to South Africa, followed by the offer of refugee status to South Africans who wished to make America their home – on the same day, 7 February 2025. Both proclamations were prompted by the introduction of the Expropriation Act of 2024. Reactions at home may have been milder, but the law still catalysed heated debate. How, exactly, has it changed the existing legal framework, and what does it mean for South Africans and our economy?

A LONG ENTRENCHED PART OF THE LEGAL FRAMEWORK Ignatious Mahlokwane of Mahlokwane Attorneys explains that the new legislation replaces the Expropriation Act of 1975, an apartheid-era act that remained in force until December 2024, when the new act came into being. Most important to note, he adds, is that it brings land reform in line with the Constitution, which states that “no one may be deprived of property except in terms of law of general application and no law may permit arbitrary deprivation of property”.

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“THE ESTABLISHMENT OF THE LAND COURT AND THE LAND COURT OF APPEAL IS A FURTHER SAFEGUARD, AS THEY PROVIDE GUIDANCE IN DISPUTE MATTERS RELATING TO LAND REFORM.” – IGNATIOUS MAHLOKWANE

It’s worth noting that expropriation has always been part of South Africa’s legal framework, say Ayanda Khumalo and Nkosinathi Thema of Webber Wentzel. They report that expropriation has been used, for example, to enable government to procure land for infrastructure purposes such as road construction, dam construction and the like. So, what’s different? “The 2024 act does not wholesale change the manner in which expropriation has always been done in South Africa. It merely aligns the very premise of expropriation with section 25 of our Constitution, which enables the expropriation

of property for a public purpose or in the public interest, subject to compensation,” they explain. The biggest change, however, is that under the new act, land may be expropriated “for nil compensation”. This is the stipulation that has raised temperatures, say Khumalo and Thema, with some arguing that, since the Constitution states that expropriation “must be against compensation”, the clause is clearly unconstitutional. “It is important to note, though, that the Constitution does not define what compensation should look like,” they observe, adding further that the “nil compensation” is limited to land. Perhaps more importantly, the clause applies only in cases of abandoned land, instances where there is speculative holding of land, or where an organ of state holds the land that is not being used for its

Did you know?

Land redistribution was the dominant form of land reform between 1994 and 2009. Source: Department of Rural Development

PROPERTY LAW

core functions. Other provisos include that the land is not likely to be required, or that the value of the land is equal to (or less than) what the state has already invested in it.

NO NEED TO WORRY? Obviously, South African property owners want to know what this means for them. Concerns appear to be especially valid given incidents such as the Ekurhuleni Municipality’s stated intention to expropriate a 34-hectare property for housing purposes

Did you know?

South Africa’s land reform programme is developed around three pillars: • Land restitution, where a person or community dispossessed of land as a result of discriminatory laws or practices may lodge a claim for restitution of that property or comparable redress. • Land redistribution, where land was provided to the disadvantaged and poor for residential and productive purposes. • Land tenure reform, which aims to prevent evictions and fulfil the promise of the Constitution (that all South Africans have access to land) by providing people with secure tenure where they live.

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Source: mokoro.co.uk

Nkosinathi Thema

without compensation, its reasoning being that the Constitution does not explain what form compensation should take. The matter was proceeding to trial at the time of writing, but Khumalo and Thema observe that this action wasn’t undertaken under the new legislation, but rather through the 1975 act and the Housing Act. “We are not aware of any expropriation notices having been issued under the 2024 act,” they continue, “but it is unlikely that the urban property market should experience any impact, unless it falls within the criteria explained in the Constitution.” Even then, it is possible to challenge an expropriation notice. “Judicial review remains a bulwark against abuse of the power to expropriate.” Rural land claims are a little different because they are guided by the provisions of the Restitution of Land Act. It is feasible, then, that land under claim may be expropriated without compensation to be restituted to the claimants. What about foreign ownership? Again, there is little cause for concern, although Khumalo and Thema warn that foreign buyers of land should be aware of the possibility of expropriation, as outlined in the act. That said, this might not be a significant deterrent to foreign buyers, given that provision for expropriation has been part of the country’s legal framework since 1975. Questions around infrastructure and rezoning have also been raised, but, say Thema and Khumalo, it is unlikely the act will affect these areas, primarily because they fall under the auspices of the Department of Public Works, while municipalities oversee zoning regulations. What does this ultimately mean for landowners concerned about their property rights? “Property rights are secure in South Africa,” say Khumalo and Thema. “The Constitution has clear and robust protections afforded to property owners, and the expropriation of land has clearly delineated limitations. Over and above this, an expropriation notice is an administrative decision that may be challenged in court. Property owners need not

Fast fact

By early 2026, the government had settled between 83 000 and 84 000 land claims lodged since the introduction of the Land Restitution Programme in 1995. Source: Sanews.gov.za be alarmed by the 2024 act because it does not fundamentally change how expropriation has always been done in South Africa, and the provisions of nil compensation only apply to land and even then, within clear limits.” Mahlokwane adds that the establishment of the Land Court and the Land Court of Appeal is a further safeguard, as they provide guidance in dispute matters relating to land reform.

WHERE TO FROM HERE? Thema and Khumalo say that although land reform is progressing, it has been slow and fraught with issues, largely because of a lack of capacity within the Department of Land Reform. The Land Court’s heavy caseload is an additional complicating factor, which has stifled the finalisation of claims. Where land is successfully restituted to communities and held in communal property associations, the lack of post-settlement support further affects the productive utilisation of restituted land. Government is addressing this through a variety of programmes aimed at providing training and support for beneficiaries of land reform, Mahlokwane informs. “It’s also worth noting that the National Development Plan Vision 2030 has targets for land reform. These include ensuring sustainable production of transferred lands; establishing monitoring institutions to protect land markets from opportunism, corruption and speculation; and offering commercial farmers and organised industries the opportunity to significantly contribute to the success of black farmers through mentorships, chain integration, preferential procurement and meaningful skills development,” he says.

Follow: Ignatious Mahlokwane www.linkedin.com/in/ignatious-marekolle-mahlokwane-7021a348 Ayanda Khumalo www.linkedin.com/in/ayanda-khumalo-93426823 www.linkedin.com/in/nkosinathithema Nkosinathi Thema Ayanda Khumalo

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CYBERSECURITY

ENHANCING CYBERSECURITY GOVERNANCE

n many cybersecurity incidents we manage, the control failures or otherwise avoidable causes often stem from insufficient investment in cybersecurity. The reality for any organisation is the significant risk of being hacked, losing valuable data or facing a nation-state attack. However, board members and legal teams may lack a comprehensive understanding of cybersecurity and its legal implications.

INCREASED FOCUS ON CYBERSECURITY OVERSIGHT The Joint Standards introduced by the Prudential Authority and the Financial Sector Conduct Authority (FSCA), mandatory for financial institutions from June 2025, emphasise cybersecurity oversight and governance. The board of directors is responsible for implementing and monitoring a robust cybersecurity framework. Yet, the technicalities of protecting technology may be outside their expertise. Therefore, an educational programme targeting in-house legal teams, senior management and board members is crucial. This programme should inform them of the risks and basic cybersecurity requirements, enabling them to make informed decisions about cybersecurity investments.

THE IMPORTANCE OF CYBERSECURITY RISK MANAGEMENT A serious cybersecurity incident can be catastrophic. Even in the best-case scenario, managing such an incident requires enormous resources and diverts attention from regular business operations. For instance, a ransomware attack –

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Rosalind Lake

even if you pay a ransom or have excellent backups – it can take weeks to resolve and months or years to address ongoing legal consequences. Our recent incident responses have revealed, even in well-prepared organisations, gaps in disaster recovery planning for a full outage caused by a ransomware attack and in preparedness for managing third-party incidents. While not all eventualities can be planned for, understanding cybersecurity control failures at the top management level and seeking expert advice can significantly enhance an organisation’s cybersecurity maturity. Cybersecurity should be a regular agenda item at board meetings, requiring continuous monitoring, investment and improvement. The chief information security officer (CISO) should have adequate time to justify necessary investments, and experts should be brought in to bridge the gap between legal and technical issues.

EDUCATION AND COLLABORATION Educating boards and legal teams on cybersecurity and ensuring in-house legal teams are aware of cybersecurity and artificial intelligence (AI) risks is crucial. One major challenge in

INTEGRATING CYBERSECURITY INTO RISK MANAGEMENT Effective governance and management of cybersecurity and AI risk require collaboration between legal teams, cybersecurity teams, the executive and the board of directors. Risks should be identified at the start of a project and during regular reviews, not after an incident occurs. Human error, rather than system failure, is often the culprit, but a combination of factors could have been detected and corrected. One way to reduce cyber-incident risks is to enforce a strict data retention policy. Reducing the amount of data available to steal minimises the target size. Prioritising data management systems will improve cyber-resilience. The successful organisation of the future integrates its CISO and legal functions within its risk management portfolio, centralising cybersecurity management rather than relegating it to the IT team. By fostering a culture of continuous education, collaboration, and investment in cybersecurity, organisations can better prepare for and mitigate the risks associated with cyber threats.

Follow: Rosalind Lake Norton Rose Fulbright

www.linkedin.com/in/rosalind-lake-51624b15 https://www.nortonrosefulbright.com/en

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ROSALIND LAKE, head of cybersecurity and data privacy at Norton Rose Fulbright South Africa, explores the role of the legal team in co-ordinating between the chief information security officer/chief information officer/IT team and the board to ensure cybersecurity risks are actually addressed

cyber-incident response and regulatory investigations is protecting legal privilege over cyber-incident investigations, especially with foreign parent or subsidiary involvement, which can lead to class action litigation following an incident. Legal involvement is essential to manage these risks. In-house legal teams need to understand the true legal risks of a cybersecurity incident and empower the CISO to secure the necessary funding to truly manage risk. Legal teams and CISOs must work in partnership. It may not be the CISO’s strength to prepare a document trail or monitor the processes and remediation steps that are critical in an investigation and legal defence. This is where the legal expertise can build the organisation’s resilience and readiness.

IN PARTNERSHIP WITH ALCHEMY

RADICAL REFORM IN THE SOUTH AFRICAN RAIL SECTOR MORNÉ VAN DER MERWE, Alchemy senior partner, asks if, finally, we are hearing the beautiful noise of the clickety-clack of a train on a track?

he South African logistics landscape has officially reached a major structural tipping point. Crippled by years of endemic corruption, institutional malfeasance and the compounding hurdles posed by rigid black economic empowerment regulations, the state’s long-standing freight monopoly is finally being systematically dismantled through a package of far-reaching legislative and regulatory reforms. The signing into law of the Economic Regulation of Transport Act in March 2026, the unveiling of the National Rail Master Plan (a 30-year, R1.9-trillion blueprint to fully restore the national network) and the National Rail Policy of 2022 have converged to deliver a massive restructuring milestone with the potential to unlock infrastructure, foster regional integration and materially reduce logistics overheads. The ongoing operational unbundling of state-owned enterprise Transnet has reached a major milestone, with the newly formed division, Transnet Rail Infrastructure Manager (TRIM), responsible for formally allocating, in May of this year, third-party rail slots to 11 private train operating companies (TOCs) under signed access agreements. The recent legal and regulatory changes in South Africa’s rail sector are potentially some of the most important economic reforms in the country in the last decade, particularly for mining, agriculture, manufacturing and export-driven businesses that depend on efficient and effective “pit-to-port” logistics.

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HISTORIC POSITION For years, a compounding logistics crisis has throttled national economic growth. Severe rail inefficiencies, chronic port congestion, pervasive cable theft, equipment shortages and structural underinvestment have severely affected South Africa’s ability to move bulk commodities. According to Transnet financial

data and the Department of Transport’s Freight Logistics Roadmap, annual freight rail volumes plummeted from approximately 226 million tonnes in 2017/18 to 160 million tonnes in the 2024/25 financial year. The consequence has been devastating. Producers across the country have had valuable product sitting idle at the “pit” with zero reliable or secure capacity to move it to coastal terminals.

Morné van der Merwe

NATURE OF REFORM The legacy paradigm of Transnet Freight Rail (TFR) operating as a vertically integrated monopoly is officially over. Current legislation strictly enforces a clean unbundling of the sector, segmenting it into two distinct commercial spheres: 1. TRIM: a division of Transnet that retains ultimate ownership of the national rail track asset. TRIM acts strictly as an independent referee, overseeing network maintenance, safety compliance via the Railway Safety Regulator, and the transparent allocation of time slots. 2. The Operational Marketplace: TFR now operates merely as one competitor among many on the tracks. Approved private operators can freely bid for and secure operational slots on 41 distinct routes spanning six strategic freight corridors. Moving from policy to practical execution fundamentally changes how business gets done, particularly for bulk commodity producers navigating the complex path from “pit to port”. Multiple competitors can now run trains and end users gain service options and pricing competition. By streamlining this infrastructure supply chain, these changes serve to boost national export efficiency and stimulate economic growth.

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THE RECENT LEGAL AND REGULATORY CHANGES IN SOUTH AFRICA’S RAIL SECTOR ARE POTENTIALLY SOME OF THE MOST IMPORTANT ECONOMIC REFORMS IN THE COUNTRY IN THE LAST DECADE. IMPACT OF REFORM Competition Under this liberalised framework, private TOCs can formally apply to operate trains on Transnet-owned infrastructure via regulated access mechanisms. Throughout 2025 and 2026, South Africa officially allocated strategic rail slots across key corridors to exporters of coal, manganese, iron ore, containers and fuel. While the physical track infrastructure remains state-owned, operations are being opened up to private-sector competition, mirroring key commercial tenets of the European rail access vertical separation model. To safeguard this nascent market, the Economic Regulation of Transport Act provides for an independent transport regulator tasked with preventing anti-competitive behaviour and regulating network access tariffs, ensuring that state mechanisms cannot arbitrarily price out private capital. The arrival of the 11 approved consortia, including operators, among others, such as Grindrod, MENAR, TLD Marine, The Railway Corporation, Mediterranean Shipping Company, Sharp Logistics, and ARC South Africa, will hopefully not be too little too late and will fundamentally alter the logistics dynamic for inland production hubs plagued by historical bottlenecks. By replacing lost opportunity costs with private efficiency, the reform allows mining

houses to run at optimal production capacity, directly stimulating corporate earnings and national gross domestic product. Economic growth and export opportunities This operational revolution alters the commercial outlook for bulk commodity exporters. South Africa’s mining sector, particularly manganese, iron ore, chrome, coal and platinum-group metals, is structurally dependent on efficient, high-volume, long-distance rail corridors connecting to the ports of Richards Bay, Durban, Saldanha, Gqeberha, and South Africa’s newest and deepest container port terminal – Ngqura (at Coega). Historically, constrained rail capacity meant that miners could not export at optimal volumes, junior miners struggled to secure rail allocation, trucking became a costly substitute, and international buyers viewed South African supply chains as unreliable. By introducing meaningful private-sector participation, TRIM anticipates that the 11 new operators will initially inject between 20 and 24 million tonnes of immediate freight capacity into the network, scaling up continuously over time. This directly underpins the state’s broader target of driving national rail volumes from 180 million tonnes back towards the 250 million tonne mark by 2030. Critically, restoring this

Rolling stock financing Crucial to financing this capital-intensive transition is the Luxembourg Rail Protocol, a 2007 international treaty forming a Protocol to the Cape Town Convention on International Interests in Mobile Equipment. It establishes a system for the cross-border recognition, priorities and enforcement of the rights of creditors and lessors in all types of railway rolling stock – from high-speed to light-rail trains, freight and passenger locomotives, wagons, trams, subways, and even cable cars and cranes running on rails. An International Registry of Interests in Rolling Stock, managed by Regulis, is now operational and able to allocate Unique Rail Vehicle Identification System (URVIS) 16-digit numbers, enabling financiers to track their assets – especially important for assets operating in multiple jurisdictions. South Africa submitted its ratification instrument on 27 January 2025, with the Protocol becoming effective from 1 May 2025, making it the sixth contracting state and the second African state after Gabon to ratify. Although ratified, the Protocol has not yet been domesticated into South African domestic law, but this is believed to be imminent. In terms of anticipated benefits, the Protocol broadens financing options for the private sector, particularly new entrants, to finance rail access and regulates and assists in mitigating financing and debt risks, lowering barriers to private-sector participation in South Africa’s rail network. “A significant benefit is its potential to attract foreign investment, as the Protocol takes precedence over domestic law in contracting states, reducing jurisdictional legal uncertainties for foreign lenders,” notes Pierre Burger, partner at Alchemy. “Furthermore, the Export

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operational capacity substantially cuts the overall logistics spend for exporters, instantly expanding corporate profit margins and making South African commodities far more price-competitive on the global stage.

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Credit Insurance Corporation of South Africa announced it will apply a risk premium discount of up to twenty per cent where it underwrites rolling stock financings in states where the Protocol is in force – a tangible financial incentive that underscores the Protocol’s role as a catalyst for cheaper, more accessible rail financing in South Africa.”

THE POSITION IN OTHER AFRICAN JURISDICTIONS As South Africa embarks on this journey, its continental peers provide clear evidence of how well-structured public-private partnerships can work to deliver meaningful infrastructure opportunities. • The Lobito Corridor: a premier example where a 30-year private concession awarded to the Lobito Atlantic Railway consortium, backed by substantial international funding, has yielded immediate operational dividends. Since its 2023 launch, the corridor has achieved a record monthly throughput of 37 000 tonnes, while slashing transit times from DRC mines to port from 25 days to just 5–8 days, reducing overall logistics costs by roughly 30 per cent. • Ghana’s Western Railway Line: managed through a 25-year agreement with the Thelo DB consortium, this project reflects a long-term sovereign commitment to modernising rail infrastructure and establishing a commercially sustainable, integrated network.

• The Simandou Railway (Guinea): illustrates the sheer scale achievable through synchronised private investment, with a multi-user rail and port network supporting one of the globe’s largest mining developments, boasting an annual capacity of approximately 120 million tonnes. • Mozambique’s Logistics Corridors: the Nacala Logistics Corridor demonstrates the power of private concession models, driven by a $4.1-billion investment and record cargo volumes in 2024. Concurrently, the Maputo Development Corridor remains a gold standard for regional integration, handling roughly 30 million tonnes annually through highly successful cross-border collaboration. It is hoped that with the new changes to rail policy in South Africa, we could catch up with these successful African examples by 2028, thereby enticing investment and creating regional connection and co-operation.

WHAT COULD POSSIBLY GO WRONG? While this transformation marks a watershed moment for the Southern African business community, commercial realities dictate that structural shifts do not occur overnight; valid, substantive risks remain. The 11 incoming operators are stepping onto a national network that continues to navigate acute maintenance backlogs, deteriorated infrastructure, severe deferred track rehabilitation, persistent

signalling failures and highly sophisticated, syndicated cable theft networks. The ultimate economic success of these sweeping reforms hinges entirely on two critical operational dependencies: • How transparently and effectively TRIM reinvests newly collected private access fees directly back into track rehabilitation. • Whether operators and state entities can successfully co-invest in security frameworks and localised infrastructure upgrades to keep the lines moving safely and reliably. Industry commentators continue to caution that true, sustainable liberalisation is heavily dependent on the unassailable independence, credibility and enforcement teeth of both the infrastructure manager and the regulator. For a country with globally significant mineral reserves, particularly in critical minerals, fixing the logistics chain between “pit and port” may ultimately determine whether South Africa fully participates in the next global commodity cycle.

Africa’s next phase of growth will be driven by infrastructure, critical minerals, energy transition investment and cross-border capital flows. Alchemy advises clients operating at the forefront of these sectors, including mining companies, financiers, developers, investors and multinational corporates. We combine high-level transactional expertise with agile, partner-led service delivery to help clients navigate complex African business environments with confidence. Do you need strategic legal advice that delivers practical solutions? Get in touch: morne@alchemylawafrica.com www.alchemylawafrica.com

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BY STREAMLINING THIS INFRASTRUCTURE SUPPLY CHAIN, THESE CHANGES SERVE TO BOOST NATIONAL EXPORT EFFICIENCY AND STIMULATE ECONOMIC GROWTH.

For more information contact: www.alchemylawafrica.com https://www.linkedin.com/company/alchemy-law info@alchemylawafrica.com +27 (0)10 035 5027

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LABOUR SAFETY

PROFIT VERSUS SAFETY

he Occupational Health and Safety Act 85 of 1993 (OHSA) and the Mine Health and Safety Act 29 of 1996 (MHSA) are the bedrock of South Africa’s workplace safety legislation foundation. Yet enforcement remains a problem. “The gap between statutory obligation and operational reality is wider than it should be,” says Amandla Magubane, senior associate at Bowmans.

STRETCHED TO THE LIMIT Kgodisho Phashe, senior associate at Cliffe Dekker Hofmeyr, and Tiago Rodrigues, candidate attorney in the firm’s employment law practice, say OHSA enforcement is hindered by insufficient funding, a fragmented regulatory architecture and an inspectorate stretched far beyond its means. Central to the enforcement problem is a structural imbalance because the Department of Employment and Labour (DEL) is, in practice, far more reactive than proactive. “A functioning OHS system should be predominantly preventive in character. The current resource and capacity constraints mean that the DEL is, in effect, significantly reduced to a reactive posture once incidents do occur. This undermines the preventative intent of the legislation, which is meant to identify and correct systemic risks before harm occurs,” says Magubane. The widely reported building collapse in George in 2024 illustrated both the reach and the limits of the system. “A section 32 formal inquiry was triggered, an investigation completed and the report submitted to the National Prosecuting Authority – a process as evidence that accountability mechanisms do function. However, the collapse also exposed a further

layer of vulnerability: 53 of those killed or injured were foreign nationals working without valid work permits. “The authorities are doing their best; however, there is insufficient funding and availability of resources. With more funding, inspectors would achieve greater impact,” say Phashe and Rodrigues. The International Labour Organisation (ILO) recommends a ratio of 1 inspector per 20 000 employees. The ILO itself has flagged a structural concern: low salaries and limited career prospects for South African inspectors drive high turnover, undermining continuity and technical expertise within the inspectorate. A further complication is regulatory fragmentation. The OHSA is administered by the DEL, while the MHSA falls under the Department of Mineral and Petroleum Resources, a split that limits effectiveness and dilutes accountability, say Phashe and Rodrigues.

PAPER TIGER On paper, the liability framework for employers is strong. Section 16 of the OHSA places direct duties on CEOs. Section 37 enables indirect liability to be attached to employers for employees’ acts or omissions, unless the employer can demonstrate that an employee acted without permission, beyond the scope of their authority, and that all reasonable steps were taken to prevent the conduct in question. The MHSA goes further: section 86a provides for criminal liability against any employer, manager, employee or CEO whose failure to comply with the act causes death or serious injury. “The imposition of fines and provisions of

Amandla Magubane

LEGAL

Kgodisho Phashe

Fast fact

South Africa’s mining sector recorded 42 fatalities in 2024, the lowest in the industry’s history and a 24 per cent drop from 55 in 2023. The Department of Employment and Labour inspectorate conducted 8 865 inspections and audits in 2023/24; this remains below the International Labour Organisation’s recommended ratio of 1 inspector per 20 000 employees. Source: Kgodisho Phashe, Senior Associate, and Tiago Rodrigues, Candidate Attorney, Cliffe Dekker Hofmeyr imprisonment alone are not enough to change corporate behaviour or reinforce an OHS culture,” says Magubane. Phashe’s view is that fines, as currently structured, are not calibrated to the level of risk faced by workers. “It is not unreasonable to conclude that the penalties prescribed under the current legislative framework are not proportionate enough to change corporate behaviour.”

ACCOUNTABILITY VACUUM Magubane identifies another blind spot that compounds enforcement. “South Africa does not have a national, real-time, publicly accessible workplace incident database, which limits the ability to target enforcement strategically. In addition, subcontracting chains diffuse accountability in ways that existing legislation does not adequately address.” The legislative pipeline offers cautious optimism. The OHSA Amendment Bill – gazetted in 2021 but not yet enacted – and the MHSA Bill of 2024 both propose expanded employer duties, stronger anti-victimisation provisions for workers who report violations, and higher penalties.

Follow: Amandla Magubane www.linkedin.com/in/amandlakathixo-amandla-magubane-68495881 Kgodisho Phashe www.linkedin.com/in/kgodisho-phashe-64302691 www.linkedin.com/in/tiago-rodrigues-b07882167 Tiago Rodrigues Tiago Rodrigues

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Workplace safety remains an issue, particularly in high-risk sectors such as mining, construction and energy. THANDO PATO speaks to labour experts to find out the safety and labour challenges facing the sectors, and the legal requirements

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OLD RULES, NEW PRESSURES The foundations of employee relations in South Africa have not moved. Everything built on top of them has, writes RYAN ANDERSON, labour law executive at Labournet

outh Africa’s workplaces are under strain. Economic pressure, a more rights-aware workforce, and the growing complexity of how people work are combining to create an employee relations environment that punishes the unprepared. Yet beneath the turbulence, the fundamentals have not moved. The Labour Relations Act (LRA) and the Basic Conditions of Employment Act (BCEA) still anchor everything, with fairness, due process and protection against unfair dismissal remaining non-negotiable. Trade unions retain significant influence, particularly in mining, manufacturing and the public sector. The Commission for Conciliation, Mediation and Arbitration (CCMA) remains the primary arena for dispute resolution, and employers are still required to act consistently, document decisions carefully, and be able to defend them. What has changed is the breadth of who those foundations are now expected to protect.

EMPLOYEES ARE ARRIVING AT DISPUTES BETTER INFORMED AND MORE PREPARED THAN THEIR EMPLOYERS SOMETIMES EXPECT.

Traditional Foundations

New Workplace Pressures

Employer Risks

LRA

Gig economy

CCMA disputes

BCEA

Hybrid work

Reputational damage

Due process

Rights-aware workforce

Misclassification claims

Fairness

Burnout and absenteeism Collective action

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The Employee Relations Landscape

Ryan Anderson

LEGAL

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IN PARTNERSHIP WITH LABOURNET

THE BOUNDARIES HAVE MOVED The definition of who deserves protection has broadened considerably. Legislative developments and case law have progressively expanded protections for so-called “non-standard workers”, including fixed-term, part-time and labour-broker employees. Amendments to the LRA have reinforced equal treatment provisions and placed greater accountability on employers to justify temporary employment arrangements – structures that were previously used with considerably more flexibility.

Evolution of Worker Protection

Traditional Employees Fixed-Term Part-Time Employees Employees Labour Broker Employees Platform/Gig Future Workforce Models Workers The gig economy has sharpened this tension further. Platform-based work – ride-hailing, delivery services, freelance digital work – has forced courts and regulators to confront whether people categorised as independent contractors are, in substance, employees entitled to statutory protections. South Africa has not yet fully codified its position, but the courts are increasingly being asked to do exactly that. Misclassification carries real risk: claims for benefits, unfair dismissal and statutory protections can follow. At the same time, collective bargaining is consolidating in certain sectors. Where bargaining structures become more co-ordinated, the scope and impact of collective disputes widen – and employer exposure with it. Beyond the legislative shifts, workplace dynamics have changed in ways that are harder to legislate, but equally difficult to manage. Higher absenteeism, burnout and performance concerns have become more prevalent, blurring the line between misconduct and incapacity. Hybrid and remote work have introduced new challenges around supervision and performance management. The balance of knowledge in the workplace has shifted. Employees are increasingly well-versed in their rights and prepared to use them – and poor employee relations practices now carry reputational consequences as well as legal ones. Getting employee relations right has always mattered. What has changed is the cost of getting it wrong.

The Cost of Getting Employee Relations Wrong

HYBRID AND REMOTE WORK HAVE INTRODUCED NEW CHALLENGES AROUND SUPERVISION AND PERFORMANCE MANAGEMENT. WHERE THE WORK HAPPENS The gap between a manageable situation and a costly one often comes down to preparation. Five areas matter most: • Early intervention: Address absenteeism, misconduct and performance concerns before they escalate into formal disputes. • Clear policies and consistent application: Managers need to understand how to apply policies fairly and uniformly across the organisation. • Accurate classification: Distinguishing correctly between misconduct, incapacity and operational requirements is fundamental to getting outcomes right. • Solid documentation: Clear records support decisions and significantly reduce legal exposure. • Legislative awareness: Changes in employee protections and obligations are ongoing, which means that what applied last year may not apply today. The state of employee relations in South Africa is not one of crisis, but it is one of consequence. Employers who understand both their obligations and their rights, and who build workplaces that reflect that understanding, will be far better placed to weather what comes next.

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BY POOLING RESOURCES ACROSS A NATIONAL NETWORK, MEMBER FIRMS GAIN ACCESS TO COST EFFICIENCIES, SHARED SERVICE PLATFORMS AND VALUE-ADDING PARTNERSHIPS THAT WOULD OTHERWISE BE DIFFICULT TO ACHIEVE INDEPENDENTLY.

A VISION ROOTED IN TRANSFORMATION AND ACCESS

Celebrating a legal network that enables member firms to retain autonomy while leveraging the resources, expertise and economies of scale of a nationally recognised brand. By LESLEY MOKGORO, chair of PH Group

n an increasingly complex legal and business environment, South African law firms are under pressure to deliver broader expertise, greater efficiency and more competitive value, without losing the personal relationships and independence that define their identity. At the centre of this evolving landscape stands the PH Group, a large legal network dedicated exclusively to supporting local law firms. Established in 2006 by founding member firm PH Attorneys, the PH Group has grown from a visionary response to a sector-wide need into a nationally recognised legal network that continues to shape the way independent firms collaborate, compete and grow. Nearly two decades later, its model remains both distinctive and increasingly relevant: independent law firms working together through structured collaboration, shared expertise and strategic alignment, while maintaining full autonomy and separate legal identity.

INDEPENDENT BUT CONNECTED At the core of the PH Group is a distinctive structural model. Unlike traditional partnerships or corporate consolidations, the PH Group is a legal association of independent law firms. Member firms practise separately, maintain their own legal identities and retain full liability and operational independence. Yet, through structured association agreements with PH Attorneys, these firms also gain access to a powerful collective platform that enhances their capabilities in meaningful ways.

Lesley Mokgoro

LEGAL

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INDEPENDENT LAW FIRMS, UNIFIED STRENGTH

The origins of the PH Group lie in a simple yet powerful insight: small and medium-sized law firms often possess exceptional legal talent and strong client relationships, but lack the scale, infrastructure and access to specialist resources enjoyed by larger firms. PH Attorneys, established in 2002 by founding partners Violet Phatshoane (now Acting Judge of the Supreme Court of Appeal) and Douglas Henney (former chair of the PH Group), recognised this gap early on. Their vision was to build a platform that would allow independent firms to remain independent yet benefit from the strength, reach and capability of a collective network. In response, the PH Group was established in 2006. The first member firm, Kotze Low Swanepoel, joined the network the same year, marking the beginning of what would become a sustained period of growth driven by shared purpose and measurable value. Today, the PH Group is a large legal network in South Africa, built on a foundation of transformation, collaboration and professional excellence.

IN PARTNERSHIP WITH PH GROUP

The result is a hybrid system that combines autonomy with collaboration and independence with shared strength.

SHARED EXPERTISE AND COLLECTIVE CAPABILITY One of the most significant benefits of the PH Group is access to shared expertise across a national network. Not every law firm can maintain deep specialisation in every area of law. Within the PH Group, however, member firms can tap into a broader ecosystem of knowledge, experience and legal skill. This enables firms to collaborate across jurisdictions, refer work internally within the network, and jointly develop solutions for complex legal matters. This collaborative framework ensures that clients are not limited by the capacity of a single firm. Instead, they gain access to a network-backed service offering that can respond to diverse legal needs, from commercial and corporate law to labour, litigation, property, regulatory compliance and specialised advisory services. Member firms remain the primary client interface, while the network provides the depth and reach that strengthen their offering. As a result, clients experience the best of both worlds: personalised legal service from a trusted local firm, backed by the resources of a national legal network.

ECONOMIES OF SCALE IN A COMPETITIVE MARKET

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Beyond legal expertise, the PH Group also delivers tangible operational advantages through economies of scale. By pooling resources across a national network, member firms gain access to cost efficiencies, shared service platforms and value-adding partnerships that would otherwise be difficult to achieve independently. These efficiencies extend across multiple dimensions of legal practice, including technology adoption, training initiatives, recruitment support and strategic business development. In a competitive legal market where margins are under pressure and client expectations continue to rise, these efficiencies play a critical role by allowing member firms to benefit from preferred partnerships and negotiated advantages that support long-term operational resilience.

COLLABORATION AS A STRATEGIC ADVANTAGE Collaboration is not simply a principle within the PH Group; it is a practical mechanism that drives performance. Member firms engage in ongoing collaboration to stay abreast of legal developments, regulatory changes and emerging industry trends. This continuous exchange of knowledge strengthens the overall capability of the network and ensures firms remain responsive in a rapidly evolving legal environment. With a national footprint of member firms across South Africa, the PH Group is uniquely positioned to facilitate seamless collaboration and referrals across regions and practice areas.

LEADERSHIP PERSPECTIVE: A CULTURE OF PURPOSE AND PROGRESS Leadership within the PH Group continues to emphasise the importance of transformation, sustainability and collective growth within the legal profession. As highlighted in the PH Group Transformation Report: “The strength of the PH Group lies not only in its scale, but in its shared commitment to transformation, collaboration and excellence. We are building a legal ecosystem where independent firms can thrive collectively while preserving their identity, their values and their connection to the communities they serve.” This perspective reflects the broader ethos of the PH Group: that meaningful progress in the legal sector is achieved not through consolidation alone, but through enabling independent firms to grow stronger together.

A PERSONAL APPROACH IN A NATIONAL NETWORK The PH Group remains deeply rooted in a principle of personal service. Member firms are not anonymous branches of a corporate structure, but independent practices embedded in their local communities. This local presence is a critical differentiator. It allows firms to maintain close client relationships, respond quickly to local needs and provide personalised legal guidance grounded in context and trust.

BY ENABLING FIRMS TO REMAIN INDEPENDENT WHILE OPERATING WITHIN A STRUCTURED, SUPPORTIVE NETWORK, THE PH GROUP HAS CREATED A SUSTAINABLE ECOSYSTEM THAT BENEFITS FIRMS, CLIENTS, LOCAL COMMUNITIES AND THE BROADER LEGAL PROFESSION.

The PH Group enhances, rather than replaces, this local strength. By combining personal service with national capability, the network ensures clients do not have to choose between intimacy and expertise; they receive both.

TWO DECADES OF GROWTH AND IMPACT Over the past 20 years, the PH Group has grown steadily and purposefully, reflecting both the demand for its model and the strength of its value proposition. From a single founding vision, it has evolved into a national network of independent law firms united by shared standards, professional integrity and a commitment to transformation. Its growth is not measured merely by the number of member firms, but also by the depth of collaboration, the quality of legal services delivered and the strengthened sustainability of independent practices across South Africa.

THE FUTURE OF INDEPENDENT LEGAL PRACTICE As the legal industry continues to evolve, the PH Group represents a compelling model for the future of independent practice. It demonstrates that autonomy and collaboration are not opposing forces, but complementary strengths. By enabling firms to remain independent while operating within a structured, supportive network, the PH Group has created a sustainable ecosystem that benefits firms, clients, local communities and the broader legal profession. In a sector defined by change, consolidation and increasing complexity, the PH Group stands for something distinct: independence strengthened through connection, and excellence achieved through collaboration.

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For more information contact: www.phfirms.co.za www.linkedin.com/in/lesley-mokgoro-4496aa211

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CROSS-BORDER GROWTH IN AFRICA FACES A REGULATORY MAZE

Regional trade frameworks are opening new markets for South African companies, but overlapping regulations, local compliance demands and uneven implementation continue to shape how – and how quickly – they expand across the continent, writes VUKANI MAGUBANE

outh African companies expanding across borders face both opportunity and complexity. Regional integration frameworks such as the African Continental Free Trade Area (AfCFTA) have opened new markets, but the path to growth remains shaped by diverse national laws and compliance requirements. Rising compliance demands at an operational level, particularly in sectors such as mining and infrastructure, are adding another layer of complexity. These challenges can raise costs and extend timelines, even as they push companies to adapt.

APPROVALS AND LICENSING HURDLES Angela Simpson, partner and M&A specialist at Bowmans, says the friction is most visible at the point of execution. Cross-border transactions that appear straightforward in principle can quickly become complex as companies encounter differing regulatory expectations across jurisdictions. Each market has its own company registration standards, tax regimes, labour codes and sector-specific regulations. As Simpson notes: “If you are doing a cross-border transaction, you are dealing with a raft of approvals, from competition and anti-trust regulators to licensing and foreign investment approvals –and each jurisdiction has its own requirements.” These approval processes frequently vary, creating uncertainty and delays. “Transactions requiring multiple approvals will inevitably take longer, particularly where regulators are not aligned or where licensing regimes operate independently,” she explains.

LEGAL

The impact is most pronounced in competition law, to align in highly regulated sectors approaches and create such as telecommunications, more predictable standards insurance and financial across jurisdictions, but services, where licensing every country is still frameworks are complex different,” she says. and timelines are Regulatory co-ordination often extended. is becoming more visible “You have to balance the in practice. Authorities are inconvenience and timing increasingly collaborating, of obtaining approvals with approvals in one Methembeni Moyo and understand that each jurisdiction, particularly South country has its own economic Africa, often influencing others. and political objectives,” Simpson This is helping to reduce duplication says. “Every country is trying to protect its and create a more pragmatic environment own economy and local interests. So, while for cross-border deals. regional frameworks exist, they cannot override national priorities,” she explains. DEMAND KEEPS EXPANSION ON TRACK There are, however, signs of progress. Nowhere is this more visible than on the “There have been real efforts, particularly ground. Even as compliance requirements become more complex, strong underlying demand continues to drive expansion, particularly in the mining sector. A surge in global demand for commodities such Africa holds approximately as copper, gold and platinum is creating significant opportunities across 30 per cent of the world’s mineral the continent. reserves, including platinum, “There is unprecedented demand for gold and copper. Rising global African commodities, and that is driving demand for these commodities investment across the mining value chain,” is driving billions in investment says Methembeni Moyo of NSDV. This growth is being reshaped by local content across the mining value chain, requirements. “Governments are using making the sector a cornerstone ownership requirements as a lever to ensure of cross-border expansion for more local participation in key industries,” South African companies. Moyo explains. For South African service Source: International Energy Agency, providers supplying goods and services ISS African Futures to mines, this often means restructuring

Fast fact

CROSS-BORDER REGULATIONS

operations, from opening local offices to forming partnerships that meet ownership thresholds, which can range from 25 to 51 per cent. “Bigger players have the resources to conduct proper due diligence and Dr Gustav Brink structure partnerships carefully. Smaller businesses often have to move quickly to comply and may not fully understand the longterm implications,” Moyo notes. This can create risks over time. “We are seeing cases where companies enter into partnerships to meet regulatory requirements and later encounter disputes once those businesses become profitable,” he adds. Beyond ownership requirements, the cost of compliance is rising. Companies are increasingly expected to establish a physical presence, employ local staff and invest in navigating regulatory systems. “It is no longer enough to service a market remotely. Companies need a local presence, local partners and local compliance structures,” Moyo says. For many firms, this represents a shift in approach. “The days of flying into a country for short-term contracts are over. Companies now have to think about long-term establishment and investment from the outset.” This creates a paradox: compliance is becoming more complex and costly, but the commercial opportunity remains compelling. “Companies are willing to navigate these requirements because the opportunities are there, but it does mean higher costs, longer timelines and more complex entry strategies,” Moyo says. This operational reality highlights the gap between policy ambition and business execution.

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PRACTICAL BARRIERS REMAIN From a policy perspective, the persistence of these challenges reflects the difficulty of aligning legal and regulatory systems across diverse economies. According to Dr Gustav Brink, extraordinary lecturer and expert in international trade law and trade remedies at the University of Pretoria, the biggest obstacles to intra-African trade remain practical rather than theoretical. Tariffs, nontariff barriers and infrastructure constraints continue to weigh heavily on cross-border activity. “Nontariff barriers often have at least double the impact of tariffs, with issues such as duplicated testing requirements, delays at borders and lack of mutual recognition significantly increasing costs,” he says. While AfCFTA has been widely adopted, implementation remains uneven, with only a limited number of countries actively trading under its provisions. Dr Brink notes that overlapping regional memberships and extensive documentation requirements further complicate trade. Companies often face multiple sets of rules depending on which regional bloc they operate within. Global frameworks such as the World Trade Organization (WTO) provide a baseline for trade, with many African agreements drawing from these standards. However, layering global, regional and national systems can add complexity in practice. “Most African regional protocols are based on WTO rules, but overlapping memberships mean companies must navigate different regimes simultaneously,” explains Dr Brink. Angela Simpson

He adds that the issue is less about aligning frameworks and more about implementation. “AfCFTA largely aligns with WTO principles – the real challenge is harmonisation and mutual recognition of standards across African countries.” Without this, companies may prioritise markets where regulatory environments are more predictable.

PRAGMATISM AMID COMPLEXITY Even as global frameworks provide a foundation, companies on the ground must still navigate fragmented systems and practical constraints. There are signs of incremental progress, though. Regulators within COMESA, ECOWAS and SADC are working to streamline processes and move towards greater alignment. In Southern Africa, authorities often look to South Africa’s lead when shaping competition and M&A approvals, contributing to more predictable outcomes. However, complexity remains part of the landscape. “Those who work in cross-border transactions are becoming increasingly adept at finding solutions,” says Simpson. For now, the gap between integration in principle and execution in practice continues to shape how South African companies expand acrossthe continent, from deal structuring to on-the-ground operations.

Follow: Dr Gustav Brink www.linkedin.com/in/gustav-brink-753b8316 Angela Simpson www.linkedin.com/in/angela-simpson-bowmanslaw Methembeni Moyo www.linkedin.com/in/methembeni-moyo-382844112

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For more information: www.juta.co.za

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A NEW DEAL

MERGERS AND REGULATIONS Activity in mergers and acquisitions has rebounded in South Africa recently, but under stricter competition and public interest rules, writes ANTHONY SHARPE

THE VODACOM-MAZIV MASSIVE One deal that’s been on everyone’s radar is the R14-billion Vodacom-Maziv merger, which allowed the telecoms giant to acquire a stake in fibre infrastructure giants Vumatel and Dark Fibre Africa. Originally blocked because of monopoly concerns, the deal was approved by the Competition Appeal Court after Maziv committed to investing at least R12-billion in broadband infrastructure development in low-income areas. Some see this deal as setting a precedent for public interest mandates in mergers.

LEGAL

“The crux of the commission’s concern with the infrastructure investment put forward Siyabulela by the merger parties Makunga was that it would not, on its own, address the competition concerns arising from the transaction, nor would it necessarily result in benefit to consumers,” explains Makunga. “It is for this reason that the commission engaged the parties about enhancements to the conditions to firstly commit to connecting customers (rather than just passing homes), and secondly, ensure lower-cost packages remain available to consumers, among others.”

CERTAINTY BREEDS INVESTMENT Burton Phillips, partner at Webber Wentzel, says while it’s unsurprising that a transaction of the nature and size of the Vodacom-Maziv deal attracted such scrutiny, he believes there is a need for greater certainty around public interest. “To the commission’s credit, it did, some time ago, publish guidelines on public interest assessments. However, those guidelines are not binding on it, and the process has played out with some inconsistencies. There have been some transactions, for example, in which there is dilution in black ownership or worker ownership and where parties

Burton Phillips

Fast fact

Over the five years 2020–2024, more than 90 per cent of all mergers overseen by the Competition Commission were completed within three months. Source: Competition Commission

As to whether this risks making South Africa a less attractive investment destination, Makunga says the commission’s public interest mandate is clearly set out in law and has been endorsed by the Constitutional Court. “A distinction must be drawn between clarity – as set out in law, guidelines and case precedent – and disagreement with or resistance to transformative public interest provisions.”

Follow: Siyabulela Makunga www.linkedin.com/in/siyabulela-makunga-0ab293126 Burton Phillips www.linkedin.com/in/burton-phillips-74a59744

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n January this year, the Department of Trade, Industry and Competition (dtic) published draft amendments to significantly raise the financial thresholds for merger notifications, with the intention of reducing regulatory drag on smaller deals. Competition Commission spokesperson Siyabulela Makunga says the commission estimates that the increase in the thresholds will reduce compulsory notifications by 25–30 per cent. “This will allow it to focus on more complex matters and to progress cases in line with our revised (reduced) service standards over the Medium-Term Expenditure Framework.” Regarding mergers in digital markets, Makunga says, the commission amended the small merger guideline in 2022 to identify early-stage digital acquisitions that may fall below the ordinary turnover/revenue thresholds. “The small merger guideline is based on deal value (rather than these thresholds), which more appropriately reflects the expected or future value of start-ups. The small merger guideline remains applicable, albeit with changes occasioned by the revised thresholds that will be announced by the minister.”

have proposed alternatives, and others where parties haven’t proposed alternatives that go through without conditions.” Phillips says: “While the commission is clear that it evaluates deals on a case-by-case basis, investors are wary of jurisdictions where there is uncertainty around whether or not you will get approval and, if your approval is subject to conditions, what the nature and cost of those conditions might be.” This often results in parties having to come up with creative packages, says Phillips, but whether or not these will suffice is difficult to predict. “In some instances, the commission has tried to link it to the deal value or purchase price, but that penalises parties with larger balance sheets or transaction values. This is important, because in larger transactions, parties are often competing in environments that are already competitive, but because they’ve gone through a competition approval process where conditions are imposed, they’re somewhat hamstrung – particularly compared to parties that have not been involved in mergers.”

CDH Legal 2026 Enabling business through legal excellence, transforming complexity into opportunity, and helping organisations invest with confidence, grow sustainably, and shape South Africa’s future.

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CONTENTS 48 62 “THE LAW IS AN ASS”

53 48 REPLACEMENT POLICIES UNDER

64 NEW COIDA REGULATIONS

THE REGULATORY SPOTLIGHT

NOW PUBLISHED

By CHARL WILLIAMS, director, PARUSHA CHETTY, associate, and JULIA ROELOFSE, candidate attorney – Corporate & Commercial

By FIONA LEPPAN, director, and KGODISHO PHASHE, senior associate – Employment Law

66 INFLATION KEEPS PRESSURING

50 ARTIFICIAL INTELLIGENCE AND ACCESS

HOUSEHOLD BUDGETS

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

By NASTASCHA HARDUTH, head – Corporate Debt, Turnaround & Restructuring and director – Dispute Resolution, and DENZIL MHLONGO, associate – Dispute Resolution

By LEBOHANG MABIDIKANE, director, MMAKGABO MOGAPI, senior associate, and CHRISTOPHER KODE, associate – Competition 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

LEGAL

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IN PARTNERSHIP WITH CLIFFE DEKKER HOFMEYR

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

84 UNPACKING IRP2025:

74 IN THE SOUTH AFRICAN CONTEXT,

PROGRESS IN MOTION

CHAPTER 9 INSTITUTIONS ARE INDISPENSABLE

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

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

88 THE TRANSFORMATION OF RAIL By VIVIEN CHAPLIN, director, and GABY WESSON, senior associate – Corporate & Commercial

78 PRIME RATE UNDER PRESSURE By MICHAEL BAILEY, senior associate, and STHEMBISO CHAUKE, candidate attorney – Banking, Finance & Projects

66 80 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

82 KING V PROVIDES A BLUEPRINT

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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

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REPLACEMENT POLICIES UNDER THE REGULATORY SPOTLIGHT Key notes for financial service providers, by CHARL WILLIAMS, director, PARUSHA CHETTY, associate, and JULIA ROELOFSE, candidate attorney – Corporate & Commercial at Cliffe Dekker Hofmeyr

ver 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) reflecting enhanced regulatory scrutiny and oversight applied in relation to financial 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 significant 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.

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 benefits, 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

consent in relation thereto, the FAIS Code builds in specific 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 financial services industry. • Provide policyholders with appropriate and adequate information, including disclosure of all material risks, obligations and limitations associated with a financial product.

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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. Charl Williams

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THE FAIS CODE BUILDS IN SPECIFIC SAFEGUARDS VIA THE IMPOSITION OF MANDATORY COMPLIANCE OBLIGATIONS ON FSPs.

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• Disclose not only the actual and potential financial 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 benefits may not be provided under the replacement policy. • Ensure that the advice given is appropriate to each policyholder’s specific financial 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 confirmation 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 financial services. • Explain the benefits 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 findings 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. • FAIS-93742-24/25 WC 4. 4 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

• Obtain appropriate information about a client’s financial 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.

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Parusha Chetty

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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

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 efficiency 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 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 office 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 office 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 reflects 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,

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.

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outh 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. Into this landscape arrives artificial 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 significant proportion of

THE GLOBAL PICTURE: AI ENTERS THE COURTROOM

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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

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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 difficulties 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 efficiency gains are substantial. One analysis suggests that AI could enable legal aid organisations to serve significantly 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 first 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 efficiently. 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 sacrificing 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 fictitious case citations, has emerged as a significant concern. South African courts have already encountered submissions containing AI-generated fictitious legal authorities. In a June 2025 matter involving Northbound Processing and the South African Diamond and Precious Metals Regulatory Authority, AI-generated errors were identified 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.

Safee-Naaz Siddiqi

Algorithmic bias presents a more insidious challenge. AI systems are trained on historical data, and that data inevitably reflects 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

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THE REGULATORY LANDSCAPE South Africa’s regulatory framework for AI remains nascent, but is evolving. The draft National Artificial 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 finalised, the framework is intended to align with international standards, drawing on the United Nations Educational, Scientific 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-fits-all approach, and African states will need to tailor-make their AI legal frameworks to fit each country’s specific 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-specific 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 significant responsibility for ensuring AI tools are used ethically and that outputs are independently verified. The legal profession’s existing duties of competence and diligence apply with equal force to AI-assisted work.

RECOMMENDATIONS For clients and business leaders

For legal practitioners

For policymakers and the judiciary

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.

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.

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.

The integration of artificial 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

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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.

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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.

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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

s 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 efficiency. 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.

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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 efficiency, water efficiency, 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 reflects 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 significant 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 certificate 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, financing 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 certification, but also financing 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 certification. Certification 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) defines 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.

Muneerah Hercules

At the forefront of green building design are energy efficiency, 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 qualifies as a green building. The most commonly applied are Green Star, Net Zero and Excellence in Design for Greater Efficiencies (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.

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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. Fatima Gattoo

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• Net Zero: Net Zero certification recognises buildings achieving net-zero environmental outcomes based on measured or modelled performance. • EDGE: EDGE requires minimum resource-efficiency 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 certification offers a range of commercial, operational and sustainability-related advantages, which may be categorised as follows: Alignment with regulatory frameworks Certification 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 certification does not replace the requirement to comply with mandatory standards. Enhanced reputation and market value Certification 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 certified buildings often benefitting from improved positioning within an increasingly sustainability-conscious market.

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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 efficiencies may be supported by section 12L of the Income Tax Act 58 of 1962, which provides a tax deduction for verified energy-efficiency savings achieved. The extension of this incentive to 31 December 2030 underscores continued governmental support for

energy-efficient development. Together, these financial benefits may enhance overall project returns and improve life cycle value. Health, environmental and broader sustainability benefits Green buildings deliver benefits 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 certification may add strategic and commercial value to a project.

GREEN BUILDINGS DELIVER BENEFITS THAT EXTEND BEYOND THE ASSET ITSELF TO ITS OCCUPANTS, SURROUNDING COMMUNITIES AND THE BROADER ENVIRONMENT.

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AT 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.

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SOUTH AFRICA’S

IMMIGRATION POLICY OUTLOOK 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

n 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, significant 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 finalised 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 specific 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 classified agriculture as a high-risk sector from an enforcement perspective. What this means is that the DEL has intensified all pillars of its intervention in the agricultural sector – advocacy, inspections and enforcement. The Minister stated that the DEL will continue to

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, specific 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).

THE EMPLOYMENT OF 10K LABOUR INSPECTORS TO INCREASE ENFORCEMENT EFFORTS. Imraan Mahomed

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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

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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 intensified inspections by the DHA, Border Management Authority, SAPS and DEL to identify undocumented migrants, with specific 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.

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 significant 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 fines) 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 identified 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

Taryn York

significant 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.

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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,

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Lee Masuku

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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

outh 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 significant pay gaps between the top and bottom levels of a company, is significant. 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,

Yaniv Kleitman

THE AMENDMENTS OBLIGE PUBLIC AND STATE-OWNED COMPANIES TO PREPARE A DIRECTORS’ REMUNERATION REPORT AND TO DISCLOSE THE PAY GAP BETWEEN DIRECTORS AND WORKERS.

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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.

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to an extent, responsible for the significant 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 five per cent and bottom five 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 significant, according to the explanatory memorandum on the Bill, given that this kind of inequality underpins much of the well-known workplace conflict in South Africa. For collective bargaining, the implications are practical rather than prescriptive. By placing verifiable 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

Roxanne Bain

THE DISCLOSURES HAND TRADE UNIONS AN OBJECTIVE BENCHMARK TOINFORM THEIR NEGOTIATING POSITIONS. median and ratio figures rather than estimates. This signals how unions are likely to deploy these figures 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.

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Nadeem Mahomed

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2026/07/06 12:35

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

he 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.

HIGH EARNERS RETAIN THE RIGHT TO CHALLENGE DISMISSALS AND CLAIM COMPENSATION, BUT THEY CANNOT SEEK REINSTATEMENT FOR ORDINARY UNFAIR DISMISSALS.

PAST ATTEMPTS TO AMEND THE LAW 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”.

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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 specified in section 188. The memorandum indicated that uniform protection for all employees “fails to recognise the significant difference in bargaining power” between lower-paid and highly paid employees. Neither proposal was enacted.

THE 2025 PROPOSAL

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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 inflation. 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.

PREVENTION OF DUPLICATE CLAIMS 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 significant for high earners whose statutory remedies may be curtailed, as it forecloses the possibility of supplementing a Sashin Naidoo capped statutory award with a concurrent common-law claim.

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.

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 significantly reduces the practical consequences of an adverse finding. The 2025 Bill is open for public comment and will proceed through Parliament before enactment.

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Nadeem Mahomed

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“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, reflect on void dispositions and restitution

he 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 finally liquidated on 30 June 2020. Between these dates – specifically 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.

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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. Nastascha Harduth

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Section 341(2) of the Act

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.

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.

PRACTICAL IMPLICATIONS

THE REPAYMENT ISSUE

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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 definition 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.

Denzil Mhlongo

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, finding 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

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The judgement has significant 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 exemplifies 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.

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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

n 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 significance 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 officer 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 confidential case files. 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

Fiona Leppan

The regulations also set out the rehabilitation benefits 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

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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 benefits and the resumption of work by an affected employee does not mean that they are disqualified from receiving the prescribed compensation benefits otherwise payable under COIDA. Employees undergoing rehabilitation shall not mean a forfeiture of any compensation benefits potentially due to them.

COIDA AMENDMENTS NOW IN FORCE: A NEW ERA FOR WORKPLACE INJURY COMPENSATION IN SOUTH AFRICA

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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 significant 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 specific effective dates and the corresponding compliance obligations that arise on each date. The Amendment Act introduces several notable changes. Perhaps most significantly, 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

Kgodisho Phashe

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 reflects 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.

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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 benefits 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 significant 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.

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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

Lebohang Mabidikane

he Competition Commission (Commission) recently published its second Cost of Living Report (report), building on the findings 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 confirms 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 inflation has moderated.

CONTINUED DIVERGENCE IN ADMINISTERED PRICES Prices for electricity and water continue to significantly outpace general inflation. 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 inflation 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 reflect local fiscal pressures, ageing infrastructure and cross-subsidisation of other municipal services. This dual-layered structure has contributed to cumulative electricity inflation of approximately 85 per cent over five years, significantly outpacing headline CPI.

INTEREST RATES, RENTALS AND HEALTHCARE Cumulative bond-repayment inflation has begun to moderate, reflecting the lagged transmission of monetary policy decisions by the South African Reserve Bank following rate increases between 2022 and 2023. Rental inflation for both flats and houses has increased by only 15 per cent since 2020, well below headline inflation, 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.

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a significant contributor to the cost-of-living crisis. In healthcare, GP consultation costs have risen above overall inflation, with 2026 tariff adjustments expected to align broadly with medical inflation 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 inflation: 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 inflation. There are indications that public school fees for 2026 have increased by approximately 10 per cent, largely due to operational costs not sufficiently covered by government funding. Internet costs remain below headline inflation, 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

Christopher Kode

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. • Sunflower oil retail prices responded to producer price increases, but did not adjust downwards when producer prices fell, displaying concerning price stickiness.

WATCH

CDH experts discuss the cost-of-living pressures and Competition Law

The report specifically 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.

CONCLUSION The report reinforces the findings of the Commission’s first 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 fluctuations in oil prices, but rather from structural issues within the country, including administered pricing mechanisms and inefficiencies across key value chains.

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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.

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Mmakgabo Mogapi

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2026/07/06 10:00

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

n 9 January 2026, the European Union (EU) announced the removal of South Africa, along with five 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 financing. The decision to delist South Africa reflects our country’s continued progress towards improved financial 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

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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 significant deficiencies 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 financial crimes. This greylisting had serious implications, affecting cross-border transactions, banking relationships and investor confidence 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 specific steps to address strategic deficiencies

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 significant progress in combatting money laundering and terrorism financing.

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 confidence. 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.

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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 fixes. 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 final report from this evaluation is expected in October 2027, and maintaining high standards will be essential to avoid potential relisting.

Kgabi Moeng

Levy Lekganyane

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2026/07/03 11:34

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

FROM CONTROL TO MANAGEMENT When assessing the proposed regulations, one can easily identify a shift in regulatory

philosophy regarding the movement of financial capital beyond our borders. Our current framework mimics a “blanket prohibition”, where transactions are restricted unless specifically 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 fixed monetary limit (R20) above which exports are prohibited (unless permission is granted, of course). Importantly, the threshold itself is not fixed 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. INSTEAD, IT APPLIES THE SAME CORE EXCHANGE CONTROL RULES TO A NEW ASSET CLASS.

Stephan Spamer

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 first time, a targeted regulatory framework for municipalities and municipal entities has been introduced to the exchange control system. Presently, while the current regulations briefly 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

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ur 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 first obtain approval from an authorised dealer before they may transfer funds. The transaction must be justified 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 finally tabled draft regulations to the Act, which seek to repeal the current regulations through the proposed Capital Flow Management Regulations, 2026 (proposed regulations).

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across borders. The proposed regulations deal with that directly by defining 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 “financial 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.

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 fiscal and macroeconomic policy considerations. This is particularly relevant in light of well-documented failures in municipal financial management, such as VBS Mutual Bank, and persistent governance issues in the eThekwini and City of Johannesburg municipalities.

ADMINISTRATIVE RELIEF

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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.

Kgantsho Ramaphala

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 confident enough in what we are disclosing to live with the consequences if it is later challenged?”

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 definitions and plugging obvious gaps like crypto point to a legislature that is trying to keep up with the financial times. For corporate South Africa, this means less box-ticking and more thinking. There is a bit more flexibility, 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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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

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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

ncidents 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 benefits affluent 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 officials. 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’ confidence in the state, the justice system, law Annemari Krugel enforcement and public services.

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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 defined 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 defiance 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 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. 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.

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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

Rimo Benjamin

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-profile 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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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

he 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 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. Far from being a peripheral issue, the question of the legal status of the SAHRC’s directives has national significance for at least three reasons: it is material to the nature and ambit of the SAHRC’s institutional powers; it impacts

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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 significant legal issues directly at the heart of the powers conferred on the SAHRC by the Constitution.

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 specific directives it had issued in this case were binding. 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

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. Jacquie Cassette

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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 fulfil 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 finding 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 finding that Chapter 9 institutions’ different roles and powers implied a vertical hierarchy between them.

AT THE CONSTITUTIONAL COURT

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The SAHRC appealed the SCA’s finding 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.

Gift Nkosinathi Xaba

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 findings 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, finding 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 significance, 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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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

Ian Hayes

recent Supreme Court of Appeal (SCA) judgement serves as a stark warning to counterparties that blindly enter into contracts without first 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 specifically 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 specific board resolution. The consequences were significant, 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 offices, which indefinitely subordinated SIG’s claim until SIM’s auditors certified 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.

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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

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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 fit. The directors’ authority was limited: they were empowered to do or cause “all such things to be done, to sign and file 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 indefinitely, 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.

PROTECTING YOURSELF: VERIFYING COUNTERPARTY 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. 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 suffice 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 identified this gap. Finally, 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. 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 offices an hour earlier to vet all documents relating to a separate transaction.

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 specific board resolution. Broadly worded resolutions will not cure a lack of specific authorisation, and resolutions authorising “reasonable and necessary” documents will be interpreted narrowly in light of the transaction they were intended to effect. 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

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2026/07/03 11:29

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

that has followed the transition away from JIBAR to the risk-free rate of ZARONIA. While the prime rate has been fixed 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

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 fixed 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 RETAIL AND MAINSTREAM LENDING, GIVEN ITS STABILITY, SIMPLICITY AND DIRECT LINK TO MONETARY POLICY.

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he 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

been administrative rather than economic. 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. This disconnect has created a persistent misunderstanding. The prime rate is frequently viewed as the starting point for negotiating lending rates, and the fixed spread above the repo rate is often assumed to reflect 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 flow through to borrowing costs and undermining transparency in the pricing of credit.

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The difference lies in transparency: the repo rate would be clearly identified as the anchor, with the lender’s margin explicitly reflecting 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

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The proposed reform is not without complexity. The prime rate is deeply embedded in South Africa’s financial system, with millions of existing contracts referencing it across mortgages, vehicle finance, 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 identified 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

Sthembiso Chauke

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, refinancings or portfolio reviews should factor this trajectory into their documentation, pricing strategy and long-term planning.

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2026/07/06 10:08

WHEN YOU HAVE AN ISSUE WITH AN ISSUE

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

he 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 officer (present or future) or a person related or inter-related to the company or a director/prescribed officer. 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 ratified? 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 ratified, and accordingly, prior approval of the shareholders is most probably required. 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. If ratification 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.

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 ratification.

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 financial assistance, specifically provide that the action of the board is void if approval of the shareholders is not obtained beforehand.

Ian Hayes

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However, that is not the case with section 41 and, moreover, section 218(1) states that unless the Companies Act specifically 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).

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 sufficient deterrence to prevent the board from acting in noncompliance.

Keagan Hyslop

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. Ridwaan Hassan

• 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 financial 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

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Yaniv Kleitman

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2026/07/03 11:08

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

n 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, defined 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 definition 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 financially 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 confined 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 efficient rescue and recovery of financially distressed companies in a manner that balances the rights and interests of all relevant stakeholders.

Natascha Harduth

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

STREAMLINED GOVERNANCE: FROM 17 PRINCIPLES TO 13 Clarity and efficiency are the currency of a successful turnaround. King V has simplified 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 clarifies that a company’s governing body is the André de Lange

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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 artificial 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.

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 significant 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 specific, qualitative narratives. Although it may seem revealing, explicitly articulating how the governing body is meeting governance objectives under financial 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

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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

EMPHASIS ON PROPORTIONAL APPLICATION

Akhona Mgwaba

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 significant 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 financial decline before it becomes an irreversible legal liability.

TECHNOLOGY AND AI: THE NEW FRONTIER OF GOVERNANCE

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 financial 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-fits-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.

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In the modern era, corporate distress is frequently tied to technological obsolescence or data mismanagement. It is unsurprising,

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2026/07/06 09:44

UNPACKING THE IRP2025: PROGRESS IN MOTION?

ollowing a media briefing 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 fleet 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

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 specific recommendations up to 2042 and flexibility beyond 2040 to accommodate technological advancements. Delivery of the projected balanced plan is premised on certain critical levers, as identified in the IRP2025. These include: • Sustaining Eskom’s fleet performance at EAF levels above 60 per cent, as any levels below this will result in a fragile power system

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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

SINCE BEING GAZETTED, THE IRP2025 HAS MOVED FROM POLICY ANNOUNCEMENT TO EARLY IMPLEMENTATION, WITH NOTABLE DEVELOPMENTS.

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• 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-fired 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 efficient options to significantly reduce both global and local emissions, which may influence 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.

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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-fired 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.

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.

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-fired power plants, depending on the outcome of clean coal technologies’ demonstration by 2030, where positive results could “influence country policy on the sustainable use of coal to power”. The Delayed Shutdown scenario considers extending the operation of Kendal, Majuba, Lethabo, Matimba and Tutuka beyond their 50-year life by an additional 10 years, with maintenance and emission-abatement retrofits 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 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. 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 five older coal-fired 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

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

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Gas to power The significant 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, regasification 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 quantifies 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 profiles 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 first 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 regasification 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 identifies 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-reflective tariff determinations and EPC capacity. 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 prequalified bidders announced for the first 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 financing for verified 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

Tessa Brewis

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 The IRP2025 affirms 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-fired power stations limited exemptions from complying with the MES, as discussed by us here.

Jackwell Feris

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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 financing strategies, opportunity cost of crowding out cheaper alternatives and uncertainty over deployment of nuclear technology.

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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 identified as a pivotal tool to decarbonise “hard-to-abate” sectors that cannot be directly electrified, 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

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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 briefing 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 identified in the IRP2025 is sustaining Eskom’s fleet 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 financial year 1 April 2025 to 12 March 2026 and noted that the generation fleet 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

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

Khutso Mongadi

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

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.

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THE TRANSFORMATION OF RAIL

outh Africa’s rail sector is undergoing its most significant transformation in decades. The government has confirmed 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), first 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 finalised 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

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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

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institutions and giving operators, customers and funders the confidence 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 efficiency; and • the international financing framework now available to investors and private sector participants (PSPs).

CAPACITY CONSTRAINTS AND INVESTMENT REQUIREMENTS

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The opening of Transnet’s Network comes against the backdrop of significant 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 financing, the NRMP recognises that rolling stock investment will remain principally the domain of private sector operators, with support from development finance institutions where required. This policy direction further underscores the importance of the financing 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 prenotification 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 first 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 LEGAL FOUNDATION FOR ECONOMIC REGULATION OF RAIL INFRASTRUCTURE AND SERVICES.

Vivien Chaplin

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-reflective 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 significant milestone in opening the Network, reflecting a competitive rail market taking shape through contractual agreements that enable genuine private-sector involvement and investment.

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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 five 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 five years. All TOCs are currently working to finalise the contractual arrangements needed to reach financial close for their significant capital outlay and to serve their proposed customers efficiently 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.

THE FORMAL APPOINTMENT OF TOCs HAS THE POTENTIAL TO REINVIGORATE SOUTH AFRICA’S ECONOMY BY IMPROVING FREIGHT CAPACITY, SUPPORTING INDUSTRIAL USERS AND CREATING A MORE COMPETITIVE LOGISTICS ENVIRONMENT.

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 financing framework discussed below.

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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 certification 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 significant for PSPs as it seeks to provide that train performance will be measured using a key performance indicator (KPI) framework addressing operational efficiency, capacity utilisation, financial performance, safety, customer satisfaction, asset management, environmental impact and rolling stock reliability, as well as certain specific KPIs for freight operations. Additionally, the NRMP seeks to implement a rail traffic control system to optimise safety on the rail Network, as well as various information systems for data retention to support efficient 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 financing 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 financing 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.

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 financiers. 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 financings. Secondly, the United Nations (UN) has adopted Revision 3 of the global Model Rules on the Permanent Identification of Railway Rolling Stock (UN Model Rules), which supports the use of permanent identification and digital tracking solutions for railway rolling stock. Together, these developments strengthen the commercial case for structuring rolling stock finance in alignment with the protocol. Gaby Wesson

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 ratified 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 significant for cross-border corridors and for PSPs seeking to finance rolling stock capable of operating across multiple African networks. As further countries adopt the protocol, the advantages of structuring finance deals in compliance with its terms will increase, given that creditors

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 financings 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 financing costs; for financiers, 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 first 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 definition of rolling stock is broad and applies to “vehicles movable on a fixed 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.

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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 significantly, 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 financiers with transformative advantages, including: tracking of location and use of financed 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 conflict 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 financiers to incorporate protocol provisions into their security agreements now. Key provisions include: obtaining the URVIS number for each item of financed 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.

is physically inaccessible, this period may be extended to up to three years. Finally, there will usually be a benefit 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 financing framework, comprising the protocol, ECIC discount and URVIS compliance, provides PSPs and financiers with compelling tools to reduce funding costs and enhance creditor protections. 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. However, success will depend on aligning operational participation with the emerging regulatory framework and adopting financing structures capable of supporting this transformation.

Practical implications PSPs engaging with financiers on rolling stock financing 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 benefit from the ECIC discount (where applicable) and enhanced creditor protections, leading to lower funding costs. The transition rules in the UN Model Rules provide flexibility 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 affixed within 12 months of signature of the relevant credit agreement. In exceptional circumstances where equipment

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Central to this framework is the Unique Rail Vehicle Identification System (URVIS), whereby a unique 16-digit identification 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.

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