SOUTH AFRICA Law and Practice Contributed by: Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
weighty countervailing public interest benefit, failing which, a condition limiting or prohibiting merger-spe - cific retrenchments may be imposed by the competi - tion authorities. As regards the promotion of a greater spread of ownership, this is currently interpreted by the Competition Commission to mean that every transaction is required to have a positive effect on this consideration, and any negative or even neutral effect (depending on the pre-existing level of HDP ownership) will require a remedy to address this defi - cit, either in the form of an employee share owner - ship plan or the disposal of shares to an HDP. Only in circumstances where a transaction renders these remedies infeasible will the Competition Commission entertain other remedies, such as commitments relat - ing to HDP procurement and remedies which advance the transformative objective, such as those resulting in the upskilling of HDPs. The Competition Commission has issued Public Inter - est Guidelines which seek to provide greater clarity on the manner in which the Competition Commission will evaluate public interest factors. These guidelines have reiterated the approach that the Competition Com - mission will adopt when assessing the promotion of a greater spread of ownership. 2.5 Labour Law Regulations The key pieces of labour legislation in SA are listed below. • The Labour Relations Act No 66 of 1995, which, inter alia, provides procedures for the resolution of labour disputes, regulates the organisational rights of trade unions, and regulates the transfer of employees in the case of the transfer of a business as a going concern. • The Basic Conditions of Employment Act No 75 of 1997, which, inter alia, regulates working hours, leave, the prohibition of child and forced labour, the payment of remuneration, and notice and pay - ments on termination of employment. • The Employment Equity Act No 55 of 1998 which prohibits unfair discrimination and implements affirmative action. Labour legislation does not usually have a direct impact on M&A transactions in SA (save for sales of
business as a going concern, or where retrenchments are contemplated as part of a merger). The competi - tion authorities, however, very often place restrictions/ prohibitions on retrenchments, as well as obligations to create a set number of jobs, as merger conditions. 2.6 National Security Review There is no current national security review of acqui - sitions in SA. However, in terms of a proposed amendment to the Competition Act (Section 18A), the President will be required to constitute a com - mittee to consider whether the implementation of a merger involving a foreign acquiring firm could have an adverse effect on national security interests. In determining what constitutes “national security”, the new section provides a list of factors that the Presi - dent must take into account. If a notice is published in the Gazette prohibiting the implementation of a merger on national security grounds, Section 18A(12) expressly prohibits the Competition Commission or the Competition Tribunal from approving said merger. Currently, there is no indication as to when Section 18A will come into force. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments Recent Amendments to the Companies Act On 26 July 2024, the Companies Amendment Act 2024 (the “Amendment Act”) and the Companies Sec - ond Amendment Act 2024 (the “Second Amendment Act”) were signed into law by the President. The Sec - ond Amendment Act and certain amendments from the Companies Amendment Act came into effect on 27 December 2024. Certain of the amendments to the Companies Act introduced by the Amendment Act that are now in force may have an impact on M&A activity. For exam - ple, Section 45 has been amended so that the require - ments for financial assistance do not apply to the giv - ing by a company of financial assistance to or for the benefit of its subsidiaries. Furthermore, Section 48 (8)(b) previously provided that a decision by a company to repurchase its shares was
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