Established under Section 196 of the Companies Act 71 of 2008, the Takeover Regulation Panel operates as a juristic legal entity within South Africa’s public administration framework, though it remains outside the public service. Holding jurisdiction across the Republic of South Africa, the Panel functions as an independent organ of state, governed by the Constitution, statutes, and government directives. It reports to the Minister of Trade, Industry and Competition, ensuring compliance with public administrative values and professional ethics while maintaining impartiality and fairness in its operations.
When carrying out its duties, the Panel must follow core public administration standards and ethical guidelines, ensuring its operations remain neutral, balanced, and free from prejudice. Its main function is safeguarding minority investors by supporting transparency in financial markets and fair treatment for security holders.
Background and History of the Panel
Before the creation of the Securities Regulation Panel, oversight of minority shareholder rights during corporate takeovers, consolidations, and mergers fell under the Johannesburg Stock Exchange Limited’s jurisdiction. The new law took effect on May 1, 2011, introducing significant reforms to strengthen regulations under both the Panel and the JSE, with a focus on better protecting minority investors during such transactions.
In essence, the Panel was established to curb increased unfair business practices negatively impacting minority shareholders during takeovers, and mergers and acquisitions. Its regulatory authority stems from the Act, including the 2011 Companies Regulations, and it supervises transactions falling under its jurisdiction as defined in Section 201.
Regulatory Framework and Powers
To this end, the Panel oversees and regulates transactions within its jurisdiction as outlined in s 201 of the Act. Section 117(c) defines an ‘affected transaction’ as any deal or series of deals involving the sale of a majority of a regulated company’s assets or business operations, among other scenarios. The Panel also oversees transactions involving ‘regulated companies,’ which include state-owned firms and private companies meeting specific criteria.
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The Panel has the authority to issue compliance notices to offending companies in instances where a party entering an affected transaction does not comply with the requirements of the Act. The Panel may also issue a compliance certificate if it is satisfied that the transaction has met the requirements of the Act. Any individual impacted by or involved in an affected transaction can file a complaint, prompting the Panel to investigate and issue a binding decision.
The Takeover Special Committee is a committee that hears appeals in terms of s 202 of the Act and consists of a chairperson who must be an attorney or an advocate. The TSC has a statutory obligation to hear and decide on matters referred to it by the Executive Director of the Panel and review compliance notices issued by the Executive Director of the Panel. A decision taken by the TSC is binding unless and until it is set aside on review or appealed by a court. The Panel ensures compliance by the parties to an affected transaction by providing for sanctions and fines in respect of non-compliance with takeover laws.
According to the Act, the Minister may prescribe a minimum percentage not being more than 10% of the issued securities of a private company, which if transferred within 24 months, would make the company and its securities subject to the provisions of chapter 5 of the Act. The Panel’s primary role is to protect minority shareholders by promoting integrity in the marketplace and fairness to the holders of securities, and it does so by regulating affected transactions and regulated companies, and by ensuring compliance with the Act.
Section 119 of the Act outlines the disclosure and confidentiality requirements that the Panel ensures compliance with, providing holders of securities with necessary information and sufficient time to make informed decisions. Failure to comply with the Act may result in a company being fined up to 10% of its annual turnover by a court on application by the Panel.
The Takeover Special Committee’s role in hearing appeals and reviewing compliance notices is essential in ensuring that the Panel’s decisions are fair and reasonable.
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Transaction Regulations and Complaint Procedures
Transactions subject to regulation include disposal of assets or undertakings of a regulated company. An amalgamation or merger involving a regulated company is also subject to regulation.
A scheme of arrangement between a regulated company and its shareholders is regulated.
A person with an interest in or affected by a transaction may lodge a complaint with the Panel. The Panel may investigate and make a determination on any complaint.
The Panel’s mandate is derived from the Act, and it conducts its affairs subject to the Constitution, statutes, government policy statements, and directives.
