Page 7 - KZN Business Sense Nkosenhle Hlophe eBook 9.5

MERGERS AND PUBLIC INTEREST GUIDELINES

Michael Jackson, Cox published amended guidelines on criteria in the assessment of
Yeats Attorneys how it will assess public interest a merger transaction. The
factors. The guidelines are critical transaction is likely to fail, if
to understanding the approach this criteria is not met. The
ince 1998, the
Competition that the Commission will adopt Commission states that even if
SAct (the Act) in evaluating a merger. Comment the merger promotes ownership
is sought on the guidelines
by HDPs, this does not preclude
has regulated which must be submitted by 6 the obligation to consider
merger activity.
Large mergers November 2023. increased ownership by workers,
and vice versa. The Commission
need to be The Commission has now will consider a number of factors
assessed and clarified that that competition including the number of shares
approved factors have equal importance
by the to public interest factors. The or interest held, the value of
Competition Commission (the Commission is therefore no the shares or interest, whether
the shares or interest owned
Commission) before they can be longer a body assessing mergers confer additional rights such as
implemented. based on pure competition. Of
course, what can be in the public board representation, whether
Until February 2019, mergers interest, is a subjective process the shares or interest pertain to
were assessed only on their productive or passive assets and
impact on competition. and the structuring of merger whether any increase in shares / participate in an ESOP. Expenses their own affairs. Many of the
transaction documents now
This all changed in February becomes much more difficult. interest held confer control. incurred in the ESOP should be provisions or insertions appear
2019 when the Act was amended The first four public interest The inclusion of workers in paid by the company. The board of to be arbitrary and to satisfy a
particular political agenda.
to state that the commission criteria are dealt with in the an ESOP (Employee Stock trustees needs to be independent
must also assess whether the Ownership Plan) owning with at least one trustee appointed The guideline are published
merger can or cannot be justified guidelines and it would be shares in a company is of by workers and one independent under Section 79 of the Act.
relatively easy to comply with
on substantial public interest them. The last criteria is the course something relatively trustee. In the ESOP, all current This section states that the
grounds. new to South African practice. and future workers should be Commission must publish
promotion of a spread of eligible and maternity leave should
The public interest factors ownership by HDPs and workers. Employee ownership schemes are not have an adverse effect on a draft and invite comment
seen by the Government as vital
within a reasonable period.
have been set out in the Act and Complying with this requirement qualifying criteria. Once adopted, the guideline
these include the effect of the could be more difficult. This to broad based transformation is not binding but any person
and re-igniting the South
merger on a particular industrial is because the Commission African economy. As the support On the funding of the ESOP, interpreting or applying the Act
sector or region, employment, stipulates that, unlike the other the merged entity should must take it into account.
the ability of small and medium public interest factors, this factor for worker schemes intensifies, provide some vendor finance
firms or firms controlled by confers a “positive obligation” this will become more and which should be interest free. The merger approval process
historically disadvantaged on merging parties to promote more an issue to consider. The A dividend policy should be is becoming more complex
persons (HDPs) to effectively a spread of ownership and/or guidelines deal with ESOPs as a introduced to provide for a and subjective. 
enter into, participate in or workers in the economy. The potential remedy to the issue of trickle dividend in the ratio of at
expand within the market, the Commission states: worker inclusion. It would seem least 35:65 meaning that at least Should you require advice or assistance,
ability national industries “Considering this, the that the Commission is looking 35% of any dividends declared please contact Michael Jackson on:
to compete on international Commission’s point of departure for the worker inclusion to be at must flow to beneficiaries and T: +27 (0)31 536 8512
markets, and finally, the about 5% of the merged entity. at most, 65% may be utilised to E: mjackson@coxyeats.co.za
promotion of a greater spread of will be that all mergers are The ESOP may be a trust or the service the vendor financing. W: www.coxyeats.co.za
required to promote a greater
ownership in particular, by HDPs spread of ownership.” allocation of shares for workers The draft guidelines are far
and workers in firms. in a registry maintained by the reaching. They represent a
It would therefore appear company secretary. Workers
On 8 October, the Commission significant intrusion on the
that this is the most important should not be required to private sector’s ability to manage

AFRICA’S LEADING MEETINGS AND CONFERENCE CENTRE

he votes have been counted “Africa’s Leading Meetings and
and it is now official. The Conference Destination” and
TDurban International “Africa’s Leading Festival and
Convention Centre (Durban ICC) Event Destination”.
has once again been crowned
as “Africa’s Leading Meetings The Durban ICC has
and Conference Centre” at the consistently been a pioneer in
esteemed 2023 World Travel the international meetings and
Awards. This prestigious accolade events industry in South Africa.
marks a remarkable milestone for It has served as a catalyst for
the Durban ICC as it celebrates economic growth and a hub for
this remarkable achievement global knowledge exchange. This
during the 30th-anniversary prestigious recognition by the
edition of the World Travel World Travel Awards underscores
Awards. its pivotal role in elevating South
three decades, been recognising Dubai’s iconic Atlantis The Royal to be named ‘Africa’s Leading Africa’s stature in the global
In the 23-year history of the travel and tourism landscape.
award category at the World organisations that consistently on 15th October, served as the Meetings and Conference Centre’
in the 2023 World Travel Awards.
platform to honour this year’s
elevate the standards of the
Travel Awards, this marks the global travel and tourism sector. winners. The glamorous event This achievement reflects the The Durban ICC extends
18th occasion that the Durban The Durban ICC’s dedication to brought together industry leaders tireless dedication of our team its gratitude to all its clients,
ICC has been bestowed with this partners, board members and
prestigious title, a testament to providing world-class services and luminaries from across and our unwavering commitment stakeholders who have played an
to providing a world-class
and facilities for meetings and
the African and Indian Ocean
its unwavering commitment to conferences has made it a natural regions. platform for meetings and integral part in this journey of
excellence. excellence. The centre remains
recipient of this prestigious title. events.” steadfast in its mission to provide
Speaking at the event, Durban
The World Travel Awards, In celebration of this remarkable ICC Chief Executive Officer, Ms. It was also a proud night exceptional services, inspire
known for its tradition of innovation, and contribute to
honouring travel excellence and accomplishment, the World Lindiwe Rakharebe expressed for the city of Durban, which the growth of South Africa’s
industry leadership, has, for Travel Awards Africa and Indian her gratitude, saying, “We are took top honours in two
Ocean Gala Ceremony, hosted at immensely proud and humbled destination categories, namely meetings and events industry. 
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