South Africa country update - 2019 Kathleen van der Linde

Consumer credit market in South Africa March 2017: 24.68 million credit active consumers 9.69 million impaired records, adverse listings, judgments etc (39.3%, decreased to just over 38% in 2018) No access to other procedures Unconstitutional? Discrimination on socio-economic grounds May 2019: Unemployment rate 27.6% Labour force decreased by 176 000 in first quarter of 2019

Existing debt relief for consumers Sequestration Only measure providing discharge Advantage to creditors Sufficient assets to meet costs and make some payment Administration order Total debts under R50 000 Repayment plan – hugely inefficient Debt review Rescheduling of credit agreements Reckless credit can be discharged

Debt intervention proceeding (NINA debtors) New amendments to the National Credit Act (NCA) (awaiting presidential signature) will apply for 48 months only (re-assessment) Qualifying consumers Total unsecured credit (under NCA) under R50 000 No income or average gross monthly income over past 6 months under R7500 Over-indebted Not sequestrated or subject to administration order Procedure Apply to National Credit Regulator for referral to National Credit Tribunal If qualifies, determines whether able to pay off within 5 years 5-year re-arrangement if possible otherwise debt intervention mm Only relevant for ‘regulated companies’ Therefore narrower relevance than fundamental transactions Aims to give shareholders access to equal information and to prevent minority shareholders from being locked in after a takeover Two types of takeovers: ‘Friendly’ takeovers – board is convinced that it is in the best interest of the company, shareholders agree, usually takes the form of a scheme of arrangement or a statutory merger Hostile takeovers – board opposes the offer, offeror must approach shareholders without the company’s cooperation to sell shares to it

Tribunal – debt intervention 12-month suspension of credit agreements Financial literacy training Restriction on new credit Position re-assessed after 8 months 5-year plan if now possible Further 12 month suspension After second period of suspension Court can extinguish qualifying debt Factors considered: Vulnerable debtor Debt relief history Circumstances and conduct relating to the credit provided Conduct of credit provider