The recent publication in the South Africa Law Journal
("SALJ") of Gary JA Moore & Jerome Veldsman's
article entitled Big Brother and the holding company: Ministerial
Consent to Dispose of Indirect controlling interests in mining
companies, may have some serious consequences.
The article analyses section 11 of the Minerals and Petroleum
Resources Development Act, 2002 ("MPRDA"), which deals
with the requirement of consent for transfers of mining and
prospecting rights and interests in them. As the title indicates,
the article's focus is on whether ministerial consent is
required for a disposal of an indirect controlling interest in a
company that holds a mining right or a prospecting right
("right").
The authors say that the MPRDA is not clear on whether section
11(1) is applicable to the disposal of indirect controlling
interests in companies which hold rights. The authors maintain,
however, that Ministerial consent under section 11(1) is indeed
applicable to companies holding rights both directly or indirectly.
This restricts the disposal of controlling interests in companies
which do not themselves hold a right, where such company is a
holding (parent) company of the company which holds a right or in
the same group of companies as a company which holds a right.
In our view, this is a very broad interpretation of a legislative
provision which itself imposes strict limitations on the right of
commercial entities to dispose of their assets and which, for that
reason, should probably be interpreted restrictively, rather than
broadly. Nevertheless, the views put forward in the article now
have some authority and mining companies should take note of its
contents.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
