Business Day Law & Tax (May 2024)

BUSINESS LAW & TAX

A REVIEW OF DEVELOPMENTS IN CORPORATE AND TAX LAW

Withhold rates at your peril

Pippa Reyburn, Yana van Leeve, Deepna Desai & Alexandra Maree ENS

Idispute

Section 102 of the Systems Act allows a municipality to consolidate municipal accounts (for example rates, electricity and water), credit payments made against any municipal account, and apply its debt collection and credit control measures against any arrears However, in terms of section 102(2), the municipality cannot do this “where there is a dispute between the municipality and a person concerning any specific amount claimed by the municipality from that person ” Westville Ratepayers Association v Ethekwini Municipality [2023] ZAKZDHC 81 deals with a dispute of this nature, in particular whether section 102 of the Systems Act is a mechanism that can be utilised by ratepayers associations in these circumstances

The case concerns a dispute between the Westville Ratepayers Association (association), and eThekwini Municipality (municipality) which arose as a result of dissatisfaction with the draft municipal budget for the 2023/4 financial year

on the draft budget The association submitted a list of complaints, which were repeated in the submission of the dispute as the premise for the rates boycott, and included allegations that:

in terms of section 102(2) of the Systems Act, based on the complaints listed above, and declared that members of the association “will not pay for any rates and services starting from July 1 2023 until and unless the city engages with (it)” (para 8) The association applied to the court for an order restraining the municipality from disconnecting municipal services to residents pending the finalisation of the dispute

The main issue the court dealt with was whether a dispute in terms of section 102 of the Systems Act was in fact pending between the association and the municipality If no such dispute existed, the relief sought by the association could not be granted

• Failure to pay likely own goal unless there is a specific dispute CONTINUED

n his 2023 state of the nation address, President Cyril Ramaphosa underscored a pressing national concern: “Too many of our municipalities, 163 out of 257, are dysfunctional or in distress due to poor governance, ineffective and sometimes corrupt financial and administrative management and poor service delivery ” In response to shortcomings in municipal service delivery, a growing trend of organised rates withholding has emerged, primarily spearheaded by ratepayers associations Property owners withhold their rates payments, and fees for other municipal services, on the basis of underperformance and poor service delivery When engagement with municipalities has failed, ratepayers associations have gone on to declare disputes with municipalities in terms of section 102 of the Local Government: Municipal Systems Act No 32 of 2000 (Systems Act), to prevent the disconnection of services for the duration of the protest or

At a large-scale gathering convened by the municipality, stakeholders were invited to offer commentary

● 615-million litres of water was lost daily, equating to R2bn;

● Outstanding municipal debt had increased by R4 7bn;

● Despite Umgeni Water’ s proposed tariff increase of 5%, the municipality proposed a 15% tariff increase to ratepayers; and

● There were a growing number of informal settlements

Despite the complaints submitted in the meeting, the Municipality adopted the draft budget The association lodged a dispute in June 2023

The court, when interpreting section 102, discussed another case dealing with similar issues, Croftdene Mall v eThekwini Municipality, which emphasised that section 102(2) requires that a dispute must relate to a specific amount claimed by a municipality, and that the objective of the section is to prevent a ratepayer from delaying payment of an account by raising a dispute in general terms

With this in mind, the court held that the association s dispute is one over tariff increases and municipal mismanagement, and does not concern a specific amount claimed by the municipality

The court held that the association was embarking on a payment boycott while demanding the provision of services, which is a matter falling entirely outside the application of section 102(2), and about which entirely different legal principles apply The application was dismissed

In light of this judgment, declaring a dispute in this manner should no longer be used by ratepayers associations as a means of prevent-

IT IS NOT FOR THE DISGRUNTLED INDIVIDUAL TO DECIDE WHAT THE APPROPRIATE RELIEF SHOULD BE

ing the termination of services to residents who withhold rates as a form of protest for a general lack of service delivery

Though the court did not elaborate on the “different legal principles” that apply to rates withholding, guidance can be taken from earlier case law discussing the issue

In City Council of Pretoria v Walker 1998 (3) BCLR 257, the Constitutional Court held that it is for the courts to grant

BILLS BOYCOTT

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BUSINESS LAW & TAX

Workplace bullies on the back foot

• How global employers are managing complaints

Evan Pickworth BD Law & Tax Editor

Irecently spoke to a multijurisdictional panel of employment law experts from Baker McKenzie offices in five different jurisdictions around the world

They were Mirjam de Blécourt (partner and head of employment, Amsterdam), Monica Kurnatowska (senior employment partner, London), Johan Botes (partner and head of employment, Johannesburg), Fermin Guardiola (partner and regional head of Employment, Madrid) and Joanna Matthews-Taylor (partner and head of employment, Dubai)

We discussed how organisations face growing pressure to address complaints about inappropriate behaviour in the workplace, including cases involving senior executives accused of harassment and bullying, for example These challenges highlight the critical need to effectively manage such issues, from addressing headline-grabbing allegations

Withhold

CONTINUED FROM PAGE 1

appropriate relief against any public official, institution or government when there are grievances It is not for the disgruntled individual to decide what the appropriate relief should be and to combine with others to take it on themselves to punish the government structure by withholding payment which is due The court also stated that: If every person who has a grievance about the conduct of a public official or a governmental structure were to take the law into his or her own hands or resort to selfhelp by withholding payment for services rendered it

to navigating the complexities of handling complaints

EP: Mirjam, let’s start with you When it comes to complaints in the workplace, what is the current global landscape on this issue?

MdB: There is increasing recognition, awareness and education about what conduct amounts to bullying/ harassment in the workplace, which has led to more clarity and confidence in identifying unacceptable behaviour, much more awareness around issues that are breeding grounds for such behaviour, for example an imbalance in power, and when this is being exploited

There has also been an increase in employee activism globally, with workers expecting to be heard on issues such as social inequality, discrimination and envi-

ronmental impact, with younger generations particularly (although not exclusively) less likely to stay silent on issues that they feel strongly about

There is an increasing expectation employers will be transparent, accountable and behave ethically and responsibly, with these characteristics being as important for many workers as individual pay and progression

Fostering a “speak up ” culture is growing in importance not only from the perspective of treating staff fairly and the demand for it from workers, but also because it is critical to identifying and addressing business risk issues

EP: Monica, what have you noted in the UK on this issue?

MK: We have seen a great deal of scrutiny around the excessive and inappropriate use of nondisclosure agreements The use of these clauses in settlement agreements, for example, has been criticised in recent years and has become a regulatory issue for advisers as well as an issue for employers

The optics of appearing to “hush up ” incidents in return for compensation, which was once common practice, now need to be considered very carefully From a reputational perspective, the perception of

a cover-up can be worse than being transparent about the original incident

EP: Johan, how would you describe the SA framework on inappropriate behaviour in the workplace, and how does our framework measure up to other countries around the world?

JB: In SA, like most jurisdictions, there is no comprehensive definition for the broad term “inappropriate behaviour in the workplace” It includes various forms of unwanted behaviour, including sexual harassment, aggression, violence and bullying In many situations, this will be contextual Cultural, societal and local factors around acceptable behaviours will feed into this In some cases, there may be a grey area, where the context, positions of those involved, the relative power between the parties and other factors play a role in determining whether unacceptable behaviour has occurred

An important piece of legislation on this topic in SA is the Employment Equity Act, which prohibits direct or indirect discrimination based on specific protected grounds Two years ago, the department of employment & labour published the Code

of Good Practice on the Prevention and Elimination of Harassment in the Workplace This code expanded the protection for employees from only sexual harassment to protection from all forms of harassment Harassment is understood to mean:

● Unwanted conduct, which impairs dignity

● Creates a hostile or intimidating work environment for one or more employees or is calculated to, or has the effect of, inducing submission by actual or threatened adverse consequences

● Is related to one or more grounds in respect of which discrimination is prohibited in terms of the Employment Equity Act (for example, race, gender, ethnic or social origin, colour, sexual orientation, age, disability to name a few)

EP: Fermin, is there a similar position in the EU?

FG: Under EU law, there is also a right not to be discriminated against or harassed on grounds of specified protected characteristics This right is enshrined under various treaties and directives and this forms basis of employee rights in EU member states Interestingly, this includes the UK notwithstanding its exit from the EU I also want to add that, at a

global level, Spain, the UK and SA are signatories to the International Labour Organisation’ s (ILO) Violence and Harassment Convention This is the first international convention recognising everyone ’ s right to a world of work free from violence and harassment, including gender-based violence and harassment Broadly, it sets out a framework to prevent and address violence and harassment at work However, ILO conventions do not give rise to any directly enforceable rights in domestic or local courts

EP: Joanna, can you tell us the approach in the UAE?

JMT: The UAE is quite similar to the EU and SA UAE labour law prohibits various forms of discrimination in respect of protected characteristics, including race, religion, nationality, gender and disability, which would impair equal opportunities or prejudice equality in obtaining or continuing employment It also outlaws sexual harassment, bullying, or any verbal, physical or psychological violence against the employee by their employer, superiors, colleagues or those working with them

The UAE also recently updated its anti-hatred law, which continues to prohibit discrimination on grounds of religion (although note that religion is relatively narrowly defined), belief, rite, community, sect, race, colour, ethnic origin, gender or race The UAE’ s harassment related to a protected characteristic has a specific definition and covers unwanted conduct related to the protected characteristic that has the purpose or effect of violating the complainant s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them

CONTINUED ON PAGE 4

carries with it the potential for chaos and anarchy and can therefore not be appropriate (para 93) Furthermore, withholding property rates alone can result in a disconnection of any municipal services, as was the case in Rademan v Moqhaka Local Municipality and Others 2013 (4) SA 225 (CC)

Rademan, a member of her local ratepayers association, withheld her municipal property rates as a result of, and in protest with, the local ratepayers association, which lodged a dispute for a lack of service delivery Rademan continued to pay all of her other service charges in full

The municipality disconnected her electricity supply due to nonpayment of rates, which prompted Rademan to approach the court to declare the disconnection unlawful

The Constitutional Court held that disconnection by the municipality was indeed lawful, for the following reasons:

● Section 5(2)(a) of the Systems Act places a duty on members of the local community to pay promptly service fees, surcharges on fees, rates on property and other taxes, levies and duties imposed by the municipality

● Section 5(2) (e) of the Systems Act further places a duty on members of the local

community to comply with by-laws of the municipality applicable to them;

● Section 102(1) of the Systems Act allows a municipality to consolidate any separate accounts of persons liable for payments to the municipality; and implement any of the debt collection and credit control measures provided for in the Systems Act in relation to any arrears;

● Moqhaka Local Municipality Credit Control and Debt Collection By-Law 18 makes provision for the consolidation of debt and provides that if one account is rendered for more than one municipal service provided, the amount due and payable by a cus-

tomer constitutes a consolidated debt Any payment made by a customer of an amount less than the total amount due, will be allocated in reduction of the consolidated debt; and

● Moqhaka Local Municipality Credit Control and Debt Collection By-Law 25(1) penalises nonpayment by providing that the municipality may restrict or disconnect the supply of water and electricity whenever a consumer fails to make full payment on charges that are due It should be noted that as regards specific services such as water, electricity, sewerage and waste removal, citizens are not

required to pay for services they have not received The Constitutional Court confirmed that [w]here a municipality claims payment from a resident or ratepayer for services, it is only entitled to payment of services that it has rendered (para 42) Strategies aimed at boycotting or withholding rates as a means of protest against poor municipal performance are understandable, but lack legal foundation

Exploring alternative avenues of lawful protest, such as petitions, gatherings, litigation, advocacy and exercising one s right to vote remain the only options that will not lead to any own goals

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BUSINESS LAW & TAX

Poor odds of taking on Sars and winning

• With taxman winning eight of every 10 cases that go to court, count opportunity costs before doing so

Bernard Mofokeng Deloitte Africa

In the revenue announcement made by South African Revenue Service (Sars) on April 2 2024 announcing preliminary revenue collection outcome for 2023/24 fiscal year, Sars announced that its total tax collections were R1 741-trillion with an unexpected surplus of R10bn

Some of the main reasons for this better-than-expected collection was credited to its compliance efforts As part of its compliance efforts, Sars has a litigation strategy that seeks to provide certainty and clarity for taxpayers through the courts on tax and customs laws and when justifiable, to make noncompliance both difficult and costly This strategy has been

implemented over several years and is continually producing better results, each fiscal year

According to Sars, in this fiscal year 110 judgments were handed down in which Sars was successful in 94 cases resulting in an 84% litigation success rate On the face of it, this means that Sars wins eight out of 10 times against taxpayers when a tax case is decided by a court This high success rate has been the trend for the past few years This is something that taxpayers and their

THE DISPUTE RESOLUTION PROCESS PLAYS A CRUCIAL PART IN RESOLVING TAX

DISPUTES

advisers must take into consideration whenever they are considering taking Sars to court on their decisions

Based on Sars’ current success rate, taking Sars to court is risky for taxpayers in many respects

In recent years, SA has become a very litigious country Reports on court cases in SA are a daily reality, but we as the public are sometimes not aware of the litigation strategy of the parties involved, the amount to of time spent on those cases, opportunities lost and the financial costs thereof For taxpayers to finally litigate and their cases to be heard in the courts against Sars, it normally means that all the internal remedies available to a taxpayer has been exhausted Practically, it means the dispute resolution (DR) pro-

LITIGATION HURDLE

cess provided in the Tax Administration Act of 2011 (TAA) has been exhausted A taxpayer would have spent thousands of rand during the DR process and, if the case is eventually heard by the Tax Court, the judgment of the Tax Court is appealed to the High Courts, the judgment of the of the High Court is appealed to the Supreme Court of Appeal (SCA) and, in some cases, the judgment of the SCA is appealed to the Constitutional Court, the costs thereof can run into millions Years will be spent without any certainty on how to apply the relevant tax laws which would, in almost all cases, have resulted in lost business opportunities for most taxpayers

However, what the 84% litigation success rate does not tell you is that the number

of judgments handed down constitute a small number of disputed cases lodged against Sars by taxpayers As usual, we hope Sars will provide us with a full analysis of disputed tax cases in their annual report later in the year for the 2023/24 fiscal year Sars’ annual reports provide a useful analysis of the tax and customs disputes handled by Sars for taxpayers and their advisers

In the annual report, Sars provides a breakdown per fiscal year of the tax disputes handled and finalised within the internal review process, as part of the DR process For the 2022/23 fiscal year, Sars received 161,115 objections (first step in tax dispute process) Just over 21,900 of the objections were disallowed and only 10,285 were referred to be litigated on by

taxpayers in the Tax Board and Tax Court Of the 10,285 cases to be litigated, about 7,644 were finalised with Sars or taxpayer conceding or withdrawing or settling the cases This was similar in many respects for fiscal year 2021/22

We expect a similar trend for the 2023/24 fiscal year

Based on the above statistics on tax disputes for fiscal year 2021/22 and 2022/23, it is clear the DR process plays a crucial part in resolving tax disputes and taxpayers should fully utilise this process and not rush in litigating in the courts against Sars, when, for now at least, it seems to favour Sars Even with ultimate success in the courts by the taxpayers, they may have lost the war considering the time, money and opportunities lost and that Sars (and the National Treasury) may ultimately decide to amend the provisions in the tax legislation that was an issue in dispute in the courts

Taxpayers and their advisers must always remember that they are underdogs when they are litigating tax cases against Sars There are eight out of 10 chances that Goliath, not David, will be the victor in any tax dispute that is ultimately decided by a court of law In simple terms, when taxpayers ask their counsels what their chances of success against Sars in court in a disputed tax case are, counsel should reply, based on current successes by taxpayers, at least 20%

Bad workplace behaviour faces backlash, litigation

It’ s good to understand the framework and definitions, but employer liability for bullying and harassment in the workplace is also important to consider Where discrimination or harassment has occurred, employers can be vicariously liable for such conduct It is a defence to show that they took all reasonable steps to prevent the conduct from occurring Individuals as well as the employer can also be held personally accountable

Under the UAE antihatred laws, the law holds company representatives, managers, or agents accountable for offences committed by company personnel where it is established that the representative was aware of the offence

EP: Let’s talk about whether there are any mandatory workplace policies, regulations or other instruments required in the different jurisdictions Monica, what is the situation in the UK?

MK: In the UK and, I think in the Netherlands too, an evaluation of the possible risks that employees may be

exposed to in the workplace is mandatory The risks considered must include those posed to psychological as well as physical wellbeing

Where risks are identified they must be addressed

Fostering a “speak up ” culture is growing in importance not only from the perspective of treating staff fairly and the demand for it from workers, but because it is critical to identifying and addressing business risk issues

In the UK, it has become a regulatory focus in the financial services sector where calling out issues such as bullying and harassment that feed into poor culture and increased risk is as important as identifying financial malpractice

The EU Whistleblowing Directive has now been implemented across the majority of member states

The directive establishes rules and procedures to protect whistleblowers workers who report breaches of certain areas of EU law

EP: Fermin, where an employee raises a complaint regarding inappropriate behaviour in the

workplace, what happens if an employer fails to address this, and what does the employer need to do?

FG: The optics of mishandling or, worse, trying to silence complaints about bullying, harassment, or workforce dissatisfaction can be disastrous from a reputational perspective

Failing to address an employee complaint is also likely to take up significant management time in the long term and result in even more scrutiny of an employer s actions by its workforce and other stakeholders

The potential conflict and tensions in the employerworker relationship are also likely to result in increased stress and mental health issues for both the aggrieved workers and those responding to the issues

It also seems increasingly likely that workers will show their dissatisfaction simply by leaving, with some reports suggesting this is more likely among younger workers

There is, however, a reported growth in so-called loud quitting

Broadly, the steps that need to be taken and the

issues that need to be considered include the following (although this may vary depending on the company ’ s policies and/or collectively agreed processes):

Assess whether the complaint warrants that an investigation be conducted

Suspension during an investigation may be appropriate in some cases, but this should not be automatic and must be assessed to determine whether this is a reasonable course of action on a case-by-case basis

If it is not possible to resolve the issue and/or the nature of the complaint warrants a further investigation, the employer may initiate an investigation It is important that the investigation be conducted as objec-

CARE MUST BE TAKEN TO ENSURE THE COMPLAINANT RECEIVES FEEDBACK ON THEIR GRIEVANCE AND CONFIDENTIALITY IS MAINTAINED

tively as possible

Once the investigation has been completed, a grievance outcome will be communicated, taking into account the general principles required for such an investigation, such as hearing both sides

As the grievance may lead to disciplinary action being taken against another employee, care must be taken to ensure that the complainant receives feedback on their grievance and that confidentiality towards the other employee is maintained This can be a challenging balance to strike in practice

Where the employee is dissatisfied with the outcome, they can exercise their right of appeal

EP: Joanna, in the jurisdictions represented in this interview, have we seen an increase in litigation around the topic of inappropriate conduct in the workplace?

JMT: Overall, yes In 2018, a study in the Netherlands for example, demonstrated that the MeToo movement had caused an increase in reports and legal proceedings

This increase has continued, as demonstrated by an increase in the number of

successful termination proceedings relating to inappropriate behaviour in the workplace since January 1 2019 In the UAE, we are aware of a number of discrimination cases raised in the Dubai International Financial Centre (DIFC) over the past year Further, the first race discrimination claim is currently ongoing in the DIFC In the UK and as a result of the MeToo movement, employers have found themselves having to investigate historic complaints, particularly complaints involving sexual harassment In addition, we have seen an increase in employees raising concerns relating to bullying and harassment in the workplace and are involved in an increasing number of investigations in this regard

EP: Johan, is SA any different?

JB: SA is no different We have also seen an increase in litigation around this topic at a local level

EP: Thanks very much to all of you for this insight into how global employers are managing workplace complaints

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BUSINESS LAW & TAX

Digital assets a focus area in drafting a will

• In a rapidly changing world virtual property places unique demands on estate planning

Ridwaan Boda, Deon

Beachen & Alexander Powell ENS

The phrase “wills and estates” often evokes thoughts of traditional wealth and assets, typically encompassing physical possessions and financial holdings stored in investment accounts and financial institutions

However, the scope of estate planning extends far beyond these tangible assets

A digital asset is a broad concept covering any digital records, files, or any other information stored in electronic format

This would include, among other things:

● Crypto-assets;

● A digital photo album (whether stored locally or in the cloud);

● Cosmetic items in video games;

● Gaming and social media accounts;

● Investment and bank accounts;

● Loyalty benefits; and

● All information and files stored on your local devices or in the cloud

Cosmetic items are tradable and marketable and are capable of holding high value (depending on the gaming platform) The most noteworthy example are cosmetic items from the game Counter-Strike Global Offensive 2, with skins selling up to the price of R1 2m If you have any video game cosmetic items which are marketable and of value, you should include a provision in your will stipulating how these digital assets should be dealt with following your death

Within legally permissible parameters, our recommendation is to clearly outline your wishes regarding the distribution of these cosmetic items including specifying which items are to be transferred to which beneficiary and any conditions or restrictions that you may want to impose

MANY GAMING AND CLOUD PLATFORMS HAVE TERMS OF SERVICE AGREEMENTS THAT GOVERN

THE USE OF DIGITAL ASSETS

The majority of people today store photographs digitally on their cellphone and other devices, or within the cloud If these photographs have not been shared with others and hold sentimental value, you may want to ensure that these photographs are accessible after your death

Here, you could include a provision in your will stipulating how these photographs may be accessed, who is allowed to access them, and any other requirements or restrictions you may have regarding such photographs, such as for example creating a backup

Some of the more obvious digital assets which have commercial value include crypto-assets, e-commerce platforms, websites and domain names

For individuals seeking to ensure that their heirs can derive benefits from these assets, addressing their inclusion in estate planning is paramount

It is important to make appropriate provision for how your digital assets are to be regulated upon your death otherwise these assets might

fall into a state of “digital limbo” rendering them inaccessible Even inaccessibility doesn’t shield the accounts containing your digital assets from potential hacking, leaving your personal information and assets vulnerable to compromise or theft

As a general precaution, it is important to note that the regulation of digital assets is subject to the implementation of suitable terms of service by the service provider Thus, considering the terms of service of the appropriate gaming or cloud platform or cryptocurrency exchange is vital as this will determine what can and cannot be done from a legal compliance standpoint

For example, many gaming and cloud platforms have terms of service agreements that govern the use of digital assets By understanding these parameters, you can ensure that any transfers you request or conditions you impose are compliant with the agreed terms and

conditions, which often deal with matters concerning ownership rights, restrictions and transferability

Violating the terms of service such as by transferring assets in breach of agreed policies, could result in account suspension or closure

The following steps are necessary to deal with your digital estate:

● Take inventory of all your digital assets including their names, descriptions and estimated values;

● Consider including appropriate instructions in your will which deal with your digital estate; and

● Consider the appropriateness of appointing a “digital

IT IS IMPORTANT TO MAKE APPROPRIATE PROVISION FOR HOW YOUR DIGITAL ASSETS ARE TO BE REGULATED UPON YOUR DEATH

estate” executor who has the knowledge and competency to manage and distribute the digital estate in line with agreed terms and conditions, as well as your directions and wishes

In today’ s rapidly expanding digital landscape, it is no longer sufficient to view our estates solely in terms of traditional wealth composed of physical assets Instead, equal importance should be placed on digital estate planning to encompass our digital assets Seeking guidance from a specialist in digital estate planning is vital to effectively navigate the complexities of this field

Through consultation with such an expert, individuals can guarantee that their cherished memories, financial assets, and sensitive personal data are managed and distributed according to their preferences This proactive approach offers peace of mind for individuals and their loved ones, both presently and in the future

Impact of strike violence on protected strikes

Jacques van Wyk

Werksmans

The labour court in the recent case of African Meat Industry and Allied Trade Union and others v Shave and Gibson Packaging (2024) 45 ILJ 79

had to consider whether a protected strike that was characterised by serious violence and intimidation could lose its protection

It also had to consider whether, having lost its protected status, the dismissal of the striking workers would be deemed to be substantively fair

In June 2018, 161 members of the African Meat Industry and Allied Trade Union (Amitu) embarked on a protected strike in support of demands for wage increases

The employer, Shave and

Gibson Packaging, embarked on a lockout in response to the strike and issued a notice which retracted its initial wage increase offer and stated that employees would be excluded from the workplace unless the workers accepted a zero (0%) wage increase

During the strike, various acts of violence and damage to property were committed by the strikers The employer sought, and was granted, an interdict prohibiting these actions However, the unlawful actions of the strikers continued

After weeks had passed, the strikers wanted to return to work The employer refused to allow them to return to work and instead instituted disciplinary proceedings against them based

on the following charges: participating in an unprotected strike that was not functional to collective bargaining and had become violent; derivative misconduct by not identifying the persons who were involved in the violence that ensued; intimidation and assault; contempt of the court order; and failing to remain in the designated picketing areas

Before the outcome of the disciplinary hearing being issued, the employer sent bulk SMSs, inviting employees to make written submissions explaining why they should not be found guilty of the alleged misconduct

This offer was made due to no attendance at the disciplinary hearing on the part of the strikers Submissions were received from four

employees, all of whom were subsequently reinstated

All the strikers (other than the employees who were reinstated) were dismissed for misconduct The employer argued that the strikers had been fairly dismissed as the strike had lost its protected status because it was marred with severe violence and intimidation, was protracted; and the strikers made unreasonable demands

However, the employer failed to link the strikers individually to any criminal acts and failed to prove that they were aware of the culprits identities

The labour court found that while the strikers had collectively associated themselves with violence and intimidation due to the misconduct and virulent Whats-

App messages, only three strikers performed acts of intimidation, harassment and assault; and only 18 strikers continued to carry weapons after receiving the interdict

Since the employer failed to link the strikers individually to the criminal acts or prove that they were aware of the culprits identities, the dismissal of the remaining strikers was ruled substantively unfair

Moreover, the court held that a protected strike did not lose its status as such on account of some strikers resorting to violence and intimidation and that the employer was not entitled to rely on the claim that the employment relationship had been rendered intolerable and retrospective reinstatement was ordered

The constitution confers the right to strike upon all employees as it is essential to social justice and functional collective bargaining It also provides a counterbalance to the employment relationship whereby employees usually have the underhand

The court s decision highlights the importance of protecting the constitutional right to strike, even in the face of incidents of violence and intimidation by confirming that a strike marred by violence is not automatically rendered unprotected This raises the question, which is yet to be answered, of whether collective bargaining can remain functional even when conduct in furtherance of a protected strike turns violent or when a strike demand is not attainable

BUSINESS LAW & TAX

Wider culpability for graft

• Firms can avoid sanction if they can show there are ‘reasonable measures ’ in place to stop corruption

Lionel Van Tonder & Danniel Kruger Webber Wentzel

SSA is continuously suffering from the effects of corruption and drainage of resources, some of which were highlighted in the state capture saga

Optimistically, significant changes have occurred in the public and private spheres to ensure that the industrialscale corruption perpetrated does not continue to repeat itself One such change is the recent signing of the Judicial Matters Amendment Bill into law by President Cyril Ramaphosa on April 3 2024

Critically, the bill expands culpability for graft under section 34 A of the Prevention and Combating of Corrupt Activities Act (Precca)

Section 34 of Precca makes it obligatory for anyone in a public or private company who learns of corruption or fraud to report it to the South African Police Service if the value of the incident loss is more than R100,000 Now, as of April 3, if authorities in private or public companies fail to stop

“associates” from engaging in corruption, they themselves will be liable

The inclusion of thirdparty contractors in the widened definition of the Precca is informative Third parties have been at the heart of corruption in SA before, during and after the state capture era due to their ability to abuse public and private procurement processes Instead of corrupt parties

THE

MOST PROACTIVE CLIENTS DO

MORE

THAN JUST MONITOR DATA AS IT ENTERS THE SYSTEM IN REAL TIME

dealing directly with their facilities, third parties are regularly used to create a layer of bureaucracy between the parties committing the fraud, so it’ s harder to identify, with third parties compensated for their efforts

It’ s a timely and needed change Section 34 A gives public and private companies

Leveraging

Estian Haupt, Leonard

Willemse & Angelique

Stronkhorst

AJM Tax

It often happens that a value-added tax (VAT) vendor issues a tax invoice which later requires updates or amendments The question that arises is how such changes can be made within the legal framework of the Value-Added Tax Act No 89 of 1991 References to sections herein shall be to sections of the VAT Act

The levy of output tax, time of supply and issuing of an invoice

Section 7(1)(a) provides that VAT shall be levied on the value of a supply by any vendor of goods or services supplied by him in the course or furtherance of any enterprise Section 10(2) determines that the value of a supply is the amount of consideration for such supply less so much of the amount as represents tax (ie VAT) The amount of consideration is:

the opportunity to avoid sanctions if they can show that they have put “ reasonable measures ” in place to prevent corruption in their organisation However, “ reasonable measures ” are not yet defined in SA law, which leaves a lingering question: what can reporting organisations do to show they have done all they can to prevent corruption by a member of staff or an associated third party?

A good starting point is to consider the UK’ s Bribery Act because Section 34 A of Precca is based on the UK Bribery Act The UK Bribery Act refers to six principles that are used to judge whether an organisation has “done enough” to stop corruption from within and by parties they work with externally These principles are proportionality, top-level commitment, risk assessment, due diligence, communication, monitoring and review

At present, these principles are being applied as guidance for what “enough” looks like in an SA context Over time, the courts will provide clarity on the minimum requirements as mat-

ters enter litigation Until that happens, organisations and their leaders must proactively act to set up and leverage systems that can identify problematic employees, patterns and third-party contractors in advance Prevention is better than cure, with technology providing new ways to stop corruption at the source

We’ ve found that companies and public organisations are far more reactive than proactive in stopping corruption at the source Leaders of organisation can fall into the trap of “fighting the last war ”

TAXING MATTERS

since the most up-to-date view of corruption they have is the last corrupt transaction perpetrated before the instigators were caught

Reactively, whistleblowers generally provided threequarters of the intelligence used to catch corrupt employees and third parties

The importance of whistleblowers is likely to stay the same, however looking at it more from a proactive view, data analytics is providing a new front for companies to tackle corruption before it can take place

The most proactive clients

do more than just monitor data as it enters the system in real time They analyse and sift through current and historical data, to identify previously missed patterns and red flags, (such as invoices that are processed on weekends fewer people means less oversight and an employee taking no leave in three or four years)

Stopping corruption at the source requires setting up the systems and parameters for continuous learning, testing, proactive reporting and filtering out false positives from acts of corruption and fraud

Organisations that fail to address and report corruption promptly face potential legal and reputational risks

To mitigate these risks, creating a supportive environment that empowers employees to report fraud as they see it is strongly recommended Furthermore, time spent vetting third parties is now of vital importance since third parties a company uses are more likely to be purveyors of corruption than the company itself

While it is impossible to stop all corruption criminals are ingenious in that way it is the fiduciary responsibility of organisational leaders to do everything they can to meet the threshold of “enough” and more

credit and debit notes for output tax

● To the extent that such consideration is not a consideration in money, the open market value of that consideration

Section 9(1) regulates the time of supply and deems the supply to take place when the supplier issues an invoice for that supply or when any payment of consideration is received by the supplier, whichever time is earlier

Regarding issuing a tax invoice, section 20(1) requires a vendor making a taxable supply to issue a tax invoice containing the particulars prescribed in the section within 21 days of the date of the supply Paragraph (i) of the proviso to section 20(1) stipulates that issuing more than one tax invoice for each taxable supply is unlawful

In other words, a VAT vendor must issue a tax invoice for every supply

However, simply issuing an additional invoice because a prior invoice s consideration was too little, is unlawful

● To the extent that such consideration is a consideration in money, the amount of the money

What, then, is the legislative provisions where an initial invoice is incorrect (ie something as simple as the consideration on the tax invoice is understated)?

Credit and debit notes

The use and effect of credit and debit notes is regulated by section 21 This section applies, among other things, where (i) the supply has been cancelled, (ii) the consideration has been altered by agreement with the recipient, or (iii) an error occurred in stipulating the amount of consideration

A credit note or a debit note may, however, only be issued if output tax has been incorrectly accounted for (due to the circumstances listed in (i) to (iii) above) and if the supplier issued a tax invoice that reflects an incorrect amount of output tax, or submitted a VAT return on which an incorrect amount of output tax has been accounted for

In these circumstances, the supplier must, in the tax period in which it has become apparent that the

output tax is incorrect, (i) account for an additional amount of output tax (by way of a debit note) when the output tax actually accounted for is less than what should have been accounted for, or (ii) make a deduction (of input tax) in terms of section 16(3) or a reduction of the output tax attributable to the said tax period (by way of a credit note) when the output tax actually accounted for exceeds the output tax properly chargeable in relation to that supply

The act requires the supplier to provide the debit or credit note to the recipient

The recipient may make the relevant adjustment in the tax period in which the credit or debit note is issued

Debit and credit notes play a crucial role in tax compliance, with specific details mandated by section 21(3)(a) and (b) for their proper documentation

These details include labelling the note as a debit note or credit note , providing comprehensive information such as the supplier s and recipient s

names, addresses, and VAT registration numbers, along with the issuance date

Additionally, a debit note should specify the increased value of the supply or consideration and the additional tax, while a credit note should detail the reduced value and excess tax or include a statement indicating tax inclusion and its rate

Furthermore, the notes must include a concise explanation of the circumstances leading to their issuance and adequate information to identify the relevant transaction, such as referencing the original tax invoice number and its issuance date This meticulous documentation ensures transparency, accuracy, and compliance with tax regulations,

NOTES MUST INCLUDE A CONCISE EXPLANATION OF THE CIRCUMSTANCES LEADING TO THEIR ISSUANCE

facilitating efficient recordkeeping and audit procedures for businesses and tax authorities alike

In essence, the process of rectifying errors in an invoice extends beyond mere modifications to the existing document or the issuance of an additional invoice pertaining to the same transaction Instead, adherence to formal protocols mandates the creation of a dedicated document, such as a debit or credit note, designed explicitly to address inaccuracies found in the initial invoice

These corrective notes are required to include a specified minimum set of information as per regulatory guidelines It is, therefore, crucial that sufficient systems are in place to ensure adequate invoicing

● Estian Haupt is associate director: SA direct tax; Leonard Willemse is associate director: SA indirect tax and Angelique Stronkhorst is a senior associate at AJM Tax

BUSINESS LAW & TAX

Mergers in Africa require focus on detail

• Multijurisdictional mergers bring unique challenges from conducting a risk analysis, to regulatory hurdles

Martin Versfeld and Lebohang Makhubedu Webber Wentzel

Patrick

Smith,

Ricky

Mann and Daniela Lamparelli RBB Economics

The changing regulatory environment across Africa’ s markets poses fresh challenges and opportunities to firms wishing to pursue multijurisdictional mergers

Navigating these challenges requires a deep understanding of the authorities that regulate mergers in their local markets, exceptional preparation, an eye for the most minute detail, patience, agility and humility

Having recently advised on two multijurisdictional mergers involving more than 20 jurisdictions, each spanning more than 18 months, Webber Wentzel and RBB Economics’ experience with various African competition

authorities makes for a worthy case study for companies that require merger filing across Africa

The first transaction involved Dutch brewer Heineken, Namibia Breweries and Distell, and the second involved Dutch coatings

HARMONISING DATA TO PRESENT A SINGLE, UNIFIED VIEW OF AN INTERESTED PARTY TO A REGULATOR IS PARAMOUNT

manufacturer, Akzo Nobel, seeking to acquire the two African entities of Japan’ s Kansai Paint

What makes the regulatory environment across Africa’ s markets so interesting is the growing intentionality among regulators to learn and conduct more sub-

stantive investigations, with public interest issues (such as job losses and localisation) never far from the conversation African mergers can no longer be viewed as a “tick box” exercise The environment and the approach to merger regulation in Africa’ s markets is evolving and dynamic Successfully navigating it requires a strategic understanding of several factors, from the order of the merger filings and understanding a regulator’ s appetite for objective economic analysis, to consistency in submissions with different authorities speaking to one another, to negotiating possible remedies

Advisers on multijurisdictional mergers need to have a detailed understanding of the process to be followed to achieve merger approval The filing process involves several phases, beginning with the risk assessment (RA) and then notifying the relevant regulators of the transaction,

followed by those regulators conducting substantive economic and public interest assessments, and the relevant decision-making bodies of the authorities concluding the process

The RA aims to consider all potential risks that may impede a proposed merger An important part of the RA is requesting and harmonising financial and organisational data provided by each participant in the transaction

In Europe, it is fairly simple to obtain this information company head offices and their subsidiaries generally provide the same numbers with systemisation institutionalised across large conglomerates

However, there is far more variance in companies operating in Africa Head office may provide one set of data about a subsidiary, but the subsidiary’ s own data on the same substantive facts may differ Also, the information needed to perform a RA is often not easily accessible due to confidentiality and other factors, making the process more time-consuming than a risk assessment in a mature market

Yet, harmonising data to present a single, unified view of an interested party to a

CONSUMER BILLS

regulator is paramount First, if even subtle differences exist, they be scrutinised 18 to 24 months later at the tribunal stage when the stakes are significantly higher

Second, from the regulator’ s point of view, greater scrutiny is being applied when evaluating and testing evidence provided by firms

That is why it is critical to dedicate significant time to understanding the concerns, context and interests of the regulators in question For example, the Federal Trade Commission in the US has been regulating competition for more than a century It can dip into decades of precedent, process, and experience when dealing with parties seeking their approval for a merger In African markets, several regulatory bodies that play the deciding role in approving a merger have only been established since 2010

While these bodies may still be in the process of developing institutional knowledge and experience, this is balanced by the deepening thoroughness that drives their investigations African regulators and the professionals that staff them are keen to test parties’ submissions robustly The onus

is on the applicant parties to prove why a multijurisdictional merger does not harm competition and economic development, with a burgeoning area of concern in recent years being the effect on public interest factors such as employment and local procurement Public interest is an increasingly pivotal feature of competition law in most of Africa and it is important for international firms to be aware of this As a result, while much of the filing process occurs electronically and through documentation, it is important to establish a rapport with regulators when meeting in person A regulator may officially respond to a query using compressed language, but speaking to the same officials face-to-face can provide additional key insights into the reasons for their response, which can aid future interactions and potentially alter the outcome of their deliberations These interactions and managing the filing process as a whole require a highly prepared team, with an understanding of local markets that can pivot quickly as required As we have encountered in the past, a regulator’ s sentiments can change suddenly, with new requirements raised or questions asked in the middle of a meeting Preparation and mastering the details are key It’ s up to the advisory team to always maintain a collaborative and empathetic posture while being able to simplify and distil complex issues for the regulator If you understand what a regulator needs and why, chances of success are markedly better

Combined financial ombud a boon to consumers

The ombud services previously provided by the separate ombuds for banking, insurance and credit were amalgamated from March 1 2024

The World Bank was mandated to review the South African financial ombud system and recommended the consolidation of the system into one new single ombud scheme, independent of industry and government to cover the whole of the financial sector The new scheme is the first step in achieving a financial industry-wide scheme

The previous position suffered from overlap (between banking and credit for instance) and required financial customers, before making a complaint, to work out for themselves where to look for relief

A one-stop point for the referral of a complaint has now been achieved for those

PAT R I C K B R AC H E R

financial industries In the long term, retirement funds will be included in the scheme The intention with regard to the statutory Fais ombud, who deals with financial intermediaries, is not clear

The World Bank recommendation has been achieved by creating a nonprofit company, the National Financial Ombud Scheme South Africa NPC (NFO) The scheme, according to the governing Financial Sector Regulation Act, is binding on all regulated banks, life and non-life insurers and credit providers What used to be

individual ombuds will now be divisions of the NFO administered and overseen by a head ombud and managed by a board selected from a committee representing the regulators, the financial institutions involved and the Ombud Council

This means that the decisions regarding funding of industry ombuds will no longer be in the hands of each regulated industry because the NFO board will decide on budgeting, costs and expenses, staffing salaries and benefits, and governance

The separate institutions have less say than they used to, but at least decisions are in the hands of an independent body with all the checks and balances relating to the operations of a registered company and its board of directors

The scope of the ombuds powers are more extensive

than before Complainants could be anyone who has a direct interest in the financial agreement , while the list of potential interests is extensive The ombud can make an early decision regarding whether the complaint should be entertained and will reject dishonest or unreasonable complaints and should not handle matters which are better dealt with by a court

As with all ombuds, the NFO ombuds have equity jurisdiction The ombud must determine what, in their opinion, is equitable, fair and reasonable in all the circumstances and must have regard to administrative fairness, legal requirements, and industry codes

Equity is not a one-sided consideration It is equity as between the customer and the financial institution and the ombud cannot ignore the agreements, the laws or the rules Previous rulings are

not binding on the ombud but an ombud, like any other adjudicating body, must act consistently or say why it is not doing so

The new rules establish a better process for an appeal against an ombud decision to an appeal panel consisting of three members who are retired judges or senior counsel The parties will hopefully develop a body of findings which give some outline to what is equitable, fair and reasonable to all parties

The powers of the ombud include the option to deal with a complaint by

A ONE-STOP POINT FOR THE REFERRAL OF A COMPLAINT HAS NOW BEEN ACHIEVED FOR THOSE FINANCIAL INDUSTRIES

conciliation or mediation or to allow the parties to resolve their complaint between themselves This option should be used where possible because dispute avoidance is always better than dispute resolution

The individual ombuds for financial institutions will, at least for now, be similarly staffed from their individual predecessors and little is likely to change on a day-today basis A competent head ombud has been appointed and the NFO should be a workable scheme which everyone should help to make work

As a good start, the word ombud is now adopted in all the structures and the patriarchal description of an adjudicator as an ombudsman should now be lost in the binary fog ● Patrick Bracher (@PBracher1) is a director at Norton Rose Fulbright

BUSINESS LAW & TAX

Protecting vulnerabilities of workers

• Additional employees have been integrated into the workforce protection threshold

Jonathan Goldberg & Grant Wilkinson Global Business Solutions

In the global economic landscape, earnings levels have emerged as a critical issue As social partners wrestle with escalating Gini coefficient inequalities in numerous jurisdictions, including SA, the spotlight is on income disparities and protections for vulnerable workers

The introduction of new legislation, such as the Companies Amendment Bill, mandates the disclosure of earnings for the top 5% and the lowest 5% of earners This transparency is a step towards addressing the vulnerabilities of workers, particularly those earning at or near the minimum wage

To supplement this, basic employment conditions that govern working hours, premium payments for Sundays, public holidays, and night work are being revised annually

These work arrangements can have adverse effects on the health and wellbeing of employees

These regulations are regu-

larly reviewed and updated to ensure that as wages rise, the thresholds that govern additional protections are also adjusted accordingly

In SA, an increased number of workers will come under the umbrella of basic employment protections after a revision to the threshold effective from April 1

TRANSPARENT COMMUNICATION WITH EMPLOYEES IS ESSENTIAL TO CLARIFY CHANGES IN EMPLOYMENT CONDITIONS

The earnings threshold, set periodically by the employment & labour minister, has been raised to R254,371 67 annually (R21,197 64 monthly) This represents a 5 5% increase and the adjustment will extend the scope of the Basic Conditions of Employment Act as well as other employment statutes This change has been met with approval from most circles

New salary guidelines affect worker entitlements

The adjustment in the salary threshold, which delineates who falls under certain protections, will exclude employees who earn above this new limit from specific provisions of the Basic Conditions of Employment Act, as well as certain aspects of the Labour Relations Act and the Employment Equity Act

Under the Basic Conditions of Employment Act, employees whose earnings exceed the defined threshold are exempt from regulations concerning standard working hours, overtime, compressed working weeks, averaging work hours, meal breaks, daily and weekly rest periods, Sunday wages, night shift pay and holiday pay

Concerning the Labour Relations Act, individuals earning above this threshold are not covered by the deeming provision, which implies that employees hired through a temporary employment agent, and not engaged in temporary tasks, are considered, after three months, employees of the hiring company for Labour Relations Act purposes Moreover, those

UNDER REVIEW

earning above the threshold are not included in additional regulations concerning fixedterm employees, who, after three months are considered as indefinitely employed if there is no justified reason for the fixed term

In terms of the Employment Equity Act, an employee earning more than the threshold and facing a dispute under Chapter II regarding unfair discrimination cannot take the dispute to the Commission for Conciliation, Mediation, and Arbitration for arbitration, except in cases of alleged unfair discrimination based on sexual harassment, or where all parties consent to arbitration Instead, they must refer their dispute to the Labour Court for resolution

Understanding the new salary threshold

It’ s paramount for employers to grasp the full extent of these changes and their implications to maintain compliance and ensure a seamless transition for all stakeholders involved Employers are advised first to conduct a comprehensive review of their current payroll to identify which

VIEWPOINT AFRICA

employees are affected by the updated threshold This entails a detailed comparison of each employee’ s annual earnings against the new limit to ascertain their eligibility for various employment protections Following this, it’ s necessary for employers to adjust their payroll systems, which may involve updating employee classifications to comply with the new regulations regarding overtime, working hours, and other related protections

To ensure legal compliance, consulting with legal experts, who specialise in employment law, might be a step employers could consider Such consultations can help in reviewing and updating employment contracts, company policies and HR procedures to align with the updated salary threshold

Moreover, equipping HR staff and managers with the knowledge on how to navigate the implications of the new threshold through targeted training sessions can aid in a smoother adaptation process These sessions should encompass guidelines on managing overtime, rest periods, and other affected

Corporate blue bonds are a f irst in Africa

Jordan Maze, Wayne Rukero, Thameena Ganey & Azariah Alexander ENS

Within the global trend towards sustainable finance opportunities and initiatives, green bonds have gained attention

Perhaps less well known, a subcategory of green bonds called blue bonds has started appearing more commonly in the market and arguably serves equally important sustainable targets and projects around the world

What distinguishes different types of green bonds is driven in part by the purpose (or initiatives) for which funds are being raised

and the intended effect of these initiatives

As can be gleaned from its name, a blue bond is a green bond that is focused on initiatives related to the sustainable use or protection of water resources and the promotion of sustainable activities within the blue economy

What would these “blue” initiatives look like?

One guide to the types of initiatives which would be

suitable for blue bonds has been provided by the International Capital Market Association (Icma) in its voluntary guide released in September 2023, entitled Bonds to Finance the Sustainable Blue Economy – A Practitioners Guide

In this guide, Icma details several kinds of suitable blue initiatives in an indicative and nonexhaustive list

This list includes initiatives focused on:

● Coastal climate adaptation and resilience

● Marine ecosystem management, conservation and restoration

● Sustainable blue tourism

● Sustainable shipping and

marine transport

Two teams within ENS, those led by Clinton van Loggerenberg and Wolf Wohlers (together with Jordan Maze and Wayne Rukero), are currently advising the Namibia-based sustainable kelp farming business, Kelp Blue Trading (Kelp Blue), in the establishment of an innovative blue bond programme which is intended to be listed on the Namibian Stock Exchange (NSX) and the issuance of blue bonds thereunder

The funding raised by Kelp Blue is intended to be utilised for, among other things, the planting and maintaining of up to 1,000ha of sustainable kelp forests offshore Lüderitz, Namibia

These kelp forests are expected to play a pivotal role in carbon sequestration, fostering biodiversity, enhancing marine wildlife abundance and facilitating employment generation for economically vulnerable costal communities

A percentage of the blue bond proceeds are also intended to be committed to supporting the effective implementation of the Namibian Islands Marine

THIS LIST INCLUDES INITIATIVES FOCUSED ON COASTAL CLIMATE ADAPTATION AND RESILIENCE

areas of employment

Transparent communication with employees is essential to clarify any changes in employment conditions Employers might find it beneficial to hold information sessions or distribute memos detailing the impact of the new threshold on employment status and rights Furthermore, providing support through one-onone sessions to address individual questions or concerns can help alleviate employee anxieties, demonstrating the employer’ s commitment to a supportive transition

The adjustment of SA’ s earnings threshold marks a pivotal enhancement in labour protections It calls for a proactive approach from employers to ensure compliance and uphold the wellbeing of their workforce This move embodies a move towards broader employment rights and a commitment to maintaining a fair and positive workplace

Remember, collective agreements and custom and practice are also relevant as to which terms and conditions apply This must be properly investigated

Protected Area management plan, which is aimed at enhancing marine wildlife conservation and conservation and protection along the southwestern coast of Namibia, in Africa s second largest marine reserve/protected area

At the time of writing, Kelp Blue s blue bonds are, set to become the first blue bonds to be listed on the NSX and the first issued by a corporate/non-sovereign issuer in Africa, representing a new channel for the flow of capital to similar blue projects and initiatives in the region

● Reviewed by Clinton van Loggerenberg, an executive in ENS s banking and finance practice

BUSINESS LAW & TAX

EU rules on ‘gatekeepers’ affecting SA

• The SA Competition Commission recommends ‘remedial actions’ to be taken by some businesses

Heather Irvine Bowmans

The EU has embarked on an unprecedented, ambitious experiment to regulate digital markets, in the form of the Digital Markets Act (DMA)

The SA Competition Commission has recommended a series of “remedial actions” be implemented by certain firms which act as intermediaries between businesses and consumers in SA However, the jury is still out on whether these interventions will be effective in achieving their aims, and what the impact will be on the quality and accessibility of digital services, as well as on future innovation and competitiveness

The DMA introduced a set of obligations and restrictions that will apply to companies designated by the European Commission (EC) as “gatekeepers” To be designated as a gatekeeper, a company must provide one or more of the “ core platform services” listed in article 2(2) of the DMA, and meet three qualitative criteria set out in article 3(1) The final list of core services comprises online intermediation services, online search engines, online social networking services, videosharing platform services, number-independent interpersonal communications services, operating systems, web browsers, virtual assistants, cloud computing services, and online advertising services

The DMA also provides for certain quantitative thresholds which, if met, give rise to a rebuttable presumption that the qualitative gatekeeper criteria are fulfilled

Gatekeepers had until March 2024 to ensure compliance with these obligations, which relate to conduct such as self-preferencing, bundling and the use of customer data Google reported that this required intensive work over many months from engineers, researchers, product managers and product designers from across the company Consumers in Europe are already starting to feel the effects for example, European users of Google

Maps will now find they can no longer access maps via a single click on the search page Disputes about whether the gatekeepers have complied with the DMA have already begun: at the time of writing, the EC had already opened five investigations into potential noncompliance by Apple, Google and Meta

The SA Competition Commission’ s intervention in digital markets, in the form of its final report on the Online Intermediary Platforms Market Inquiry (OIPMI), is different in a number of respects to the new regulatory regime created by the DMA

IT RECOMMENDED THAT AUTOTRADER, CARS.CO.ZA, PROPERTY24 AND PRIVATE PROPERTY REDUCE THEIR PRICES TO SMALL CUSTOMERS

First, the commission’ s recommendations are not legislation, and they do not create permanent legal obligations on any firms as part of an ex ante regulatory regime

Second, these recommendations do not apply to all providers of particular kinds of digital services, or to all providers which meet particular legislated criteria Instead, the OIPMI focuses only on particular kinds of

platforms which the commission identified as “intermediaries” between certain suppliers of products or services (such as hotels, App developers and restaurants) and SA consumers

Within the particular kinds of intermediary platform selected for investigation, the commission’ s recommendations were targeted only at “leading firms” One of these, Booking com, is not designated as a gatekeeper in Europe, and 10 others, which the commission targeted on the basis that they are “national restaurants chains” , are not leading providers of a platform service at all The inquiry recommended these firms (and only these firms – and potentially Amazon, should it establish an SA store) should implement a series of “remedial actions”

In some cases, the commission has recommended the transplantation of the DMA requirements However, in many instances, the commission’ s recommendations extend well beyond the requirements imposed by the DMA, which primarily address concerns about competition and consumer protection For example, the commission recommended that Takealot offer historically disadvantaged sellers advertising credits and promotional rebates, personalised onboarding on its site and waive its subscription fees It recommended that

DIGITAL DEVELOPMENTS

Autotrader, Cars co za, Property24 and Private Property reduce their prices to small customers, and that Google make R180m in advertising credits available to small platforms, and spend a further R150m in training and product support for small firms and historically disadvantaged people It recommended that Booking com and Apple make “substantial investments” into programs to support historically disadvantaged accommodation providers and software developers

The commission noted that for Apple and Google, the trigger for its recommendations was the lack of a more robust and vibrant ecosystem in SA for paid apps , though its report did not identify that this was caused by the conduct of these firms Instead, the report focused on that these firms don t offer local curation” , “despite the hundreds of millions in revenues generated from SA each year ” This echoed the commission’ s finding in the preliminary report that lower

taxation rates for global platforms disadvantages SA platforms This suggests an exercise in taxation, rather than market regulation

Unlike the DMA, these remedial actions are not permanent in most cases, they were required to be implemented only for four years after July 2023 Some firms, such as Google and Takealot, have apparently complied However, appeals to the Competition Tribunal by

THE GREAT SHIFT TO DIGITAL HAS ALREADY OFFERED HUGE BENEFITS TO SA CONSUMERS AND BUSINESSES ESPECIALLY SMALL ONES

Apple, Booking com, Private Property, Famous Brands and UberEats, and review applications to the high court by Apple and Booking com, have yet to be heard

It is accordingly too early to assess how effective these interventions in digital markets will be The great shift to digital has already offered huge benefits to SA consumers and businesses especially small ones who are now able to use highly accessible, cost-effective and efficient online services to access critical products and services, such as healthcare and education This has brought big benefits to SA consumers and businesses, including lower prices, greater accessibility, more convenience and variety

The competitive dynamics in SA digital markets and, accordingly, the rationale for intervention, may be very different to European ones In

addition, SA already has competition legislation which addresses its unique context as a developing economy in particular, to offer special protection to small businesses and those owned by historically disadvantaged persons SA online markets are evolving rapidly as the rapid expansion in SA by online retailers Shein and Temu demonstrates Neither of these retailers was scrutinised by the OIPMI, despite the significant effects they are already having on shopping patterns in SA This provides a good illustration of how temporary remedial actions which are applied only to some firms, in certain SA digital markets, may not appropriately address changes which are happening across entire ecosystems, as the world digitalises Unpredictable, ad hoc regulation may hamper the evolution of these markets, especially those that are nascent, or rapidly changing in response to consumer preferences It may also damage SA s efforts to attract foreign direct investment, and the roll-out of new technologies In the US, while there has recently been an increased focus in antitrust circles on how corporate power is amassed and wielded, and what its consequences may be, not only for consumers, but also for workers, democracy and the environment, there has not yet been any advance towards DMA-style regulation The home of the global tech giants seems far more concerned that adding layers of regulatory red tape may undermine the incentives of companies to innovate, and harm their competitiveness in fast-growing industries such as AI

BUSINESS LAW & TAX

ESG in the SA mining industry

• Environmental, social and governance imperatives

Ntsiki Adonisi & Dorencia Pillay ENS

The principal statute governing the mining and minerals industry in SA, the Mineral and Petroleum Resources Development Act, 2002 would have been in effect for 20 years on May 1 2024

Section 2(d) of the act, provides for substantial and meaningful expansion of opportunities for historically disadvantaged South Africans to enter into and participate in the mining and minerals industry and to benefit from the exploitation of the nation’ s resources Section 2(f) provides for the promotion of employment and advancement of the social and economic welfare of all South Africans, underscoring two crucial social objectives of the act which are operationalised through the charter outlined in section 100, and in the implementation of social and labour plans (SLPs)

To ensure the attainment of the government’ s objectives in redressing historical, social and economic inequalities, the act provides for the development of a broadbased socioeconomic empowerment charter that sets the framework for targets for effecting active participation of historically disadvantaged South Africans in the mining industry

The Broad-Based SocioEconomic Empowerment Charter for the Mining Industry, 2004 was published in August 2004, with various iterations thereafter, the latest being the Broad-Based

Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (Mining Charter III) in an attempt to provide regulatory certainty and strengthen the effectiveness of transformation of the industry

Although there are no ownership requirements involving government participation in the mining right or mining operation, the erstwhile Mining Charter required rights holders to achieve a minimum of 26% BEE ownership More recently, Mining Charter III sought to increase this to 30% for existing rights holders

However, in the case of Minerals Council of SA v Minister of Mineral Resources and Energy and Others ZAGPPHC 623 (September 21 2021), the court recognised the “flow-through” principle as well as the “ once empowered, always empowered”

NEW MINING RIGHTS MUST ACHIEVE A MINIMUM OF 30% BEE OWNERSHIP AT ANY LEVEL

principle, which provides that historical transactions concluded at any level which achieved 26% empowerment shall be recognised as compliant for the duration of the mining right

Nevertheless, new mining rights must achieve a minimum of 30% BEE ownership at any level, although the distribution of the 30% ownership is no longer prescribed

The Mining Charter also sets targets for employment equity, including the historically disadvantaged South Africans demographic representation at various levels of a company, targets for total spend on mining goods pro-

cured, as well as services which must be sourced from SA-based companies

There has been controversy surrounding the status of the Mining Charter and the ownership requirements imposed by it A takeaway from the Minerals Council case is that the charter is a policy document and not binding in law It only binds rights holders insofar as its terms have been lawfully incorporated into such rights

In relation to ownership requirements, there also have been instances wherein empowerment partners do not necessarily benefit from their respective mining ventures as dividends do not trickle down Managing and monitoring these issues are challenging as the mineral resources & energy department does not always have the capacity and resources to ensure compliance In some respects, the Mineral and Petroleum Resources Development Act has struggled to overcome these hurdles and adequately effect local content policies to allow for disadvantaged South Africans and host communities to benefit from the exploitation of mineral resources

To ensure effective transformation, the act and the regulations published thereunder require the submission of an SLP as a pre-requisite for the granting of a mining right or production right An SLP requires applicants to develop and implement, inter alia, comprehensive human resource development programmes, mine community development plans, housing and living conditions plans and employment equity plans

SLPs also provide for the management of downscaling and closure to minimise the impact thereof on employees, regions and local economies SLPs are designed to, inter alia, transform the mining

AT THE COALFACE

industry from its discriminatory past and to counter the reality that when most mining operations shut down, the host areas go from being vibrant economies to marginalised economies

In March 2020, the Mineral and Petroleum Resources Development Act regulations were amended to provide further clarity and guidance on SLPs, including: periodic five-year reviews of approved SLPs until a closure certificate has been issued; ministerial consent to amend an approved SLP; annual reports on compliance with the approved SLP following a minimum of three meetings per annum with mine communities and other stakeholders; publication of approved SLPs within 30 days of approval in English and one other dominant official language; and a review of the SLP from the fourth year, including meaningful consultation with mine communities and other stakeholders

Mining rights holders are required to consult with various stakeholders, including municipalities, mine communities, traditional authorities and other affected stakeholders to identify developmental priorities, which should be

contained in the SLP These include bursaries, scholarships and the development or upgrade of clinics, schools, roads, water and sewage treatment facilities and other infrastructure required in those communities

However, in practice, at various stages of the SLP process, mining companies appear to be experiencing bottlenecks when consulting with stakeholders due to differing views on commitments to be made by the mine or factions within the communities with different agendas, which, at times, stalls consultations In recent years, we have seen growing dissatisfaction by mine communities with mining companies and the mineral resources & energy department alike regarding implementation of SLPs

There may also be delays in obtaining input and sign off from various governmental

SLPS ARE DESIGNED TO TRANSFORM THE MINING INDUSTRY FROM ITS DISCRIMINATORY PAST

authorities, who inform the commitments of the SLP Collaboration between the stakeholders is vital in achieving advancement of the social and economic welfare of mine communities It is common knowledge that the regulatory authorities are undercapacitated and underresourced; thus, there may be delays between submission of an SLP and approval thereof, which further creates delays in implementation As the Mineral and Petroleum Resources Development ActMineral and Petroleum Resources Development Act regulations require mining companies to report to the mineral resources & energy department annually, the issues faced by the mine impact on progress made with SLP implementation This then results in mines obtaining directives from the department due to the alleged noncompliances despite efforts being made on their part Last of all, the lack of revenue generated when mines are placed on care and maintenance due to commodity cyclical volatility and economic turbulence precludes mines from fulfilling all their SLP obligations, which can be taxing on those communities placing reliance on these commitments

The implementation of SLPs and the Mining Charter have been successful in some respects as mining companies have met some of their obligations; however, there have been concerns regarding the slow pace of transformation of the mining and minerals industry That being said, as mining companies and investors rely heavily on regulatory frameworks and legal certainty to inform their business strategies, the proposed amendments to the act must address the ESG criteria to ensure the sustainability of the mining industry in SA

Revised guidelines a critical framework for merger analysis

Phuti Mashalane Werksmans

The South African Competition Commission has published its final revised Public Interest Guidelines (guidelines) relating to merger control The guidelines serve to clarify the commission s stance on public interest factors as set out in the Competition Act 89 of 1998 (as amended) (Competition Act) There are pivotal updates and key insights that require the attention of parties seeking merger approval from the commission Although these are nonbinding in principle, they do provide a useful guide

on the commission s stance in relation to public interest assessment of mergers

In assessing mergers before it, the commission is also legislatively required to consider the impact that a particular merger will have on public interest considerations set out in section 12A(3) of the Competition Act These considerations are the impact a merger will have on (i) a particular industrial sector or region (ii) employment (iii) ability of small and mediumsized firms that are owned or controlled by historically disadvantaged persons, to effectively enter or expand within a market (iv) the ability of

national industries to compete in international markets, and (v) the promotion of a greater spread of ownership by historically disadvantaged persons (HDPs)

ASSESSMENT

The guidelines outline that in evaluating a merger s impact on public interest, the commission will first conduct an assessment of each public interest factor individually, discerning whether the merger is likely to have a positive or negative effect on each then consider whether the effect is merger-specific; and only if so, will it consider whether the effect is substan-

tial

Where a determination is made that only positive public interest benefits arise from a particular merger, they are merger-specific and substantial, the enquiry into those factors understandably ends However, if the commission concludes that if a specific public interest aspect is adverse, specific to the merger and significant, it will require remedies to address the negative impact In cases where rectifying the negative impact on that particular public interest aspect isn t feasible, the commission might weigh alternative public interest aspects of equal signifi-

cance that counterbalance the identified negative impact

Although the guidelines introduce several new provisions, perhaps the most notable and somewhat controversial provision relates to the fact that all mergers will be subject to the requirement that the merger promotes a greater spread of ownership

OBLIGATION

According to the guidelines, a failure to do so may render the merger unjustifiable on public interest grounds This imposes a positive obligation on the merging parties to increase the levels of ownership by HDPs or workers

(typically through ESOPs) (potentially both) This is a controversial and onerous provision in our view We say so because this requirement appears to find application irrespective of the fact that the merger does not raise any public interest concerns

The critical question that arises is whether or not the guidelines, particularly the HDP provision, will water down or undermine the holistic approach that is often taken in terms of which the public interest considerations or factors are weighed and considered holistically as opposed to on an individual basis

BUSINESS LAW & TAX

Celebs no safe bet for brands

• Companies must teach their influencers well to stay onside with trademark law

Dr Bernard Dippenaar ENS

Client feedback has shown that articles dealing with celebrities and major brands are relatable, and interesting and bring some life to the field of intellectual property (IP) In this article, we will discuss a number of recent IP cases dealing with well-known personalities and/or prominent brands, exploring the fascinating intersections between fame, creativity and legal protection

Thom Browne there’ s nothing unusual about Thom

A Chinese company, Dongguan Tinda Apparel, filed an application to register the trademark, Thom Bonzero, for clothing in the EU The US clothing company, Thom Browne, filed an opposition based on an EU registration for the trademark Thom Browne The US company claimed that:

● The Thom Browne brand is well known;

● The goods and services are identical;

● There will be confusion;

● Tom may be common, but the name Thom is unusual; and

● That there was bad faith

The European Intellectual Property Office (EUIPO) rejected the opposition Its reasoning was that:

● The product area, clothing, is one where consumer attention is average;

● The name Thom is not that unusual and is an abbreviation of Thomas;

● Although the first part of a trademark, in this case, “Thom” , is generally regarded as the most significant feature, surnames are better indicators of origin and people tend to pay more attention to them;

● The surnames Browne and Bonzero are in no way similar;

● The Thom Browne trademark really isn’t that well known in the EU yes it’ s quite well known in the UK but, well, that’ s no longer in the EU, is it?

Calvin Klein absolutely nothing like Cailin Kailun In Japan, a Chinese individual

applied to register the trademark Cailin Kailun for clothing which was opposed by Calvin Klein, on the basis of a likelihood of confusion

The Japan Patent Office (JPO) accepted that Calvin Klein is a well-known trademark for clothing But it went on to find that there was no likelihood of confusion

Why? Well, there are significant visual, phonetic and conceptual differences between the marks And the trade mark Cailin Kailun has no meaning at all

CELEBRITIES, MAJOR BRANDS AND IP

Kanye West – not feeling the love

The estate of the late singer Donna Summer (think Hot Stuff and Love to Love You Baby) is suing Kanye West (plain Ye to his mates) for copyright infringement the claim is that Kanye West used a sample of Donna Summer’ s 1977 song I Feel Love on a new album Good (Don’t Die), without getting clearance

from Donna Summer’ s estate

Kanye claims that he did seek clearance, albeit just a week before the release of the album (a last-minute thought, then) But the request was refused because of a “potential degradation to Summer’ s legacy” this seemingly relates to the fact that “West is known as a controversial public figure whose conduct has led numerous brands and busi-

ness partners to disassociate from him”

The Donna Summer estate has said that it wants “ no association with West’ s controversial history”

Sinead O’Connor –Nothing compares to an ex-president who thinks he’ s above the law

The estate of the late Irish singer Sinead O’Connor best known for her huge hit Nothing Compares 2U has made it clear that it is extremely upset about Donald Trump’ s use of her greatest song at his rallies The estate claims that O’Connor lived by a “fierce moral code” and had a very low opinion of Donald Trump she apparently referred to him as a “biblical devil”

As far as we can tell no IP right has been raised here Just common decency!

Rihanna – don’t forget novelty

The singer Rihanna has long

worked as an “influencer” for the shoe manufacturer

Puma In 2016, Puma applied for and obtained for an EU design registration (RCD) for a shoe known as the Puma Creeper Shoe But in 2019, a Dutch footwear company sought cancellation of the registration on the basis that there had been prior disclosure of the design But who on earth would have made the disclosure? Well it turns out that the disclosure was in fact the influencer the claim of prior disclosure related to a 2014 posting on Rihanna’ s Instagram account, a posting that received more than 300,000 likes and showed her wearing the Puma Creeper Shoe The Dutch company argued that the effect of this 2014 disclosure was that by the time the application for registration was filed in 2016, the shoe no longer had the required novelty and individual character The European Court of Justice confirmed this on March 6 2024

The lesson, with apologies to Crosby, Still, Nash & Young, teaches your influencers well!

The takeaway message here is that a simple social media post could result in a patent or design being rendered invalid, which could (arguably) cost the company millions as it no longer has a monopoly to enjoy the fruits of its labour

● Reviewed by Gaelyn Scott, Head of ENS’ IP practice

Fica compliance: identify risks, avoid fines

Hawken McEwan DocFox

Despite being viewed as an administrative and burdensome expense with excessive paperwork sometimes causing potential delays to establishing business relationships and concluding transactions, Financial Intelligence Centre Act (Fica) compliance is more crucial than ever

With a staggering 2% to 5% of global GDP being laundered annually, the imperative for robust anti-money laundering and counter terrorist/proliferation financing control measures cannot be overstated, particularly in the wake of the country s recent greylisting

Since its inception in 2001, the Fica has been synonymous with compliance challenges and seemingly endless documentation Many accountable institutions fulfil

the requirements with reluctance, if at all, while their customers find the frequent need to verify their identity burdensome

However, the rationale behind the existence of Fica is compelling Fica plays a crucial role in identifying the proceeds of money laundering, terrorist funding and tax evasion and the people behind it SA s greylisting by the Financial Action Task Force in 2023 proves SA still doesn t have a proper handle on financial crime

The government cannot solely be blamed for SA s deficiencies While resources in our regulators, police and prosecuting authorities are stretched, the private sector must also be held accountable Companies serve as the frontline defence against SA being seen as a hotspot for financial crime

DUE DILIGENCE AND

COMPLIANCE CHALLENGES

Fica aims to ensure accountable institutions have sufficient and accurate knowledge of their clients’ true identities and motivations, empowering them to alert authorities about any suspicious activities or transactions Without information from people exposed to these attempts to clean dirty money, authorities have nothing to base their investigations on For Fica to be more effective, accountable Institutions need to take compliance more seriously Fica places an obligation on accountable institutions, such as credit providers, high value goods dealers, and financial intermediaries to put various controls in place to identify and report suspicious activity

Yet for many industries, compliance remains a tremendous challenge Legal practitioners and estate

agents are two categories of accountable institutions that have been consistently declared noncompliant According to the Financial Intelligence Centre (FIC), about 80% of law firms fail to adhere to Fica requirements Noncompliance carries significant consequences, including reprimands and fines of up to R50m for organisations

INDUSTRIES

MOST AT RISK

Authorities have identified many industries as vulnerable to exploitation by money launderers, terrorists, and proliferation financiers These industries encompass a wide spectrum, including financial intermediaries, credit providers, legal practitioners, estate agents and dealers of high-value goods

These industries are at a higher risk simply because of the products and services they offer whether they are

moving money through bank accounts, changing currency, sending money offshore or selling luxury cars, jewellery or properties

Several companies fail to recognise their potential involvement in illegal schemes For example, instances, such as gold smugglers in Zimbabwe bribing SA bank officials to launder money, demonstrate how easily criminals can conceal their illicit activities and coerce others

Besides banks, high-value goods dealers are also at risk of receiving illicit funds for goods they sell They are a recent addition to Fica s list of accountable institutions, but there is still much to do to educate them about how to implement appropriate, riskbased controls

Fica mandates accountable institutions to thoroughly examine their clients using enhanced due diligence in

situations where there is potentially higher risk, such as requesting documentary proof of the information that has been provided The vast majority of clients will be run of the mill, but it s important to always bear in mind not only the reputational risk if you re caught up in a moneylaundering scheme but the potential fine associated with noncompliance

Given the persistent threat of financial crime, organisations cannot afford to lower their guard

As technology advances and new markets are created, money launderers, terrorists and proliferation financiers are finding increasingly innovative ways to use these systems, tools and markets to evade detection

To counter the everchanging face of money laundering and legislation, the companies at risk of being misused must also adapt

Khanye West /Picture: JASON PERSSE

BUSINESS LAW & TAX

Two-pot relief for hospitality

• Workers in the sector

were hard hit by Covid and stand to benefit in new retirement savings system

Nicolette van Vuuren Webber Wentzel

Allowing financially stretched fund members to withdraw a limited amount of money from their pension savings from what’ s known as a savings pot, the two-pot system offers benefits to employees across a multitude of sectors

For the hospitality and leisure industry, which has a relatively high staff turnover rate, the system may facilitate access to emergency pension funds without the need to resign

Set to be implemented on September 1, SA retirement plans will have a new feature: the two-pot system This system will allow certain members of retirement funds to access a savings pot (once per tax year) that will, on the implementation date, hold 10% of their retirement fund capital, capped at R30,000, and thereafter one-third of all retirement fund contributions going forward Upon doing so, they will be taxed at their marginal tax rate

The system also enforces long-term preservation of the remaining two-thirds of retirement fund contributions from September 1 into a retirement pot, which ensures that there will be savings available at retirement This reform is particularly helpful for industries with high staff turnover, like hospitality Previously, employees would leave their jobs just to access retirement savings, often to access cash to

service debts Now, they would be able to access their savings pot without resigning While access to the savings pot may not significantly reduce members’ debt, it will allow them to access their savings pot once a tax year (subject to tax), which may in turn reduce the trend of job hopping in the industry

RATIONALE

The rationale for the two-pot has its roots in the Covid-19 pandemic, when many people struggled financially without access to emergency funds This system, proposed by government, provided a way for people to get access to a source of finance quickly,

MOST SOUTH AFRICANS DON’T SAVE FOR RETIREMENT, OR THEY DON’T SAVE ENOUGH FOR RETIREMENT

while seeking to ensure members of retirement funds are forced to save a substantial portion of their retirement savings to retirement

One of the hardest-hit sectors during the pandemic, hospitality, felt this need acutely, leaving those working in the industry desperately seeking ways to access alternative income sources Over the Covid pandemic and even today, employees across sectors are overindebted Loans and similar products may not be an alternative for them The hos-

pitality sector, where many lost their jobs, is still recovering Now, many of those who are employed or reemployed are still grappling with the consequences of the personal financial hardships and loan limitations that arose at the time

The second motivating factor was to encourage people to save because many employees across sectors continue to resign to get access to those funds in the challenging economic climate There has been much talk around the fact that most South Africans don’t save for retirement, or they don’t save enough for retirement

This is therefore a way that the government saw to force people to save because the retirement pot, which will be two-thirds of your contributions from the implementation date, is only accessible on retirement

This access will only be through annuities, so employees would not have access to that lump sum even if they left employment during that time

While there has been much debate around the two-pot implementation date, which has been changed numerous times, National Treasury has indicated that the two-pot system will be implemented on September 1

The Revenue Laws Amendment Bill is waiting for the president to sign it into law, and the Pension Funds Amendment Bill, which now includes funds not governed by the Pension Funds Act, has been approved by the National Assembly and has

CHECKING IN

been adopted by the select committee on finance in the National Council of Provinces

EDUCATION

While the final legislation has not been received yet, stakeholders within the industry are gearing up for the implementation of the two-pot system, with member education being the most important step in the process It is important for members to be educated that while there is a provision for 10% seeding from the current retirement savings into the savings pot,

many members may not be able to withdraw funds on September 1 since their seeded amount may be too small, considering that a minimum withdrawal of R2,000 is required For example, where a member has R19,000 as

NATIONAL TREASURY HAS INDICATED THAT THE TWO-POT SYSTEM WILL BE IMPLEMENTED ON SEPTEMBER 1

their current retirement savings 10% of R19,000 will be seeded to the savings pot R1,900 Therefore the member will be unable to withdraw from their savings pot, until it has grown above R2,000

Members would accordingly be required to be properly educated on the entire two-pot system, in a manner that they are able to fully understand the implementation and the workings of the system as well as the “ cans and cannots” and consequences of withdrawal from the savings pot

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