AFRICAN BUZZ •
Photos by Webber Wentzel
Giada Masina at Webber Wentzel .
Francois Sieberhagen at Webber Wentzel .
In the case of Mogale Alloys Proprietary Limited v Nuco Chrome Bophuthatswana & Others [ 2011 ] JOL 26907 , on 11 March 2011 , the court adopted a wide and purposive interpretation of section 11 . It made it clear that the minister ' s consent is required before any transaction that results in a loss of control , even if another party is not gaining control . Some uncertainty , however , remained on whether section 11 applies to an indirect change of control ( or loss of control ).
The case of Arqomanzi Proprietary Limited v Vantage Goldfields Proprietary Limited ( In Business Rescue ) and 9 Others , under case number 3772 / 2020 , related to an Australian company , Macquarie Metals ( Pty ) Ltd , which acquired ultimate control high up the corporate chain in a group of companies , where subsidiaries far down the chain held mining rights . The transaction involved the issue of shares in the holding company , Vantage Goldfields Limited , to Macquarie , which thereafter constituted 98 % of the shares in Vantage .
The court a quo held that a controlling interest is not limited to a direct controlling interest . It includes an indirect controlling interest . The minister argued that if the legislature intended to restrict the prohibition in section 11 to a direct controlling interest in a company that holds a right , it would have said so in express terms . The court held that section 11 is a protective mechanism to ensure that the objects of the MPRDA are achieved . It would be inconsistent with the MPRDA and its objects to exclude a change of an indirect controlling interest , especially considering the state ' s responsibility to act as custodian of South Africa ' s mineral resources and the objects relating to equitable access to the nation ' s mineral resources and transformation .
The Arqomanzi judgement was taken on appeal . On 27 June 2023 , the Supreme Court of Appeal handed down a unanimous judgement which confirms the court a quo ' s finding . The court held that the issue of shares to Macquarie severely diluted the existing shareholders ' shareholding in Vantage . The effect was that the shareholders , by consent , alienated or disposed of their controlling interest in Vantage , and indirectly in the holders of the mining rights . This indirect change of control of the holders of mining rights required the minister ' s prior written consent . The court stated that it would be absurd to confine the interpretation of section 11 to direct cessions and disposals since , by doing so , ministerial consent and therefore the objects of the MPRDA could easily be thwarted .
There can therefore no longer be any doubt that the reference to change of control in section 11 should be given a very broad interpretation . It applies to both a loss of control and an indirect change of control and can be triggered by an issue of new shares in a company where the existing shareholders are not actually selling any shares . •
www . africanmining . co . za African Mining Publication African Mining African Mining • October 2023 • 7