MINERAL AND PETROLEUM RESOURCES DEVELOPMENT AMENDMENT BILL 2013 APPROVED
On March 27 2014 the National Assembly and the National Council of Provinces approved the Mineral and Petroleum Resources Development Amendment Bill 2013. The bill will be sent to the president to sign. Once the bill is signed, its commencement date will be published in the Government Gazette.
This update discusses some of the key changes introduced by the bill that affect the mining sector and commercial mining companies and transactions. It does not deal with the changes introduced by the bill with respect to the petroleum sector. Transfer of mining or prospecting rights and consent for change of control Currently, listed mining companies that are in the chain of control of mining rights holders are exempt from the need to obtain ministerial consent if the listed company undergoes a change in control.
However, the bill will require listed mining companies to obtain ministerial consent if there is a change in control. In addition, non-listed companies that hold mining rights or are in the chain of control of such rights holders currently require ministerial consent only when they go through a change of control. However, the bill will require ministerial consent for any change in the shareholding of non-listed companies.
The bill has inserted a narrow definition of 'controlling interest':
- in relation to a company, the majority of the voting rights attached to all classes of shares in the company; or
- in relation to any business other than a company, any interest which enables the rights holder to exercise directly or indirectly any control whatsoever over the activities or assets of the business. As such, only a 51% change seems to be covered for listed companies.
There is still an outstanding question as to whether the bill, in the case of both listed and non-listed companies, intends to limit the Section 11 consent requirement to direct holders of mining rights, and not to regulate an indirect change in shareholding. Given the serious impact of not obtaining consent where it is required, it is premature to advocate anything other than a conservative approach, pending further clarification of this matter from the Department of Mineral Resources.
In this regard, transactions that are completed contrary to Section 11 will be void in terms of Section 11(5) of the Mineral and Petroleum Resources Development Act (28/2002, as amended) and also place the prospecting or mining right at risk of being cancelled or suspended by the minister.Read further