This blog was authored by Rory Scott, Candidate Attorney. In recent years, financial markets globally have been implementing the reform of reference interest rates to Risk-free Reference Rates (RFRs). South Africa, following suit, is progressing towards replacing the Johannesburg Interbank Average Rate (JIBAR) with the preferred successor rate of the Market Practitioners Group’s (MPG), most … Continue reading
The social aspect of environmental, social and governance (ESG) is an essential component of a sustainable business practice providing sustainability, and perhaps it is even more important than the environmental aspect. This article focuses on the ‘S’ in ESG, and its importance in South Africa. The adoption and implementation of ESG practices has become increasingly … Continue reading
On 23 February 2023, the Loan Market Association (LMA) announced the publication of updated Green Loan Principles (GLPs), together with supporting guidance documents, produced in collaboration with the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications and Trading Association (LSTA). The intention behind the updated GLPs is to ensure that they reflect recent … Continue reading
This blog was co-authored with Rory Scott and Lara Thom, Candidate Attorney’s In 2017, the Alternative Reference Rates Committee (ARRC) recommended the replacement of LIBOR with the Secured Overnight Financing Rate (SOFR). Since the proposed transition, developing markets have been rudderless regarding which benchmarks to apply. There are four types of SOFR that apply to … Continue reading
From a reputational and corporate governance perspective, green and sustainable activity both gain favour with shareholders and investors (particularly those who place emphasis on investment with a positive environmental, social and governance (ESG) impact). Green Loans and Sustainability Linked Loans have distinctive characteristics which should influence the type of loan offering borrowers consider. A key … Continue reading
What are Green Loans? Green loans are loan instruments made available exclusively to finance or re-finance, wholly or partly, new or existing eligible Green Projects, according to the Loan Market Association’s Green Loan Principles (the GLPs). There are no specific qualifying criteria for a “Green Project” but indicative categories set out in the GLPs include … Continue reading
This blog was co-authored by James Donald, candidate attorney The Ministry of Trade, Industry and Competition published the Companies Amendment Bill 2021 for public comment by 31 October 2021. The Bill proposes to amend the definition of “securities” and to exclude subsidiary companies from the financial assistance requirements in section 45 of the Companies Act … Continue reading
The increase in documentation fraud which has adversely impacted financial institutions operating within the trade finance space is an unwanted development that blockchain technology can mitigate. The types of lending most frequently seen in the trade financing space, including letters of credit, revolving credit facilities as well as guarantees have proven susceptible to fraud. An … Continue reading
What are Green bonds? Green bonds (also referred to as Climate Bonds) are like typical bonds but their distinguishing feature is that the proceeds of the bond are ring-fenced and exclusively allocated to support “green projects” aimed at mitigating climate change and promoting energy efficiency, pollution prevention, sustainable agriculture, clean transport, and the cultivation of … Continue reading
Climate change is no longer a future threat. The associated risks have already had a devastating impact on the financial sector. Financial institutions are financially exposed to the physical risks associated with more frequent severe weather events, as well as the transition risks associated with the changes necessary to achieve a low-carbon economy. Mortgage, commercial … Continue reading
The paper-based nature of trade finance presents significant risks of error, fraud and duplicated costs. The COVID-19 pandemic has revitalised efforts towards digitisation, because the transport of these documents is dependent on courier services and the processing is dependent on in-person handling. The International Chamber of Commerce (ICC) called on governments and central banks in … Continue reading
The use of electronic signatures in cross-border transactions can be fraught with difficulties given the lack of uniformity relating to electronic signatures across countries. This position is further exacerbated by the lack of widespread adoption of the Convention on the Use of Electronic Communications in International Contracts 2005, which sought to standardise electronic communications. The … Continue reading
Are electronic signatures valid? It depends: the parties must explicitly agree to the use of electronic signatures and must agree a signing method which complies with the requirements in the Electronic Communications and Transactions Act 2002 (ECTA). What constitutes an electronic signature and whether such signatures are valid in South Africa has become a question … Continue reading
The history of manipulation and scandals surrounding interbank offered rates (IBORs), for example LIBOR and JIBAR, has led to the shift toward Risk-Free Rates (RFRs), a shift which is primarily market led and remains uncertain. The transition to RFR’s rests on the fact that rates such as LIBOR are forward-looking interest rates, calculated using estimates … Continue reading
The outbreak of COVID-19 (Coronavirus) has affected many areas of business, and the legal implications extend far beyond the obvious sectors such as tourism and employment law. Click here to look at our publications for a range of insights on the impact of the pandemic if it continues to spread. Here are eight areas affected … Continue reading
In mid-January 2019, the SARB published its Consultation Paper on Policy Proposals for Crypto Assets, amid a growing interest, investment and participation in crypto assets by financial institutions and individuals and an estimated market capitalisation of about US$200 billion for crypto assets globally. Crypto assets are digital representations or tokens that are accessed, verified, transacted … Continue reading
The Companies Amendment Bill released on 21 September 2018 for public comment, proposes a raft of amendments to the Companies Act. Section 45 presently provides that any financial assistance granted by a holding company to its subsidiary must be authorised by the board and the shareholders by way of a special resolution. If not the … Continue reading
The amendments proposed in the Companies Amendment Bill 2018 have caught the attention of financiers and attorneys in so far as the provision of financial assistance (e.g. providing a loan, guaranteeing a loan, and securing any debt or obligation), to ‘its own subsidiary’ is concerned. The Amendment Bill proposes to amend section 45 by removing … Continue reading
In our previous articles in this series we argued that banks can create new markets for themselves in trade finance by providing digitised letters of credit or trade finance instruments for the movement of both digital and physical goods using blockchain. We also highlighted the fact that Barclays, together with the Israeli start-up Wave, may … Continue reading
In our last article in this series we argued that banks can create new markets for themselves in trade finance by providing digitised letters of credit or trade finance instruments for the movement of both digital and physical goods using blockchain. We likened the ease of transacting in this way to the simplicity of ordering … Continue reading
Uber’s success is that it made it as easy to order and pay for a ride as clicking a few buttons. It created a multi-billion dollar market that didn’t exist just a few years ago. Blockchain is a payment technology that enables people to automate functions that previously needed manual input and creates certainty without … Continue reading
The Liquidity Coverage Ratio (LCR) was introduced with the implementation of Basel III, and is designed to ensure that financial institutions have the necessary assets on hand to ride out short-term liquidity disruptions. Two important elements of the LCR that are especially relevant to South African banks are: 1. The LCR in South Africa was … Continue reading