Topic: Banking

Blockchain – will this be trade and commodity finance’s Uber?

By Steve Chemaly and Rohan Isaacs (ZA) on August 24, 2016 Posted in Banking

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

Acceleration clauses and prescription

By Aslam Moosajee (ZA) on June 3, 2016 Posted in Banking

If a loan is repayable in instalments and includes an acceleration clause that if the debtor defaults on paying any instalment, the creditor is entitled on notice to terminate the loan agreement and claim the full balance outstanding, the debt ordinarily only prescribes three years after the date of the notice claiming the full outstanding … Continue reading

Failure to join creditors is fatal to an application to set aside business rescue proceedings

By Aslam Moosajee (ZA) on May 30, 2016 Posted in Banking

Creditors of a company have a substantial interest in an application to set aside business rescue proceedings or the adoption of a business rescue plan. A court will dismiss such an application if the creditors are not joined as parties to the application. Giving notice of the application to the creditors does not cure the … Continue reading

Extra-territorial application of NCA to offshore credit agreements

By Riccardo Petersen (ZA) on May 25, 2016 Posted in Banking

A settlement agreement concluded outside South Africa between a foreign company and a person resident in the United Kingdom that was concluded completely outside the South African credit market and has no bearing on accessibility to credit by South Africans or the nature of credit products available within South Africa does not “have an effect … Continue reading

Bank held liable for the fraudulent conduct of a former director of its customer

By Aslam Moosajee (ZA) on May 23, 2016 Posted in Banking

A bank needs to ensure that a company has authorised its director to allow the company’s bank account to be debited each month, if the payments settle the director’s personal obligations. This much is clear from the recent SCA judgment in First National Bank and Another v Scenematic One (Pty) Ltd. Mr Naude, a former … Continue reading

New NCA regulations prescribing maximum interest rates and service and initiation fees come into force as court application fails

By Aslam Moosajee (ZA) on May 5, 2016 Posted in Banking

The new regulations prescribing the maximum rates of interest, initiation fees and service fees that credit providers can charge come into effect on 6 May 2016. An urgent application by Micro Finance South Africa (MFSA) to stay the implementation of the new regulations pending the outcome of an application to set aside the Minister of … Continue reading

Shareholder has no claim for company’s loss

By Riccardo Petersen (ZA) on April 7, 2016 Posted in Banking

A plaintiff who was a shareholder in a liquidated company sued the company’s bank for a R50 million loss in value of his indirectly held shareholding allegedly caused by intentional conduct of the bank for lending money beyond the means of the company and then liquidating the company. The delictual claim for pure economic loss failed … Continue reading

A consumer who gets a section 129 notice cannot rely on fanciful technical points

By Aslam Moosajee (ZA) on March 10, 2016 Posted in Banking

The purpose of s129 of the National Credit Act (NCA) is to ensure that a consumer is notified of the default and of the various options available to the consumer. In Sebola v Standard Bank the Constitutional Court held that a credit provider can normally show compliance with s129 by: proving that the notice was sent … Continue reading

What is a simulated transaction?

By Patrick Bracher (ZA) on December 9, 2015 Posted in Banking

The Supreme Court of Appeal has reminded us that a simulated transaction is one where all the parties to the intended contract disguise the true nature of the transaction. Where one party fraudulently causes the other party to enter into a transaction different from what they thought it was, it is an invalid transaction, not … Continue reading

Insist on clear court orders that affect you

By Aslam Moosajee (ZA) on November 30, 2015 Posted in Banking

All laws and court orders must be written in a clear and accessible way. Vague laws or court orders violate the rule of law, which is a founding principle of our Constitution. In Minister of Water and Environmental Affairs v Kloof Conservancy, the Supreme Court of Appeal set aside part of a court order because it … Continue reading

South African renewable energy programme: benefits of local community investments

By Melusi Dlamini and Malibuye Cossie (ZA) on November 23, 2015 Posted in Banking

In order to ensure that the construction and operation of renewable energy projects in South Africa is not hampered by unsatisfied local communities it is important that borrowers’ and sponsors’ alike invest in educating local communities on how they derive benefit from the projects. Since our article of September 2014 (Renewable energy projects: community related … Continue reading

Doing Business in South Africa, 2016

By Lize Louw and Donovan Brown on November 18, 2015 Posted in Banking

The World Bank’s Doing Business Report is eagerly awaited each year as an indicator of the ease of doing business in various economies around the world. Released in October 2015, this year’s report presents data for 189 economies and aggregates information from ten areas of business regulation (such as starting a business, getting credit and … Continue reading

Proving prejudice not sufficient for surety to escape liability

By Aslam Moosajee (ZA) on November 18, 2015 Posted in Banking

Prejudice to a surety will only release the surety from liability if the prejudice is the result of a breach of a legal duty or obligation owed by the creditor. The primary sources of a creditor’s duties and obligations are the principal agreement and the suretyship. If the prejudice complained of results from conduct falling … Continue reading

Challenges to banking and tech: data and cybercrime

By Rohan Isaacs (ZA) on October 13, 2015 Posted in Banking

The proliferation of data gives rise to two challenges: Companies need to manage the vast amounts of data they now control and turn it to useful purposes. The availability of so much data has been an ideal environment for an explosion of various forms of cybercrime. Data The role of data scientists and analytic technology … Continue reading

Letters of credit: silent confirmations do not strip an honouring bank’s rights as nominated bank under UCP 600

By Fabio Miceli on October 7, 2015 Posted in Banking

The court in Greenhill International Pty Ltd v Commonwealth Bank of Australia confirmed that silent confirmations of letters of credit fall outside the Uniform Customs and Practice for Documentary Credits 600 (UCP 600) and are governed purely by the express and implied terms agreed to by the paying bank and the beneficiary. However, the court … Continue reading

Arbitrations hit by moratorium on legal proceedings in business rescue

By Riza Moosa on October 7, 2015 Posted in Banking

Overturning a lower court judgment, the appeal court has found that arbitrations are included in the general moratorium on legal proceedings against companies under business rescue in section 133(1) of the Companies Act 2008. In Chetty v Hart, the Supreme Court of Appeal looked at the meaning of the phrase “legal proceedings” in section 133 in relation … Continue reading

Without prejudice letter with admission of liability interrupts prescription

By Patrick Bracher (ZA) on August 25, 2015 Posted in Banking

When a debtor received a demand to repay the balance of a R10 million loan it replied that it “would like to make a settlement proposal” but the company was “struggling to turn the business around”. It was held in Absa Bank Limited v Hammerle Group (Pty) Limited that this letter was not only an unequivocal … Continue reading

Regulation of small-scale embedded generation and the potential regulatory framework provided by NERSA

By Katrijn Thys and Malibuye Cossie (ZA) on August 14, 2015 Posted in Banking

Small-scale embedded generation (SSEG), particularly rooftop solar photovoltaic systems, are increasingly used by South Africans as an alternative solution to South Africa’s current energy supply challenge. The Integrated Resource Plan 2010-2030 Update estimates that residential and commercial PV embedded generation could reach 22.5GW by 2020. However, there is no legal framework for the implementation of … Continue reading

Margin requirements for derivatives – but which OTC’s will be affected?

By Bridget King and Desiree Reddy (ZA) on August 6, 2015 Posted in Banking

The International Swaps and Derivatives Association Inc. (ISDA) indicated that South Africa has been in focus over recent months since the margin requirements for non-centrally cleared derivatives transactions were published for comment in June 2015. The aim of the requirements is to outline the future regulation of OTC derivatives in South Africa in line with … Continue reading

National Credit Act salary attachment procedure revisited

By André Vos and Riccardo Petersen (ZA) on August 6, 2015 Posted in Banking

In early July 2015 the High Court declared aspects of a long-established but often abused debt collecting process unlawful, with potential wide-ranging consequences. It could render hundreds of thousands of salary attachment orders unenforceable. In our recent blog post we highlighted the findings of what is known as the Desai Judgment (after the judge who … Continue reading

Business rescue: Constitutional Court upholds SCA judgment regarding interpretation of binding offer in Section 153(1b)(ii) of the Companies Act

By Aslam Moosajee (ZA) on August 3, 2015 Posted in Banking

The Constitutional Court refused leave to appeal against the Supreme Court of Appeal decision that a “binding offer” to a creditor in business rescue proceedings, made under s 153(1)(b)(ii) of the 2008 Companies Act, is not automatically binding on the creditor. The appeal had “no prospects of success” which effectively confirms the correctness of the interpretation of … Continue reading

New Curatorship regime – thanks to ABIL?

By Bridget King on August 3, 2015 Posted in Banking

The Banks Amendment Act came into operation on Monday, 29 June 2015. The Amendment Act looks slightly different to the draft bills that were circulated towards the end of 2014. Input from the Standing Committee on Finance has now been incorporated. The Amendment Act provides for the curator of a financially distressed bank to create … Continue reading

Comment on the draft regulations limiting interest and fees under the NCA

By Riccardo Petersen (ZA) on July 1, 2015 Posted in Banking

The Minister published the draft regulations on the review of the limitations of fees and interest rates on 25 June 2015. The regulations will increase and decrease interest rates and fees that credit providers can levy on consumers’ mortgage agreements, credit cards, store cards and unsecured credit transactions. The proposed changes to the interest rates … Continue reading

Amendments to Banks Act

By Aslam Moosajee (ZA) on July 1, 2015 Posted in Banking

With effect from 29 June 2015, the Banks Act has been amended. The amendments to the Banks Act enable the provisions in the Companies Act on arrangements and compromises to apply to banks under curatorship and to expand the basis on which a curator of a bank may dispose of all or part of the … Continue reading