Competition Commission: Draft Guidelines on Minority Shareholder Protections

Brought to you by SA Accounting Academy: The Competition Commission has released draft guidelines clarifying when minority shareholder protections constitute an acquisition of “control” under South African merger control regulations.

In terms of the Competition Act, No. 89 of 1998, the Competition Commission has published Draft Guidelines on Minority Shareholder Protections. These guidelines provide the Commission’s interpretation of when rights typically enjoyed by minority investors cross the threshold into “control” for the purposes of merger control approval, even in instances where the shareholding is below 50%.

The draft guidelines specify that minority shareholdings will no longer be automatically excluded from merger control if the associated rights grant strategic influence over the target firm. The Commission identifies several control-conferring protections that may trigger a notification requirement, including:

• Veto rights over the adoption or amendment of business plans and strategic budgets;
• The power to approve or veto the appointment or dismissal of key executive leadership; and
• Influence over other high-level strategic decisions that dictate the competitive behavior of the firm.

The Commission’s objective is to ensure that levers of influence which amount to de facto control are subject to regulatory scrutiny. This move signals more rigorous enforcement regarding minority stakes and requires parties to structure deals with these notification thresholds in mind. Public comments on the draft guidelines are due by 17 December 2025, with the final framework expected to govern transactions from 2026 onwards.

Click here to download the Draft Guidelines on Minority Protections.

What this means for you, your business, or your clients

• For yourself: You must update your regulatory checklist for due diligence to include a specific assessment of veto rights against the Commission’s expanded definition of control.
• For your business: Your firm must review standard investment templates and shareholder agreements to identify clauses that might inadvertently trigger a mandatory merger notification.
• For your clients: Advise clients that minority investments previously considered non-notifiable may now require formal Competition Commission approval, potentially adding significant costs and delays to transaction timelines.

Originally published at https://accountingacademy.co.za/news/read/competition-commission-draft-guidelines-on-minority-shareholder-protections