Minority shareholder protection under the spotlight with CompCom draft guidelines

South Africa's competition authority has published draft guidelines relating to the rights of the minority shareholders in companies.

The guidelines provide the approach which the Competition Commission 'is likely to adopt' in assessing a transaction which would amount to the acquisition of a form of control by a minority shareholder in terms of the Competition Act, specifically where this may require approval of a merger.

Stephen Grootes talks to Simphiwe Gumede, Senior Legal Counsel at the CompCom and co-author of the draft guidelines.

Gumede draws attention to the two annexures which distinguish between minority shareholder protections which don't, or which do confer control - for instance in the latter case, with the right to approve and/or veto or decline a strategy, business plan or budget.

He says the guidelines don't point to any major changes, but basically reinforce those positions already confirmed by the Competition Appeal Court as well as the Competition Tribunal.

"In the way that they're framed, they actually recognise the fact that there ARE these protections that minority shareholders do have and sometimes do gain as a result of transactions... and what role these protections play within the broader business space, as well as within merger control more generally."

These guidelines are similarly followed in Europe as well, he adds.

For more detail on what is quite a technical issue, listen to the interview audio at the top of the article