Forcing the few: Issues from the South African Reserve Bank’s legal action against its delinquent shareholders

Abstract

The SA Reserve Bank is a public company with shareholders in terms of the South African Reserve Bank Act, No. 90 of 1989 (Republic of South Africa 1989). This article considers shareholding in the SA Reserve Bank against the background of legislative amendments promulgated in 2010 and legal action instituted by the SA Reserve Bank against certain shareholders on the basis of these amendments. The amendments provide, inter alia, for shareholders regarded as associates in terms of the SA Reserve Bank Act to declare such relationship and their shareholding to the bank. While some associated shareholders made such declarations or provided undertakings to sell their shares, the central bank has reason to believe that the respondents against whom legal action is brought, are associates, but failed to disclose such associations in the manner prescribed by legislation. A matter for concern is that the legislative amendments of 2010 ex post reduce the rights of shareholders, while another option was available. The voting rights of all associated shareholders could simply have been reduced while permitting them to keep the shares, as was the case with a change of legislation pertaining to the SA Reserve Bank in 1944.

Keywords: central banks, shareholders