ICASA’s new Draft Regulations could introduce stringent processes for shareholding changes
On 16 March 2022, the Independent Communications Authority of South Africa (“ICASA”) published Draft regulations containing amendments which, if implemented, will have a dire effect on licensees, especially M&A, restructure or other transactions that result in a change in shareholding.
The stated purpose of the Draft Regulations Regarding Standard Terms and Conditions for Individual Licences under Chapter 3 of the Electronic Communications Act, 2005 is to provide further clarity regarding ICASA’s standard terms with respect to individual licences and to enhance compliance, and to streamline the submission of documents to ICASA. The Draft Regulations will impact individual broadcasting and ECS/ECNS licenses.
MOST IMPORTANT PROPOSED CHANGES
ICASA approval required for changes in shareholding
Most importantly, the Draft Regulations intend to repeal the requirement for a licensee to notify ICASA of changes in its shareholding and replace it with a requirement to obtain their prior approval.
ICASA motivates this change by stating that: “It has been noted that the notification process is susceptible to abuse or being incorrectly applied to the extent that it alters or changes ownership. Through a notification the Authority is unable to sufficiently monitor and manage the change in shareholding specifically to the extent that it changes ownership and control over time. Any shareholding changes have the effect of changing the shareholding structure of that entity, and such changes may conflict with the objectives and mandate of the Authority as found in the ECA. Thus, the process of any changes in shareholding, will be subject to an approval by the Authority and will be guided and prescribed in terms of the Process and Procedure Regulations for individual licenses.” [our emphasis added]
This amendment, will require all licensees to obtain ICASA’s approval for any changes in their shareholding (no matter how small).
The process to obtain this approval is not set out in the Draft Regulations, so it is unclear how it will work and what fee would need to be paid. It is also not clear if a similar process would need to be followed as is currently required for the approval for change of control applications (which is a costly and very lengthy process, which can take anything from six to 18 months). ICASA states that the process will be prescribed in the Process and Procedure Regulations. ICASA has not yet published amendments to the current Process and Procedure Regulations detailing the above.
Extension of notification period for change in details
The Draft Regulations intend to extend the time period for notification of a change in licensee details and information from seven to 14 days.
Notification before the provision of services
Regulation 9 requires licensees to notify ICASA five days prior to the provision of services (and, seemingly, prior to the amendment or termination of services) of:
- the name of the new product/service, amendment, or termination being notified to ICASA;
- the objective and reason(s) of launching a new product/service, amendment or termination of a product/service;
- the effective date of the new product/service, amendment or termination of a product/service; and
- the price(s), and all other fees applicable to the product/service.
Written comments and representations on the Draft Regulations must be submitted to ICASA by no later than 16h00 on 5 May 2022 by post, hand delivery or electronically and marked specifically for attention:
Independent Communications Authority of South Africa
350 Witch-Hazel Avenue,
Eco Point Office Park,
Eco Park, Centurion,
Attention: Mr. Pascalis Adams