South Africa’s government expects private shareholders unhappy with proposed changes to the Reserve Bank Act to challenge these changes in court, but is confident it will win any litigation, a Cabinet spokesperson said on Thursday.
Finance Minister Pravin Gordhan on Monday announced proposed amendments to tighten rules on shareholding in the central bank to try stop private shareholders the government says are motivated by profit, from undermining the bank’s independence.
“We do expect some of the shareholders to challenge this Bill we are putting to Parliament but our view is that the process we are implementing to amend the Bill is fully in line with existing procedures and regulations,” Themba Maseko, chief government spokesperson, told reporters.
South Africa’s Reserve Bank is one of the few central banks in the world owned by private shareholders, a system originally meant to give ordinary South Africans a chance to own a small number of shares.
Shareholders have no say in the operations of the central bank or monetary policy but a small group have bought shares in family and friends’ names, circumventing shareholding limits, to try gain more votes and influence.
They regularly disrupt Reserve Bank general meetings, using time-wasting tactics to press their demands, which the central bank and government say is, ultimately, to ensure bigger payouts.
“It’s not unexpected that some of the shareholders, who had wanted to increase their shareholding in the Reserve Bank, may not take this lying down and may want to take government to court,” Maseko said.
German shareholder Michael Duerr has told local media he would approach the International Centre for the Settlement of Investment Disputes as a last resort if the concerns of minority shareholders were not met. – Reuters