In May 2014, section 13 of the Electronic Communications Act (“ECA”) was amended as follows:
(1) An individual licence may not be let, sub-let, assigned, ceded or in any way transferred, and the control of an individual licence may not be assigned, ceded or in any way transferred, to any other person without the prior written permission of the Authority.
(2) An application for permission to let, sub-let, assign, cede or in any way transfer an individual licence, or assign, cede or transfer control of an individual licence may be made to the Authority in the prescribed manner.
There has been much debate about the meaning of ‘control’ in s13(1), and what would constitute a transfer of control of an individual licence as contemplated therein. This is due to the lack of definition for the term ‘control’ in the ECA or any regulation falling thereunder.
In his judgement on the unreported matter of Lesedi Africa Productions CC versus the Independent Communications Authority of South Africa (“ICASA”) and three others, Fabricius J brought an end to one aspect of this debate by noting:
 Section 13 of the ECA deals with the transfer of individual licenses or change in ownership. The prohibition in s13(1) of the ECA is against the transfer of individual license or change of ownership of the license as a result of which control of a license is transferred from one shareholder to another shareholder member in a close corporation. Section 13(1) must be given ordinary grammatical meaning. The following words were added to s 13 (1) with effect from 21 May 2014:
“. . . and the control of an individual licence may not be assigned, ceded or in any way transferred to any other person without prior written permission of the Authority.“
It is in my view clear, given the context also, that the prohibition is not only against the transfer of a license itself, but also the change of control of an entity to which a license has been granted. The reasons for this are also apparent from sections 2,4(3) of 8 of the ECA which deal with various relevant licensing provisions and conditions. Context is relevant and an important consideration.
This judgement clarifies the position that section 13(1) of the ECA applies to changes in the ownership of a licensee. Where there is a change in the shareholding of a company holding IECNS or IECS licences, and that change results in a shift in the control of the company, then that change in ownership not be given effect to unless ICASA has given its prior written permission for the transaction, which permission is sought by following the prescribed application process.
What qualifies as ‘control’ is still not defined for purposes of the ECA. The Companies Act and Competition Acts can provide guidance in this regard. Each proposed transaction should be considered from these and any other relevant angles to determine whether the transfer will result in a transfer of control and which ICASA process should be followed for the change to shareholding.
It is noteworthy that ICASA had referred certain licensees to the CCC for contravention of s13(1) of the ECA, specifically for making shareholding changes which ICASA had viewed as having resulted in a transfer of control of the licensee without securing ICASA’s permission prior to making the shareholding changes. In these matters, the CCC had found that the licensees had indeed contravened s13(1) of the ECA, and ordered that these licensees undo their shareholding changes.
If you intend to make changes to your shareholding and require assistance with the ICASA processes for securing permission for these changes, please contact Sumaiyah Makda at email@example.com.
If you would like to have proposed shareholding changes considered to determine whether they would constitute a transfer of control, please contact Sumaiyah Makda at firstname.lastname@example.org.