1.  Description of the legislation
    1.  Is there a moratorium on loans legislation implemented in your jurisdiction?
    2. If no: Are there any ongoing discussions regarding a potential introduction of such measures?
    3. What is the name of the relevant legislation (the “Relevant Act”)?
    4. What is the duration of the measures (period of moratorium)?
    5. Does the legislation provide for an extension of the period of moratorium?
    6. Is the moratorium mandatory, or can each borrower opt out should they wish to simply continue payments, or opt in if they want to be protected by the moratorium?
  2. Parties and agreements affected by the Relevant Act
    1. Is the moratorium available for both corporate and consumer loans?
    2. Who are the affected Lenders?
    3.  Does it make a difference whether loans are granted by a foreign entity and governed by foreign law?
  3. Impact on the loan agreements
    1.  Is there a cut-off date with respect to loan agreements to which the Relevant Act will apply (e.g. not applicable to loan agreements entered into after the cut-off date)?
    2.  Does the moratorium apply to principal only, or also to interest and/or fees?
    3. Will the maturity of the loan automatically be extended by the moratorium period?
    4.  Are repayments and interest which have become due and payable under the contract before the Relevant Act has come into force covered by the moratorium?
    5. Will lenders be able to terminate a loan due to an event of default other than non-payment (e.g. breach of financial covenants)?

jurisdiction

South Africa
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1. Description of the legislation

1.1 Is there a moratorium on loans legislation implemented in your jurisdiction?

No.

1.2 If no: Are there any ongoing discussions regarding a potential introduction of such measures?

There is no specific loan moratorium legislation. However, banks have been exempted from certain practices under the Competition Act 1998 (the “Act”), the relevant exemption being the COVID-19 Block Exemption for the banking sector 2020 (the “Exemption”). The Exemption allows them to introduce measures designed to:

  • promote concerted conduct to prevent an escalation of the national disaster and to alleviate, contain and minimise the effects of the national disaster
  • enable the banking sector to minimise the negative impact on the ability of customers, including both business and private individuals, to manage their finances during the national disaster, and be in a position to continue normal operations beyond the national disaster, and
  • enable the banking sector to manage the banking infrastructure, including the payment infrastructure, ATMs and branches.The practices adopted by banks allow for payment holidays and debt relief measures for businesses and individual debtors in financial distress.

 The Exemption will remain in operation for as long as the declaration of COVID-19 as a national disaster subsists, or until they are withdrawn by the Minister of Trade and Industry, whichever comes earlier.

1.3 What is the name of the relevant legislation (the “Relevant Act”)?

N/A

See point 1.1 above.

1.4 What is the duration of the measures (period of moratorium)?

N/A

See point 1.1 above.

1.5 Does the legislation provide for an extension of the period of moratorium?

N/A

See point 1.1 above.

1.6 Is the moratorium mandatory, or can each borrower opt out should they wish to simply continue payments, or opt in if they want to be protected by the moratorium?

N/A

See point 1.1 above.

2. Parties and agreements affected by the Relevant Act

2.1 Is the moratorium available for both corporate and consumer loans?

The measures employed by banks are available to both commercial and private customers.

2.2 Who are the affected Lenders?

The Exemption applies to a category of agreements or practices between banks, the Banking Association of South Africa and/or the Payments Association of South Africa.

2.3 Does it make a difference whether loans are granted by a foreign entity and governed by foreign law?

The measures do not provide for a distinction. We are not aware of any specific banks that have applied this distinction. 

3. Impact on the loan agreements

3.1 Is there a cut-off date with respect to loan agreements to which the Relevant Act will apply (e.g. not applicable to loan agreements entered into after the cut-off date)?

No, there is no cut-off date applicable and neither are we aware of any applicable practice.

3.2 Does the moratorium apply to principal only, or also to interest and/or fees?

Individual banks have included various measures which may apply to the principal, interest and fees as part of their relief measures. 

3.3 Will the maturity of the loan automatically be extended by the moratorium period?

In introducing measures under the Regulations, certain banks have extended the maturity period of customer loans.

3.4 Are repayments and interest which have become due and payable under the contract before the Relevant Act has come into force covered by the moratorium?

Individual banks’ practices may vary in this regard.

3.5 Will lenders be able to terminate a loan due to an event of default other than non-payment (e.g. breach of financial covenants)?

There is no legislation preventing any bank from exercising their rights under any loan agreement pursuant to an event of default. A bank’s rights are therefore retained unless they have by practice or agreement varied them.