SA moving the cash to EAG is a good ideaRestrictions on foreign mining investors are getting complicated. At least if you can't sell everything then move what you can now. SA is thinking and EAG is looking better all the time. Cheers.
Tighter foreign ownership restrictions for exploration
and producing mines
The industry expectation was that Reg 27/2013 would lay out the remaining
details of how the 51% divestment arrangement would be implemented.
However, Reg 27/2013 introduces an additional foreign investment regime
which further restricts the ability of foreigners to maintain their shareholdings
in IUP companies.
The new restrictions introduced are triggered when either:
a non-foreign investment (non-PMA) IUP company is first converted to
PMA (i.e., when a foreign investor acquires any shares in that IUP
company for the first time); or
there is a change in the shareholding in an existing PMA IUP company.
The new foreign ownership limitations that are triggered in such
circumstances are:
foreign ownership in companies holding Exploration IUPs is limited to 75%;
and
foreign ownership in companies holding Production Operation IUPs is
limited to 49%.
The effect of these new requirements is to introduce a faster divestment
requirement than previously existed.
For example, if an existing IUP company
has an Exploration IUP and 80% foreign ownership and the foreign
shareholder wishes to sell out to another foreign owner, the maximum foreign
ownership would become 75% and the extra 5% would need to be sold to
Indonesians. Similarly, the maximum foreign ownership that an incoming
foreign investor would be able to obtain in an IUP company holding a
Production Operation IUP would immediately be limited to 49%.
Aside from the obvious commercial impact, this also has ramifications for
dilution under shareholders agreements and enforcement of pledges over
shares.