(1) The lower threshold required to be determined in terms of section 11 of the Act is reached in respect of a merger if the value of that merger equals or exceeds both of the values set out in paragraphs (a) and (b), below:
(a) Either -
(i) The combined annual turnover in, into or from the Republic of the acquiring firms and the transferred firms is valued below R 200 million; or
(ii) The combined assets in the Republic of the acquiring firms and the transferred firms are valued at less than R 200 million; or
(iii) The annual turnover in, into or from the Republic of the acquiring firms plus the assets in the Republic of the transferred firms are valued at less than R 200 million; or
(iv) The annual turnover in, into or from the Republic of the transferred firms plus the assets in the Republic of the acquiring firms are valued at less than R 200 million.
(b) Either -
(i) The annual turnover in, into or from the Republic, of the transferred firms is less than R 30 million; or
(ii) The asset value of the transferred firm is less than R 30 million.
(2) The higher threshold required to be determined in terms of section 11 of the Act is reached in respect of a merger if the value of that merger equals or exceeds both of the values set out in paragraphs (a) and (b), below:
(a) Either -
(i) The combined annual turnover in, into or from the Republic of the acquiring firms and the transferred firms is valued at or above R 3,5 billion; or
(ii) The combined assets in the Republic of the acquiring firms and the transferred firms are valued at or above R 3,5 billion; or
(iii) The annual turnover in, into or from the Republic of the acquiring firms plus the assets in the Republic of the transferred firms are at or above R 3,5 billion; or
(iv) The annual turnover in, into or from the Republic of the transferred firms plus the assets in the Republic of the acquiring firms are at or above R 3,5 billion.
(b) Either -
(i) The annual turnover in, into or from the Republic, of the transferred firms is valued at or above R 100 million; or
(ii) The asset value of the transferred firm is valued at or above R 100 million.
(3) The provisions of the Act respecting a “small merger” apply to a merger if it falls below either value of the lower threshold.
(4) The provisions of the Act respecting an “intermediate merger” apply to a merger if -
(a) it equals or exceeds both values of the lower threshold; but
(b) if falls below either value of the higher threshold.
(5) The provisions of the Act respecting a “large merger” apply to a merger if it equals or exceeds both values of the higher threshold.
(6) For the purposes of Section 11 of the Act, the assets and the turnover of a firm in, into or from the Republic, must be calculated in accordance with the provisions of the following Schedule.
(7) In this Determination of Threshold “transferred firm” means -
(a) a firm, or the business or assets of the firm, that as a result of a transaction in any circumstances set out in section 12, would become directly or indirectly controlled by an acquiring firm; and
(b) any other firm, or business or assets of the firm, the whole or part of whose business is directly or indirectly controlled by a firm contemplated in paragraph (a).
Method of Calculation
1. Generally accepted accounting practices apply
For the purposes of section 11 of the Act, the assets, and the turnover, of a firm must be calculated in accordance with South African generally accepted accounting practice ("G.A.A.P."), subject only to the following provisions of this notice.
2. Valuation of Assets
(1) For the purpose of section 11 of the Act, the asset value of a firm at any time is based on the gross value of the firm's assets as recorded on the firm's balance sheet for the end of the immediately previous financial year, subject to the provisions of sub-items (2) and (3).
(2) In particular -
(a) the asset value equals the total assets less any amount shown on that balance sheet for depreciation or diminution of value;
(b) the combined assets are to include all assets on the balance sheets of the firms concerned, including any goodwill or intangible assets included in their balance sheets;
(c) no deduction may be taken for liabilities or encumbrances of the firm;
(d) the combined assets are to be calculated on the basis of the combined assets before giving affect to the merger and accordingly the combined assets do not include any goodwill or intangible assets that would arise as a result of the merger;
(e) the combined assets are not adjusted for any investments the acquiring firm might have in the transferred firm or amounts due by one firm to the other; and
(f) assets in the Republic includes all assets arising from activities in the Republic.
(3) If, between the date of the financial statements being used to calculate the asset value of a firm, and the date on which that calculation is being made, the firm has acquired any subsidiary company, associated company or joint venture not shown on those financial statements, or divested itself of any subsidiary company, associated company or joint venture shown on those financial statements -
(a) The following items must be added to the calculation of the firm's asset value if these items should in terms of G.A.A.P. be included in the firm's asset value;
(i) The value of those recently acquired assets; and
(ii) Any asset received in exchange for those recently divested assets.
(b) The following items may be deducted in calculating the firm's asset value if these items were included in the firm's asset value:
(i) The value of those recently divested assets at the date of their divestiture; and
(ii) Any asset that was shown on the balance sheet and was subsequently used to acquire the recently acquired asset.
3. Calculation of annual turnover
(1) For the purpose of section 11 of the Act, the annual turnover of a firm at any time is the gross revenue of that firm from income in, into or from the Republic, arising from the following transactions and events as recorded on the firm's income statement for the immediately previous financial year, subject to the provisions of sub-items (2), (3) and (4):
(a) the sale of goods;
(b) the rendering of services; and
(c) the use by others of the firm's assets yielding interest, royalties and dividends.
(2) In particular -
(a) When calculating turnover the following amounts may be excluded:
(i) any amount that is properly excluded from gross revenue in accordance with G.A.A.P.;
(ii) taxes, rebates, or any similar amount calculated and paid in direct relation to revenue, as for example, sales tax, value added tax, excise duties, and sales rebates, may be deducted from gross revenue;
(b) no adjustment is made for any amount that represents a duplication arising from transactions between the acquiring firm and the transferred firm;
(c) revenue excludes gains arising from non current assets and from foreign currency transactions; and
(d) for banks and insurance firms revenue includes those amounts of income required to be included in an income statement in terms of generally accepted accounting practice, but excluding those amounts noted in 3(2)(c).
(3) If, between the date of the most recent financial statements being used to calculate the turnover of a firm, and the date on which that calculation is being made, the firm has acquired any subsidiary company, associated company or joint venture not shown on those financial statements, or divested itself of any subsidiary company, associated company or joint venture shown on those financial statements -
(a) the turnover generated by those recently acquired assets must be included in the calculation of the firm's turnover if this turnover should in terms G.A.A.P. be included in the turnover of the firm; and
(b) the turnover generated by those recently divested assets in the immediately previous financial year may be deducted from the firm's turnover if this turnover was included in the turnover of the firm.
(4) If the financial statements used as a basis for calculating turnover or the turnover included in terms of sub-item 3(a) are for more or less than twelve months, the values recorded on those statements must be pro-rated to the equivalent of twelve months.
4. Combined valuation of firms
(1) If the acquiring firm is a subsidiary of a group of companies as contemplated in the Companies Act, 1973 (Act No. 61 of 1973) for the purposes of calculations required in terms of this notice -
(a) the combined assets of the firms that are part of that group, and the combined turnover of those firms, must be consolidated;
(b) the consolidated assets and turnover of the group are to exclude turnover or assets arising as a result of transactions by one part of the group with another part of the same group.
(2) If the transferred firm controls any other firm or business for the purposes of calculations required in terms of this notice -
(a) the combined assets of those firms and businesses, and their combined turnover, must be consolidated; and
(b) the consolidated assets and turnover of the group are to exclude turnover or assets arising as a result of transactions by one part of the group with another part of the same group.
5. Form of financial statements
Financial statements used as a basis for calculating assets or turnover of a firm -
(a) must be the firm's audited financial statements, if, -
(i) in terms of any law, the firm is required to produce such statements; or
(ii) the firm has audited statements for the relevant period; and
(b) otherwise, must be prepared in accordance with G.A.A.P
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