The Micro Finance Regulatory Council v AAA Investment (Pty) Limited and Another

The Minister of Trade and Industry, acting under s 15A of the Usury Act 73 of 1968, exempted certain micro-lending transactions from the Act on condition that lenders register with an approved regulatory institution. The appellant, the Micro Finance Regulatory Council (a s 21 company), was approved as such a regulatory institution. Its memorandum of association empowered it to make and enforce rules binding on registered micro-lenders. Lenders who registered contractually undertook to comply with the Council’s rules. The Council introduced revised rules, including a requirement that lenders submit loan information to a national loans register. The first respondent, a registered micro-lender, objected to the revised rules and applied to the High Court to have both the initial and revised rules set aside, arguing that the Council was unlawfully exercising public legislative power without statutory authority and that certain rules infringed the constitutional right to privacy. The High Court upheld the challenge and set aside the rules, leading to an appeal to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The order of the High Court was set aside and replaced with an order dismissing the application with costs.

The case clarifies the distinction in South African law between public regulatory power and private regulation based on consent. It confirms that private regulatory bodies approved by the state may validly make and enforce rules against members where their authority flows from contract and company law, without engaging constitutional or administrative-law constraints applicable to public power.