by Garyn Rapson, Partner & Sabeeha Loonat, Associate from Webber Wentzel

With the Mining Indaba fast approaching, mining companies should prioritise understanding the new director liability provision proposed in the National Water Amendment Bill (Water Bill), published on 17 November 2023.

Potential director liability for non-compliance is currently regulated under the National Environmental Management Act 107 of 1998 (NEMA) but has never before been contemplated under the National Water Act, 1998 (National Water Act).

In terms of NEMA, the liability of a company can be extended to its directors personally for certain listed offences, if they were a director when the company committed the offence, and if it can be proved that the director failed to take all reasonable steps which were needed at the time to prevent the offence from being committed. 

This means that a director can avoid prosecution by relying on the standard of reasonableness.

The Water Bill proposes to include a director liability provision which goes far beyond the NEMA provision as the standard of reasonableness as a defense is excluded.

In terms of the offending proposed section 156A directors (of companies) and municipal managers (of municipalities) will automatically be considered to have committed an offence under the National Water Act if they were acting in a representative capacity at the time the company or municipality committed an offence.

If convicted the court could impose the following sentences (which have also been proposed) on the director:

• recovering the amount of loss or damage (to rehabilitate or prevent damage).
• determination of monetary value of any advantage gained because of the offence and recovery thereof; or
• recovery of reasonable costs incurred for the investigation and prosecution of the offence.

Evidently, the section 156A proposed director liability provision does not align with NEMA, which is the overarching law in South Africa, upon which all other environmental laws are based. It is the most stringent standard of strict liability that could possibly be envisaged in environmental law. The proposed provision should either be scrapped or aligned with the NEMA provisions.

The mining sector should get involved and oppose this proposed addition.