The regulation of commercial paper issuance in South Africa has, since 1994, been governed by an exemption notice. This exemption notice is known as the Commercial Paper Regulations. It permits certain entities to issue debt instruments. It also ensures they are not deemed to conduct “the business of a bank” under the Banks Act 94 of 1990 (Banks Act).
Since its introduction, this framework has remained in place for more than three decades. As a result, the Prudential Authority has recognised the need to modernise the regulatory framework. This modernisation reflects current market practices. It also addresses financial stability considerations. This process forms part of broader commercial paper regulations reform efforts.
Some key changes for consideration
On 23 January 2026, the Prudential Authority published the final draft amendments to the Commercial Paper Regulations. It released these amendments for consultation. After the consultation process, the Prudential Authority sought Ministerial approval. It then proceeded to prepare a publication in the Government Gazette.
At that stage, the current Commercial Paper Regulations were expected to be repealed. The draft Commercial Paper Regulations are proposed to take effect from June 2026. This timeline formed a central pillar of commercial paper regulations reform.
The current draft Commercial Paper Regulations represents the culmination of a seven-year regulatory process. This process commenced in 2018. It progressed through three iterations. For further context, see our earlier publication titled “Looking Back to Look Ahead: Revisiting the 2023 and 2024 Draft Commercial Paper Regulations”, published on 22 January 2026. This analysis remains relevant to ongoing commercial paper regulations reform developments.
The Prudential Authority has responded constructively to market feedback. It addressed minimum denomination scope, use-of-proceeds flexibility, auditor engagement requirements, regulatory approval requirements, regulatory capital, FLAC instrument carve-outs, SPI approval, and mandatory credit ratings. These refinements reflect meaningful engagement with industry concerns. They also strengthen the commercial paper regulations reform agenda.
The latest draft introduces key amendments. It also raises issues that require further clarification.
Minimum denomination
Following feedback during the August 2025 informal consultation, the Prudential Authority redefined “minimum denomination”. It defined it as the minimum aggregate nominal value when originally issued to the general public by the issuer. The draft Commercial Paper Regulations now reflect this definition. It also expressly states that the definition does not apply to subsequent purchase, sale or transfer. This applies to commercial paper and debt securities.
The revised definition shows a policy focus on primary issuance. It does not regulate secondary market activity. The ZAR 12.5 million minimum denomination threshold remains in place. It applies to both commercial paper and debt securities. However, it now applies only at the issuance stage. It does not affect secondary-market trading.
Although this narrows regulatory scope, the threshold remains high. Market participants may still find it restrictive in practice. This remains relevant in the context of commercial paper regulations reform debates.
Use of proceeds for “debt securities”
Proceeds from “debt securities” must be raised for general corporate purposes. They may also be used for purposes defined in the listing requirements of a licensed exchange.
In response to industry concerns, the Prudential Authority removed earlier restrictions. It replaced “capital funding” limitations with a broader framework. This framework includes general corporate purposes. It also includes exchange-defined purposes.
This change increases flexibility. It recognises the fungibility of money. It also strengthens issuer discretion. A key consequence follows; the draft removes references to single-asset repackaged note programmes. This removes earlier structural limitations. It also increases flexibility for structured finance transactions.
This adjustment forms part of broader commercial paper regulations reform measures aimed at market efficiency.
Auditor engagement
The issuer must appoint an auditor. The auditor must perform a non-assurance engagement. It must verify compliance using agreed-upon procedures (AUPs). The auditor must issue an AUP report. It must comply with applicable auditing standards.
The draft introduces a formal AUP framework. This aligns with professional auditing standards. It also improves regulatory clarity.
A footnote clarifies that disclosure requirements apply to unlisted issuances only. Therefore, auditor engagement applies only to unlisted instruments. This reduces compliance burden for listed issuers. It also aligns with the commercial paper regulations reform objectives of proportional regulation.
Regulatory approval
All issuers must submit placing documents and a summary page before initial issuance. However, listed issuances are exempt. Bilateral arrangements with institutional investors are also exempt. Therefore, pre-approval applies only to initial unlisted issuances. Subsequent drawdowns do not require approval.
The draft does not specify approval timelines. This creates uncertainty for issuers. Clear turnaround times would improve predictability. Additionally, the scope of “bilateral arrangements” requires clarification. This remains an outstanding issue within the commercial paper regulations reform implementation.
Regulatory capital and FLAC instruments
The draft Commercial Paper Regulations create express carve-outs for banking groups issuing regulatory capital and FLAC instruments:
- commercial paper issued for regulatory capital purposes must comply with section 79 of the Banks Act and Directive 5 of 2024 (reference to Directive 6 of 2017, is erroneous) and only paragraphs 1 to 3 of the draft Commercial Paper Regulations (not paragraphs 4 to 10); similarly
- debt securities that qualify as FLAC instruments must comply with Prudential Standard RA03 (issued under section 30(1A) of the Financial Sector Regulation Act, 2017) and only paragraphs 1 to 3 of the draft Commercial Paper Regulations (not paragraphs 4 to 10).
Special Purpose Institutions (SPIs)
SPIs must obtain prior approval for initial issuance. Subsequent issuances do not require approval. Listed SPIs are exempt. Bilateral arrangements with institutional investors are also exempt. However, the meaning of bilateral arrangements remains unclear. This creates interpretive uncertainty.
Clarification would support the consistent application of commercial paper regulations reform provisions.
Removal of mandatory credit ratings
The draft removes mandatory credit ratings. Earlier versions required them. Market participants are likely to welcome this change. It reduces issuance costs. It also improves access for smaller issuers.
This reform aligns with broader commercial paper regulations reform cost-reduction objectives.
Disclosure requirements
Issuers must comply with exchange listing requirements for listed instruments. Where conflicts arise, exchange rules take precedence.
Compliance burden on international transactions
A key unresolved issue concerns offshore capital-raising transactions. These include Regulation S and Rule 144A offerings.
These transactions target international investors. However, they may still involve South African investors. This depends on the structure. This raises extraterritorial application concerns. It remains unclear whether the regulations apply offshore.
Clear guidance is required. This is essential for consistent commercial paper regulations reform interpretation.
Transitional arrangements for existing Issuers
The draft does not address existing instruments clearly. It does not clarify treatment under Notice 1256 of 2009. Market participants require clarity on grandfathering. It remains unclear whether existing programmes must change.
Exemptions for development finance institutions also require clarity. Transitional rules remain a critical gap in the implementation of commercial paper regulations reform.
Other key features:
- Debt securities must have maturities between 366 days and 30 years.
- All instruments must be dematerialised and settled through licensed systems.
- Issuers must submit quarterly returns within 15 business days after the quarter end. Annexure A applies.
- Commercial paper proceeds must fund operating capital only. They may not fund lending.
Next steps
The Prudential Authority consultation pack includes four annexures. These are Annexure A, B, C, and D.
The original comment deadline of 6 March 2026 has now lapsed. As a result, stakeholders must await revised timelines or further guidance from the Prudential Authority. This delay is now central to the ongoing commercial paper regulations reform process.
The Prudential Authority requested targeted submissions. It asked stakeholders to focus only on amendments after August 2025.
| Dawid de Villiers | Partner | Financial Services Regulation | mail me | |  |
| Lenee Green | Partner | Financial Services Regulation | mail me | |  |
| Lerato Nkanza | Partner | Banking and Finance – Debt Capital Markets | mail me | |  |
| Mariam Ismail |Associate | mail me | |  |
| | Webber Wentzel | | |
