Unlawful & Unregistered Credit Agreements: Sections 40, 89 & 90 of the NCA [2026]

The two-step gate: does the Act apply, and was the lender registered?

“The agreement is void because the lender was not registered” is one of the most powerful defences in South African credit litigation — and one of the most misunderstood. The mistake is to start at the end. Whether a credit agreement is unlawful for want of registration is the second question, not the first. The first is always whether the National Credit Act applies to the agreement at all.

That sequencing was the whole point of the Supreme Court of Appeal’s 2026 decision in The Profit Hub (Pty) Ltd v Zuwon Consultants (Pty) Ltd. Before any registration argument could be reached, the court had to decide what the agreements were (a discount or a loan?), whether a loan of that kind is a credit agreement at all, and whether the juristic-person thresholds took it outside the Act. Only if every gate is passed does the s 40 / s 89 voidness machinery engage. Get the order wrong and you can spend an entire trial on a registration point that was never live.

This guide works through both steps in order:

1. Step 1 — scope. Is this a credit agreement to which the Act applies? (Covered in when the NCA applies and the thresholds; recapped below through Profit Hub.)
2. Step 2 — lawfulness. If the Act applies, was the provider registered? Was the agreement otherwise lawful? This is the s 40, s 89 and s 90 enquiry — the heart of this page.

Who must register — and the nil (R0) threshold

Section 40(1) sets the registration trigger, and the threshold for it is determined by the Minister under section 42(1). As the Act was first enacted, registration turned on numerical triggers — being the credit provider under a set number of agreements, or a total principal debt above a prescribed amount (then R500 000). Those numerical triggers no longer bite, because the section 42(1) threshold has been reduced to nil — R0,00 by General Notice 513 in Government Gazette 39981 (published 11 May 2016, effective 11 November 2016):

The practical result is stark: because any outstanding principal debt now exceeds R0, virtually every person who extends credit under a credit agreement to which the Act applies must be a registered credit provider before doing so. There is no longer a quiet zone for “casual” or small-scale lenders. The detailed registration mechanics — who is exempt, clearance certificates and the application process — are covered in our credit-provider registration guide.

A vital caveat, repeated throughout this page: the R0 threshold only matters for agreements to which the Act applies. A loan to a company whose turnover or assets are at or above R1 000 000, or a large agreement to a smaller company, is outside the Act — and for those deals the registration duty simply does not arise.

Section 40(3) and (4): the bar on lending and the “unlawful and void” sanction

Section 40 does two things to an unregistered-but-required provider. First, subsection (3) forbids it from lending at all. Second, subsection (4) attaches the consequence to any agreement it makes anyway:

Note the precise wording. The bar in s 40(3) and the voidness in s 40(4) apply only to a provider that is required to register and is not registered. A provider that falls outside the registration duty — because the Act does not apply to its agreement — commits no offence and its agreement is not void on this ground. Section 40(4) also does not declare the whole agreement void in the abstract; it makes it void “to the extent provided for in section 89”. To understand the real consequence, you must read section 89.

Section 89: when a credit agreement is unlawful

Section 89 lists the circumstances in which a credit agreement is unlawful. The one that matters here is s 89(2)(d): an unregistered provider that the Act requires to be registered. The section also carries two important safe harbours in s 89(4) — a provider that had applied for registration within 30 days, or that held a valid NCR clearance certificate, is protected:

Two practical points follow. First, the test is fixed at the time the agreement was made— registering later does not cure an agreement that was unlawful when concluded. Second, section 89 expressly does not apply to a pawn transaction (s 89(1)), a carve-out the SCA noted in Loan Company (Pty) Ltd v National Credit Regulator [2025] ZASCA 40, the most recent SCA authority on the enforcement consequences of operating without registration.

The consequences of voidness under s 89(5) — and NCR v Opperman

Where an agreement is unlawful under section 89, subsection (5) tells the court what orders it must make — and the language is emphatic, overriding common law and contrary contract terms:

On its face, s 89(5)(c) was draconian: not only is the agreement void, but the lender forfeits even the right to recover the capital it advanced. The Constitutional Court held that this went too far. In National Credit Regulator v Opperman, the Court confirmed the High Court’s declaration of invalidity, reasoning that stripping an unregistered provider of its right to restitution was an arbitrary deprivation of property:

The effect of Opperman is decisive for how these disputes now play out. The agreement remains void from inception, the consumer must be refunded what it paid with interest, and the lender cannot enforce the agreed interest, fees or charges. But the lender is no longer automatically barred from recovering the capital it advanced: restitution falls to be decided under the ordinary common law — typically the condictio for money paid under a void contract, subject to the usual equitable defences. In short, voidness for non-registration is a real and serious sanction, but it is not the wholesale confiscation the unamended text once threatened.

Section 90: prohibited provisions inside an otherwise valid agreement

Unlawfulness is not only an all-or-nothing question about the lender’s registration. Even a lawful, registered credit agreement must not contain an unlawful provision. Section 90 lists the clauses the Act prohibits — chiefly those that try to defeat the Act, deceive the consumer, or contract the consumer out of statutory rights:

The drafting lesson is that you cannot “contract out” of the National Credit Act. A clause by which the consumer waives the protections of the Act, or by which the parties agree the Act does not apply, is itself an unlawful provision. Section 90 also feeds the substance-over-form theme of this page: a clause whose effect is to defeat the Act’s policies is unlawful regardless of how it is labelled. (The consequences of an unlawful provision — severance or voidness — are dealt with in s 90(3) and (4); a court may sever the offending clause or, where severance is not feasible, declare the whole agreement void.)

Substance over form: you cannot dodge the Act by re-labelling the deal

Because the sanctions in s 40, s 89 and s 90 are so severe, there is a powerful temptation to draft around the Act — to dress a regulated loan up as something the Act does not reach. South African courts have closed that door. The Act itself says a credit facility is decided “irrespective of its form” (s 8(3)), and the courts read every agreement by the now-standard Endumeni triad of text, context and purpose. In The Profit Hub v Zuwon, Unterhalter JA put it directly:

Applying that rule, the SCA looked past the “discounting agreement” and “out-and-out cession” labels. Because the client (Zuwon) had to repay the advance plus a factoring fee whether or not its own debtors paid, and gave suretyships as security, the court held the deal was in substance a loan and the cession was security, not a sale:

This same substance-over-form approach runs through the earlier discounting cases. In Renier Nel Inc v Cash on Demand (KZN) (Pty) Ltd the High Court had to decide whether a “Master Discounting Agreement” was in truth a loan caught by the NCA, and approached it by looking at the nature of the transactions and their substance rather than their form — the same fact-specific exercise the SCA later applied in Profit Hub:

The reason this matters for the s 40 / s 89 enquiry is direct: an unregistered financier cannot escape the registration duty by re-labelling its loans as discounts — but equally, a litigant cannot invoke the voidness sanction without first proving that the deal is a credit agreement the Act actually reaches. In Profit Hub itself the Act did not apply, because the borrower was a company and the agreements were large agreements above the thresholds:

A compliance checklist for SA lenders, financiers and factoring businesses

The same questions, worked in order, protect both a lender drafting a facility and a borrower scrutinising one:

1. Characterise the deal honestly. Is it really a sale/discount, or a loan? If the client must repay regardless of debtor performance and gives security for that repayment, it is a loan — whatever the heading says. See invoice discounting vs loans.
2. Test whether the Act applies. Is it a credit agreement? Who is the consumer, and does a juristic-person threshold (R1 000 000 turnover/assets, or the R250 000 large-agreement line) take it out of the Act?
3. If the Act applies, register before you lend. The threshold is R0, so registration is effectively universal for affected providers. Do not rely on registering later — lawfulness is judged at the date of the agreement. Use the s 89(4) safe harbours only as a genuine bridge.
4. Strip out prohibited provisions. No waiver-of-rights, no “the Act does not apply” clauses, no attempt to contract out (s 90).
5. Document the characterisation and the consumer’s status. Record turnover/asset evidence and the basis on which you concluded the Act does or does not apply — that record is what you will need if the deal is ever challenged.

The lesson of Profit Hub v Zuwon is easy to state and easy to forget: characterise first, check the thresholds second, and only then ask about registration. An unregistered lender cannot be ambushed by s 40 / s 89 where the Act never applied — but where it does apply, an unregistered-but-required provider’s agreement is void from inception under s 89(5), subject only to common-law restitution of the capital after NCR v Opperman.