Company: KARO
Filing Date: 2025-06-09
Form Type: 20-F
Source: 0001213900-25-052372
Chunk: 49

Company: Karooooo Ltd.
Filing Date: 2025-06-09
Form: 20-F
Item: Item 3
Chunk 49
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 compensation in
the event of termination of employment for operational reasons, and impose monetary penalties for non-compliance with administrative and
reporting requirements in respect of affirmative action policies, could result in significant costs.

Labor legislation in South Africa
has stringent requirements in relation to the relationship with employees. For example, under the Labour Relations Amendment Act, No.
66 of 1995 (as amended) (the “ LRA”), an employee on a fixed term contract must be permanently employed unless the employer
can establish justification for employment on a fixed term basis. The reasons available to an employer for justifying a fixed term contract
are limited. Temporary employees are required to be given the same pay and benefits as permanent employees, including pensions and medical
insurance coverage. The LRA provides strict penalties for failure to comply with its provisions and in certain instances breach of the
legislation amounts to a criminal offense.

Furthermore, the Employment Equity
Act, No. 55 of 1998 (as amended) (the “ EEA”) creates obligations and administrative requirements in respect of non-discrimination
and equity in employment matters. Fines of up to 10% of revenue may be imposed in the event of non-compliance with certain provisions
of the EEA.

In addition, future changes to
South African legislation and regulations relating to labor may increase our costs or alter our relationship with our employees. Resulting
disruptions could have a material adverse effect on our business, results of operations and financial condition.

If we do not achieve applicable
black economic empowerment objectives in our South African operations, we risk early termination of certain of our subscription contracts
and the loss of the corresponding revenue.

The South African government,
through the Broad-Based Black Economic Empowerment Act No, 53 of 2003 (as amended), and the codes of good practice and industry charters
published pursuant thereto, has established a legislative framework for the promotion of broad-based black economic empowerment, or “ B-BBEE”.
Achievement of specified B- BBEE objectives is measured by a scorecard which establishes a weighting for the various objectives of B-BBEE,
which include procuring goods and services from black-owned businesses (or from businesses that have earned good B-BBEE scores) and achieving
certain levels of black South African employment and management participation, which is then translated to an entity’s “contributor
level”. Compliance may affect the ability of a company to secure contracts in the public and private sectors in South Africa. We
have