Please note that most Acts are published in English and another South African official language. Currently we only have capacity to publish the English versions. This means that this document will only contain even numbered pages as the other language is printed on uneven numbered pages. REPUBLIC OF SOUTH AFRICA GOVERNMENT -GAZETTE . STAATSKOERANT VAN DIE REPUBLIEK VAN SUID .. AFRIKA Registered at the Post Office as a Newspaper As 'n Nuusblad by die Poskantoor Geregistreer VoL. 377 CAPE TOWN, 20 NOVEMBER 1996 KAAPSTAD, 20 NOVEMBER .1996 · No. 17585 PRESIDENT'S OFFICE · KANTOOR VAN DIE PRESIDENT No. 1873. 20 November 1996 No. 1873. 20 November 1996 It is hereby notified that the President has assented to the following Act which is hereby published for general infor mation:- · Hierby word bekend gemaak dat die President sy goed keuring geheg het aan die onderstaande Wet wat hierby ter algemene inligting gepubliseer word:- :=). 73 of 1996: Financial Markets Control Amendment Act, No. 73 van 1996: Wysigingswet op Beheer van Finansiele ' 1996. . Markte, 1996. 2 No. 17585 Act No. 73, 1996 GOVERNMENT GAZETfE, 20 NOVEMBER 1996 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1996 GENERAL EXPLANATORY NOTE: [ Words in bold type in square brackets indicate omissions from existing enactments. Words underlined with a solid line indicate insertions in existing enactments. ACT To amend the Financial Markets Control Act, 1989, so as to insert, amend or delete certain definitions; to ·further regulate restrictions ·on the management of investments; to further regulate the juristic personality of an association; to make further provision for the rules of a financial exchange; to make further provision for the separation of funds of members and other persons; to provide for the recognition of interdealer brokers; to further regulate the board for the hearing of appeals; to further regulate advertising or canvassing in relation to financial instruments; to make further provision for inspections; to further regulate certain provisions relating to penalties; to further regulate limitation of liability; and to effect certain technical amendments to the text; to amend the Financial Markets Control Amendment Act, 1995, so as to further regulate the application of that Act; and to provide for matters connected therewith. (Afrikaans text signed by the President.) (Assented to 6 November 1996.) BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:- Amendment of section 1 of Act 55 of 1989, as amended by section 29 of Act 97 of 1990, section 23 of Act 54 of 1991, section 36 of Act 83 of 1992 and section 1 of Act 55 of 1995 5 1. Section I of the Financial Markets Control Act, 1989 (hereinafter referred to·as the· principal Act), is hereby amended- ( a) by the substitution for paragraph (b) of the definition of "financial market" of the following paragraph: · "(b)by means of any system or facility;"; · 10 (b) by the insertion after the definition of "futures contract" of the following definition: · " 'interdealer broke~· means a participant in a financial market who facilitates transactions in listed financial instruments between mem bers;"; and .15 · 4 No. 17585 Act No. 73, 1996 GOVERNMENT GAZETTE. 20 NOVEMBER 1996 FINANCIAL MARKETS CONTROL AMENDMENT ACT,1996 (c) by the substitution for paragraph (b) of the definition of "loan stock" of the following paragraph: "(b) [an institution or body contemplated in section 84(1)(D of the Provincial Government Act, 1961 (Act No. 32 of 1961)] a local government body contemplated in the Local Government TraiiSj: 5 tion Act, 1993 (Act No. 209 of 1993), or a provincial govern ment;". Amendment of section 3 of Act 55 of 1989 2. Section 3 of the principal Act is hereby amended- ( a) by the substitution in the Afrikaans text for subsection (2) of the following 10 subsection: "(2) Die adviesraad kan van tyd tot tyd ondersoek instel en die Registrateur van advies dien, of aanbevelings by die Minister doen, aangaande enige aangeleentheid betreffende finansiele markte en [effektebeurse] aandelebeurse, en moet die Minister van advies dien oor 15 'n aangeleentheid wat deur die Minister na die adviesraad verwys word."; (b) by the substitution in the Afrikaans text forparagraph (a) of subsection (5) of the following paragraph: . . . . "(a) Die adviesraad kan een of meer subkomitees aanstel om die 20 aangeleenthede betreffende finansiele markte en [effektebeurse] aandelebeurse wat deur die adviesraad na so 'n subkomitee verwys word, te oorweeg en daaroor advies te gee."; and (c) by the substitution in the Afrikaans text for subsection (6) of the following subsection: · 25 "(6) Die adviesraad kan die hulp inroep van die persoon of persone wat hy mag nodig vind om hom by te staan, of om aangeleenthede betreffende finansiele markte en [effektebeurse] aandelebeurse te ondersoek.". 6 No. 17585 Act No. 73, 1996 GOVERNMENT GAZETTE, 20 NOVEMBER 1996 FINANCIAL MARKETS CONTROL AMENDMENT · ACT, 1996 Amendment of section 5 of Act 55 of 1989, as substituted by section 2 of Act 55 of 1995 3. Section 5 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for the words preceding paragraph (a) of the following words: :'No person shall, as a regular feature of his or her business, [manage] undertake the management of investments on behalf of another person, and for such management receive any remuneration in whatever form, other than fees charged by a member for ihe buying and selling of . financial instruments, unless he or she-"; . (b) . by the substitution for paragraph (c) of subsection (4) of the following paragraph: "(c) the applicant complies with the [capital adequacy] prudential requirements determined by the Registrar by notice in the Ga- ' zette; "; 5 10 15 (c) by the substitution for paragraph (e) of subsection (4) of the following paragraph: · "(e) the applicant undertakes to pay the [prescribed] annual levy prescribed under section 15A of the Financial Services Board Act, 1990 (Act No. 97 of 1990). "; and · 20 (d) by the substitution in paragraph (a) of subsection (6) forthe words preceding · subparagraph (i) of the following words: · "For the purposes of subsection (I) it shall be deemed that the [managing] mana£ement of investments is not a regular feature of the business of any person if such investments form part of the assets-". 25 Amendment of section 10 of Act 55 of 1989, as substituted by section 7 of Act 55 of 1995 4. Section I 0 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for subparagraph (ii) of paragraph (a) of the following subparagraph: 30 "(ii) the provisions of section 8( I)( a), (c) or (d) no longer applied to the financial [market] exchange concerned;"; and (b) by the substitution for subsection (2) of the following subsection: "(2) The Registrar shall not refuse to renew a [stock exchange] financial market licence on any grounds unless he or she has furnished the association 35 concerned with the reasons for his or her proposed refusal and the association has had the opportunity to show cause within a period specified in a notice by the Registrar to the association why such renewal should not be refused.". Substitution of section 12 of Act 55 of 1989 . 5. The following section is hereby substituted for section 12 of the principal Act: 40 "Juristic personality of association 12. An association referred to in section 7 shall as from the date on which it is for the first time issued with a financial market licence be a juristic · · person capable of suing or being sued in the name in which it is licensed, and of acquiring, owning, burdening, hiring, letting and alienating property, 45 and, subject to the provisions of this Act, of doing such things as may be necessary for or incidental to the exercise of its powers or the carrying out of its duties in terms of the rules.". 8 No. 17585 Act No. 73, 1996 GOVERNMENT GAZETTE, 20 NOVEMBER 1996 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1996 Amendment of section 17 of Act 55 of 1989, as amended by section 25 of Act 54 of 1991, section 18 of Act 7 of 1993, section 65 of Act 104 of 1993 and section 12 of Act 55 of 1995 6. Section 17 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for the words preceding item (aa) of 5 subparagraph (iii) of paragraph (a) of the following words: "that no person is_ admitted as a member or allowed to continue as a member unless [he] that person-"; (b) by the substitution in subsection (I) for item (cc) of subparagraph (iii) of ·paragraph (a) of the following item: 10 "(cc) employs the number of [brokers] persons required in terms of the rules and who comply with the standards and other qualifications contemplated in item (bb);"; (c) by the deletion of subparagraph (i) of paragraph (I) of subsection (I); and (d) by the deletion of paragraph (w) of subsection (I). 15 Amendment of section 178 of Act 55 of 1989, as inserted by seCtion 14 of Act 55 of 1995 . . 7. Section 178 of the principal Act is hereby amended by the substitution in subsection (I) for the words preceding the proviso of the following words: "Every member who has one or more clients shall- ~ open and maintain a separate trust account at a bank; or (b) utilise a separate trust account at a bank, opened and maintained by a stock exchange as defined in the Stock Exchanges Control Act, 1985 (Act No. I of 1985), or by a financial exchange, to which the member belongs, 20 and shall on the date of receipt of any payment from or on behalf of a [person] client 25 deposit in [such account either] the account in question the cheque, draft or instrument by means of which such payment is made or alternatively deposit for same day value in such account funds equal to the amount of such payment". · · Insertion of section 17C in Act 55 of 1989 · 8. The following section is hereby inserted in the principal Act after section 178: ' 30 "Recognition ·of interdealer brokers · 17C. An interdealer broker who is not a member of a financial exchange shall comply with such conditions as the Registrar may determine.". Amendment of section 18 of Act 55 ofl989, as amended by section 66 of Act 104 of 1993 and section 15 of Act 55 of 1995 35 9. Section 18 of the principal Act is hereby amended by the addition of the following subsection: "(7) The decision of a majority of the members of the board shall be the decision of the board, but the chairperson alone shall decide any question of law, and whether any matter constitutes a question of law or a question of fact.". · 40 Amendment' of section 21A of Act 55 of 1989, :is inSerted by section 17 of Act 55 of 1995 10. Section 21A of the principal Act is hereby amended by the substitution for subsection (I) of the following subsection:· . . "(I) No person other than a member or an officer or employee of a member who 45 is so permitted in terms of the rules, or a financial exchange or an employee of a financial exchange, shall in any matter or by any means, either for himself, herself or for any other person, directly or indirectly advertise or canvass for any business · relating to the buying and selling of financial instruments.". 10 No. 17585 Act No; 73, 1996 GOVERNMENT GAZETJ"E, 20 NOVEMBER 1996 - FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1996 Amendment of section 26 of Act 55 of 1989, as amended by section 18 of Act 55 of 1995 1,·. 11. Section 26 of the principal Act is hereby amended- ( a) by the deletion in subsection (I) of the word "or" at the end or' subparagraph (iii) of paragraph (a), the addition of the word ''and" at the end of paragraph 5 (b) and the addition to the said subsection of the following paragraph: "(c) any other person whom the Registrar has reason to believe contravenes or has contravened any provision of this Act."; (b) ·by the substitution in paragraph (b) of subsection (2) for the words preceding " '(e)" of the following words: · · -; "the proviso to section 8( I) thereof shall be construed :is if the following further [proviso were] paragraph had been added [at the end thereof]:"; and (c)' by· the substitution for paragraph (c) of subsection (2) of the following paragraph: 10 15 "(c) [such]~ financial exchange, clearing house, member or an officer . - : . 'or employee of a' member or other person referred to in subsection (I) [(a) and (b)] shall be deemed to be a financial institution, and the Registrar [as defined in section 1 shall] to be the registrar [in respect of such financial exchange, member or person] as 20 defined in section l of the Inspection of Financial Institutions Act, 1984.", . ' , Amendment of s~ction 36 ~fAct 55 ~f1989, as amended by section 28 of Act 54 of · : 1991 and seCtion 25 of Ad 55 of 1995 · 12. Se~tio~ 36 of th~ -principal Act is hereby amended by the substitution for 25 paragraph (a) of subsection (3} of the following paragraph:·- - _ "(a) If any person intentionally or negligently fails to submit to the Registrar or · to furnish the Registrar with any record, return, statement, report or other document _ or information in accordance with a requirement of this Act [or regulation made 'under section 37(1)]'within the period determined by 'or under this Act; _the 30 Registrar may impose upon him or her by wa~ of a notice in writing a fine not exceeding the prescribed amount for every day during which such failure continues: Provided that the Registrar may not impose any such fi'ne before the person to be fined has been afforded an opportunity of making representations in writing to the Registrar setting out the reason for the failure to submit or to furnish 35 such record, return, statement, report or other document or information.". Substitution of section 37 A of Act 55 of 1989, as inserted by section 27 of Act 55 of : 1995 - -13. The following section is hereby substituted for section'37 A of the principal Act: - . . ' "Limitation of liability 40 : t 37 A. [(1)] No executive officer, employee or representative of a financial exchange or of a clearing house, or any member of an executive committee or subcommittee of the executive committee, or of a clearing house, shall hi: liable for any loss sustained by or'damage caused to any person as a ,. result of anything done or omitted by the officer, employee, representative 45 . -'or member in [a] the bona fide or negligent, but not grossly negligent, exercise of any power or carrying out of any duty or performance of any function under or in terms of this Act or the rules. [(2) For the purposes of this section, 'bona fide' shall include the negligent exercise of a, power or the carrying out of a duty, but shall 50 . exclude gross negligence, wilful misconduct or dishonesty.]"._ 12 No. 17585 Act No; 73, 1996 GOVERNMENT GAZETTE, 20 NOVEMBER 1996 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1996 Amendment of section 40 of Act 55 of 1989, as amended by section 29 of Act 54 of 1991 14. Section 40 of the principal Act is hereby amended by the substitution in the Afrikaans text for subsection (I) of the following subsection: · · "(I) Die bepalings van hierdie Wet, uitgesonderd artikels 3 en 38, en behalwe vir sover die Minister by kennisgewing in die Staatskoerant anders bepaal, raak nie die werking van die Wet op Beheer van [Effektebeurse] Aandelebeurse, 1985 (Wet No. I van 1985), of enigiets wat behoorlik daarkragtens gedoen of toegelaat word nie.". Substitution of section 29 of Act 55 of 1995 15. (I) The following section is hereby substituted for section 29 of the Financial Markets Control Amendment Act, 1995: · · · 5 I 0 · "Transitional provisions 29. Any rule, requirement, directive or decision made, put or issued or ·other thing done under or in terms of any provision of the principal Act as 15 it was in force immediately prior to the commencement of this Act, shall be deemed to have been made, put, issued or done under or in terms of the corresponding provision of the principal Act as amended by this Act.". · (2) Subsection (I) shall be deemed to have come into operation on II October 1995. Short title 20 16. This Act shall be called the Financial Markets Control Amendment Act, 1996.
