Local Government Municipal Systems Amendment Act

This section amends several definitions in the Municipal Systems Act, including municipal entity, service utility, parent municipality, and related terms.

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Jurisdiction: South Africa
Instrument: Act or statute
Citation: Act 44 of 2003
Version: Undated source snapshot
Language: en
Updated: 30 Jan 2004
Official source: View official record ↗

acquisition of interests in corporate bodies annual reports asset transfer board governance capacity building community consultation community notification company formation compliance corporate bodies director conduct dispute resolution employee discipline entity dissolution establishment external service mechanisms feasibility studies fees financial impact assessment financial projections funding government administration guidelines inspection +43 more

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This section amends several definitions in the Municipal Systems Act, including municipal entity, service utility, parent municipality, and related terms. Before proposing municipal function/power assignments by national or provincial law, the responsible executive must seek a Financial and Fiscal Commission assessment, consult listed government and local-government bodies, and attach a memorandum with specified financial information. This section replaces section 10 with a provision about assigning functions or powers to specific municipalities by executive act or by agreement. If an organ of state assigns a function or power to a municipality, it must first send a memorandum to the Minister and the National Treasury. This provision inserts a new section titled “Funding and capacity building” into the principal Act after section 10.

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Provisions of Local Government Municipal Systems Amendment Act

Showing 64 of 64

1
Section 1 of the Local Government: Municipal Systems Act. 2000 (hereinafter
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AI-assisted research summary: This section amends several definitions in the Municipal Systems Act, including municipal entity, service utility, parent municipality, and related terms.

1. Section 1 of the Local Government: Municipal Systems Act. 2000 (hereinafter 5 referred to as the principal Act), is hereby amended by- ( ( I ) the insertion after the definition following definition: of “basic municipal services“ of the “ ‘board of directors’. in relation to a municipal entity. means the board of directors of the entity;“: 10 ( h i the insertion after definition: the definition of “district municipality“ of the following ‘* ‘effective control’, in relation to a private company. means the power which a shareholder in the private company may have- (LI) to appoint or remove at least the majority of the board of 15 directors of the private company; or ( h ) to control at least the ma.jority of the voting rights at a general meeting of the private c o r n p i x ” ; the insertion after the definition of ”executive authority” of the following definition: 20 *‘ ‘external service provider’ means an external mechanism referred to in section 76(b) which provides a municipal service for a municipality;”: ( d ) the insertion after the definition of “Minister” of the following definition: ‘’ ‘multi-jurisdictional service utility’ means terms of section 87;”; a body established in 25 ( e ) the substitution for the definition of “municipal entity” of the following definition: ‘* ‘municipal entity’ means - [a company, co-operative, trust, fund or any other corpo- rate entity established in terms of any applicable national o r provincial legislation and which operates under the ownership control includes, in the case of a company under such ownership control, any subsidiary of that company] a private cornpan!’ referred to in section 86B( 1)irr); [or] a service utility; or - of one or more municipalities, and 5 , . , a multi-iurisdicti&l service utility:”; I f ) the insertion after the definition of “municipal entity” definition: of the foIlouinf 1 0 ’. ‘Municipal Finance Management Act’ means the Local Govern- ment: Municipal Finance Management Act, 2003, and any repulation5 made under that Act;”; (x) the insertion after the definition of “nationt31 organ of state“ of the follouing 15 definition: .. ‘National Treasury’ means section 5 of the Public Finance Management Act, 1999 (Act No. 1 o f 1999):”: - ,. , ~. . the National Treasury established b! of “organ of state“ of the foliowinr 3 ) ( / I ) the insertion after the definition definition: * * ’parent municipality’- in relation to a municipal entity which is a private cornpan)’ in respect of which effective control vests in a single municipal- ity, means that municipality: in relation to a municipal enlity which is a private company in in t w o or more respect of which effective control vests municipalities collectively, means each of those municipali- ties: in relation to a municipal entity which is a senice utilit!.. means the municipality which established the entity: or in relation to a municipal entity which is a multi-jurisdictional service utility, means each municipality which is a part\’ t o thc apreement establishing the service utility:”: the of “ownership deletion the insertion after the definition of “prescribe“ of the following definition: definition of the control“; - . - - ( i ) ( j ) 25 30 35 ’* ‘private company’ means a company referred to in sections 19 and 20 of the Companies Act. 1973 (Act No. 61 of 1973);“: and (X-) the substitution for the definition of “service utility” of the f o l l o ~ i n g definition: ‘ * ‘service utility’ means [a municipal entity established in terms section 82(l)(c)] a body established in terms of section 86H:”. of Substitution of section 9 of Act 32 of 2000
2
The following section is hereby substituted for section 9 of the principal Act:
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AI-assisted research summary: Before proposing municipal function/power assignments by national or provincial law, the responsible executive must seek a Financial and Fiscal Commission assessment, consult listed government and local-government bodies, and attach a memorandum with specified financial information.

2. The following section is hereby substituted for section 9 of the principal Act: “Assignment municipalities powers to or functions generally by Acts of Parliament or provincial Acts of 9. (1) A Cabinet member or Deputy Minister seekin, 0 to initiate the assignment of a function or power by way of an Act of Parliament to municipalities in general, or any category of municipalities. must within a j 40 45 2003 Act No. 44. LOCAL GOVERNMENT: hlUNICIPAL SYSTEMS AMENDMENT ACT. 2007 the draft Act providing for the assignnlent i \ reasonable time before introduced in Parliament- ( ( I ) request the Financial and Fiscal Commission to ashe>\ the iinmclal and fiscal implications of the legislation, after informing the Financial and Fiscal Commission of the possible impact of such ;lssiSnnlcnt on- (i) the future division of revenue between the sphere\ o f ~ "O\ ernmt'nt in terms of section 214 of the Constitution: the fiscal power, fiscal capacitl and efficiency o f nl~~nicip;~lities or any category of municipalities; and the transfer, if any, of employees, assets and liabilities: and (ii) (iii) ( 0 ) consult the Minister, the Minister of Finance and organi\ed local \I i t h regard government representing local government nationall! to- (i) the assessment by the Financial and Fiscal Commission contell)- plated in paragraph (0): the policy goals to be achieved b y the assignment and the re:l\ons for utilising assignment as the preferred option: the financial least three years; implications of the assignment projected o \ c ~ - at ( i i ) (iii) ( i v ) any possible financial 1iabilitit:s or risks after the thee-!ear ( v ) (vi) (vii) period referred to in subparagraph ( i i i ) : the manner in which additional expenditure b) municip;1litic\ ;I\ a result of the assignment will be funded: the implications of the assignment for the capacit! o f nlunic~ip;lIi- ties: the assistance and support that will be pro\,ided to municip;ditie\ in respect of the assignment: and (viii) any other matter that may be przscribed. ( 9 ) An MEC seeking to initiate the assignment of ;I function o r p o \ \ t~ h! way o f a provincial Act to municipalities. or any category of Inunicip;llitie\. in the province must. within a reasonable time before the dr~rft pro\ inci;ll Act providing for the assignment is introduced in the r e k \ a n t pro\ inc,i;ll legislature- ( a ) request the Financial and Fiscal Commission to ; ~ s s e \ ~ thc tinanc,ial and tiscal implications of the legislation. after informing the Financial and Fiscal Commission of the possible impact of such assignment on- (i) the future division of revenue between the spheres o f = "o\'erlllllt'lll i n terms of section 214 of the Constitution: the fiscal power, fiscal capacity and efficiency of municipalities or any category of municipalities; and the transfer, if any, of employee<,. assets and liabilities: and (ii) (iii) ( 0 ) consult the MEC for local government. the hlEC responsible for local ~ "(>\'ern- finance. and organised local governrnent representing ment in the province, with regard to-- (i) the assessment by the Financial and Fiscal Commi~sion conten- plated in paragraph ( a ) ; the policy goals to be achieved by the assignment and the reason\ for utilising assignment as the preferred option: implications of the financial over at least three years; possible after risks three-year period referred to in subparagraph (iii): the manner in which additional expenditure by nlunicipalities a s a result ofthe assignment will be funded; the implications of the assignment for the capacity of municipali- ties: the assignment projected liabilities financial the or (ii) (iii) ( v ) (vi) (iv) any l i d No. 44, 2003 LOCAL GOVERN~MENT bIUNICIF'AL SYSTEMS AMENDMENT ACT. 200.: (vii) the assistance and support that will be provided t o municip, 'I I ' Ill<'\ in respect of the assignment: and (viii) any other matter that may be prescribed. ( 3 ) When draft legislation referred to in subsection ( 1 ) or ( 3 ) i \ intl-oduL~<cl ir Parliament or a provincial legislature. the legislation m s t be accompanied b!-- ~ 5 period; and l o ) a niemorandum- (i) giving at least a three-year projection of the finallcial and t i \ L ~ i I l er for thow implications of the assignment of that function 01- p o ~ municipalities; (ii) disclosing any possible financial liabilities or risk\ ;dter the three- i I O (iii) (iv) year indicating how any additional ties will be funded; indicating the implications ofthe assignment for t h L , capacit! o i 1 those 1 t h o r ntunicip;1Il- ~ expenditure b!, and ~ ! 15 municipalities: ( b , the assessment of the Financial and Fiscal Comnli\sion rel'erred 1 0 in I subsection ( I ) ( r r ) or @)(a), as the case may be.". Substitution of section 10 of Act 32 of 2000
3
The follo\ving section is hereby substituted for section 10 of the principal Act:
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AI-assisted research summary: This section replaces section 10 with a provision about assigning functions or powers to specific municipalities by executive act or by agreement.

3. The follo\ving section is hereby substituted for section 10 of the principal Act: "Assignment of functions or powers to specific municipalities by acts of 2 0 executive or by agreement I
10
If a function or power is assigned to any specitic nlunicipalit!. ill
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AI-assisted research summary: If an organ of state assigns a function or power to a municipality, it must first send a memorandum to the Minister and the National Treasury.

10. If a function or power is assigned to any specitic nlunicipalit!. ill terms of a power contained in an Act of Parliament or a pro\incial Act. o r by agreement in terms of section 99 or I26 ofthe Constitution. the organ 01' state assigning the function or power must, before assigning the i'unctiou 0 1 - power. submit to the Minister and the National Treasury ;I n1emor:undum - ( n i giving at least a three-year projection of the financial inq>lication\ o t ' ! that function or power for the municipality: and ( b ) disclosing any possible financial liabilities or riskc after the threz-!,car period; and ( c , indicating how any additional expenditure by the municipalit\, \\ i l l bc funded.". Insertion of section IOA in Act 32 of 2000
4
The f o h v i n g section is hereby inserted in the principal Act after section 1 0 :
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AI-assisted research summary: This provision inserts a new section titled “Funding and capacity building” into the principal Act after section 10.

4. The f o h v i n g section is hereby inserted in the principal Act after section 1 0 : "Funding and capacity building js I
10A
The Cabinet member, MEC or other organ of state initiating ~111
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AI-assisted research summary: If a Cabinet member, MEC, or other organ of state assigns a function or power to a municipality in the stated circumstances, it must take steps to ensure sufficient funding and needed capacity-building.

10A. The Cabinet member, MEC or other organ of state initiating ~111 assignment of a function or power to a municipality in t e r m o f section Y or IO. must take appropriate steps to ensure suffkient funding. and w c h capacity-building initiatives as may be needed. for the performance o f the assigned function or power by the municipality if - (ai or power imposes a duty on the the assignment of the function municipality; ( 0 ) that duty falls outside the functional areas listed in Part B of Schedule 4 or Part B of Schedule 5 to the Constitution or is not incidental 10 an!' of those functional areas; and ( c ) the performance of that duty has financial implications municipality.". f o r the 1 Act No. 44.2003 LOCAL GOVERNMEST, MUNICIPAL SYSTEMS A M E N D M D T .ACT. 2003 Insertion of sections 21A and 21B in Act 32 of 2000
5
The following sections are hereby inserted in the principal Act. attcr wction 2 I
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AI-assisted research summary: Municipalities must make required public documents available to the local community, including by display, website publication where applicable, and notice of where the documents can be obtained.

5. The following sections are hereby inserted in the principal Act. attcr wction 2 I "Documents to be made public 21A. ( 1 1 All documents that must be made public b!. ;I municipalir! i n terms of a requirement of this Act. the Municipal Finance h l m l a y l ~ e n t Act or other applicable legislation, must be conveyed to the local communit)~ - ( r r l by displaying the documents at the municipalit!.'s head and satellite offices and libraries; 0 7 ) by displaying the documents on the municipalit\~'s official website. it' the municipality has a website as en\;isaged by section 2 I B: and f c ) by notifying the local community. the place, including the website address. where concerning the documents can be obtained. i n accordance \\.it11 section 2 I . o f ' detailed particular\ ( 2 ) If appropriate. any notification in terms of subsection ( 1 ) ( ( ' I must invite the local community to submit written comments or representations to the municipality in respect of the relevmt documents. Official website 21B. ( 1 ) Each municipality must- ( a ) establish its own official website if the municipalit!. decides t h a t i t 1s affordable; and f b j place o n that oficial website information required t o be made public i n terms of this Act and the Municipal 1-inance Mana, wllent Act. ( 2 ) If a municipality decides that it is not aRordable for i t to establi\h i t \ own official website, it must provide the information i n terms o t ' legizlation referred on an o r p n i s e d local (1)fh) for display government website sponsored or facilitated by the National Treasury. t o in subsection (3) The municipal manager must maintain and r e y u l a r l ~ updatc the municipality's official website. if in existence. or pro\ ide the rele\allt information as required by subsection ( 2 ) . " . Substitution of section 46 of Act 32 of 2000
6
The following section is hereby substituted for section 46 of the principal Act:
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AI-assisted research summary: A municipality must prepare an annual performance report for each financial year and include it in the municipality’s annual report.

6. The following section is hereby substituted for section 46 of the principal Act: "Annual performance reports 46. ( 1 ) A municipality must prepare for each financial year ;I performance report reflecting - ( n j the performance of the municipality provider during that financial year: and of each external s e n ice (0) a comparison of the performances referred to i n paragraph f u j M it11 targets set for and performances in the previous tinancial !)ear: and ( c ) measures taken to improve performance. ( 2 ) An annual performance report must form part of the municipality'\ annual report in terms of Chapter 12 of the Municipal Finance Manqement Act.". Amendment of section 55 of Act 32 of 2000
7
Section 55 of the principal Act is hereby amended by the substitution i n subsection
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AI-assisted research summary: This section amends section 55 of the principal Act by replacing subsection 2(c) with wording requiring proper and diligent compliance with the Municipal Finance Management Act.

7. Section 55 of the principal Act is hereby amended by the substitution i n subsection ( 2 ) for paragraph (c) of the following paragraph: "(c.) proper and diligent compliance with [applicable municipal finance manage- ment legislation] the Municipal Finance Management Act.". 17 No. 25960 Act No. 44,2003 GOVERNMENT GXZFTlL. 3 1 \ \ l 1 ?I:> ? ~ ' ~ ~ - j !.OCAL GOVERNMENT: MUNICIPAL SYSTEMS AMENDMENT ACT. 7003 Amendment of section 57 of Act 32 of 2000
8
Section 57 of the principal Act is hereby amended by the insertion atter subsection
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AI-assisted research summary: The provision says certain responsibilities under the Municipal Finance Management Act are treated as part of a municipal manager’s performance agreement, and performance bonuses for a municipal manager may be awarded only after the required performance evaluation and municipal council approval.

8. Section 57 of the principal Act is hereby amended by the insertion atter subsection (4) of the following subsections: "(4A) The provisions of the Municipal Finance Mana,cement Act confrrriny responsibilities on the accounting officer of a municipality must be regarded a\ forming part of the performance agreement of a municipal manager. (4B) Bonuses based on performance may be awarded to a municipal manager o r the end of thc an evaluation of performance and approval of wch a manager directly accountable to the municipal manager after financial year and only after evaluation by the municipal council concerned.". Repeal of section 58 of Act 32 of 2000
9
Section 58 of the principal Act is hereby repealed
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AI-assisted research summary: Section 58 of the principal Act is repealed.

9. Section 58 of the principal Act is hereby repealed Amendment of section 74 of Act 32 of 2000
10
Section 74 of the principal Act is hereby amended by the substitution t'or
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AI-assisted research summary: A municipal council must adopt and implement a tariff policy for municipal service fees, and the policy must comply with the Act and any other applicable municipal finance management legislation.

10. Section 74 of the principal Act is hereby amended by the substitution t'or subsection (1) of the following subsection: '*( 1 ) A municipal council must adopt and implement a tariff polic!. on the It,\ yiny of fees for municipal services provided o f service delivery agreements, and which complies with the provisions o f t i l l 5 Act, Act and [with] any other applicable the Municipal Finance Management legislation.". by the municipality itself 01- h! \\.:I!' 15 2 0 Amendment of section 78 of Act 32 of 2000
11
Section 78 of the principal Act is hereby amended-
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AI-assisted research summary: If a municipality considers using an external mechanism to provide a municipal service, it must notify the local community, assess service delivery options, and do or commission a feasibility study.

11. Section 78 of the principal Act is hereby amended- ( [ I ) by the substitution for subsection (3) of the following subsection: "(3) If a municipality decides in t e r m of subsection ( ? ) ( / I , t o explort. the possibility of providing the municipal service throuyh mechanism it must- an extcrnill 25 costs and benetits aswciatd including the expected effect of an!. give notice to the local community of its intention t o t.\plorc the pro\ision of the municipal service through an e\tcrnal mechanism; [and] assess the different service delivery options i n terms o f section 3 0 76(b). taking into account- the direct and indirect with the project, service delivery mechanism on the environment and on health. human the capacity and potential future capacity of prospx- tive service providers to furnish the skills. exprrti\e and resources necessary for the pro\.ision of the service; the views of the local community: the likely employment patterns in the municipality: and the views of organised labour: and impact on development. job creation 2nd and well-being safety: 40 3s conduct or commission a feasibility study which must be taken into account and which must include- 45 (i) a clear identification of the municipal service for Lvhich the municipality intends to consider an external mech;!- nism; (ii) an indication of the number of years for which the provision of the municipal service through an external mechanism might be considered; l w 01' rn hich the pro\ i\ion t 1.hrough an external mcchani\n1 the projected outputs municipal service might be expected to produce: an assessment as to the extent to n.hich the pro\ i i o n 01' the municipal service through an external nwcll;lnisllI will- (aa) provide value for money: (bb) address the needs of the poor: (cc) be affordable for the municipalit! and re\ident\: \ and (dd) transfer appropriate technical. operational a n d financial risk: the projected impact on the municipalit! .\ \ t a f l ' . a\\c't\ and liabilities: the projected impact on the municipalit!,'\ development plan: the projected impact on the municipalit! .s huciyzt. l o r the period for Lvhich an external mechanism might 1~ on revenue. expenditure. used. borrowing. debt and tariffs: and any other matter that may be prescribed.": a n d including impacts - intc~gratccl ( h i by the addition of the following subsection: "(6) The national government or rele\,ant pro\,incial go\ ernnlent ma!. in accordance with an agreement. assist municipalities i n c;~rr\ i n ? o u t ;I t o in subsection ( 3 ) ( ( , ) . or i n preparing \cl~n icc feasibility study referred delivery agreements.". Substitution of section 80 of Act 32 of 2000
12
The following section is hereby substituted for section X 0 o f the pt~incilxil Act:
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AI-assisted research summary: Municipalities may enter certain service delivery agreements without Part 3, but must consult the community, disclose the agreement’s contents, and obtain or commission a feasibility study in some cases.

12. The following section is hereby substituted for section X 0 o f the pt~incilxil Act: "Provision of services through service deliver!. agreements external mechanisms \\ i t h 80. ( 1 ) If a municipality decides to pro\,ide a municipal s c ~ n I C C through a service deliwry agreement i n terms of section 7 h ( h ) with- f t r ) a municipal entity another [or A national or provincial organ of state]. it may. x h i e c t to suhsection i .3 ). nescxi:\tc and enter into such an agreement rn.ith the relevmt municip1I entit! municipality [or organ of state] J.vithout applyins Part i o t this Chapter; [or] municipalit!. (([A) a national or provincial oryan of state. it ma! enter into \uch ; I n ayreement with the relevant organ of state N,ithout appl\ ing F ' x t 3 o f ' this Chapter: or 4 ) ( h ) any institution or entity, or any person, juristic 01- n:ttural. not mentioned in paragraph ( a ) or ( C I A ) . it must ;~ppl! Parr -3 o f t h i \ Chapter before entering into such an agreement such institution, entity or person. \\ it11 -_ :1n! (2) Before a municipality enters into a service delivery agreement [for a 45 basic municipal service] with an external service pro\.ider it mtlst establi\h a [mechanism and] programme for community consultation m J infbrma- tion dissemination regarding the appointment of the external s e n ice provider and the contents of the service delivery agreement. The content\ o f ' a service delivery agreement must be communicated to the local conlmu- 30 nity through the media. to enter into a s e n ice deli\ el.! agreement with another municipality as contemplated by section 7h(bl(ii). 1 that other municipality must conduct or commission a feasibilit! stud!. which it must take into account, before the service deliver!, agreement i \ entered into. (3) ( a ) Where a municipality decides ( b ) The feasibility study referred to in paragraph ( L I J , nlust include- (i) an assessment on the impact on the budget of that other municipality. staff expenditure. for each of the and on its assets, liabilities and 1 , 5 ~ I O (ii) an assessment on whether i t will be necessar!' to financial years that it intends to serve as an external scr\ ice p r o \ icier. incre;w the ntlmbcr , of staff to enable that other municipality to be an external x m . i c . c . provider, and whether it will be necessary to transfel GI- w c o n ~ ! an! ~ staff from the appointing municipality to that other rnunicipalit! : (iii) an assessment on the ability of that other municipulit~ l o absorb an! 1 if and n.hen the commitments, liabilities or employees involwd. appointment as proi'ider ends: and external service (iv) any other relevant information as may be prescribed.". Amendment of section 81 of Act 32 of 2000

Part

Chapter before entering into such an agreement

13
Section 81 of the principal Act is hereby amended-
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AI-assisted research summary: The amendment requires the municipality’s agreement to include a dispute-resolution mechanism for disputes between the service provider and the municipality.

13. Section 81 of the principal Act is hereby amended- ( a i by the substitution for subparagraph ( v ) of paragraph it71 of xuhsection ( 2 1 o f the following subparagraph: "(v) managing its own accounting, financial management. budgetins. activities \\ithin ;I investment and borrowing and tinancial control transparency, accountability, reporting to (applicable munici- determined by the municipality. subject pal finance management legislation] the L,lunicipal 1'1nanct. Management Act;": and tl-amework o f 15 ( h i by the insertion after paragraph (0) of subsection ( 2 ) of the followiny 2 0 paragraph: "(hA) must ensure that the agreement provides for ;1 diapt~te-resolution mechanism to settle disputes between service provider;". the municipality alltl the Repeal of section 82 of Act 32 of 2000 _. 'i
14
Section 82 of the principal Act is hereby repealed.
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AI-assisted research summary: Section 82 of the principal Act is repealed.

14. Section 82 of the principal Act is hereby repealed. Amendment of section 83 of Act 32 of 2000
15
Section 83 of the principal Act is hereby amended by the substitution i n aubwctio~l
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AI-assisted research summary: This section amends section 83 and the heading to Part 4 of Chapter 8 of Act 32 of 2000.

15. Section 83 of the principal Act is hereby amended by the substitution i n aubwctio~l ( I ) for paragraph ( a ) of the following paragraph: "(0) [are competitive, fair, transparent, equitable and cost-effective] compl! 3 ) with Chapter 11 of the Municipal Finance hk~napement Act:". Substitution of heading to Part 4 of Chapter 8 of Act 32 of 2000
16
The following heading is hereby substituted for the heading to Part 1 of Chapter
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AI-assisted research summary: The heading to Part 1 of Chapter 8 is replaced with “Part 4: Internal municipal service districts.”

16. The following heading is hereby substituted for the heading to Part 1 of Chapter 8 of the principal Act: "Part 4: Internal municipal service districts". 7 - .> .1 insertion of Part 4A in Chapter 8 of Act 32 of 2000
17
The following Part is hereby inserted in the principal Act after section 86:
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AI-assisted research summary: The Minister may make regulations or issue guidelines about listed municipal services matters, subject to section 120 and consultation requirements.

17. The following Part is hereby inserted in the principal Act after section 86: *'Part 4A: Regulations and guidelines regarding municipal services Regulations and guidelines regarding municipal services 1 40 86A. (1) The Minister may for purposes of this Chapter make regulations or issue guidelines in accordance with section 120 to provide for or regulate the following matters: ( a ) The preparation, adoption and implementation of a municipal tariff policy; 16) the subsidisation of tariffs for poor households through- (i) cross-subsidisation within and between services; (ii) equitable share allocations to municipalities: and to municipalities; (iii) national ( c ) limits on tariff increases; and provincial grants LOCAL GOVERNMEST: hlUNlCIPAL SYSTEMS AMENDMEXT ACT. 200.1 criteria to be taken into account by municipalitie\ \\hen i r n p o \ ~ n ~ surcharges on tariffs for services and determining t h t d u r ; l t i o n thtrtol': incentives and penalties to encourage - ( i ) the economical, efficient and effective use o f re\ot~rce\ \\ l1cn providing services; the recycling of waste: and ( i i ) ( i i i ) other environmental objectives: into account by municipalitie\ \\ hen a\\t\\ln: in selecting and appointing \ e n icc the stripping o f ' nlullicilxll criteria to be taken options for the provision of a municipal service: measures against malpractice providers, including measures against assets: mechanisms and procedures for the co-ordination and intt'gration o i sectoral requirements in terms ofleg~slation with t h i \ Chapter. and tllc manner in which municipalities must comply uith these: standard draft service delivery agreements: the minimum content and management ments: additional matters that must be included in a feasibilit! \ t t d ! of section 78(3)(c), which may include- i n terms of service dcli\.er!, ~12rec- ( i ) (ii) an assessment of the municipality's the strategic and operational costs and benetits o f ' ;in t \ t t r n ; l l mechanism in terms of the municipality's strattgic ot?,jc'cti\ e s : to c'ft'tcti\ti! monitor the provision of the municipal senice through ;m t o enforce the wn ice clcii\tr! external mechanism and agreement; capacit! 111 I 1 1 1 i performance guarantees by service pro\,iders: and any other matter that would facilitattt - ( i ) ( i i ) the effective and efficient provision of municipal s e n ices: or the amlication of this Chanter. .. ( 2 ) The Minister may only make rtgulations and issue guideline\ contemplated in subsection (I)((/) to ( e ) after consulting u i t h the blinistcr 1 of Finance and any other Cabinet membt~r whose portfoilo i \ atfccted h! such regulations and guidelines. ( 3 ) When making regulations or issuing guidelines i n t t m \ o f ' wction in substction ( I 1. t h e 120 to provide for or regulate the matters mentioned Minister must- ((/) take into account regulations and guidelines: and the capacity of municipalities to compl! \\ i t h wc11 ( b ) differentiate between different their respective capacities.". kind\ of municipalitie\ according t o Insertion of heading and sections 86B, 86C, 86D, 86E, 86F, 86G, 86H. 861. X6J and 86K in Act 32 of 2000
18
The following headings and sections are hereby inserted
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AI-assisted research summary: This section adds rules for municipal entities and limits when a municipality may establish or own interests in a private company.

18. The following headings and sections are hereby inserted i n the principal Act after 45 hsction 86A: "CHAPTER SA MUNICIPAL ENTITIES Part I : General provisiom I 5 0 Kinds of municipal entities 86B. ( I ) There are the following kinds of municipal entities: (0) a private company- 20 No. 25960 Act No. 44,2003 GOVERN:vIENT(;.-\ZFTT~. 7 0 I \ \ i \I<) ZOO- LOCAL GOVERNMENT: MLJNICIPAL SYSTEMS AMENDMENT .-\CT. 2003 (i) established by one or more municipalities in term\ of Part 2: or in which one or more municipalities ha\.? acquired o r hold an (ii) interest in terms of Part 2; ( b ) a service utility established by a municipality in term\ o f Part i: and ( c ) a multi-jurisdictional service two or m r e utility established b!, municipalities in terms of Part 4. ( 2 ) No municipality may establish, or participate in the establishment of. or acquire or hold an interest in. a corporate body. including a trust. except where such corporate body is- (a) a private company, service utility or multi-jurisdictional scr\,ice utilit! referred to in subsection (1); or (bj a fund for the benefit of its employees in terms of a law replatiny pensions or medical aid schemes. (3) Subsection (2) does not apply to the acquisition by a municipality for investment purposes of securities in a company listed on the Johanne\burg Securities Exchange in accordance with the investment frame\vorl\ envisaged in section 13 of the Municipal Finance Management Act. Part 2: Private companies Establishment and acquisition of private companies 86C. ( I ) A municipality may, subject to subsection ( 2 ) - (a) establish or participate in the establishment of a priwte cornpan! i n accordance with the Companies Act. 1973 (Act No. 6 I o f 1973): o r ( h ) acquire or hold an interest in a private company i n accordance \\ i t h the Companies Act. 1973 (Act No. 61 of 1973). ( 2 ) (a) A municipality may in terms of subsection ( I ) ( ( ) ) or ( h i either acquire or hold full ownership of a private company. or acquire or hold ;I lesser interest in a private company. ( b ) A municipality may acquire or hold such a lesser interest i n ;I p i \ ate‘ company only if all the other interests are held by- (i) another municipality or municipalities; (ii) a national or provincial organ of state or organs ot state: o r (iii) any combination of institution:, referred to in subparagraph\ ( i and (ii). ( c ) A municipality may. despite paragraph IhJ. acquire o r hold an interest in a private company in which an investor other than another municipalit! or a national or provincial organ of state has an interest. but only ifefft.cti\ c control in the private company vests in- that municipality; (i) (ii) another municipality; or (iii) that municipality and another municipality collectivel>,. (3) If a municipality establishes a privar company or acquire5 or hold\ an interest in such a company, it must comply with the Companies Act. 1973 (Act No. 61 of 1973), and any other law regulating companies. but i t any conflict arises between that Act or such law and a provision of this Act. this Act prevails. Legal status of private companies established by municipalities or in which municipalities hold interests 86D. ( 1 ) A private company referred to in section 86C( 1)- ( a ) is a municipal entity if a municipality, or two or more municipalitieh collectively, have effective control of the private company: or Art No. 44.2003 LOCAL GOVERNMENT. MUNICIPAL SYSTEMS AMENDhlEXT ACT, 200.2 ( h ) is a public entity to which the Public, Finance hlanagclnent h . 1 . I ()()() (Act NO. 1 of 1999), applies if ownership control i n the compn!. within the meaning of that Act, is held b!, p r o \ 1nc1a1 organ of state. a national 01' ( 2 ) A private company which is a municipal entit!- ( a ) must restrict its activities to the purpose for \\hich i r parent municipality in term5 of section 86E( I ) ( ( / I : and i \ used h! i t \ (19) has no competence to perform any activity nhich t ; l l l \ out\itle tht' powers of its parenr. municipalit! contcn1pl;lrcd h! functions and section 8. Conditions precedent for establishing or acquiring interests in pri\ate I companies I ! 86E. ( 1 ) A municipality may establish ;I private cornpan! o r xquirc a n 1 interest in such a company only- ( a ) for the purpose of utilising the company ;IS ;I mech;lni\m t o a s s i s t i t 111 ~ 15 the performance of any of its functions or pou ers referred l o i n \cc.tion ~ 8: if the municipality can demonstrate that- ( h ) ~ ( i ) ( i i ) there is a need to perform that function o r pouer i n accord;mL,c I with business practices objectives of the municipalit!, more effectii el! : m t l the company would benetit the local cornmunit! : and i n order to achie\c the strategic ' 2 0 i ( c i if any other conditions that may be prescribed h a \ e h.en con~pliL~d with. ( 3 ) I f n municipality establishes a primtt. compan! o r :1cquirL\\ ; I n tn1el.c\[ 3 i n such a company for the purpose of using that cornpan! ;I\ ;I n v x h a n i \ n l 1 to provide ;I municipal service, 8 applies. Chapter I ~ 1 i Conditions precedent for co-owning of private companies

Part

Part 2: Private companies

86F
If two or more municipalities intend to establish ;I pri\ are cornpan!
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AI-assisted research summary: If two or more municipalities want to establish or buy into a private company, they must agree on shared control, follow section 86E, and review cash flow projections for at least three financial years.

86F. If two or more municipalities intend to establish ;I pri\ are cornpan! o l tho\c or to acquire interests municipalities must- ( L I J ( h i consider and reach agreement on proposals tor shared control o f in the same private cornpan!. C;Ich comply with section 86E: ' the company: and (c) consider cash flow projections of the cornpan! .s proposcd operation\ for at least three financial years. Disposal of companies and equity interests in companies
86G
A municipality may transfer ownership or other\\ ise dispow of-
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AI-assisted research summary: A municipality may transfer certain ownership interests and may establish a service utility, but the service utility’s activities must stay within its established purpose.

86G. A municipality may transfer ownership or other\\ ise dispow of- to the hlunicipal Finance ((0 a wholly owned private company. subject Management Act: or ( h ) an interest in a private company - (i) (ii) subject to section 14 of the Municipal Financt. Management Act: and if that transfer or disposal would not result i n a n infringement of section 86C(2) by another municipality which holds an interest in the company. Part 3: Service utilities Establishment 86H. ( 1 ) A municipality may pass a by-law establishing a service utilit!. i o Act No. 44.2003 LOCAL GOVERNMENT: MUNICIPAL SYSTEMS AMENDMI3NT ACT. 200.2 (2) A by-law establishing a service utility must- ( a ) state the purpose for which the service utility is established: ( h ) confer the powers and impose the duties on the senice utilit!, which are necessary for the attainment of such purpose: (c) provide for- I > 1 0 ~ conditions of appointment of directors: (i) a board of directors to manage the service utility: (ii) the number of directors to be appointed: (iii) the appointment of directors. the tilling of \acancies and t h e I replacement and recall of directors by the parent municipallt! : 1 the terms and the appointment of a chairperson; ( i v ) ( v ) ~ i (vi) the operating procedures of the board of directors: i (vii) ' the delegation of powers and duties to the hoard of directors: i of rhc ! (viii) any other matter necessary for the proper functioning board of directors: ~ I5 the acquisition of infrastructure. goods. services. supplieh o r i equipment by the service utility. or the transfer of infrustru- ' or equipment to the ser\.ic~t> I ture. goods. services, supplies utility; I 2 0 the appointment of staff by the service utility. o r the tran\ter 01. secondment of staff to the service utility in accordance wit11 I applicable labour legislation: : i the terms and conditions I appointment or secondment is made; the governance of the service utility: and on which an) acquisition. tran+r'. (ix) (xi) (x) for the proper functioniny of the (xii) (xiii) any other matter necessary service utility: and ~ li i (d) determine budgetary and funding arrangements for implementatiol~ ot ! I the by-law. (4) No by-law may confer on a service utility any functions o r powtw ~ 30 falling outside the competence of the parent municipality contemplatrcl b! section 8. 1 I Legal status of service utilities 861. ( 1 ) A service utility is a juristic person and a municipal entity under the sole control of the municipality which established it. ( 2 ) A service utility- ( a ) must restrict its activities to the purpose for which it was established: and (b) has no competence to perform any activity which falls outside functions or powers in terms of a b y l a w of the municipality. Conditions precedent for establishing service utilities i f \ 1 865. (1) A municipality may establish a service utility only- ( a ) for the purpose of utilising the service utility as a mechanism to assist the municipality in the performance of any of its functions or powers referred to in section 8; ( 6 ) if the municipality can demonstrate-. (i) that that function or power could be performed more efficiently by a separate structure the strategic objectives of the municipality, and that the service utility would benefit the local community; and ( c ) if all other conditions that may be prescribed have been complied with. in order to achie\,e (ii) -1s 5 0 Act so. 44. 2003 LOCAL GOVERNMENT: hll~NICIPAL SYSTEMS AMENDMENT ACT. 2003 ( 9 ) If a municipality establishes a service utility for the purpose of using that service utility as a mechanism to provide a municipal ser\,ice. Chapter 8 applies. Disestablishment of service utilities I 86K. ( I ) A municipality may pass a by-law disestablishing ;I sen ice utility which it has established. ( 7 ) If a service utility is disestablished-. I C / ) all assets. liabilities. rights and obligations of the service utility \'est i n the municipality: and ( 1 7 ) staff of the service utility must be lrtealt with in accordance with applicable labour legislation. Part 4: Multi-jurisdictiorlal service utilities" Substitution of section 87 of Act 32 of 2000

Part

Part 4: Multi-jurisdictiorlal service utilities"

19
The follou,ing section is hereby substituted for section 87 of the principal Act:
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AI-assisted research summary: This section replaces section 87 of the principal Act with a new section titled “Establishment of multi-jurisdictional utilities I5”.

19. The follou,ing section is hereby substituted for section 87 of the principal Act: service "Establishment of multi-jurisdictional utilities I5
87
Two or more municipalities. by Lvritten ayreement. ma! e\tablish ;I
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AI-assisted research summary: Two or more municipalities may, by written agreement, establish a multi-jurisdictional service utility.

87. Two or more municipalities. by Lvritten ayreement. ma! e\tablish ;I I1llllti-.jurisdictional service utility to pet form any function o r pcner- envisayed by section 8 in their municipal arras or in any dehignated parts o f their municipal areas.". Amendment of section 88 of Act 32 of 2000 2 0
20
Section 88 of the principal Act is hereby amended by-
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AI-assisted research summary: The Minister may, in the national interest and after consulting the relevant Cabinet member, request two or more municipalities to establish a multi-jurisdictional service utility.

20. Section 88 of the principal Act is hereby amended by- / ( I ) the substitution for the heading of the following heading: "Minister requesting [the] establishment of multi-jurisdictional [mu- nicipal service districts] service utilities": and ((7) the substitution for subsection ( I ) of the following subsection: -. 'i "( 1 ) The Minister may. in the national interest and i n consultation with the [national Minister] Cabinet member responsible for thc functional t o establish Idesig- area i n question. request two or more municipalities nated] a mLllti-jurisciictional [municipal senice districts] ser\.ice u t i l i t \ , to conform to prolision of a specitic municipal service.". the requirements of national le$slation applicable to the 3 0 Substitution of section 89 of Act 32 of 2000
21
The following section is hereby substituted for section 89 of the principal Act:
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AI-assisted research summary: An agreement creating a multi-jurisdictional service utility must set out the municipalities’ rights and responsibilities and cover boundaries, service terms, governance, funding, staffing, withdrawal, termination, and reporting.

21. The following section is hereby substituted for section 89 of the principal Act: service districts] "Contents of agreements establishing multi-.jurisdictional [municipal service utilities - - .I 3 89. [(l)] An agreement establishing a multi-jurisdictional [municipal and service district] service utility must describe the rights. obligations responsibilities of the [participating] p a r e n t municipalities. and ml~st- ( r r ) determine the boundaries service multi-jurisdictional of the rdistrict] area for Lvhich the utility is established: 40 ( b ) identify the municipal service terms of the agreement; or other function to be provided in [(c) determine the mechanism that will provide the service in the district;] Id) determine budgetary and funding [and scheduling] arranyements I S for implementation ofthe agreement; ( e ) provide for- 28 GAZETTE. GOVERNMENT No. 25960 70 I.-\XL'.\Rl' 2004 Act No. 44,2003 GOVERNMENT. LOCAL MUNICIPAL SYSTEMS AMENDMENT' ACT. 2003 [the establishment of a governing body] a hoard of multi-jurisdictional [municipal service directors for the district] service utility; the appointment of [representatives of the] directors b\, the respective [participating] parent municipalities [to the governing body], the filling of vacancies and the replace- ment and recall of [representatives] directors: the number of [representatives] directors appointed [for] b~ each [participating] parent municipality[. subject to subsection (2)]; the terms and conditions of appointment of [those repre- sentatives] directors; the appointment of a chairperson: the operating procedures of the [governing body] board of directors; the delegation of powers and duties to the [governing body consistent with section 921 board of directors; and any other matter relating to the proper functioning of the [governing body] board of directors; 5 1 0 IS (fl provide for- (i) the acquisition of infrastructure, goods. services. supplies o r [governing body] multi-jurisdictional equipment by the of infrastructure. goods. service utility, or the transfer services, supplies or equipment to the [governing body] multi-.jurisdictional service utility: of staff by the (ii) the appointment [governing body] multi- jurisdictional service utility, or the transfer or secondment of staff to the [governing body] multi-jurisdictional service utility in accordance with applicable labour legislation: & the terms and conditions on which any acquisition, transfer. appointment or secondment is made: [and] (8) determine the conditions for, and consequences of, the withdrawal from the agreement of a [participating] parent municipality: ( h ) determine the conditions for, and consequences of, the termination (iii) of the agreement, including- (i) the method and schedule for winding-up the [district] multi-jurisdictional service utility: the operations of (ii) the distribution (iii) of the proceeds: and the allocation among the [participating] parent municipali- ties of any assets and liabilities; and (i) provide for- (i) (ii) compulsory the governing of the multi-jurisdictional service utility: written reports regarding the activities and performance of the multi-jurisdictional service utility to a parent municipality: information that may be requested from the multi-jurisdic- tional service utility by a parent municipality: (iii) (iv) the (v) any other matter necessary for the Droper functionine of the amendment of the agreement; and - - multi-jurisdictional service utility. - [(2) A governing body must consist of between three and fifteen Substitution of section 90 of Act 32 of 2000
22
The following section is hereby substituted for section 90 of the principal Act:
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AI-assisted research summary: A multi-jurisdictional service utility must limit its activities to the purpose for which it was established and cannot act outside its functions under the relevant agreement.

22. The following section is hereby substituted for section 90 of the principal Act: .\rt No. 44,2003 LOC.4L GOVERNMEST': MUNICIPAL SYSTEMS AMENDMENT .ACT. 200.; "Legal status of [governing bodies] multi-jurisdictional s e n ice utilities 90. (1) [The governing body of a] A n~ulti-jL~risdlctiollal [municipal service district] service utility is a juristic person. and a municip;ll entit! under the shared control of the parent municipalities. ( 2 ) A multi-iurisdictional utility-.. i o ) must restrict its activities to the ob.ject for which it \\;I\ c\tahli~hed: service \ and (1,) h a s n o competence to perform any activity \vhich f:~ll\ out\icltl i t \ functions in terms of the agreement referred t o i n src1ion S7.". Repeal of section 91 of Act 32 of 2000
23
Section 91 of the principal Act is hereby repealed
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AI-assisted research summary: Section 91 of the principal Act is repealed.

23. Section 91 of the principal Act is hereby repealed Substitution of section 92 of Act 32 of 2000
21
The following section is hereby substituted for section 92 of the principll :Zct:
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AI-assisted research summary: A multi-jurisdictional service utility’s governing body must comply with the Municipal Finance Management Act and remains accountable to the parent municipalities.

21. The following section is hereby substituted for section 92 of the principll :Zct: utilities service districts] "Control of [governing bodies service of] multi-jurisdictional [municipal io I5 92. I ) [The governing body of a] A - n~ulti-jurisdiction;~l [municipal service district] service utility- I N ) is accountable to the [participating] parent mLlnicipalitit.~: and ( h ) must comply with [any legislation applicable to the financial management of municipalities and municipal entities] Municipal Finance Management Act. ( 2 ) A [participating] parent municipal it!^-- lrrl is entitled to receive such regular [governing body of a district] multi-jurisdictiolal \ e n ice u t i l i t ! with respect to its activities and performance. a\ ma!. he h e t OLII the agreement establishins tional service utility; written repom fro111 the the [governing body] ~ll~~lti-jt~ri\~lic- i n 25 2 0 l b i may request the [governing body] multi-jurisdictional \ c n ice utilitv to furnish it with such information regarding i t \ acti\ i t i t . \ ;I\ the [participating] parent municipality may reasonahl! Iqtlirtl: ?O and ( L ' ) may appoint a nominee to inspect, at any time dtlrlns 11orm;d business hours. the books, records. operations and tacilitie\ o t ' t h c [governing body] multi-jurisdictional service utilit!. and [of1 those of its contractors relating t o the [provision of the n~unicipal 35 of the function service] performance [district] multi-jurisdictional senice. utility is estahllshrtl.". or power f o r \\.hich the Substitution of section 93 of Act 32 of 2000
25
The following section is hereby substituted for section 93 of the principal Act:
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AI-assisted research summary: This section substitutes a new section 93 about the termination of multi-jurisdictional municipal service districts service utilities.

25. The following section is hereby substituted for section 93 of the principal Act: "Termination of multi-jurisdictional [municipal service districts] service utilities
93
A multi-jurisdictional [municipal service district]
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AI-assisted research summary: The provision says the municipal service utility/district ends automatically if the listed conditions are met.

93. A multi-jurisdictional [municipal service district] h e n ice utility terminates- ( t i l automatically. when there parent municipality; is only one remaining [Participating] I h l by written agreement among all of the [participating] parent municipalities; or 40 45 N o . 25960 32 - Act No. 44,2003 GOVERNRll_NI'G,~ZETTE. 10 JA\I'..\K) ? ( I O - ; LOCAL GOVERNMENT: MUNICIPAL SYSTEMS AMENDMENT .ACT. 200.1 ( c ) upon the termination date or the fulfilment of any condition termination contained multi-jurisdictional service utility.". in the agreement establishing for the [district I Insertion of parts 5 , 6 and 7 in Chapter 8A of Act 32 of 2000
26
Thc following Parts are hereby inserted in Chapter 8A of the principal .4cl after
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AI-assisted research summary: This section inserts a new Part about the duties and responsibilities of parent municipalities with respect to municipal entities.

26. Thc following Parts are hereby inserted in Chapter 8A of the principal .4cl after section 93: "Part 5: Duties and responsibilities of parent municipalities Duties of parent municipalities with respect to municipal entities
93A
The parent municipality of a municipal entity-
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AI-assisted research summary: The parent municipality of a municipal entity must use its rights and powers to ensure legal compliance, responsible management, and clear communication with the entity.

93A. The parent municipality of a municipal entity- fa) must exercise any shareholder, statutory. contractual or other right5 t o ensure and powers it may have in respect of rhe municipal entit!. that- (i) both the municipality and the municipal entity comply with this Act, the Municipal Finance Management other applicable legislation: and the municipal entity is managed responsibly and trunsparentl!. and meets its statutory, contractual and other obligations: Act and an!' (ii) (6) must allow the board of directors and chief executive officer o f the municipal entity to fulfil their responsibilities; and (c) must establish and maintain clear channels of communication between the municipality and the municipal entity. Parent municipalities having sole control
93B
A parent municipality which has sole control of a municipal cntit!.
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AI-assisted research summary: A parent municipality that has sole control of a municipal entity must set annual performance objectives and indicators by agreement, include them in the business plan, and monitor and review performance annually; it may also liquidate and disestablish the entity if stated conditions are met.

93B. A parent municipality which has sole control of a municipal cntit!. in the case of a municipal entity which or effective control company- ( a ) must ensure that annual performance objectives and indicator5 f o r thc' municipal entity are established by agreement with the municipal entity and included in the municipal entity's multi-year hu\inez\ plan in accordance with section 87(5)(d) of the Municipal Finance Management Act; is :I pri\.ate (b) must monitor and annually review. as part of the municipal entit!'s out in section 87 of the Municipal the performance of the municipal entit! annual budget process as set Finance Management Act, against the agreed performance objecti\.es and indicators: and (c) may liquidate and disestablish the municipal entity - (i) following an annual performance review. if the performance ot' (ii) (iii) the municipal entity is unsatisfactory; if the municipality does not impose a financial recovery plan i n terms of the Municipal Finance Management Act and the municipal entity continues to experience serious or persistent financial problems; or if the municipality has terminated the service deli\.ery agrer- ment or other agreement it had with the municipal entity. Parent municipalities having shared control
93C
Parent municipalities
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AI-assisted research summary: Parent municipalities with shared control of a municipal entity must make a mutual agreement covering how they will manage their relationship, rights, powers, functions, performance targets, budgets, dispute resolution, withdrawal, termination, disestablishment, and related matters.

93C. Parent municipalities that have shared control of a municipal entity- ( a ) must enter into a mutual agreement determining and regulating- (i) their mutual relationships in relation to the municipal entity; LOCAL GOVERNMENT: hlUNICIPAL SYSTEMS AMENDMEN'T ACT. 100.~ the exercise of any shareholder. contractual o r other righ[\ : 1 n d powers they may have in respect of the municipal entit!,: the exercise of their powers and f'unctions i n t e r m o f t h i \ Act ;und the Municipal Finance Management Act \\ ith respecr t o the municipal entity; measures to ensure that annwl performance objecti\ es and indicators for the municipal entity are established h!, agreemcnt with the municipal entity and included i n the municipal cntit! ' \ multi-year business plan in accordance ~ v i t h section 87(5)1r/, o f the Municipal Finance Management Act: re\,ieu,. a s p u t of the municip;ll the monitoring and annual as set out i n section Xi 01' 1111' entity's annual budget process Municipal Finance Managemen1 Act, of the performance o f the the established performance ol?jt.cti\ e< municipal entity against and indicators; the payment of any monies by the municipalities to the municip;ll entity or by the municipal entity to the municipnlities: procedures for the resolution of dihputes betneen thosc n1uniL.i- palities: procedures governing conditions for and consequellces o f \\ i t h - drawal from the municipal entit!, by a municipalit\ : procedures for terminating the appointment and utilisation o f the a mechanism for the perfornwnce 01. J municipal entity as municipal function: the disestablishment of the municipal entit!,. the di\ i\ion. tran\ter or liquidation of responsibility for its liabilities: and the detrrminntion its assets and t11r o f ' ( x i ) any other matter that may be prescribed: and ( h i may liquidate and disestablish the municipal entit! - ( i ) ( i i ) ( i i i ) following an annual performance review. if the performance o f the municipal entity is unsatisfactory: if the municipality does not impose ;I financial reco\er! plan i n terms of the Municipal Finance t11c municipal entity serious o r pcr\i\tent financial problems: or if the municipality has terminated the s e n ice deli\ er! :lgreenlLwt or other agreement it had with the municipal entit!. hlanagement Act and continues to elperiencr Municipal representatives 93D. ( 1 ) The council of a parent municipality must dehignate a councillor or an official of the parent municipality. or both. ;I\ thc represent:tti\e o r representatives of the parent municipality-- ( u j to represent the parent municipality as a non-participatin~ o h s e n w a t meetings of the board of directors of the municipal entit! concerned: and ( h ) to attend shareholder meetings and to exercise the parent municipali- a shareholder. together uith such officials that the council ma! designate ;IS ty's rights and responsibilities as other councillors or representatives. (2) ( a ) The official lines of communications between ;I municipal entit! Ihe chairperson of the board o f and the parent municipality exist between directors of the municipal entity and the mayor or executi\y mayor. a s the case may be, of the parent municipality. ( b ) The mayor or executive mayor. as the case may be. of a parent municipality may at any time call or converle any meeting of shareholder\ or other general meeting comprising the board of directors o f the municipal 1 . I . Act No. 44, 2003 GOVERNMENT: LOCAL MUNICIPAL SYSTEMS AMENDMENT ACT. 7003 entity concerned and the representatives of the parent municipalit>. i n orc1c1- for the board of directors to give account fhr actions taken b! it. (c) The council of a parent municipality may detertninr the reporting responsibilities of a municipal representative referred ( I ) ( a ) or fb). to i n w h ~ c c t l o i l (3) ( a ) A municipal representative referred to in subsection ( I ) t h i . m u \ ( at shareholder meeting>. of personal interest or gain, and mttq keep the represent the parent municipality faithfully without consideration council informed of- (i) how voting rights were exercised: and (ii) all relevant actions taken on behalf of the municipalit!. by the representative. (b) A municipal representative referred to in subsection ( 1 or ( / I ) - (i) must act in accordance with the instructions of the council: and (ii) may be reimbursed for expenses in connection lvith hi4 o r her duties as a municipal representative, but may not receix an\ additional compensation or salary for such duties. Part 6: Governance of municipal entities Appointment of directors 93E. (1) The board of directors of a municipal entity- ( a ) must have the requisite range of expertise to effectivel!, manage and guide the activities of the municipal entity; ( b ) must consist of at least a third non-exocutive directors: and (c) must have a non-executive chairperson. ( 2 ) The parent municipality of a municipal entit! must. before nominating or appointing a director, establish a process through Lvhich- ( a ) applications for nomination or appointment are widely solicited: ( 6 ) a list of all applicants and applicants is compiled; and any prescribed particulars concerning (c) the municipal council makes the appointment or nomination froln such list. Disqualifications 93F. ( 1 ) A person is not eligible to be a director of a municipal entit!, if he or she - (a) holds office as a councillor of any municipality; (b) is a member of the National Assembly or a provincial legislature: (c) is a permanent delegate to the National Council of Provinces: id) is an official of the parent municipalit] of that municipal entit) : ( e ) was convicted of any offence and sentenced to imprisonment \vithout the option of a fine, and a period of five years since completion of the sentence has not lapsed; (f, has been declared by a court to be of unsound mind; or ( g ) is an unrehabilitated insolvent. (2) If a director of a municipal entity during that person's term of office becomes disqualified on a ground mentioned in subsection ( 1 ). such person ceases to be a director from the date of becoming disqualified. Removal or recall of directors

Part

Part 6: Governance of municipal entities

93G
The parent municipality of a municipal entity may remove or recall
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AI-assisted research summary: The parent municipality may remove or recall a director in listed cases, directors must disclose interests and step out of conflicted matters, and a municipal entity may not set up or hold interests in companies or trusts except for limited exceptions.

93G. The parent municipality of a municipal entity may remove or recall a director appointed or nominated by that municipality- ( a ) if the performance of the director is unsatisfactory; (b) if the director, either through illness or for any other reason. is unable to perform the functions of office effectively; or (c) if the director, whilst holding office- (i) is convicted of fraud or theft or any ott'ence fraudulent conduct; or (ii) has failed to comply with or breached an! regulating the conduct of directors. including an!. code of conduct. i n \ o I \ ins Icgi\latiot1 applicahlc Duties of directors 93H. ( 1) The board of directors of a municipal entit!, must- f r r ) provide effective, transparent. accountable governance and conduct municipal entity; effective oversight (D) ensure that it and the municipal entity comply legislation and agreements; and cohel-ent c ~ ~ r p o r ; ~ c of the affair\ o i the ~ I O I with all applicahlr. ~ fc) communicate openly and promptly with the parent municipalit! o f the ~ and entity: municipal ~ I5 l d ) deal with the parent municipality of the municipal entit!' i n y o d l.aitl1. ( 2 ) A director must- J ~ N disclose to the board of directors. and to the represrntati\c ot the parent municipality, any direct or indirect personal or bu\ines\ inrerc\t I that the director or his or her spouse or partner may h a \ e i n an! I m t t t ~ l - before the board, and the proceeding\ o t tllc board when that matter is considered. unless the board decides that tlw ~ director's direct or indirect interest in the matter is tri\,ial o r irrelr.\ a n t : ~ and must withdraw from ~ ' 2 0 (1)) at all times act in accordance with the Code of Conduct t o r dirr.ctol.\ ' 25 referred to in section 93L. RIeetings of board of directors I ~ 931. ( 1 ) Meetings of the board of director5 of a municipal entit! m u \ t hc open to the municipal representatives referred to i n section 03D( I ) ( t r i . ( 2 ) Municipal representatives referred non-participating observer status in a meeting of the board o f dtl-ector\ o municipal entity. t o in section 93D( I ) ( ( / i h a \ c ;I f ;2ppointment of chief executive officer 935. ( 1 ) The board of directors of a tnunic~pal entity must appoint ;I chief' executive officer of the municipal entity. ( 2 ) The chief executive officer of a municipal entity is accountable t o the board of directors for the management of the municipal entit!. Part 7: General Establishment of and acquisition of disallowed interests in corporate bodies 93K. ( 1 ) A municipal entity may not- ( a ) establish or participate in the establishment of a compan! o r an\ othcr corporate body, including a trust: or ( 1 7 ) acquire or hold an interest in a company or any other corporate hod!,. including a trust. ( 2 ) Subsection ( 1 ) does not apply to- ( a ) the acquisition by a municipal entity of securities i n a company listed on the Johannesburg Securities Exchange for investment purposes. subject to any applicable provisions of Management Act; or the Municipal Finance 40 - No. 25960 Act No. 44,2003 < i O V E R N ~ l E S T G . ~ Z F _ T T L . $ 1 1 I \ \ I . \Kj 2 O I l i LOCAL GOVERNMENT: MUNICIPAL SYSTEMS AMENDMENT XCT. 200.; ( b ) a fund for the benefit of employees of ;L municipal entit! 111 term5 of ;I law regulating pensions or medical aid .schemes.". Code of Conduct for directors and members of staff of nwnicipal entit? 93L. (1) ( a ) The Code of Conduct for councillors contained i n Schedule 1 applies. with the necessary changes, to directors of a municipal entit!,. ( 6 ) In the application of item 14 of Schedule 1 to directors o f a municipal entity, that item must be regarded as providing as follows: 'Breaches of Code 14. (1) The board of directors of a municipal entity ma!' - ( a ) (6) a finding on any alleged breach investigate and make provision of this Code by a director; or establish a special committee - (i) to investigate and make a finding on any alleged breach ot of ;I a provision of this Code by a director: or appropriate recommendations to (ii) to make the board o f directors. (2) If the board of directors or special committee finds that ;I director has breached a provision of this Code. the board o f directors mal- ( a ) ( b ) ( c ) (dl issue a formal warning to the director: reprimand the director; fine the director; or recommend to the parent municipality removed or recalled in terms of wction 93G. that the dircctol- hc (3) The board of directors of a municipal entity must inform <I pxcnt municipality of that entity of any action taken against ;I director ill terms of subsection (2).'. ( 2 ) The Code of Conduct for municipal staff members contaim>ci 111 Schedule 2 applies. with the necessary changes. t o memhe1-~ of staft o f ;I municipal entity. (3) For purposes of this section, any refclrence i n Schedule I or 2 to ;I 'councillor', 'MEC for local government council', 'municipality' and 'rules and orders' must. unles\ incon~iatent with the be construed :I\ :I reference to a director of a municipal entity. parent municipalit!. h o m i o f directors, municipal entity and procedural rules, respectively.". i n the pro\ince'. 'municipl clearly inappropriate. context or otherwise Repeal of section 94 of Act 32 of 2000
93E
Appointment of directors
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AI-assisted research summary: Section 93E is titled “Appointment of directors.”

93E. Appointment of directors
93F
Disqualifications
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AI-assisted research summary: Section 93F is titled “Disqualifications” and the text provided also references sections 93G and 93H of directors.

93F. Disqualifications 93G. 93H. of directors
931
Meetings of board of directors
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AI-assisted research summary: Section 931 is titled “Meetings of board of directors.”

931. Meetings of board of directors
935
Appointment of chief executive officer
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AI-assisted research summary: Section heading: Appointment of chief executive officer or recall of directors.

935. Appointment of chief executive officer or recall of directors Duties Part 7: General i

Part

Schedule 2 applies. with the necessary changes. t o memhe1-~ of staft o f ;I

27
Section 94 of the principal Act and the Part-heading preceding
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AI-assisted research summary: Section 94 of the principal Act, and the part-heading before it, are repealed.

27. Section 94 of the principal Act and the Part-heading preceding wction Y4 art' hereby repealed. Amendment of section 120 of Act 32 of 2000
28
Section 120 of the principal Act
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AI-assisted research summary: This provision amends section 120 of the principal Act and inserts item 14A into Schedule 2 to Act 32 of 2000.

28. Section 120 of the principal Act is hereby amended subsection (1) for paragraph ( a ) of the following paragraph: by the substitution i n " ( a ) the matters listed in sections 22, 37, 49, 72, [94] - 86A and 104:". Insertion of item 14A in Schedule 2 to Act 32 of 2000
29
The following item is hereby inserted
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AI-assisted research summary: A staff member found guilty of breaching the Code may be dismissed or face other disciplinary steps.

29. The following item is hereby inserted in Schedule 2 t o the principal Act after item 14: "Disciplinary steps 14A. ( 1 ) A breach of this Code is a Zround for diw1l\\al o r otilcr disciplinary steps against a staff member who has been found guilt! o f ' h u ~ . h a breach. ( 2 ) Such other disciplinary steps may include- ( a ) suspension without pay for no longer than three months: ( b ) demotion: ( c ) transfer to another post: (d) reduction in salary, allowances or other benetits: or (e) an appropriate fine.". Amendment of Table of Contents of Act 32 of 2000
30
The Table of Contents of the principal Act is herttby amended-
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AI-assisted research summary: This section amends the principal Act’s Table of Contents by replacing references to sections 9 and 10 with a new section heading/reference.

30. The Table of Contents of the principal Act is herttby amended- ((/) by the substitution for the references to sections 9 and 10 o t ' the t o l l o \ \ ing references: "9. Assignment of functions or powers to municipalities yenerall! by .Act\ o f 15 Parliament or provincial Acts
10
Assignment of functions or powers to specitic nlunicipalirie\ b! act\ o f
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AI-assisted research summary: This provision amends several section and part references, including adding references to funding and capacity building, public documents, an official website, annual performance reports, and new Part 4A on regulations and guidelines regarding municipal services.

10. Assignment of functions or powers to specitic nlunicipalirie\ b! act\ o f executive or by agreement"; ( h ) by the insertion after the reference to section I O of the follou ing reterencc: 3 ) "10A. Funding and capacity building": (('1 by the insertion after the reference to section 21 of the follo\\~in: retercnw "21A. Documents to be made public 2 1 B. Oficial website" ; ( d l by the substitution for the reference to section 46 of the t ' o l l o ~ ing reterence: 25 "46. Annual performance reports": ( P ) by the substitution for the reference to Part 4 of Chapter ,Y o t ' the folio\\ ing reference: ( f l by the insertion after the reference to section X6 of the follo\\.ing ret'ercncc\: 30 "Part 4: Internal municipal service districts" "Part 4A: Regulations arld guideliues regarding municipal services
86A
Regulations and guidelines regarding municipal W I ice\
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AI-assisted research summary: This section is titled “Regulations and guidelines regarding municipal W I ice” and appears under Chapter 8A, Municipal Entities, Part 1: General provisions.

86A. Regulations and guidelines regarding municipal W I ice\ CHAPTER 8A MUNICIPAL ENTITIES Part 1: General provisions

Part

Part 1: General provisions

86B
Kinds of municipal entities
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AI-assisted research summary: Section 86B is titled “Kinds of municipal entities” and refers to Part 2: Private companies.

86B. Kinds of municipal entities Part 2: Private conyanies .> 3 ? -

Part

Part 2: Private conyanies

86C
Establishment and acquisition of pri\.ate companie\
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AI-assisted research summary: Section 86C concerns the establishment and acquisition of private companies.

86C. Establishment and acquisition of pri\.ate companie\
86D
Legal Status of private companies rstablished b! municipalitieh o r 40
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AI-assisted research summary: Section 86D is titled about the legal status of private companies established by municipalities or in which municipalities hold interests.

86D. Legal Status of private companies rstablished b! municipalitieh o r 40 in which municipalities hold interests
86E
Conditions
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AI-assisted research summary: This section heading indicates conditions precedent for establishing or acquiring an interest in private companies, and for co-owning private companies.

86E. Conditions precedent for establishing or accluiring intereht\ i n private companies ,86F. Conditions precedent for co-onming of pri\,ate companies
86G
Disposal of companies and equity interests i n companie\
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AI-assisted research summary: 86G. Disposal of companies and equity interests i n companie\ Part 3: Service utilities

86G. Disposal of companies and equity interests i n companie\ Part 3: Service utilities

Part

Part 3: Service utilities

861
Legal status of service utilities
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AI-assisted research summary: 861. Legal status of service utilities

861. Legal status of service utilities
865
Conditions precedent for establishing ser\.ice utilities
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AI-assisted research summary: This provision is titled “Conditions precedent for establishing service utilities.”

865. Conditions precedent for establishing ser\.ice utilities
86K
Disestablishment of service utilities
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AI-assisted research summary: This section appears to replace certain statutory references in the part on multi-jurisdictional service utilities, but the text is truncated.

86K. Disestablishment of service utilities Part 4: Multi-jurisdictional service utilities'' : (g) by the substitution for the references to section 87. 88. 89 and clti 01' thc following references: "87. Establishment utilities tricts] service of multi-jurisdictional [municipal service dis-

Part

Part 4: Multi-jurisdictional service utilities'' :

88
Minister requesting
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AI-assisted research summary: This section appears to concern a Minister requesting the establishment of multi-jurisdictional municipal service districts and service utilities.

88. Minister requesting [the] establishment of multi-jllrisdictional [municipal service districts] servicc utilities
89
Contents of agreements establishing rnulti-jurisdiction31 [municipal
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AI-assisted research summary: This section appears to concern the contents of agreements establishing municipal service districts and service utilities.

89. Contents of agreements establishing rnulti-jurisdiction31 [municipal service districts] service utilities 45 5 0 55 1.4 No. 25960 Act No. 44.2003 CiO\.’ERS.\I~~T(;r~LhTTI, ; ( I I \ \ i \ ! < ~ T .’I,”- LOCAL GOVERNMENT. MUNICIPAL SYSTEMS AMENDMENT ACT. 2 0 0 3
90
Legal status
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AI-assisted research summary: This section appears to concern the legal status of service utilities and related reference changes to other sections.

90. Legal status utilities”; of [governing bodies] multi-jurisdictio~l~~l s c n I C C (11) by the deletion of the reference to section 91: (i) by the substitution references: for the references to sections 92 and 93 o f the t o l l o \ \ ing “92. Control of [governing bodies of] multi-jurisdictional [municipal service districts] service utilitie!,
93
Termination of multi-jurisdiction~~l [municipal service districts]
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AI-assisted research summary: This text appears to be an amendment reference about section 93 and related municipal service district material.

93. Termination of multi-jurisdiction~~l [municipal service districts] service utilities”; ( j ) by the insertion after the reference to section 93 of the following reterences: “Part 5: Duties and responsibilities of parent tmnicipulities
93A
Duties of parent municipality with respect to municipal entilie\
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AI-assisted research summary: This section is about the duties of a parent municipality regarding municipal entities.

93A. Duties of parent municipality with respect to municipal entilie\
93B
Parent municipalities having sole control
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AI-assisted research summary: Section 93B is titled “Parent municipalities having sole control.”

93B. Parent municipalities having sole control
93C
Parent municipalities having shared control
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AI-assisted research summary: Heading for a section about parent municipalities having shared control representatives.

93C. Parent municipalities having shared control representatives 93D. Part 6: Governance of municipal entities Municipal Removal

Part

Part 7: General

93K
Establishment of and acquisition of interests in corporate bodies 1
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AI-assisted research summary: This section appears to disallow establishment of, and acquiring interests in, corporate bodies.

93K. Establishment of and acquisition of interests in corporate bodies 1 disallowed \ I O ~ 1 i i I5 1 ! I ~ ‘0 ~ ’ 5 I -. ~
93L
Code of Conduct for directors and members of staff of municipal i
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AI-assisted research summary: Municipalities must publish a public list of certain pre-existing corporate bodies within three months, and some municipalities may convert certain companies into service utilities.

93L. Code of Conduct for directors and members of staff of municipal i I k ) by the insertion after the reference to item 14 of Schedule 2 of the following e n t l t y ” ; and reference: “ 14A. Disciplinary steps”. Transitional provisions 30 31. ( I ) If a municipality has established any corporate body. includiy a trust. undrr- or in terms of applicable legislation before this Act took effect. such a corporate hod!, continues to exist, despite the provisions of Chapter 8A of the principal Act. until such corporate body is disestablished or liquidated, as the case may be. 7 - .13 (2) A corporate body, including a trust, referred to in subsection ( 1 ) must be regarded the principal Act and ths Local to the extent that the as a municipal entity Government: Municipal Finance Management Act. 2003. provisions of those Acts can be applied. for the purposes of this Act. (3) A municipality that has established a corporate body referred to in subsection ( I ). 40 n u s t within three months after this Act takes effect. publish a list of all such corporate bodies in the relevant provincial gazette and make that list public in terms o f section 2 I A of the principal Act. (4) If. before this Act took effect - ( a ) a municipality or municipal entity has established a company referred to i n 45 section 21 of the Companies Act, 1973 (Act No. 61 of 1973). the municipalit!. or the parent municipality of the municipal entity may. despite that Act. pass a by-law converting the company into a service utility under the sole control of the municipality or parent municipality; or ( b ) two or more municipalities have established a company referred to in section 50 21 of the Companies Act, 1973 (Act No. 61 of 1973). those municipalities may, despite that Act, enter into an agreement converting the company into a multi-jurisdictional service utility under the shared control of those munici- palities. (5) A by-law referred subsection (4)(b) - to in subsection (4)(a) and an agreement referred to i n 55 (a) must substantially comply with sections 86H (2) and 89. respectively. of the principal Act; and Act No. 44, 2003 LOCAL GOVERNMENT MUNICIPAL SYSTEMS AMENDMEN r ACT. ~ o . 3 Ih) may provide for such transitional and other pro1 ision\ as ma! be nece\sar! 1 0 effectively convert the company into a service utilit! or ~ ~ ~ ~ ~ l service utility, as the case may be. t i - ~ ~ l ~ - i ~ ~ ~ i ~ t i ~ ~ ~ ~ , ~ l Short title and commencement
32
This Act is called the Local Government: Municipal Systems Atnenciment Act.
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AI-assisted research summary: This section names the Act and says it starts on a date set by the President.

32. This Act is called the Local Government: Municipal Systems Atnenciment Act. b!, proclamation i n I l w 1003. and takes effect on a date determined by the President Gnzettr. 5

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Local Government Municipal Systems Amendment Act

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Provisions of Local Government Municipal Systems Amendment Act

Chapter before entering into such an agreement

Part 2: Private companies

Part 4: Multi-jurisdictiorlal service utilities"

Part 6: Governance of municipal entities

Schedule 2 applies. with the necessary changes. t o memhe1-~ of staft o f ;I

Part 1: General provisions

Part 2: Private conyanies

Part 3: Service utilities

Part 4: Multi-jurisdictional service utilities'' :

Part 7: General

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