South Africa Act or statute

Parliament of the Republic of South Africa

Banks Amendment Act, 2003

administrative penaltiesagencyamalgamationamendmentamendmentsapplication processapplication processingapplication requirementsapplication reviewapplicationsapplications and regulatory reporting deadlinesasset transferaudit committeeauditor appointmentauditor dutiesauditor reportsbank authorizationbank authorizationsbank branch namingbank compliancebank consentbank curatorshipbank definitionsbank governancebank investigationsbank liquidationbank namingbank notice to registrarbank registrationbank registration approvalbank supervisionBanking and financebanking regulationboard appointmentsboard committeesboard compositionbranch operationscancellation or suspensioncapital requirementscapital/risk-weight calculationscivil recoverycommittee functionscommittee governancecompany administrationcompany constitutionCompany lawcompliance functioncompulsory examinationconfidentialitycontrol of a bankcorporate constitutional amendmentcorporate controlCompany lawcorporate resolutioncourt administrationcredit exposurecreditor meetingsdelegationdirector dutiesdirector suitabilitydirectors appointmentdividendsdocument signingencumbrancefeesfees refundfinancial institution registrationfinancial reportingfinesforeign bank authorizationforeign institution authorizationforeign institution representative officegovernanceguaranteesinformation disclosureinformation furnishinginformation requestinvestigationsinvestment limitslegislative draftinglendinglending limitsBusiness registrationliquidity assetsmember remunerationministerial approvalnotice and representationsoffencesofficial immunityprudential limitspublic interestregistrar information requestsregistrar objection to appointmentsregistrar powersregistrationregistration cancellationregistry endorsementsregulatory applicationregulatory appointmentsregulatory approvalregulatory complianceregulatory conditionsregulatory consentregulatory decision-makingregulatory enforcementregulatory exemptionregulatory filingsregulatory information requestsregulatory interventionregulatory offencesregulatory powersregulatory reportingrelated-party investmentsrepayment directionrepayment enforcementreportingreporting and filingsreporting formsrepresentationsreview proceduresrisk managementsequestrationshare acquisition permissionsshare allotmentshare registrationshareholder recordsshareholdingshareholding and voting rightsshareholding limitsstatutory amendmentssubsidiariessummonstermination of bank officer appointmentsunauthorized banking activitiesvoting rightswinding upwinding-upwinding-up procedurewitness fees

Jurisdiction: South Africa
Structure: 74 provisions
Citation: Act 19 of 2003
Dates: updated 5 Aug 2003

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Dates: updated 5 Aug 2003

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Purpose and legislative effect

“This section says that bold text in square brackets marks omissions, and underlined text marks insertions.”

This section says that bold text in square brackets marks omissions, and underlined text marks insertions. This provision amends several definitions in the Banks Act, including close relative, corporate governance, director, executive officer, liquid assets, and the business of a bank. The Registrar may ask any person to complete a questionnaire, and the person must provide the information needed. Refusing or failing to comply is an offence. A delegation under subsection (1)(a) does not stop the Registrar from exercising the relevant power personally. The Registrar has powers and duties tied to bank supervision and may issue circulars to banks with guidance or other information.

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Section 1

Section 22 of the principal Act is hereby amended-

Banks and certain foreign institutions may not use a different name from the one under which they are registered or authorised, except with the Registrar’s approval; unauthorised pretending to be a registered bank is an offence.

Section 17

Section 50 of the principal Act is hereby amended by the substitution for the

Section 50 is amended to cap certain investments at 40% of the relevant consolidated amount.

Section 33

Section 72 of the principal Act is hereby amended by the substitution for

A bank must not pledge or otherwise encumber its liquid assets held under subsection (1), unless the Registrar exempts it.

Section 50

This Act is called the Banks Amendment Act, 2003.

This section gives the Act its short title: the Banks Amendment Act, 2003.

Section 67

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Showing 74 of 74 provisions

Substitution 66Amendment 5Short title 2Commencement

§ 1Words in bold type in square brackets indicate omissionsSubstitution

This section says that bold text in square brackets marks omissions, and underlined text marks insertions.

1 Words in bold type in square brackets indicate omissions from existing enactments. Words underlined with a solid existing enactments. line indicate insertions in (English text signed by the President.) [Assented to 30 July 2003.) ~~ ACT of a name that includes to legislation and institutions; to substitute To amend the Banks Act, 1990, so as to rectify gender insensitive provisions; to amend certain definitions and insert certain new definitions; to allow the Registrar to give information to banks by means of a circular; to clarify certain provisions in line with their practical application; to provide for the use the word “bank”; to update references or delete obsolete provisions and references; to provide for the establishment of a compliance function and to require banks to establish and maintain an adequate process of corporate governance; to make further provision regarding the appointment of auditors by a bank; to make further provision regarding the fiduciary duty and a duty of care and skill resting on directors and to extend such duties to chief executive officers and executive officers of banks and bank controlling companies; to grant certain powers relating to the institution for breach of the fiduciary duties to the Registrar; to provide for the formation certain committees and to determine their functions; to provide for new offences and the increase of penalties for existing offences; and to provide for matters connected therewith. of action of E IT ENACTED by the Parliament B follows:- of the Republic of South Africa, as Amendment of section 1 of Act 94 of 1990, as amended by Government Notice R.1765 of 30 July 1991, section 1 of Act 42 of 1992, sections 1 and 25 of Act 9 of 1993, section 1 of Act 26 of 1994, section 1 of Act 55 of 1996 and section 1 of Act 36 of 2000 5 definition: following 10 (a) by the substitution in subsection (1) for the definition of “close relative” of the

Section 1Verify source

§ 1Section 1 of the Banks Act, 1990 (hereinafter referred to as the principal Act), isSubstitution

This provision amends several definitions in the Banks Act, including close relative, corporate governance, director, executive officer, liquid assets, and the business of a bank.

1. Section 1 of the Banks Act, 1990 (hereinafter referred to as the principal Act), is hereby amended- ’’ ‘close relative’, in relation to any person, means- (a) [his] 4 spouse; jb) [his] 4 child, stepchild, parent or stepparent; (c) the spouse of any of the persons mentioned in paragraph (b);“; (b) by the insertion in subsection (1) after the definition of “co-operative” of the 15 following definition: “ ‘corporate governance’, in relation to the management of a bank or a controlling company, includes all structures, processes, policies, systems and procedures whereby the bank or controlling company is governed;”; 4 No. 25294 GOVERNMENT GAZETTE. 5 AUGUST 2003 ~~ Act No. 19,2003 BANKS AMENDMENT ACT, 2003 (c) by the insertion in subsection (1) after the definition of “deposit” of the following definition: “ ‘director’ includes an executive director and non-executive director, unless expressly stated otherwise;”; (d) by the substitution in subsection (1) for the definition of “employee in charge of a risk management function” of the following definition: ‘’ ‘employee in charge of a risk management function’, in relation to a bank, means that employee of the bank who is ultimately responsible for the management of one or more of the following types of risk to which the bank is exposed, namely- (a) solvency risk; (6) liquidity risk; (c) credit risk; (dl currency risk; (e) market risk (position risk); (fi interest rate risk; (g) counterparty risk; (h) technological risk; (i) ( j ) compliance risk; or - (k) any other risk regarded as material by that bank;”; operational risk; [or] (e) by thesubstitution in subsection (1) for the definition of “executive officer” of the following definition: “ 6 executive officer’, in relation to any institution- (a) that is not a bank, includes any manager, the compliance officer, the secretary of the company and any director who is also an employee of such an institution; (h) that is a bank, includes any employee [of the bank] who is a 5 10 15 20 25 director or who is in charge of a risk management function of the bank, [and] the compliance officer, secretary of the company or any manager of the bank who is responsible, or reports, directly to the chief executive officer of the bank;”; 30 (f) by the substitution in subsection (1) for paragraph (f) of the definition of “liquid assets” of the following paragraph: “Cf) securities issued by virtue of section 66 of the Public Finance Management Act, 1999 (Act No. 1 of 1999), to fund the National Government;”; 35 (g) by the insertion in subsection (1) after the definition of “Regulations relating to Banks’ Financial Instrument Trading” of the following definition: ‘‘ u d ‘Conditions for conducting business of bank by foreign institution by means of branch in Republic’ published by Government Notice No. R. 1414 of 28 December 2000;”; (hi by the substitution in subsection (1) for paragraph (c) of the definition of “the business of a bank” of the following paragraph: 40 45 “(c) the utilization of money, or of the interest or other income earned on money, accepted by way of deposit as contemplated in paragraph (a 1- (9 of a trust or a for the granting by any person, acting as lender in [his] & person’s own name or through the medium nominee, of loans to other persons; for investment by any person, acting as investor in [his] & person’s own name or through the medium nominee; or for the financing, wholly or to any material extent, by any person of any other business activity conducted by [him] & person in his m o w n name or through the medium of a trust or a nominee;”; of a trust or a (ii) (iii) 50 55

Section 1Verify source

§ 6No. 25294Substitution

The Registrar may ask any person to complete a questionnaire, and the person must provide the information needed. Refusing or failing to comply is an offence.

6 No. 25294 GAZETTE, GOVERNMENT 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 (i) by the substitution in subsection (1) for the words preceding subparagraph (i) of the proviso to item (aa) of the definition of “the business of a bank” of the following words: ‘.the acceptance of a deposit by a person who does not [hold himself out as accepting] purport to accept deposits on a regular basis and who has not advertised for or solicited such deposit: Provided that-”; 5 ( j ) by the substitution in subsection (1) for subparagraph (ii) of the proviso to item (aa) of the definition of “the business of a bank” of the following subparagraph: “(ii) a person and any person controlled directly or indirectly by [him] the first-mentioned person (whether such control is through shareholding or otherwise) or managed by [him] such first- mentioned person, and a subsidiary of such last-mentioned person, who accepts deposits as contemplated in this paragraph shall for the purposes of subparagraph (i) of this proviso be deemed to be one person;”; ( k ) by the substitution in subsection (1A) for subparagraphs (i) and (ii) of paragraph (a) of the following subparagraphs, respectively: “(i) [His] The general probity of that person; (ii) [his] thecompetence and soundness of judgment of that person for the fulfilment of the responsibilities of the office in question; and”; (1A) for subparagraphs (iv) and (v) of ( I ) by the substitution in subsection paragraph ( b ) of the following subparagraphs, respectively: “(iv) had taken part in any business practices that, in the opinion of the Registrar, were deceitful, prejudicial or otherwise improper (whether unlawful or not) or which otherwise brought discredit on [his] that person’s methods of conducting business; or had taken part in or been associated with any such other business practices as would, or had otherwise conducted himself or herself in such a way as to, cast doubt on his or her competence and soundness of judgement.”; (v) ( m ) by the substitution in subsection (1A) for paragraph (c) of the following paragraph: “(c) The Registrar shall be entitled, at any time, to request any person to complete a questionnaire that is designed to enable, and such person shall provide the Registrar with such information as may be necessary to enable, the Registrar subsection, regarding the qualities of that person.”; and to form an opinion, as contemplated in this (n) by the substitution paragraph: in subsection (1A) for paragraph (d) of the following “ ( d ) [If the Registrar has under paragraph (e) addressed a request to a person who is to be appointed as a director or an executive officer of a bank or a controlling company and such person has refused or failed to comply with such request, the provisions of section 60(5)(b) shall mutatis mutandis apply to the appointment of that person as such a director or such an executive officer] Any person who refuses or fails to comply with a request addressed to that person by the Registrar under paragraph ( c ) shall be guilty of an offence.”. 10 15 20 25 30 35 40 45 Amendment of section 5 of Act 94 of 1990

Section 6Verify source

§ 2Section 5 of the principal Act is hereby amended by the substitution for subsectionSubstitution

A delegation under subsection (1)(a) does not stop the Registrar from exercising the relevant power personally.

2. Section 5 of the principal Act is hereby amended by the substitution for subsection 50 (2) of the following subsection: “ ( 2 ) Any delegation under subsection (l)(a) shall not prevent the exercise of the relevant power by the Registrar [himself] personally.”. Amendment of section 6 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 3 of Act 26 of 1994 55

Section 2Verify source

§ 3Section 6 of the principal Act is hereby amended-Substitution

The Registrar has powers and duties tied to bank supervision and may issue circulars to banks with guidance or other information.

3. Section 6 of the principal Act is hereby amended- i n ) bv the substitution for subsection (1 1 of the followin2 subsection: c 8 No. 25294 GOVERNMENT GAZETTE. 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT. 2003 “(1) In addition to the powers and duties conferred or imposed upon shall, for the purposes of the him or her by this Act, the Registrar performance of his or her functions under this Act, have powers and duties in all respects corresponding to the powers and duties conferred or imposed by the Inspection of Financial Institutions Act, [1984 (Act No. 38 of 1984)] 1998 (Act No. 80 of 1998), upon a registrar contemplated in the last-mentioned Act.”; ( b ) by the substitution for subsection (2) of the following subsection: “ ( 2 ) Any reference in this Act to an inspection or investigation made under this section shall be construed as a reference to an inspection made in accordance with the provisions of the Inspection of Financial Institutions Act, [1984] 1998.”; and (c) by the substitution for subsection (4) of the following subsection: “(4) The Registrar may from time to time by means of a circular furnish banks with guide-lines regarding the application and interpreta- tion of the provisions of this Act or provide banks with any other information.”. Amendment of section 7 of Act 94 of 1990, as amended by sections 3 and 25 of Act 9 of 1993 and section 3 of Act 36 of 2000

Section 3Verify source

§ 4Section 7 of the principal Act is hereby amended-Substitution

The Registrar may direct a bank, controlling company, or subsidiary to provide specified information, and the information must be supplied as required by the notice.

4. Section 7 of the principal Act is hereby amended- (a) by the substitution in subsection (1) for paragraph ( a ) of the following paragraph: “ ( a ) direct a bank or a controlling company or a subsidiary of a bank or controlling company to furnish the Registrar, at such time or times or at such intervals or in respect of such period or periods as may be specified in the notice, with such information as may be specified in the notice and as the Registrar may reasonably require for the performance of his functions under this Act; or”; and ( 6 ) by the insertion after subsection (1) of the following subsection: ‘*( 1A) The report required by the Registrar under paragraph ( 6 ) shall or at the expense of the bank, controlling company be drawn up subsidiary in question.”. Amendment of section 8 of Act 94 of 1990

Section 4Verify source

§ 5Section 8 of the principal Act is hereby amended by the substitution for subsectionSubstitution

The Registrar may decide an application and, if granted, extend the deadline for submitting the required return, statement, information, report, or other document. If refused, the Registrar must notify the applicant in writing.

5. Section 8 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection: “(2) The Registrar may, after consideration of an application referred to in subsection (1)- (a) grant the application and extend by such period as he orshe may determine the or report or other document period within which the return, statement, information had to be submitted or furnished; or 5 10 15 20 25 30 35 40 (b) refuse the application, and shall in writing notify Registrar’s decision.”. the person who lodged the application of [his] the Amendment of section 9 of Act 94 of 1990, as substituted by section 4 of Act 36 of 2000 45

Section 5Verify source

§ 6Section 9 of the principal Act is hereby amended-Substitution

This section amends rules for the board of review, including appointment, replacement, procedure, witness powers, fee refunds, and member remuneration.

6. Section 9 of the principal Act is hereby amended- ( a ) by the substitution in subsection (2) for paragraph ( a ) of the following paragraph: “ ( a ) one shall be appointed on account of his knowledge of law and shall be the [chairman] chairperson;”; (i7) by the substitution for subsection (2A) of the following subsection: “(2A) In any review under subsection (I), the board of review is, subject to the provisions of subsection (8), confined to establishing whether or not, in the exercised his taking of the relevant decision, the Registrar and in good faith.”; ( c ) by the substitution for subsection (4) of the following subsection: discretion properly 50 55 10 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 “ (4) If before or during any review under subsection (1) it transpires that any member of the board of review has any direct or indirect personal interest in the outcome of that review, such member shall recuse himself or herself and [he] such member shall be replaced by a person temporarily appointed, subject to the provisions of subsection ( 2 ) , by the Minister for the purposes of the review.”; 5 (d) by the substitution for subsection (4A) of the following subsection: “(4A) If before or during any review under subsection ( I ) , it transpires that any member of the board of review will, due to illness, absence from the Republic or for any other bonajide reason be unable to participate or continue to participate in that review, [he] such member shall be replaced provisions of by a person temporarily appointed, subject subsection (2), by the Minister for the purposes of the review.”; to the 10 ( e ) by the substitution for subsection ( 5 ) of the following subsection: “(5) A member of the board of review shall hold office for a period of three years and shall on the expiration of [his] such member’s term of office be eligible for reappointment.”: 15 cf) by the substitution for subsection (6) of the following subsection: “(6) Any casual vacancy that occurs on the board of review shall be filled by the appointment by the Minister, subject to the provisions of subsection ( 2 ) , of another member, and any person so appointed shall hold office for the unexpired portion of the period of office of [his] the predecessor of such member.”; - 20 (g) by the substitution in subsection (8) for paragraph ( a ) of the following paragraph: “ ( a ) summon any person who, in its opinion, may be able to give material information for the purposes of the review or who it believes has in his e possession or custody or under his control any document which has any bearing upon the decision under review, to appear before it at a time and place specified in the summons, to be interrogated or to produce that document, and retain for examination any document so produced;”; (h) by the substitution in subsection (8) for paragraph (c) of the following paragraph: “(c) call any person present at the review proceedings as a witness and interrogate [him] such person and require [him] such person to produce any document in his or her possession or custody or under shall be entitled to legal his or her control, and such a person representation at his or her own expense.”; (i) by the substitution for subsection (9) of the following subsection: “(9) Subject to the provisions of subsection (2A), the procedure at the relriew shall be determined by the [chairman] chairperson of the board of review.”; ( j ) by the substitution for subsection (13) of the following subsection: 25 30 35 40 45 (k) by the substitution for subsection (14) of the following subsection: ’‘(13) If the board of review sets aside any decision by the Registrar, the prescribed fees paid by the applicant in respect of the review in question shall be refunded to [him] the applicant, and if the board of review varies any such decision, it may in its discretion direct that the whole or any part of such fees be refunded to the applicant.”; and curred by him - in the performance of his * functions as such a services as such a member be reimbursement for transport, travelling and subsistence ’.(14) A member of the board of review shall in respect of his e member, as the Minister may from time to time determine.”. remuneration, including expenses in- paid such 50 55 Amendment of section 10 of Act 94 of 1990

Section 6Verify source

§ 7Section 10 of the principal Act is hereby amended by the substitution for subsectionSubstitution

The Registrar must submit an annual report to the Minister about activities under the Act.

7. Section 10 of the principal Act is hereby amended by the substitution for subsection (1) of the following subsection: 12 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 “(1) The Registrar shall annually submit to the Minister a report on his or her - activities in terms of this Act during the year under review.”. Amendment of section 12 of Act 94 of 1990, as amended by sections 5 and 25 of Act 9 of 1993

Section 7Verify source

§ 8Section 12 of theSubstitution

An application under subsection (1) must be made in the prescribed manner and form, and include a statement with the prescribed information.

8. Section 12 of the principal Act is hereby amended- (aj by the substitution for subsection (2) of the following subsection: S “(2) An application under subsection (1)- ( a ) shall be made in the [prescribed] manner and on the [mescribedl form prescribed in the Regulations relating to Banks; and (bj shall be accompanied by a statement containing the [prescribed] 10 information prescribed in the Regulations relating to Banks. ’’ ; and (b) by the substitution in subsection (3) for the words preceding paragraph ( a ) of the following words: him “The Registrar may require an applicant contemplated in subsection (1) to furnish with-”. 15 Amendment of section 13 of Act 94 of 1990, as amended by sections 6 and 25 of Act 9 of 1993

Section 8Verify source

§ 9Section 13 of the principal Act is hereby amended-Substitution

This section amends section 13 so the Registrar may refuse or grant certain applications, may attach conditions, and must give written notice of a grant or refusal.

9. Section 13 of the principal Act is hereby amended- ( a ) by the substitution for subsection (1) of the following subsection: “(1) Subject to the provisions of subsection (2), the Registrar may, 20 after considering all information, documents and reports furnished him &r refuse the relevant application or grant the application subject conditions as he or she may determine.”; to for the purposes of an application under section 12, grant or to such (b) by the substitution in subsection (2) for the words preceding paragraph ( a ) of 25 the following words: “The Registrar shall not grant an application made under section unless he or she is satisfied-”; and 12 (c) by the substitution for subsection (3) of the following subsection: “(3) When the Registrar grants or refuses an application made under 30 section 12, he orshe shall give written notice of that fact to the applicant concerned.”. Amendment of section 14 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 6 of Act 26 of 1994

Section 9Verify source

§ 10Section 14 of theSubstitution

This section amends section 14 so that, in one case, success must be achieved within 12 months after authorization is granted, and the Registrar must give written notice when an authorization is revoked.

10. Section 14 of the Act principal (a) by the substitution paragraph: is hereby amended- 35 in subsection (1) for paragraph (b) of the following ‘.(b) success has not been achieved within a period of [six] 12 months as from the date of the granting of the said authorization, with the formation, in accordance application for the said authorization, of the proposed bank.”; and with the proposals contained in the 40 (0) by the substitution for subsection (2) of the following subsection: “(2) When the Registrar revokes an authorization in terms of subsection (l), he orshe shall give written notice of that fact to the person to whom the was granted.”. authorization 45 Amendment of section 15 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 7 of ,4ct 26 of 1994

Section 10Verify source

§ 11Section 15 of the principal ActSubstitution

This provision amends section 15 so the Registrar may grant the approval only if satisfied the company will probably qualify for registration as a bank.

11. Section 15 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection: .‘(2) The Registrar shall grant the approval referred to in subsection (1) only if he SO - or she is of the opinion that the company concerned will probably, having regard to the provisions of section 17, be eligible for registration as a bank in terms of this Act.”. 14 No. 25294 GAZETTE, GOVERNMENT 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT. 2003 Amendment of section 16 of Act 94 of 1990, as substituted by section 8 of Act 26 of 1994

Section 11Verify source

§ 12Section 16 of the principal Act is hereby amended-Substitution

The Registrar may ask an applicant for extra information or documents, and the application must be signed by the chairperson or chief executive officer.

12. Section 16 of the principal Act is hereby amended- ( a ) by the substitution in subsection (2) for paragraph (a) of the following paragraph: “ ( a ) be made in the [prescribedl manner and on the [prescribed] form prescribed in the Regulations relating to Banks; and”; (bj by the substitution in subsection (2)(b)(ii) for item (dd) of the followinrr item: “(dd) the full names and the addresses of the [chairman] chairpkrson, the other directors and the executive officers of the institution; and” ; (c) by the substitution for subsection (3) of the following subsection: “(3) The Registrar may require an applicant contemplated in subsection (1) to furnish him with such information or documents, in addition to information and documents furnished by the applicant in terms of subsection (2), as the Registrar may deem necessary.”; and (dl by the substitution for subsection (4) of the following subsection: “(4) The application and lodged in terms of subsection (2) or (3) shall be signed by the [chairman] chairperson or the chief executive officer of the institution.”. every document Amendment of section 17 of Act 94 of 1990, as substituted by section 9 of Act 26 of 1994

Section 12Verify source

§ 13Section 17 of the principal Act is hereby amended-Substitution

This section amends the bank-registration rules so the Registrar can grant or refuse an application, must notify the applicant in writing, and must provisionally register the institution and issue a certificate if the application is granted and the fee is paid.

13. Section 17 of the principal Act is hereby amended- ( a ) by the substitution in subsection (1) for the words preceding paragraph (a) of the following words: 5 10 15 20 25 “Subject to the provisions of subsection (2), the Registrar shall, after considering all information and documents furnished in terms of section 16 for the purposes of an application under that section, grant such application if he or she is satisfied-”; to him ( b ) by the substitution in subsection (2) for the words preceding paragraph (a) of 30 the following words: “Notwithstanding the provisions of subsection (l), the Registrar may refuse an application for the registration of an institution as a bank if he or - she is of the opinion-”; (c) by the substitution for subsection (3) of the following subsection: “(3) When the Registrar in terms of this section grants or refuses an application for registration, he & shall give written notice of that fact to the applicant concerned.”; and (d) by the substitution for subsection (4) of the following subsection: “(4) If the Registrar in terms of this section grants an application for shall, subject to the provisions of section 18: and on registration he payment by the applicant of the prescribed registration fee, provisionally register the institution concerned as a bank and issue to the institution, on the prescribed form, a certificate of registration as a bank.”. 35 40

Section 13Verify source

§ 14Section 18 of the principal ActSubstitution

The Registrar may require an institution to make specified company-law changes to its memorandum or articles within a set period.

14. Section 18 of the principal Act subsection (2) of the following subsection: is hereby amended by the substitution for “(2) In addition to any other condition which the Registrar may impose under subsection (1) he orshe may impose a condition requiring the institution concerned 50 to take within a specified period such steps in terms of the Companies Act as may be necessary to alter its memorandum of association or articles of association in accordance with the requirements of the Registrar.”. 16 GAZETTE. GOVERNMENT No. 25294 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT. 2003 A4mendment of section 18A of Act 94 of 1990, as inserted by section 11 of Act 26 of 1994

Section 14Verify source

§ 15Section 1 SA of the principal Act is hereby amended-Substitution

A foreign institution must apply to the Registrar in the prescribed form and manner for authorization to operate a bank branch in the Republic, and the Registrar must notify the applicant if the application is granted or refused.

15. Section 1 SA of the principal Act is hereby amended- (a) by the substitution in subsection (2) for the words preceding paragraph (a) of words: the following “To obtain the authorization of the Registrar as contemplated in subsection (l), the foreign institution concerned shall in the [prescribed] manner and on the [prescribed] form prescribed in the Regulations lodge with the Registrar a written application which accompanied be shall by-”; (b) by the substitution in subsection (3) for the words preceding paragraph (a) of the following words: “The Registrar may require the foreign institution applying in terms of subsection (2) to furnish him with-”; (c) by the substitution for subsection (4) of the following subsection: “(4) When the Registrar grants or refuses an application in terms of subsection (2) for authorization to conduct the business of a bank by shall give written notice of he means of a branch in the Republic, that fact to the applicant concerned.”; (dj by the substitution for subsection (5) of the following subsection: “(5) The Registrar shall not grant an application in terms of subsection (2) unless he orshe is satisfied that proper supervision as contemplated in subsection (3)(h) is or will be exercised by the responsible supervisory authority of the foreign institution’s country of domicile.”; and (e) by the substitution for subsection (6) of the following subsection: “(6) If the Registrar grants an application referred to in subsection (4) he or she shall on the prescribed form issue to the foreign institution concerned a certificate of authorization to conduct the business of a bank by means of a branch in the Republic.”. 5 10 15 20 25 Amendment of section 18B of Act 94 of 1990, as inserted by section 11 of Act 26 of 30 1994

Section 15Verify source

§ 16Section 18B of the principal Act is hereby amended-Substitution

The Registrar may decide whether to cancel or suspend an authorization after considering representations from the foreign institution, and must notify the foreign institution in writing.

16. Section 18B of the principal Act is hereby amended- (a) by the substitution in subsection (2) for paragraph (a) of the following paragraph: “ ( a ) inform the foreign institution of his or her intention to cancel or 35 suspend, as the case may be, such authorization;”; and ( b ) by the substitution for subsection (3) of the following subsection: “(3) After considering any representations received within the specified period from the foreign institution concerned by virtue of the provisions of subsection (2)(c), the Registrar may in discretion- (a) proceed with the cancellation or suspension in terms of subsection his or her 40 (1) of the authorization; or (bj refrain from taking any further steps in terms of subsection (I). and the Registrar shall in writing inform the foreign institution concerned 45 of his e decision in terms of this subsection.” Amendment of section 22 of Act 94 of 1990, as amended by sections 7 and 25 of Act 9 of 1993, section 15 of Act 24 of 1994 and section 5 of Act 36 of 2000

Section 16Verify source

§ 17Section 22 of the principal Act is hereby amended-Substitution

17. Section 22 of the principal Act is hereby amended- ( a ) by the substitution for subsection (1) of the following subsection: ”( 1) Subject to the provisions of subsection ( 2 ) , an institution which is registered as a bank or a foreign institution which is authorized under section 18A to conduct the business of a bank by means of a branch in the Republic or an institution which is registered as a representative office of a foreim institution under section 34 shall not- 50 55 18 GAZETTE, GOVERNMENT No. 25294 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 ( a ) in the case of such bank use, or refer to itself by, a name other than the name under which it is so registered; or ( b ) in the case of such foreign institution, in respect of the branch concerned use, or refer to the branch by, a name other than the name under which the conduct of the business of a bank in the Republic was so authorized, 5 or any literal translation or abbreviation of such name which has been approved by the Registrar: Provided that the Registrar may, if he or she deems it desirable, authorize the use of a name by which such bank or foreign institution is otherwise generally known.”; ( b ) by the insertion after subsection ( 2 ) of the following subsection: “(2A) A bank may, with the prior written coisent of the Registrar, in conjunction with its registered name, and subject to such conditions as the Registrar may determine, use or refer to a name of a division, brand or product of that bank, which name includes the word ‘bank’ or any derivative thereof.”; ( c ) by the substitution for subsection (4) of the following subsection: “(4) Any person who, in connection with any business conducted by [him] such person- ( a ) uses[, or refers to himself by,] any name, description or symbol to infer, that [he] such __ indicating, or calculated to lead persons person is a bank registered as such under this Act; or ( b ) in any other manner [holds himself out] purports to be a bank registered as such under this Act, 10 15 20 while [he] such person is not so registered as a bank, shall be guilty of an offence.”; and (d) by the substitution in subsection ( 5 ) for paragraph (a) of the following 25 paragraph: “(a) the business in question is a bank or a foreign institution which is authorised under section 18A to conduct the business of a bank bv means of a branch in the Republic or an institution that is registereb as a representative office of a foreign institution under section 34; or”. 30 Amendment of section 24 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 17 of Act 26 of 1994 35

Section 17Verify source

§ 18Section 24 of the principal Act is hereby amended-Substitution

This section amends section 24 so the Registrar must give written notice before cancelling or suspending a bank’s registration and must notify the institution of the decision after considering representations.

18. Section 24 of the principal Act is hereby amended- ( a ) by the substitution in subsection (1) for the words preceding paragraph ( a ) and for paragraph (a) of the following words and paragraph, respectively: “The Registrar shall, before cancelling or suspending under section 23 the registration of a bank, in a written notice addressed to the [chairman] chairperson or chief executive officer of the institution concemed- (a) inform the institution of his intention to cancel or suspend, as the case may be, such registration;”; and (b) by the substitution for subsection (2) of the following subsection: any representations received within “(2) After considering the by virtue of the in his or her from the institution concerned specified period provisions of subsection (l)(c), the Registrar may discretion- ( a ) proceed with the cancellation or suspension, in terms of section 23, of the registration; or (b) refrain from taking any further steps in terms of section 23, and the Registrar shall in writing inform the [chairman] chairperson 01 chief executive officer of the institution concerned of his & decision in terms of this subsection.”. 40 45 50 ~ ~~ 20 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 Amendment of section 25 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 18 of Act 26 of 1994

Section 18Verify source

§ 19Section 25 of the principal ActSubstitution

This section amends section 25(2) of the principal Act to replace the wording about which court division is competent for the bank concerned.

19. Section 25 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection- “(2) A competent court [provincial or local] division of the [Supreme] w Court of South Africa within the area of jurisdiction of which the registered office, referred to in section 170 of the Companies Act, of the bank concerned is situated.”. of subsection (1) shall be any 5 for the purposes Substitution of section 27 of Act 94 of 1990, as substituted by section 20 of Act 26 of 1994 10

Section 19Verify source

§ 20The following section is hereby substituted for section 27 of the principal Act:Substitution

Section 27 is replaced with a new section called “Cancellation of registration at request of bank.”

20. The following section is hereby substituted for section 27 of the principal Act: “Cancellation of registration at request of bank

Section 20Verify source

§ 27The Registrar shall cancel the registration of a bank upon submissionSubstitution

The Registrar must cancel a bank’s registration when the institution concerned submits a special resolution authorizing cancellation.

27. The Registrar shall cancel the registration of a bank upon submission to him or her by the institution concerned contemplated in section 200 of the Companies Act authorizing such cancellation.”. of a special resolution Substitution of section 28 of Act 94 of 1990, as substituted by section 21 of Act 26 of 1994

Section 27Verify source

§ 21The following section is hereby substituted for section 28 of the principal Act:Substitution

This section substitutes a new section 28 dealing with cancellation of registration upon winding-up.

21. The following section is hereby substituted for section 28 of the principal Act: “Cancellation of registration upon winding-up 15 20

Section 21Verify source

§ 28When the affairs of a bank have been completely woundSubstitution

When a bank has been completely wound up, the responsible Master of the Supreme Court must send the Registrar a copy of the certificate, and the Registrar must then cancel the bank’s registration.

28. When the affairs of a bank have been completely wound up as contemplated in section 419(1) of the Companies Act, the responsible Master of the [Supreme] w Court shall transmit to the Registrar a copy of the certificate referred to in that section, and the Registrar shall upon receipt of such copy cancel the registration of the bank concerned.”. 25 Amendment of section 30 of Act 94 of 1990, as substituted by section 8 of Act 9 of 1993 and amended by section 23 of Act 26 of 1994

Section 28Verify source

§ 22Section 30 of the principal Act is hereby amended by theSubstitution

This section amends section 30 of the principal Act by replacing two paragraphs.

22. Section 30 of the principal Act is hereby amended by the substitution for paragraphs (b) and (cj of the following paragraphs, respectively: “(bj of every consent to the establishment in the Republic of a representative office 30 of a foreign institution which has been granted by of [sections] section 34; and [him] in terms (c) of every authorization to conduct the business of a bank by means of a branch in the Republic which has been granted by [him] institution under section 18A.”. 35 Amendment of section 32 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 25 of Act 26 of 1994

Section 22Verify source

§ 23Section 32 of the principal Act is hereby amended bySubstitution

This section amends section 32(2) of the principal Act.

23. Section 32 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection: *‘(2) Different directions and periods may under subsection (1) be determined in 40 respect of different kinds of deposits: Provided that in determining such directions and periods no preference shall be given to any such member of the public which [he] such person does not in law enjoy.”. Amendment of section 31 of Act 91 of 1990, as amended by section 25 of Act 9 of 1993, section 27 of Act 26 of 1994 and section 2 of Act 55 of 1996 45

Section 23Verify source

§ 24Section 34 of the principal Act is hereby amended-Substitution

The Registrar may require a foreign institution to provide extra information and documents, and representative offices must provide prescribed information and conduct business subject to prescribed conditions.

24. Section 34 of the principal Act is hereby amended- ( a ) by the substitution for subsection (2Aj of the following subsection: 22 GOVERNMENT No. 25294 GAZElTE, 5 AUGUST 2003 ~~ Act No. 19,2003 BANKS AMENDMENT ACT, 2003 “(2A) Aforeign institution applying in terms of subsection (2) may be required by the Registrar to furnish him or her with such information and documents as he or she may deem necessary, over and above any information and documents which have been furnished by such foreign institution by virtue of that subsection.”; - 5 ( 6 ) by the substitution in subsection (2B) for the words preceding paragraph ( a ) of the following words: “After having considered all information and documents furnished to [him] the Registrar for the purposes subsection (2), the Registrar may grant the application, either uncondi- tionally or subject to such conditions as he or she may determine, if Registrar is satisfied that-”; of an application in terms of 10 (c) by the substitution for subsection (5) of the following subsection: “ ( 5 ) Representative offices established in accordance with the provisions of this section shall furnish the Registrar, at such time or times 15 or at such intervals or in respect of such period or periods and in such form as may be prescribed, with such prescribed information as [he] the Registrar may require reasonably for purposes of the performance of his or her functions under this Act.”; and - (d) by the addition of the following subsection: 20 “(6) Representative offices established in accordance with this section shall conduct their business subject prescribed.”. to such conditions as may be Amendment of section 37 of Act 94 of 1990, as amended by section 4 of Act 42 of 1992, section 25 of Act 9 of 1993 and section 30 of Act 26 of 1994 25

Section 24Verify source

§ 25Section 37 of the principal Act is hereby amended-Commencement

The section changes when a person may buy larger shareholdings in a bank or controlling company, and gives the Registrar or Minister permission powers.

25. Section 37 of the principal Act is hereby amended- ( a ) by the substitution paragraph: in subsection (1) for paragraph (c) of the following “(c) of which the total nominal value together with the total nominal value of such shares already held by such person and by [his] the associate or associates of such person,”; (bj by the substitution for subsection (2) of the following subsection: 30 “(2) (a) If, subject to the provisions of paragraph (c)- ( 9 (ii) (iii) (iv) 35 40 if the Registrar has granted any person has for a period of 12 months or such shorter period as the Registrar may deem fit held so many shares in a bank or controlling company as [he] such person may in accordance with the provisions of subsection (1) hold therein, [he] such person may, if the Registrar has granted permission in writing thereto, acquire more than 15 percent, but not exceeding 24 percent, of those shares as contemplated in the said subsection; the said person has for a period of 12 months or such shorter period as the Registrar may deem fit held 24 percent of those shares as so contemplated [he] such person may, permission in writing thereto, acquire more than 24 percent, but not 45 exceeding 49 percent, of those shares as contemplated in the said subsection (1); the said person has for a period of 12 months or such shorter period as the Minister may deem fit held 49 percent of those shares as contemplated in the said subsection (1) [he] such person may, if the Minister has, through the Registrar, granted permission thereto in writing, acquire more than 49 percent, but not exceeding 74 percent, of those shares as contemplated in the said subsection; and the said person has for a period of 12 months or such shorter period as the Minister may deem fit held 74 percent of those shares as contemplated in the said subsection (1) [he] such person may, if the Minister has, through the Registrar, granted permission thereto in writing, acquire more than 74 percent of those shares as contem- dated in the said subsection. 55 50 (b) [Permission in terms of paragraph (a) shall only be granted on application on the prescribed form and after consultation with the 60 24 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT PICT. 2003 Competition Board established by section 3 of the Maintenance and Promotion of Competition Act, 1979 (Act No. 96 of 1979).] In - considering granting permission in terms of paragraph ( a ) the Registrar or the Minister. as the case may be, may consult with the Competition Commission established in telms of the Competition Act, 1998 (Act No. 89 of 1998). (c) Notwithstanding the provisions of paragraph (a), the Registrar or 5 the Minister, as the case may be, may, if in a particular case Registrar or the Minister, as the case may be, deems it fit to do so, grant permission for the acquisition of shares as contemplated in subparagraph (i), (ii), (iii) or (iv) of paragraph (a) without the applicant for such permission having held shares for the period of 12 months or any shorter period as required in any of the said subparagraphs.”; [he] ( e ) by the substitution for subsection (3) of the following subsection: “(3) If any person at the commencement of the Deposit-taking Institutions Amendment Act, 1992, already holds more than 15 per cent of the shares subsection (l), [he] such person may not acquire more of those shares as contemplated in the said subsection before [he] such person has obtained the appropriate permission in terms of subsection (2).”; and (d) by the substitution for subsection ( 5 ) of the following subsection: in a bank or controlling company as contemplated in “ ( 5 ) If, in the case of a shareholding contemplated in- la) subsection 2(a)(i) and (ii), the Registrar; or ih) subsection (2)(a)(iii) and (iv), the Minister, is of the opinion that the retention of such shareholding in a bank or controlling company by a particular shareholder will be to the detriment of the bank or controlling company concerned, [he] the Registrar or the Minister, as the case may be, may by way of application on notice of motion apply to the division of the [Supreme] H~J$ Court in whose area of jurisdiction the head office of the bank or Controlling company is situated, for an order- compelling such shareholder to reduce, within a period determined by the court, [his] the shareholding of that person in that bank or controlling companyto a shareholding, as contemplated in subsec- tion (l), with a total nominal value of not more than 15 per cent of the total nominal value of all the issued shares of that bank or controlling company; and limiting, with immediate effect, the voting rights that may be exercised by such shareholder by virtue of [his] shareholding of that person to 15 per cent of the voting rights attached to all the issued shares of the bank or controlling company concerned.”. 10 1s 20 25 30 3s 40 Amendment of section 38 of Act 94 of 1990, as amended by section 17 of Act 85 of 1992 and section 25 of Act 9 of 1993

Section 25Verify source

§ 26Section 38 of the principal Act is hereby amendedSubstitution

This section amends section 38 by replacing paragraph (e) on when shares may be allotted, issued, or registered in certain names.

26. Section 38 of the principal Act is hereby amended paragraph ( e ) of subsection (2) of the following paragraph: by the substitution for “(e) for a period of not more than six months, in the name of a stock-broker or of 45 a company established by [him] such stock-broker for a purpose mentioned in section 17(3j of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985), or of a company controlled by the bank or of an employee of the bank, if it is necessary that the shares be so allotted, issued or registered in order to facilitate delivery to the purchaser or to protect the rights of the beneficiary in respect of those shares or where the beneficiary is not known;”. so 26 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 Amendment of section 39 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 31 of Act 26 of 1994

Section 26Verify source

§ 27Section 39 of the principal Act is hereby amended bySubstitution

Section 39 is amended so that a person seeking shares in a bank or controlling company, or someone acting for that person, must provide information or materials to the bank or controlling company when it asks in writing.

27. Section 39 of the principal Act is hereby amended by the substitution for the words preceding paragraph ( b ) of the following words: “Any person desiring shares in a bank or controlling company to be allotted or issued to [him] such person or to be registered in [his] & name of such person, or in whose name such shares are registered, and any person acting on behalf of such a person, shall at the written request of the bank or controlling company furnish it with-”. 5 Amendment of section 41 of Act 94 of 1990, as amended by section 25 of Act 9 of 10 1993

Section 27Verify source

§ 28Section 41 of the principal ActSubstitution

This provision amends section 41 to prohibit a person from voting on, or receiving dividends from, certain bank or controlling company shares where that holding is in contravention of the Act.

28. Section 41 of the principal Act subsection (1) of the following subsection: is hereby amended by the substitution for “(1) No person shall- ( a ) either personally or by proxy granted to any other person, cast a vote attached 15 to; or (b) receive a dividend payable on, any share in a bank or controlling company allotted or issued to [him] such person or registered in [his] the name of such person in contravention of a provision of this Act.”. 20 Amendment of section 42 of Act 94 of 1990, as amended by section 5 of Act 42 of 1992, section 25 of Act 9 of 1993 and section 33 of Act 26 of 1994

Section 28Verify source

§ 29Section 42 of the principal Act is hereby amended by the substitutionSubstitution

This section replaces the control test for a bank, treating a person as controlling a bank in several shareholding, voting, or director-appointment situations, subject to a voting-rights limitation exception.

29. Section 42 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection: “(2) For the purpose of this Act a person shall be deemed to exercise control over 25 a bank if, in the case where that person is a company, the bank is a subsidiary of that company, or, whether or not that person is a company, if that person [by himself] alone or together with his or her associates- - (a) holds shares in the bank of which the total nominal value represents more than 50 percent of the nominal value of a11 the issued shares of the bank, unless, due 30 to limitations on the voting rights attached to the shares so held by the person [by himself] alone or together with his a associates, as the case may be, such person voting [on his own] independently or such person and his e associates voting as a group, is or are unable outcome of the voting at a general meeting of the bank; to decisively influence the 35 (bj is entitled to exercise more than 50 percent of the voting rights in respect of (c) the issued shares of that bank, or is entitled or has the power to determine the appointment of the majority of the directors of that bank, including- (i) the power to appoint or remove, without the concurrence of any other 40 person, all or the majority of such directors; or the power to prevent any person from being appointed a director without (ii) his e consent, and if a person’s appointment as a director of the bank follows necessarily from his - or her appointment as a director of the person first-mentioned in this subsection, the 45 first-mentioned appointment shall for the purposes of this subsection be deemed to be an appointment by virtue of a power of a person so first-mentioned.”. Amendment of section 43 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 34 of Act 26 of 1994

Section 29Verify source

§ 30Section 43 of the principal Act is hereby amended by the substitution for 50Substitution

This section replaces subsection (1) of section 43 so a public company may apply to the Registrar to be registered as a controlling company for a bank or proposed bank.

30. Section 43 of the principal Act is hereby amended by the substitution for 50 subsection (1) of the following subsection: “( 1) A public compmy- ( a ) which desires to exercise control over any bank; or 28 No. 25294 GOVERNMENT GAZETTE. 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 1003 (b) which is a controlling company. as defined in section 1 of the Companies Act. in respect of any other public company which has applied in terms of section 16 for registration as a bank. may apply to the Registrar on the [prescribed] form prescribed in the Regulations relating to Banks for registration as a controlling company in respect of that bank or proposed bank, as the case may be.”. 5 Amendment of section 44 of Act 94 of 1990, as amended by section 10 of Act 9 of 1993

Section 30Verify source

§ 31Section 44 of the principal Act is hereby amended-Substitution

The Registrar may grant or refuse a registration application, impose conditions, and must give written notice of the decision.

31. Section 44 of the principal Act is hereby amended- (a) by the substitution for subsection (1) of the following subsection: 10 “(1) Subject to the provisions of subsection (2), the Registrar may, in after considering all information, documents and particulars furnished terms of section 43 for the purposes of an application under that section, grant or refuse the relevant application or grant the application subject to 15 such conditions as he e may impose.”; (6) by the substitution in subsection (2) for the words preceding paragraph (a) of the following words: “The Registrar shall not grant an application made under section unless he & is satisfied-”; 43 (c) by the substitution for subsection (3) of the following subsection: “(3) When the Registrar in terms of this section grants or refuses an application for registration as a controlling company, he orshe shall give written notice of that fact to the applicant concerned.”; (d) by the substitution in subsection (4) for paragraph (a) of the following paragraph: 20 25 “(a) If the Registrar in telms of this section grants an application he 0’ - she shall, upon compliance by the applicant with the conditions subject to which the application was granted and on payment of the prescribed a controlling registration fee, register the applicant concerned as company in respect of the bank concerned and on the prescribed form certificate of registration as a controlling issue to the applicant a company in respect of the bank concerned.”; 30 ( e ) by the substitution in subsection (5) for the words preceding paragraph (a) of the following words: “In addition to any other condition which the Registrar may impose under subsection (l), he or she may impose a condition requiring an applicant which applied for registration as a controlling company in the circumstances referred to in section 43(l)(a)--”; and If) by the substitution paragraph: in subsection (6) for paragraph ( a ) of the following 35 40 “ ( a ) Whenever the Registrar has imposed a condition referred to in subsection (5)(6), he or she may, after consultation with the applicant concerned, designate a person of the applicant, and to advise the Registrar on, the reasonableness and fairness 45 of the basis and conditions on which the applicant intends to make the share offer in compliance with the condition.”. to investigate, independently Substitution of section 47 of Act 94 of 1990

Section 31Verify source

§ 32The following section is hereby substituted for section 47 of the principal Act:Substitution

This section substitutes a new section 47 titled “Cancellation of registration at request of controlling company.”

32. The following section is hereby substituted for section 47 of the principal Act: “Cancellation of registration at request of controlling company

Section 32Verify source

§ 47The Registrar shall cancel the registration of a controlling company 50Amendment

The Registrar must cancel a controlling company’s registration when the company submits the required special resolution.

47. The Registrar shall cancel the registration of a controlling company 50 upon submission to him or her by the controlling company of a special resolution contemplated in section 200 of the Companies A4ct authorizing such cancellation.”. 30 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 Amendment of section 50 of Act 94 of 1990

Section 47Verify source

§ 33Section 50 of the principal Act is hereby amended by the substitution for theSubstitution

Section 50 is amended to cap certain investments at 40% of the relevant consolidated amount.

33. Section 50 of the principal Act is hereby amended by the substitution for the words following upon paragraph (b) of the following words: “shall manage its transactions in such investments in such a way that the amount of such investments does not at any time exceed 40 per cent of the sum of [its] share capital and reserve funds of the controlling company and any bank under its control, calculated on a consolidated basis in the manner prescribed.”. 5 Amendment of section 51 of Act 94 of 1990, as amended by sections 11 and 25 of Act 9 of 1993

Section 33Verify source

§ 34Section 5 1 of the principal Act is hereby amended by the deletion of subsection 10Amendment

This section amends the principal Act by deleting subsection 10(3) from section 5 1.

34. Section 5 1 of the principal Act is hereby amended by the deletion of subsection 10 ( 3 ) . Amendment of section 52 of Act 94 of 1990, as amended by section 3 of Act 55 of 1996

Section 34Verify source

§ 35Section 52 of the principal Act is hereby amended-Substitution

A company may establish a subsidiary or division, and the Registrar may require an applicant to provide extra information.

35. Section 52 of the principal Act is hereby amended- (a) by the substitution in subsection (1) for paragraph (a) of the following 15 paragraph: “ ( a ) establish a subsidiary or create a division in the manner prescribed within O i outside the Republic or enter into an agreement having the effect that any company becomes its subsidiary the within or outside 20 Republic;”; and or such division (b) by the substitution for subsection (3) of the following subsection: “(3) The Registrar may require an applicant contemplated in with such information, in addition to subsection (2) to furnish him particulars furnished by the applicant in terms of that subsection, as the necessary.”. Registrar may deem 25 Amendment of section 54 of Act 94 of 1990, as substituted by section 6 of Act 42 of 1992 and amended by sections 12 and 25 of Act 9 of 1993, Proclamation No. 132 of 1994, section 36 of Act 26 of 1994 and section 5 of Act 55 of 1996

Section 35Verify source

§ 36Section 54 of the principal Act is hereby amended-Substitution

This section amends section 54 to tighten consent, registration, and registry-update rules for bank amalgamations or transfers.

36. Section 54 of the principal Act is hereby amended- (a) by the substitution in subsection (2) for the words preceding paragraph ( a ) and 30 paragraph (a) of the following words and paragraph: “The Minister shall not grant his a consent referred to in subsection (1) unless- (a) he or she is satisfied that the transaction in question will not be detrimental to the public interest;”; (b) by the substitution for subsection (7) of the following subsection: “(7) Upon registration of subsection ( 6 ) , he or she shall issue a certificate of registration to the bank concerned.”; the Registrar in terms of a bank by (c) by the substitution for subsection (8) of the following subsection: “(8) The Registrar of Companies, every Master of the [Supreme] Court and every officer or person in charge of a deeds registry or any other office, if, in [his] the office of such Registrar, Master, officer or person or any register under[his] the control of such Registrar, Master, officer or person there- (a) is registered any title to property belonging to, or any bond or other right in favour of, or any appointment of or by; (aA)is registered any share, stock, debenture or other marketable security in favour of; or (b) has been issued any licence to or in favour of, 50 any bank which has amalgamated with any other bank or any bank which has transferred all or part of its assets and liabilities to any other bank or person, shall, if satisfied- (i) in terms of subsection (1) to the that the Minister has consented 55 amalgamation or transfer; and that such amalgamation or transfer has been duly effected, (ii) 35 40 45 32 KO. 25294 GOVERNMENT GAZETTE. 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 or other document, make such endorsements and upon production to [him] such Registrar, Master, officer or person of any relevant deed, bond, share, stock, debenture, certificate, letter of appointment, licence thereon and effect such alterations in [his] the registers of such Registrar, Master, officer or person as may be necessaryto record the transfer of the relevant property, bond or other right, share, stock, debenture, market- able security, letter of appointment or licence and of any rights thereunder to the amalgamated bank or, as the case may be, to the bank or person that has taken transfer of the said assets and liabilities.”; and 5 (d) by the substitution in subsection (1 I)(c) for the words preceding subparagraph 10 (ii) of the following words: “neither the Securities Regulation Panel established by section 440B of the Companies Act nor its executive committee or its executive director shall furnish any clearance, decision or ruling in respect of a matter submitted to it or [him] such executive director in terms of the provisions 15 of the above-mentioned Code or Rules, and which matter relates to an affected transaction, as defined in section 440A( 1) of the Companies Act involving-”. Amendment of section 56 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 20

Section 36Verify source

§ 37Section 56 of the principal Act is hereby amended-Substitution

This amendment changes section 56 so the Registrar must not grant certain applications if of the required opinion, and it updates wording about change-of-name procedures.

37. Section 56 of the principal Act is hereby amended- ( a ) by the substitution in subsection (3) for the words preceding paragraph (a) of the following words: “The Registrar shall not grant any application referred to in subsection (2) if he or she is of the opinion-”; and 25 (b) by the substitution in subsection (5) for paragraph (bj of the following paragraph: “(bj in the case of a special resolution relating to a change of name, [his] the register of change the name of the bank concerned in banks, and issue to the bank concerned a certificate of such change 30 of name.”. Amendment of section 57 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993

Section 37Verify source

§ 38Section 57 of the principal ActSubstitution

If a bank does not change its memorandum or articles as directed by the Registrar, the Registrar may send that direction to the Registrar of Companies, and that office must handle it as if the bank had passed a special resolution.

38. Section 57 of the principal Act is hereby amended by the substitution for subsection (3) of the following subsection: 35 “(3) If a bank refuses or fails to alter its memorandum of association or articles of association in accordance with a direction of the Registrar under subsection ( l ) , the Registrar may submit a copy of that direction to the Registrar of Companies, who shall thereupon deal in accordance with the Companies Act as if it were contained in a special resolution 40 adopted by the bank concerned and submitted to [him] the Registrar of Companies by that bank in accordance with that Act.”. with the proposed alteration contained therein Amendment of section 59 ofAct 94 of 1990, as amended by sections 13 and 25 ofAct 9 of 1993 and section 38 of Act 26 of 1994

Section 38Verify source

§ 39Section 59 of the principal Act is hereby amended-Substitution

This section amends section 59 of the principal Act by changing wording about what shareholder information is included in a list.

39. Section 59 of the principal Act is hereby amended- 45 ( a ) by the substitution paragraph: in subsection (2) for paragraph (b) of the following ‘.(bj the number and class of shares registered in [his] - the name ~ of the shareholder;”; and (0) by the substitution in the proviso to subsection (2) for the words preceding 50 item (aa) of paragraph (ii) of the following words: of a shareholder and the particulars referred ”that the name to in paragraphs ( a ) to ( e ) , inclusive, shall, subject to subsection ( 3 ) , not be included in such a list if the total nominal value of the shares registered in [his] - the name of the shar-eholder-”. 55 34 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act Na. 19,2003 BANKS AMENDMENT ACT, 2003 Amendment of section 60 of Act 94 of 1990, as substituted by section 1 of Act 81 of 1991 and amended by section 25 of Act 9 of 1993 and section 39 of Act 26 of 1994

Section 39Verify source

§ 40Section 60 of the principal Act is hereby amended-Substitution

This section amends section 60 of the principal Act to set duties for bank directors and senior officers, and to give the Registrar notice and objection powers over certain appointments.

40. Section 60 of the principal Act is hereby amended- ( a ) bv the substitution for subsection (1) of the following subsection: v , , ~, “(1) Each director, chief executive officer and executive officer of a bank [or controlling company shall stand in a fiduciary relationship] owes a fiduciary duty and a duty of care and skill to the bank [or controlling company, as the case may be,] of which [he] such a person is a director, chief executive officer or executive officer.”; (b) by the insertion of the following subsections after subsection (1): “( 1A) Each director, chief executive officer and executive officer of a bank owes a duty towards the bank t o - ( a ) act bona fide for the benefit of the bank: (bj avoid an; conflict between the bank’s interests and the interests of such a director, chief executive officer or executive officer, as the case may be; 5 10 15 ( c ) possess and maintain the knowledge and skill that may reasonably be expected of a person holding a similar appointment and carrying out similar functions as are carried out executive officer or executive officer of that bank; and by the director, chief 20 (d) exercise such care in the carrying out of his or her functions in relation to that bank as may reasonably be expected of a diligent person who holds the stances, and who possesses both the knowledge and skill mentioned in paragraph (c) and any such additional knowledge and skill as the director, chief executive officer or executive officer in question may have. same appointment under similar circum- (1B) (a) The Registrar may institute action in terms of section 424 of the Companies Act against any director, chief executive officer or executive officer of a bank who was knowingly a party to the carrying on of the business of the bank in the manner envisaged in that section. (b} Notwithstanding anything to the contrary in any law, any amount the Registrar as a result of proceedings instituted by recovered as envisaged in paragraph (a), shall be utilized- (i) first to reimburse all expenses reasonably incurred by the Registrar in bringing such proceedings; 25 30 35 (ii) thereafter to set off against any amount paid to depositors by the Registrar, a deposit insurance scheme, or any governmental body, as part or full compensation for the losses suffered by depositors as a result of the bank being unable to repay their deposits; and (iii) thereafter for the pro rata repayment of the losses of depositors.”. 40 (c) by the substitution for subsection (2) of the following subsection: .‘(2) Without derogating from the [generality of the expression ‘fiduciary relationship’ in subsection (1). the rwovisions of that subsection imply thata director-] provisions of-subsections (1) and 45 (lA), a director, chief executive officer or executive officer of a bank shall, in the performance of his or her functions in respect of that bank, observe such guidelines and comply with such requirements as may be prescribed under section 90(1)(b). [(a) shall, in relation to the bank or controlling company of which he 50 is a director, act honestly and in good faith and, in particular, shall exercise such powers as he may have to manage or represent the bank or controlling company, exclusively in the best interests and for the benefit of the bank and its depositors or of the controlling company, as the case may be; and 55 36 No. 25294 GOVERNMENT GAZETTE. 5 AUGUST 2003 .4ct No. 19,2003 BANKS AMENDMENT ACT, 2003 (b) shall, in the performance of his functions as director of such bank or controlling company, observe such guide-lines and comply with such requirements as may be prescribed under section 90(l)(b).]”; (d) by the substitution for subsection (5) of the following subsection: 5 “ ( 5 ) ( a ) ci, Every bank [and every controlling company shall, at least 30 days prior to the appointment of a new director (whether for the purpose of the filling of a casual vacancy or in any other circumstances) to its board of directors becoming effective, in writing furnish the Registrar with the prescribed information in respect of the proposed new director] shall give the Registrar written notice of the nomination of any person for appointment as a non- executive member of its board of directors by furnishing the Registrar with the prescribed information in respect of the nominee. 10 (ii) The notice shall reach the Registrar at least 30 days prior to the 15 proposed date of appointment. (iii) The Registrar may object to the proposed appointment by means of a written notice, stating the grounds for the objection, given to the chairperson of the board of directors of the bank and to the nominee, within 20 days of receipt of the notice referred to in subparagraph (ii). (iv) If the Registrar objects to the proposed appointment as envisaged in subparagraph (iii), the bank shall not appoint the nominee and any purported appointment shall have no legal effect: Provided that the bank in which case the or nominee may dispute the Registrar’s objection, provisions of subsection ( 6 ) ( d ) to ( k ) , inclusive, shall apply mutatis mutandis. (b) (i) [No appointment of a new director to the board of directors of anybank or controlling company, as contemplated in paragraph (a), shall have legal force for the purpose of this Act or any other law unless the prescribed information in respect of such director has been furnished to the Registrar in accordance with the Drovisions of paragraph (a)] Every bank shall give the Registrar writtei notice of the appointment of a chief executive officer, executive director or executive officer by furnishing the Registrar with in respect of the appointee. the prescribed information (ii) The Registrar may object to the appointment by means of a written notice, stating the grounds for the objection, given to the chief executive officer, or acting chief executive officer of the bank, and to the appointee, within 20 working days to in subparagraph (i). of receipt of the notice referred 20 25 30 35 40 (iii) If the Registrar objects to the appointment in terms of subpara- graph (ii), the appointment shall be terminated within 14 working days of receipt of the Registrar’s notice of objection by the bank: Provided that in which the bank or appointee may dispute the Registrar’s objection, case the provisions of subsection ( 6 ) ( d ) to (kj, inclusive, shall apply 45 mutatis mutandis. (iv) Notwithstanding anything law or in any agreement, the appointment by a bank of a chief executive officer, executive director or executive officer shall be subject to the resolutive is not terminated under subparagraph condition that the appointment (iii).”; to the contrary in any 50 ( e ) by theaddition to subsection ( 5 ) of the following paragraph: “ ( c ) For the purpose of this subsection ‘every bank’ means the chief executive officer, or in the case where it concerns the appointment of the chief executive officer, such member of the board of directors as may be 55 designated by the board of directors.”; and (f) by the substitution for subsection (6) of the following subsections: 38 NO. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT. 2003 “ ( 6 ) ( a ) [The provisions of subsection (5) shall not be construed as director referred to in that rendering the appointment of a of the Registrar.] Without subsection subject to the approval derogating from any law, the appointment of a chief executive officer, executive director or executive officer of a bank may be terminated by if the chief executive officer, executive director or the Registrar executive officer concerned is not, or is no longer, a fit and proper person to hold that appointment, or if it is not in the public interest that such chief executive officer, executive director or executive officer continues to hold such appointment. (bj If the Registrar wishes to terminate the appointment of a chief executive officer, executive director or executive officer of a bank, as envisaged in paragraph parties in writing of his or her intention and of the grounds proposed termination: (i) The chief executive officer, executive director or executive officer (a), the Registrar shall notify the following for the concerned; (ii) The chairperson of the board of directors of that bank (except if the chairperson of the board is the person whose appointment the Registrar wishes to terminate, in which case each director of the bank concerned shall be notified); and (iii) The chief executive officer of that bank, (except if the chief executive officer is the person whose appointment the Re,‘ olstrar wishes to terminate, in which case the deputy chief executive officer shall be notified). (c) The written notice referred to in paragraph ( b ) shall notify such to submit written representations to the parties that they are entitled Registrar in response to that notice. (d) Any affected party who wishes to respond to the Registrar’s written notice shall submit written representations in response to that notice to the Registrar within 14 working days of receipt of the Registrar’s notice, or within such application by the affected party concerned, allow. longer period as the Registrar may, upon written (e) The Registrar shall, within 14 working days of receipt of a written representation referred to in paragraph (dl- (i) consider the representation; (ii) decide whether or not the appointment of the chief executive officer, executive director terminated for the reasons contemplated in paragraph (a); and (iii) give notice to the affected parties referred to in paragraph (b) of his or executive officer concerned should be or her decision in writing. (f) If, after having considered any written representation in respect of or executive officer the chief executive officer, executive director of the view that such officer’s concerned, the Registrar remains or if no written representation is appointment should be terminated, submitted to the Registrar within the period allowed under paragraph (d), the Registrar shall refer the matter to the Arbitration Foundation of South Africa or its successor-in-law, or any other body designated by the Registrar by means of a notice in the Gazette (hereinafter referred to as arbitration in terms of expedited procedures, the “Arbitrator”) for approved by the Registrar in writing and published in the Gazette. (g) The Registrar shall make the request for arbitration referred to in paragraph Cfj- (i) in writing: and (ii) within three working days after the expiry of the 14 day period referred to in paragraph (e) or, if the affected parties do not submit the period any written representations to the Registrar within 5 10 15 20 25 30 35 40 45 50 55 40 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT. 2003 allowed under paragraph (d), within three working days after the expiry of that period. ( 1 2 ) The Arbitrator shall determine whether or not adequate reasons exist for the termination, by the Registrar, of the appointment of the chief executive officer, executive director or executive officer concerned. (i) If under paragraph ( h ) the Arbitrator decides that adequate reasons exist for the termination, the Arbitrator shall confirm the termination of the appointment in writing addressed to the Registrar and the chief executive officer, executive director whereupon the termination shall immediately take effect. or executive officer concerned, (j) If the Arbitrator determines that adequate reasons do not exist for by written the termination, the Arbitrator shall reject the termination notice to the Registrar and to the chief executive officer, executive director or executive officer concerned, whereupon the appointment of the person in question shall continue with full force and effect. ( k ) A termination in terms of this section shall not be subject to review in terms of section 9. (7) This section, where applicable, shall apply mutatis mutandis in respect of any branch or a controlling company.”. Insertion of sections 60A and 60B in Act 94 of 1990

Section 40Verify source

Part

part or full compensation for the losses suffered by depositors as a

§ 41The following sections are hereby inserted in the principal Act after section 60:Amendment

Banks must establish an independent compliance function and maintain an effective corporate governance process; the compliance officer must act with reasonable care and skill and follow any prescribed regulatory requirements.

41. The following sections are hereby inserted in the principal Act after section 60: “Compliance function 60A. (1) Notwithstanding anything to the contrary in any law, a bank shall establish an independent compliance function as part of the risk management framework of the bank.- 5 10 15 20 25 (2) The compliance function shall be headed by a compliance officer of the bank, who shall perform his or her functions with such care and skill as can reasonably be expected from a person responsible for such a function in a similar institution. (3) The appointed compliance officer shall perform his or her functions the subject to such requirements and conditions as may be prescribed in Regulations relating to Banks. 30 Corporate governance 60B. (1) Notwithstanding anything to the contrary in any law, the board of directors and executive officers of a bank shall establish and maintain an adequate and effective process of corporate governance, which shall be inherent in the activities consistent with the nature, complexity and risks and the business of the bank concerned. ( 3 ) The process of corporate governance shall be established with the objective of achieving the bank’s strategic and business objectives efficiently, effectively, ethically and equitably (within acceptable parameters), to ensure- risk compliance with the strategic framework and guidelines established for the bank or controlling company; commitment by the executive company to adhere to corporate recognised and accepted as correct and proper; a balance of interests of the shareholders and other interested persons who may be affected by the conduct of directors or executive officers of the bank or controlling company within a framework of effective accountability; officers of the bank or controlling behaviour that is universally 35 40 45 50 42 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 (dl (i) to that mechanisms and procedures are established and maintained minimize or avoid potential conflicts of interests between the business interests of the bank or controlling company and the personal interests of directors or executive officers of the bank or controlling company; responsible conduct by the directors and executive officers of the bank or controlling company; the achievement of the maximum level of efficiency and profitability of the bank within an acceptable risk profile for the bank or controlling company; the timely, accurate and meaningful disclosure material to the business of the bank or controlling company or the interests of the shareholders of or other persons having an interest in the bank or controlling company; that the board of directors retains control business direction of the bank or controlling company, whilst enabling its executives to manage the bank’s or controlling company’s operations and the achievement of the agreed strategic and business objectives; and compliance with all applicable laws and regulations. of matters that are strategic and over the 5 10 15 (3) A bank shall establish and maintain the process of corporate governance in accordance with any requirements that may be prescribed in the Regulations relating to Banks.”. 20 Amendment of section 61 of Act 94 of 1990, as amended by sections 14 and 25 of Act 9 of 1993

Section 41Verify source

§ 42Section 61 of the principal Act is hereby amended-Substitution

Banks and controlling companies must get the Registrar’s approval for an auditor, and a person cannot act as auditor without that approval.

42. Section 61 of the principal Act is hereby amended- (a) by the substitution for subsection (1) of the following subsection: “( 1) Notwithstanding the provisions of Chapter X of the Companies Act- ( a ) no person shall hold office as auditor of a bank or a controlling company unless [his] approved by the Registrar; and appointment of such person as such an auditor has been (b) [a bank of which the total assets as at the close of its last preceding financial year exceeded R10 000 000 000 shall appoint not less than two auditors who are independent any person contemplated in paragraph (a) shall be appointed for such period and on such conditions as may be prescribed.”; of each other] ( b ) by the substitution for subsection (2) of the following subsection: “(2) A bank or a controlling company shall within 30 days of the appointment in accordance with the provisions of Chapter X of the Companies Act of a person as auditor thereof, apply to the Registrar on the prescribed form for [his] the Registrar’s approval of such appointment.”; (c) by the substitution for subsection (3) of the following subsection: “(3) The Registrar may[, without being required to furnish any reason therefor]- (a) refuse an application under subsection approval of the appointment of an auditor if- - (i) the application seeks the re-appointment of an auditor who has already served as auditor of the bank in question for the prescribed number of years consecutively; or (2) for [his] the Registrar’s (ii) any grounds for withdrawal of approval listed in paragraph (b)(i) to (iv) apply to the proposed appointee; or (b) withdraw any approval of the appointment of an auditor previously granted by the Registrar under this section, if such an auditor- (i) has been convicted of an offence of which dishonesty is an element; (ii) is found to be incompetent or unfit to perform the functions of an auditor; (iii) is under investigation by the Public Accountants’ and Auditors’ Board: or 25 30 35 40 45 50 55 44 No. 25294 GOVERNMENT GAZETTE. 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 (iv) fails to disclose any direct or indirect interests which may constitute a conflict of interest in respect of such auditor’s duties, and thereupon the functions and responsibilities of that auditor in respect of that bank [concerned] shall [vacate his office] cease forthwith.”; by the substitution for subsection (4) of the following subsection: r “(4) If the Registrar under paragraph f a ) of subsection (3) refuses an approval of the appointment of an auditor or under application for his e paragraph ( b ) of that subsection withdraws an approval previously granted by him or her, the board of directors of the bank or the controllin,- 7 company concerned shall appoint another person as auditor and the provisions of subsections (1) and (2) shall apply mutatis mutandis in respect of the last-mentioned appointment.”; and by the addition of the following subsection: “(6) A person appointed under subsection (4) to replace an auditor whose approval has been withdrawn under subsection (3)(bj shall be appointed for the remainder of the period for which the person whom he or she replaces was appointed and is subject to the same conditions as his or her predecessor.”. Amendment of section 63 of Act 94 of 1990, as amended by section 7 of Act 42 of 1992, sections 15 and 25 of Act 9 of 1993 and section 40 of Act 26 of 1994

Section 42Verify source

§ 43Section 63 of the principal Act is hereby amended-Substitution

Auditors for the bank must report certain irregularities and risk-related matters to the Registrar, and may also send a copy to the bank’s chief executive officer.

43. Section 63 of the principal Act is hereby amended- (a) by the substitution for subsection (1) of the following subsection: “(1) Notwithstanding anything to the contrary contained in the Public Accountants’ and Auditors’ Act, 1991 (Act No. 80 of 19911, or the Companies Act, but subject to the provisions of subsections (2) and (3) of this section, the auditor referred to in section 61 or 62- (a) shall, whenever [he] such auditor furnishes, in terms of section the Public Accountants’ and 20(5)(b/ of the first-mentioned Act, Auditors’ Board with copies of the report, acknowledgement of receipt and reply and with the other particulars referred to in that section, relating to an irregularity or suspected irregularity in the conduct of the affairs of the bank for which [he] such auditor has been appointed as auditor, also furnish the Registrar with such copies and particulars; and ( b ) shall in writing inform affairs of a bank- the Registrar of any matter relating to the (i) of which such auditor became aware in the performance of [his] such auditor’s functions as auditor of that bank: and (ii) which, in the opinion of such auditor, may endanger the bank’s ability to continue as a going concern protection of the funds of the bank‘s depositors or may be contrary to principles of sound management (including risk management) or amounts to inadequate maintenance internal controls; and or may impair the of 5 10 15 20 25 30 35 40 (c) shall, if requested by the Registrar to do so, furnish him __ or her with written information relating to a matter referred to in paragraph (b), specified by the Registrar.”; 45 (hj by the substitution for subsection (2) of the following subsection: “ ( 2 ) Whenever an auditor by virtue of the provisions of subsection ( l ) ( b ) or ( c ) furnishes the Registrar with written information, [he] auditor may at the same time furnish the chief executive oEcer of the copy of the relevant bank to which such information relates with a document.”; and (c] by the substitution for subsection (4) of the following subsection: “(4) Nothing in subsection (1) contained shall be construed as conferring upon any person any right of action against an auditor which, but for the provisions of that subsection, [he] such person would not have had.”. 50 55 46 GAZETTE, GOVERNMENT No. 25294 2003 5 AUGUST Act No. 19,2003 BANKS AMENDMENT ACT, 2003 Amendment of section 64 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993, section 41 of Act 26 of 1994 and section 8 of Act 36 of 2000

Section 43Verify source

§ 44Section 64 of the principal Act is hereby amended-Substitution

This section amends the audit committee rules for section 64 of the principal Act.

44. Section 64 of the principal Act is hereby amended- ( a ) by the addition to subsection (2) of the following paragraph: “ ( d ) perform such further functions as may be prescribed.”; and (b) by the substitution for subsection (3) of the following subsection: 5 “ ( 3 ) All of the members of the audit committee may be, and the majority of such members, including the [chairman] chairperson of the audit committee, shall be, persons who are not employees of the bank nor of any of its subsidiaries, its controlling company or any subsidiary of its 10 controlling company: Provided that the [chairman] chairperson of the board of directors of the bank shall not be appointed as a member of the audit committee.”. Insertion of sections 64A and 64B in Act 94 of 1990

Section 44Verify source

§ 45The following sections are hereby inserted in the principal Act after section 64:Amendment

A bank’s board must appoint a risk committee of at least three members, with at least two non-executive directors, and must establish a directors’ affairs committee made up only of non-executive directors.

45. The following sections are hereby inserted in the principal Act after section 64: 15 “Risk committee 64A. (1) The board of directors of a bank shall appoint at least three of its members, of whom at least two are non-executive directors, to form a risk committee. (2) The functions of the risk committee shall be to- ( a ) assist the board in its evaluation of the adequacy and efficiency of the risk policies, procedures, practices and controls applied within that bank in the day-to-day management of its business; in the identification of the build (b) assist the board up of and 20 concentration of the various risks to which the bank is exposed; (c) assist the board in developing a risk mitigation strategy to ensure that 25 the bank manages the risks in an optimal manner; (d) assist the board in ensuring that a formal risk assessment is undertaken at least annually; (e) assist the board in identifying and regularly monitoring all key risks its decision-making and key performance indicators to ensure that capability and accuracy of its reporting is maintained at a high level; facilitate and promote communication, through reporting structures, regarding the matters referred to in paragraph ( a ) or any other related matter, between the board and the executive officers of the bank; ( 8 ) ensure the establishment of an independent risk management function, (j) 30 35 and in the case where the bank forms part management function, the head point for all aspects relating to risk management within the bank, including the responsibility board in the different risk areas to which that bank is exposed; ( h ) introduce such measures as may serve to enhance the adequacy of a group, a group risk of which shall act as the reference and efficiency of the risk management policies, procedures, practices and controls applied within that bank; co-ordinate the monitoring of risk management on a globalised basis: and to arrange training of members of the (i) 0) perform such further functions as may be prescribed. 40 45 48 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT. 2003 Directors’ affairs committee 64B. (1) The board of directors of a bank shall establish a directors’ affairs committee, consisting only of non-executive directors of the bank. 12) The functions of the directors’ affairs committee shall be to- assist the board of directors in its determination and evaluation of the adequacy, efficiency and appropriateness of the corporate governance structure and practices of the bank; establish and maintain a board directorship continuity programme entailing- (i) a review of the performance of and planning for successors to the 5 10 executive directors; (ii) measures (iii) a regular review of the composition of skills, experience and to ensure continuity of non-executive directors; other qualities required for the effectiveness of the board; and (iv) an annual assessment of the board as a whole and of the 15 contribution of each individual director; assist the board in the nomination of successors to the key positions in is in the bank in order to ensure that a management succession plan place; assist the board director should be terminated; assist the board in ensuring that the bank is at all times in compliance of conduct and with all applicable laws, regulations and codes practices; and perform such further functions in determining whether the employment as may be prescribed.”. 25 of any 20 (,f) Amendment of section 68 of Act 94 of 1990, as amended by sections 16 and 25 of Act 9 of 1993, section 42 of Act 26 of 1994 and section 9 of Act 36 of 2000

Section 45Verify source

§ 46Section 68 of the principal Act is hereby amended-Substitution

This provision amends section 68 so the Master must appoint a Registrar-designated person to help a bank liquidator, and it sets filing and reporting steps for winding-up applications for banks.

46. Section 68 of the principal Act is hereby amended- ( a ) by the substitution in subsection (1) for paragraph (c) of the following paragraph: “(c) the Master shall appoint a person designated by the Registrar, who shall be a person who in the opinion of the Registrar has wide experience of, the banking and is knowledgeable about the latest developments in, to in industry, to assist a provisional liquidator or liquidator referred paragraph (b) in the performance provisional liquidator or liquidator in respect of the bank in question.”; and of [his] functions of such 35 30 ( b ) by the substitution in subsection (3) for paragraph (a) of the following paragraph: “ ( a ) of section 346 of the Companies Act, subsection (4) of that section shall 40 be deemed to have been amended to read as follows: ‘(4) (a) Before an application for the winding-up of a company which is a bank is presented to the Court, a copy of the application and of every affidavit confirming the facts stated therein shall be lodged with the Registrar of Banks and with the Master, or if there is no Master at the seat 45 of the Court, with an officer in the public service designated for that purpose by the Master by notice [ofl the Gazette. ( b ) The Registrar of Banks or the Master or any such officer may report [him] such Registrar, Master or to the court any facts ascertained by officer which appear to [him] such Regiswar, Master or officer to justify SO the Court in postponing the hearing or dismissing the application, and shall transmit a copy of that report to the applicant or [his] the agent of such applicant and to the said company.’; and”. 50 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 Amendment of section 69 of Act 94 of 1990, as amended by section 8 of Act 42 of 1992, sections 17 and 25 of Act 9 of 1993, section 43 of Act 26 of 1994, section 6 of Act 55 of 1996 and section 10 of Act 36 of 2000

Section 46Verify source

§ 47Section 69 of the principal Act is hereby amended-Substitution

The Minister can appoint a curator for a bank and later change the curator’s powers. The curator must report if the curatorship is no longer likely to help the bank pay its debts, and must keep records of actions taken.

47. Section 69 of the principal Act is hereby amended- ( a ) by the substitution in subsection (1) for paragraph (a) of the following 5 paragraph: “ ( a i If, in the opinion of the Registrar, any bank will be unable to or will to do SO, deposits made with it repay, when legally obliged probably be unable to meet any other of its obligations, the Minister may, if he or she deems it desirable consent of the chief executive officer or the [chairman] chairperson of the board of directors of that bank, appoint a curator to the bank.”; (c) of the following in the public interest, with (1) for paragraph the written 10 (b) by the substitution in subsection paragraph: “ ( c ) The person appointed in terms of paragraph (b) shall in respect of 15 the services rendered by appointment be paid such remuneration out under curatorship as the Registrar may after consultation with the curator determine.”; (ci by the substitution in subsection of the funds of the bank [him] that person pursuant (b) of the following (2) for paragraph to his or her 20 paragraph: “(b) directions in regard to the security which the curator has to furnish for the proper performance of his duties;”; (d) by the substitution for subsection (2D) of the following subsection: “(2D) If at any time the curator is of the opinion that there is no reasonable probability that the continuation of the curatorship will its obligations and become a enable the bank to pay its debts or meet successful concern, [he] the curator shall forthwith in writing inform the Registrar of such opinion.”; (e) by the substitution for subsection (2E) of the following subsection: 25 30 “(2E) Any money of the bank that becomes available to the curator shall be applied by him or her in paying the costs of the curatorship and in the conduct of the bank’s business in accordance with the requirements of the curatorship and, as far as the circumstances permit, in the payment of the claims curatorship.”; of creditors which arose before the date of the 35 (fl by the substitution in subsection (3) for the words preceding paragraph (a) of the following words: letter of appointment or at any time “The Minister may, in the subsequent thereto, empower the curator in his or her discretion, but subject to any condition which the Minister may impose-”; (8) by the substitution for paragraphs (a), (b), (c) and (d) of subsection (3) of the 40 following paragraphs, respectively: “ ( a ) to suspend or reduce, as from the date of [his] the curator’s appointment as [curator] creditors of the bank concerned to claim or receive interest on any money owing to them by that bank; or any subsequent date, the right of 45 (c) deem fit; jb) to make payments, whether in respect of capital or interest, to any in such creditor or creditors of the bank concerned at such time, in such manner as [he] the curator may order and to cancel any agreement between the bank concerned and any other party to advance moneys due after the date of [his] the curator’s appointment as [curator] &, extend any existing facility, if, in the opinion of the curator, such advance or any loan under such to the secured or would curator or if the bank lacks the necessary funds to meet its obligations under any such agreement or if it would not otherwise be in the interests of the bank; not be repayable on terms satisfactory facility would not be adequately or to cancel any agreement to 50 55 ( d ~ to convene from time to time, in such manner as [he] the curator 60 may deem fit, a meeting of creditors of the bank concerned for the of the bank’s purpose of establishing the nature and extent 52 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 creditors and for consultation with such indebtedness to such creditors in so far as their interests may be affected by decisions taken by the curator in the course of the management of the affairs of the bank concerned;”; ( h ) by the substitution in subsection (3) for paragraph rf) of the following paragraph: ‘‘V) to make and carry out, in the course of [his] the curator’s management of the bank concerned, any decision which in terms of the provisions of the Companies Act would have been required to be made by way of a special resolution contemplated in section 199 of the said Act;”; (i) by the substitution for subsection (3A) of the following subsection: “(3A) The curator shall duly record the nature of and the reasons for each act performed by [him] the curator under any power conferred upon [him] the curator in terms of subsection (3), and such records shall be examined as part of the normal audit performed in respect of the affairs of the bank concerned.”. 5 10 15 ( j ) by the substitution for subsection (4) of the following subsection: ‘.(4) The Minister may, at any time and in any manner, amend the directions in the letter of appointment, and the powers granted by [him] the Minister under subsection (3) to the curator.”; and 20 ( k ) by the substitution for subsection (7) of the following subsection: “(7) The Registrar shall as soon as the appointment of a curator and the powers granted to [him] the curator on [his] the appointment of the curator, and any amendment or withdrawal of such powers, by notice in the Gazette.”. is practicable announce 25 Amendment of section 69A of Act 94 of 1990, as inserted by section 44 of Act 26 of 1994 and amended by section 11 of Act 36 of 2000

Section 47Verify source

§ 48Section 69A of the principal Act is hereby amended-Substitution

This section lets the Registrar appoint assistants for an investigation, requires the Registrar to ensure appointees can report objectively, and gives the commissioner powers to examine, summon, and restrict publication of certain evidence.

48. Section 69A of the principal Act is hereby amended- ( a ) by the substitution for subsection (2) of the following subsection: 30 “ ( 2 ) The Registrar may appoint a person as an assistant or two or more persons as assistants to the commissioner referred to in subsection (1) in order to assist the commissioner, subject directions of the Registrar, in an investigation contemplated in subsec- tion (l).”; control and to [his] (b) by the substitution for subsection (3) of the following subsection: “(3) Before the Registrar appoints a commissioner in terms of subsection (1) or a person or persons in terms of subsection (2), [he] the Registrar shall take all reasonable steps to ensure that the person or persons [he appoints] so appointed will be able to report objectively and impartially on the affairs of the bank concerned or the associate or associates of such bank.”; ( c ) by the substitution for subsection (4) of the following subsection: “(4) A commissioner appointed under subsection (1) and any person or persons appointed under subsection (2) shall for the purpose of their functions in terms of this section have powers and duties in all respects corresponding to the powers and duties conferred or imposed by [section 4(1), (2), (3), (4) and (6)] sections 4 and 5 of the Inspection of Financial Institutions Act, [1984 (Act No. 38 of 1984-hereinafter in this section referred to as the Inspection Act)] 1998 (Act No. 80 of 1998), upon a registrar or an inspector contemplated in the Inspection of Financial Institutions Act, 1998: Provided that for the purposes of this section- 35 40 45 50 any reference to an ‘institution’ or a ‘financial institution’ in [section] sections 4 and 5 of the [Inspection Act] Inspection of Financial lnstitutions Act, 1998, shall be deemed to be a reference to 55 a bank under curatorship or any of its associates: and any reference to ’the registrar’ and ‘an inspector’ in [section] of the [Inspection Act] Inspection of Financial sections 4 Institutions Act, 1998, shall be deemed to be a reference to the commissioner and any person appointed respectively.”: under subsection (2), 60 54 GAZETTE, GOVERNMENT No. 25294 2003 5 AUGUST Act No. 19,2003 BANKS AMENDMENT ACT, 2003 (d) by the substitution for subsection ( 5 ) of the following subsection: “(5) When an investigation is made under this section and section 4 of the Inspection of Financial Institutions Act, 1998 (Act No. 80 of 1998), applies, subsection (l)(a) of that section shall be deemed to have been amended to read as follows: ‘(1) In carrying out an investigation into the business, trade, dealings, affairs or assets and liabilities of a bank under curatorship, a commissioner may- (a) administer an oath or affirmation or otherwise exanline any person who is, or formerly was, a director, servant, employee, partner, member or shareholder of the institution: Provided that the person examined, whether under oath or not, may have his or her legal adviser present at the examination: Provided further that on good cause shown the commissioner may direct shall be held in that the proceedings under this paragraph camera and not be accessible to the public;’ ”; ( e ) by the insertion of the following subsection after subsection (5): “(5A) When an investigation is made under this section and section 5 1998 (Act No. 80 of of the Inspection of Financial Institutions Act, 1998), applies subsection (l)(a) of that section shall be deemed to have been amended to read as follows: 5 10 15 “(1) In carrying out an investigation into the business, trade, dealings, affairs or assets and liabilities of a bank under curatorship, a commissioner may- (a) administer an oath or affirmation or otherwise examine any person, if the commissioner has reason to believe that such a to the person may be able to provide information relating affairs of the bank: Provided examined, whether under oath or not, may have his or her legal adviser present at the examination: Provided further that on good cause shown the commissioner may direct under this paragraph accessible to the pGblic;’ ”; that the proceedings shall be held in camera and not be that the person - - (‘0 by the substitution in subsection (6) for paragraphs (a) and ( 6 ) of the following . ~~ paragraphs, respectively: “(a) Any person examined by a commissioner under this section shall not be entitled, at such examination, to refuse to answer any question upon the ground that the answer would tend to incriminate him e or upon the ground that he & is to be tried on a criminal charge and may be prejudiced at such trial by his e answer. ( b ) Where any person gives evidence in terms of the provisions of this 40 - _ section and is obliged to-answer questions that may incriminate him @ or, where he or she is to be tried on a criminal charge, &t may prejudice him or her at such trial, the commissioner shall direct, in respect of such part of the proceedings, that no information regarding such questions and answers may be published in any manner whatso- ever.” ; (g) by the substitution for subsection (7) of the following subsection: “(7) In addition to the powers conferred upon the commissioner by subsection (4) the commissioner shall for the purpose of the performance of [his] the functions of the Commissioner under this section have the power tosummon before [him] the commissioner any such person as [he] the commissioner may examine of subsection (5)”; in terms of the provisions (12) by the substitution for subsection (8) of the following subsection: ‘.(8) If any person who has been duly summoned under subsection (7) and to whom a reasonable sum for [his] the expenses of such person has been tendered, fails to attend before a commissioner at the time and place appointed by the summons without lawful excuse made to the commissioner at the time of the sitting, the commissioner may cause the 35 45 50 55 60 56 GAZETTE, GOVERNMENT No. 25294 2003

Section 48Verify source

§ 5AUGUSTSubstitution

A commissioner must finish the investigation within 5 months of appointment and file a written report within 30 days after it is completed. People duly summoned under the section are entitled to witness fees, and non-compliance with summons or related requests can be an offence.

5 AUGUST Act No. 19,2003 BANKS AMENDMENT ACT, 2003 person so summoned to be apprehended and brought before [him] the commissioner for examination.”: - (ij by the substitution for subsection (9) of the following subsection: “(9) Any person duly summoned under subsection (7) shall be entitled to such witness fees as [he] such person would have been entitled to if he [were] or she had been a witness in civil proceedings in a magistrate’s court.”; 5 ( j ) by the substitution in subsection (1 1) for the words preceding paragraph ( a ) of the following words: “A commissioner shall within a period of five months as from the date of 10 [his] the commissioner’s appointment complete [his] investigation in terms of subsection (1 j and shall within a period of 30 days after completion of such investigation prepare a written report thereon, in which, inter diu, shall be stated whether or not, in the opinion of the commissioner-”; and 15 ( k ) by the substitution for subsection (14) of the following subsection: “( 14) Any person who- ( a ) has been duly summoned under this section by a commissioner and who fails, without sufficient cause, to attend at the time and place specified in summons; (bj has been duly summoned under this section by a commissioner and the who- (ij fails, without sufficient cause, to remain in attendance until excused by the commissioner from further attendance; (ii) refuses to be sworn (iiij fails, without sufficient cause- or to affirm as a witness; or 20 25 (aa) to answer fully and satisfactorily any question lawfully put to [him] such person by a commissioner, notwith- standing that such answer may tend to incriminate him g &; or 30 (bbj to produce books or papers in [his] &custody of such person or under [his] &control of such person which a commissioner has required him e to produce; (c) wilfully furnishes the commissioner with any false information; (dj refuses or fails to comply to the best of his reasonable request made to him &by the commissioner in the exercise of [his] the commissioner’s powers or the performance of [his] the commissioner’s duties; ability with any 35 (e) wilfully hinders the commissioner in the exercise of his or her (f) the performance of his powers or fails to comply with any provision of a direction by the commis- sioner or the Registrar as contemplated in this section, duties: or 40 shall be guilty of an offence.”. Amendment of section 70 of Act 94 of 1990, as amended by section 9 of Act 42 of 1992, sections 18 and 25 of Act 9 of 1993, section 45 of Act 26 of 1994 and section 12 45 of Act 36 of 2000

Section 5Verify source

§ 49Section 70 of the principal Act is hereby amended-Substitution

This provision amends section 70 by changing how certain amounts are calculated using prescribed percentages and averages of assets and other risk exposures.

49. Section 70 of the principal Act is hereby amended- (a) by the substitution in subsection (2)(a) for subparagraph (iij of the following subparagraph: “(ii) an amount which represents a prescribed percentage of the sum of 50 amounts calculated by multiplying the average of the amounts (as shown in the returns furnished to the Registrar in terms of section 75[(l)ja)(ii)]) of such different categories of- (aaj assets; and (bbj other risk exposures in the conduct of its business,”; and 55 ( b ) by the substitution in subsection (2B)(a)(ii) for item ( a a ) of the following item: “ ( m j of the sum of amounts calculated by a prescribed percentage multiplying the average of the amounts (as shown in the returns furnished to the Registrar- in terms of section 75[(l)(a)(ii)]), of 60 such different categories of- (A) assets: and GOVERNMENT 58 25294 No. GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 (B) other risk exposures in the conduct of its business, as may be prescribed in the Regulations relating to Banks, by so prescribed in the risk weights, expressed as percentages, respect of such different categories of assets and other risk exposures; and”. 5 Amendment of section 72 of Act 94 of 1990, as amended by section 10 of Act 42 of 1992, section 25 of Act 9 of 1993 and section 14 of Act 36 of 2000

Section 49Verify source

§ 50Section 72 of the principal Act is hereby amended by the substitution forSubstitution

A bank must not pledge or otherwise encumber its liquid assets held under subsection (1), unless the Registrar exempts it.

50. Section 72 of the principal Act is hereby amended by the substitution for subsection ( 3 ) of the following subsection: “ ( 3 ) A bank shall not pledge or otherwise encumber any portion of the liquid assets held by it in compliance with the provisions of subsection (1): Provided that the Registrar may exempt a bank from the prohibition contained in this subsection on such conditions and to such an extent and for such a period as [he] the Registrar may determine.”. 10 Amendment of section 73 of Act 94 of 1990, as substituted by section 15 of Act 36 of 2000 15

Section 50Verify source

§ 51Section 73 of the principal Act is hereby amended by the substitutionSubstitution

If a private sector non-bank person’s specified investments, loans, advances and other credit exceed 800% of its capital and reserves, it becomes subject to additional capital requirements that may be prescribed.

51. Section 73 of the principal Act is hereby amended by the substitution in subsection (1) for paragraph (b) of the following paragraph: “ ( b ) shall in the event of the aggregate amount of investments, loans, advances and other credit contemplated in paragraph (a), relating to any private sector non-bank person, exceeding 800 per cent of such an amount of its capital and reserves as may capital requirements as may be prescribed.”. be subject to such additional be prescribed, 20 Amendment of section 74 of Act 94 of 1990, as amended by sections 20 and 25 of Act 9 of 1993 25

Section 51Verify source

§ 52Section 74 of the principal Act is hereby amended-Substitution

The Registrar may act against a bank, may excuse non-compliance in suitable circumstances, and may recover an unpaid fine through civil action. Fines must be paid to the Registrar within the time stated in the notice.

52. Section 74 of the principal Act is hereby amended- ( a ) by the substitution for subsection (2) of the following subsection: “(2) The Registrar may summarily take action under this Act against a bank referred to in subsection (1) or, if in the circumstances [he] the Registrar deems it fit to do so, condone the failure or inability and aE03 30 the bank concerned Registrar may determine, to comply with the relevant provision within a specified period.”; and an opportunity, subject to such conditions as the (6) by the substitution for subsection (4) of the following subsection: “(4) A fine imposed under subsection (3) shall be paid to the Registrar 35 within such period as may be specified in the relevant notice, and if the bank Concerned fails Registrar may by way of civil action in a competent court recover from that bank the amount of the fine or any portion thereof which [he] the Registrar may in the circumstances consider justified.”. fine within the specified period the to pay the - 40 L Amendment of section 75 of Act 94 of 1990, as amended by section 12 of Act 42 of 1992, sections 21 and 25 of Act 9 of 1993 and section 47 of Act 26 of 1994

Section 52Verify source

§ 53Section 75 of the principal Act is hereby amended by the substitution forSubstitution

Banks must give the Registrar an auditor’s report for certain year-end returns, and the Registrar may require similar reports for other returns during the financial year.

53. Section 75 of the principal Act is hereby amended by the substitution for subsection (5) of the following subsection: “(5) A bank shall furnish the Registrar, in respect of those of the respective returns referred to in subsections (1) and (3) which most nearly coincide with the end of the financial year of the bank with a report by the auditor of the bank in which is stated whether or not those returns fairly and in conformity with generally accepted accounting practice present those affairs of the bank to which the returns relate, and the Registrar may, if he orshe deems it necessary, require the bank so to furnish [him] the Registrar with such a report in respect of any other of those returns furnished during the financial year.”. 4s so 60 No. 75294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19, 2003 BANKS AMENDMENT ACT. 2003 Substitution of section 76 of Act 94 of 1990, as amended by section 2 of Act 81 of 1991, section 25 of Act 9 of 1993 and section 48 of Act 26 of 1994

Section 53Verify source

§ 54The following section is hereby substituted for section 76 of the principal Act:Substitution

Banks must keep certain property, share, loan, and advance exposures within a prescribed limit, unless the Minister gives written approval for a higher amount.

54. The following section is hereby substituted for section 76 of the principal Act: “Restriction on investments in immovable property and shares, and on loans and advances to certain subsidiaries 76. ( I ) Subject to the provisions of subsection ( 2 ) , a bank which invests money in immovable property or in shares of any company, or which lends or advances money to any of its subsidiaries [of which the main object is the acquisition and holding or development of immovable property,] shall manage its transactions in such investments, loans or advances in such a way that the sum of the amounts- l a ) invested by it in immovable property, taken at the book value thereof; ( b ) invested by it in shares of any company (excluding preference shares which are not convertible into ordinary shares), taken at the price at which they were acquired; and (c) owing to it by any such subsidiary in respect of a loan or an advance granted by it, 5 10 15 does not at any time exceed a prescribed amount. (2) A bank may with the written approval of the Minister and subject to such conditions as he or she may determine, make investments and grant loans and advances, referred to in subsection (l), to an aggregate amount which exceeds the sum to which it is limited in terms of subsection (l).”. 20 Amendment of section 77 of Act 94 of 1990, as amended by section 13 of Act 42 of 1992, section 25 of Act 9 of 1993 and section 49 of Act 26 of 1994

Section 54Verify source

§ 55Section 77 of the principal Act is hereby amended by the substitution forSubstitution

A bank must keep certain investments, loans, advances, and guarantees involving associates within a prescribed limit.

55. Section 77 of the principal Act is hereby amended by the substitution for 25 subsection (1) of the following subsection: “( 1) A bank which invests money in debentures or preference shares of any of its associates (excluding any such associate which is a subsidiary referred to in section 76( I), a bank or a mutual building society), or which lends or advances money to any such associate, or which provides guarantees in respect of liabilities of such associates. shall manage its transactions in such investments, loans, advances or guarantees in such a way that the sum of the amounts- ( a ) invested by it in debentures or preference shares of such associates (excluding debentures or preference shares which are convertible into ordinary shares), taken at the price at which they were acquired; (bj owing to it by such associates in respect of loans or advances granted by it; 30 35 and ( c ) of such guarantees, does not at any time exceed ten per cent of [its liabilities, excluding its liabilities in respect of capital and reserves] the amount prescribed.”. 40 Amendment of section 78 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 50 of Act 26 of 1994

Section 55Verify source

§ 56Section 78 of the principal Act is hereby amended-Substitution

Banks are prohibited from making certain loans, acting as an agent in a money-lending transaction except in a stated agency arrangement, and paying dividends from share capital without the Registrar’s prior written approval.

56. Section 78 of the principal Act is hereby amended- ( 0 ) by the substitution in subsection (1) for paragraph jbj of the following paragraph: “ ( b ) shall not lend money to any person against security of its own shares 45 or of shares of that bank’s controlling company;”; ( b ) by the substitution in subsection (1) for paragraph (8) of the following paragraph: *‘(g) shall not, for the purpose of effecting a money lending transaction 50 directly between a lender and a borrower, perform any act in the capacity of an agent except where the funds to be lent in terms of the money lending transaction are entrusted by the lender to the bank 62 No. 25294 GAZETTE, GOVERNMENT 2003 5 AUGUST Act No. 19,2003 BANKS AMENDMENT ACT. 2003 subject to a written contract of agency in which, in addition to any other terms thereof, at least the following matters shall be recorded: (i) Confirmation by the lender that the bank acts as [his] the agent - of the lender; (ii) that the lender assumes, except in so far as [he] the lender may in law have a right of recovery against the bank, all risks connected with the placing by the bank of the funds entrusted to it by the lender, as well as the responsibility to ensure that the bank executes the lender’s instructions as recorded in the written contract of agency; and (iii) that no express or implied guarantee regarding the payment of to another in any amount of money owing by one person pursuance of the relevant money lending transaction furnished by the bank;”; and is (c) by the addition to subsection (1) of the following paragraph: “(kj shall not, without the prior written appiovai 0; the Registrar and notwithstanding anything to the contrary contained in any law, pay out dividends from its share capital.”. 5 10 15 Amendment of section 81 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 53 of Act 26 of 1994 20

Section 56Verify source

§ 57Section 81 of the principal Act is hereby amended by the substitutionSubstitution

If the Registrar suspects unauthorized banking activity, the Registrar may apply to court for an order stopping the conduct, stopping repetition, or preventing disposal of assets during investigation.

57. Section 81 of the principal Act is hereby amended by the substitution for subsection (1) of the following subsection: “( 1) If the Registrar has reason to suspect that any person who is not registered as a bank in terms of this Act nor authorized in terms of the provisions of section 18A(1) to carry on the business of a bank- (a) is likely to conduct the business of a bank in contravention of the provisions 25 of section 11(1) or 18A(6); or (b) has so contravened the provisions of section ll(1) or 18A(6) or has contravened the provisions of section 22(4) or ( 5 ) , or that such a contravention is likely to be continued or repeated, 30 apply to a division of the [Supreme] the Registrar may iurisdiction (hereinafter in this section referred to as the court) for an order- >(i) prohibiting the anticipated contravention referred to in paragraph (a); (ii) prohibiting the continuation or repetition of a contravention referred _ _ Court having to in 35 paragraph ( 6 ) ; or (iii) prohibiting the person concerned from disposing of or otherwise dealing with any of [his] the [or its] assets of that person while the contravention suspected of having been committed or of being continued is investigated.”. Amendment of section 82 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 54 of Act 26 of 1994 40

Section 57Verify source

§ 58Section 82 of the principal Act is hereby amended by the substitution forSubstitution

If the Registrar suspects an unregistered and unauthorised person is carrying on banking business, the Registrar may require that person to provide specified documents or information in writing.

58. Section 82 of the principal Act is hereby amended by the substitution for subsection (1) of the following subsection: “(1) If the Registrar has reason to suspect that any person who is neither registered as a bank nor authorized in terms of the provisions of section 18A( 1) to carry on the business of a bank is carrying on the business of a bank, the Registrar may by notice in writing direct that person to submit to [him] the Registrar such document or to furnish [him] the Registrar with such information, relating to the affairs of that person, as the Registrar may specify in the notice and as may be available to that person.”. 45 64 No. 25194 GAZETTE, GOVERNMENT 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT. 2003 Amendment of section 83 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993 and section 55 of Act 26 of 1994

Section 58Verify source

§ 59Section 83 of the principal Act is hereby amended-Substitution

The Registrar may order a person to repay money obtained from carrying on banking business without registration or authorization. If the person does not comply, they commit an offence and the Registrar may seek winding-up or sequestration.

59. Section 83 of the principal Act is hereby amended- ( a ) by the substitution for subsection (1) of the following subsection: “(1) If as a result of an inspection conducted under section 12 of the 5 No. 90 of 1989), the South African Reserve Bank Act, 1989 (Act Registrar is satisfied that any person has obtained money by carrying on the business of a bank without being registered as a bank or without being authorized, in terms of the provisions of section 18A(1), to carry on the business of a bank, the Registrar may in writing direct that person to repay, subject to the provisions of section 84 and in accordance with such requirements and within such period as may be specified in the direction, all money so obtained by [him] that person in so far as such or any other money has not yet been repaid, including any interest amounts owing by [him] that person in respect of such money.”; and (bj by the substitution for subsection (3) of the following subsection: “(3) Any person who refuses or fails to comply with a direction under subsection (1)- or to shall be guilty of an offence; and the purposes of any law relating to the winding-up of shall for the sequestration of insolvent estates, be juristic persons deemed not to be able to pay [his] the debts owed by such person or to have committed an act of insolvency, as the case may be, and the Registrar shall, notwithstanding anything to the contrary contained in any law, be competent to apply for the winding-up of such a juristic person or for the sequestration of the estate of such a person, as the case may be, to any court having jurisdiction.”. 10 15 20 25 Amendment of section 84 of Act 94 of 1990

Section 59Verify source

§ 60Section 84 of the principal Act is hereby amended-Substitution

The Registrar must appoint a manager after a direction under section 83(1), and the manager controls repayment and can use inspection-type powers. The affected person’s specified assets are restricted unless the manager gives written permission.

60. Section 84 of the principal Act is hereby amended- (a) by the substitution for subsection (1) of the following subsection: 30 “(1) Simultaneously with the issuing of a direction under section 83( I), or as soon thereafter as may be practicable, the Registrar shall by a letter of appointment signed by him or her appoint a person (hereinafter in this section referred to as the manager) to manage and control the repayment of money in compliance with the direction by the person subject thereto.”; 35 (b) by the substitution for subsection (2) of the following subsection: “(2) The Registrar shall serve a copy of the letter of appointment (1) upon the person subject to the relevant referred to in subsection direction, and such person shall, with effect from the date of the letter of appointment, be prohibited from disposing of or otherwise dealing with such of [his] assets of such person as are specified in the letter of appointment, except with the written permission of the manager.”; ( e ) by the substitution for subsection (3) of the following subsection: “(3) The manager shall act under the control of the Registrar, and [he] the manager may from time to time apply to the Registrar for instructions in regard to any matter arising out of or in connection with the performance of his & duties in terms of subsection (4).”; in subsection (4) for paragraph (c) of the following (d) by the substitution paragraph: ”(c) to report the suspected commission by any person of any offence of which [he] the manager becomes the course of the duties as manager in terms of this section, performance of his to the [attorney-general] responsible prosecuting authorities hav- ing jurisdiction in the area in which such offence is so suspected of having been committed; and”; aware in ( e ) by the substitution in subsection (4) for paragraph (dl of the following paragraph: 40 45 50 55 ‘.(d) to perform any other function assigned to [him] the manaFer by the Registrar in connection with the finalization of the repayment of money in accordance with the relevant direction.”; 60 66 No. 25294 GAZETTE, GOVERNMENT 5 AUGUST 2003 Act No. 19.2003 BANKS AMENDMENT ACT, 2003 cf) by the substitution for subsection (5) of the following subsection: “(5) For the purposes of the performance of [his] the duties as set out in subsection (4), the manager shall, in relation to the person subject to the relevant direction and in relation to the affairs of that person, have the powers conferred by [section 4(1), ( 2 ) , (3) and (4)] sections 4 and 5 of the inspection of Financial institutions Act, 11984 (Act No. 38 of 1984)] in [that 1998 (Act No. 80 of 1998), upon an inspector contemplated section] those sections, as if the manager were an inspector and the person subject to the direction were a financial institution contemplated in [that section] those sections.”; 5 10 (g) by the substitution for subsection (6) of the following subsection: “(6) The manager shall in respect of the services rendered by him or - her in terms of this section and the responsible inspector or inspectors shall in respect of an inspection referred to in section 83(1) conducted under section 12 of the South African Reserve Bank Act, 1989 (Act No. 15 such remuneration by the Registrar as [the 90 of 1989), be paid Minister] the Registrar may determine, and the Registrar may recover an amount equal to the remuneration so paid from the person subject to the direction or the inspection, as the case may be.”; (h) by the substitution for subsection (7) of the following subsection: 20 “(7) The manager shall hold office until the relevant direction has been fully complied with, but withdraw the appointment whereupon the manager shall vacate his office.”; of the manager the Registrar may at any time in writing on good cause shown, and subsection: 2s (i) by the substitution for subsection (8) of the following “( 8) Any person who- ( a ) when requested by the manager affirmation, refuses to do so; to take an oath or to make an (b) without lawful excuse refuses or fails to answer to the best of his or - her ability a question put to [him] such person by the manager in the 30 exercise of [his] the manager’s powers or the performance of [his] the manager’s duties, even though to incriminate that person; the answer may tend ( c ) wilfully furnishes the manager with any false information; (d) refuses or fails to comply to the best of his or her ability with any 35 reasonable request made to [him] such person by the manager in the exercise of [his] the manager’s powers or the performance of [his] the manager’s duties; (e) wilfully hinders the manager in the performance of [his] the exercise of [his] duties of the manager; powers or 40 or If) commits any other deed designed to obstruct, or to enable any person to evade, the repayment of money as required by a direction under section 83(1), shall be guilty of an offence: Provided that no answer given to a question put by the manager to a person in terms of this section and no information 45 proceedings.”. Amendment of section 86 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993

Section 60Verify source

§ 61Section 86 of the principal ActSubstitution

The Registrar may exempt a person from paying the prescribed fee for an inspection, certificate, copy, or extract if this is in the public interest.

61. Section 86 of the principal Act subsection (4) of the following subsection: is hereby amended by the substitution for 50 “(4) if the Registrar is of the opinion that a person requires an inspection or any certificate, copy or extract referred to in subsection (1) to promote any public interest, [he] the Registrar may exempt that person from the obligation to pay the prescribed fee in respect of such inspection, certificate, copy or extract.”. 55 68 No. 25294 ~~ Act No. 19.2003 GAZETTE, GOVERNMENT 5 AUGUST 2003 BANKS AMENDMENT ACT, 7-003 Substitution of section 88 of Act 94 of 1990

Section 61Verify source

§ 62The following section is hereby substituted for section 88 of the principal Act:Substitution

This section replaces section 88 of the principal Act with new text beginning “Limitation of liability”.

62. The following section is hereby substituted for section 88 of the principal Act: “Limitation of liability

Section 62Verify source

§ 88No liability shall attach to the South African Reserve Bank or, eitherAmendment

The Reserve Bank, its board members, the Registrar, and other officers or employees are not liable for loss or damage caused by acts or omissions done in good faith while performing functions or duties under the Act.

88. No liability shall attach to the South African Reserve Bank or, either in his or her official or personal capacity, any member of the board of directors of the said Bank, the Registrar or any other officer or employee of the said Bank, for any loss sustained by or damage caused to any person as a result of anything done or omitted by such member, the Registrar or such other officer or employee in the bona$de performance of any function or duty under this Act.”. 5 10 Amendment of section 89 of Act 94 of 1990

Section 88Verify source

§ 63Section 89 of the principal Act is hereby amended by the substitution forSubstitution

The Registrar may furnish information despite section 33(1) of the South African Reserve Bank Act, 1989.

63. Section 89 of the principal Act is hereby amended by the substitution for the words preceding paragraph ( a ) of the following words: “Notwithstanding the provisions of section 33(1) of the South African Reserve Bank Act, 1989 (Act No. 90 of 1989), the Registrar may furnish information as contemplated in that section-”. acquired by him 15 Amendment of section 90 of Act 94 of 1990, as amended by section 25 of Act 9 of 1993

Section 63Verify source

§ 64Section 90 of the principal Act is hereby amended-Substitution

This section amends section 90 to let the Minister prescribe matters and issue bank-director conduct guidelines, and it says a required return or statement is not treated as rendered unless it includes all required particulars.

64. Section 90 of the principal Act is hereby amended- ( a ) by the substitution in subsection (1) for paragraph ( b ) of the following 20 paragraph: “(b) subject to the provisions of the Companies Act, providing guide- lines relating to the conduct of, and prescribing requirements to be complied with by, a member of the board of directors of a bank in the performance of [his] functions [as] of such a director;”; for paragraph(ij of the following (bj by the substitution in subsection (1) paragraph: “(i) prescribing, generally, any matter, whether or not connected with any matter specified in paragraphs (a) to (hj, inclusive, which [he] the Minister may deem it necessary or expedient to prescribe in order that the objects achieved.”; and and purposes of this Act may be better ( e ) by the substitution for subsection (2) of the following subsection: “(2) A person who is obliged in terms of any provision of this Act to render a return or statement in a prescribed form, shall be deemed not to have rendered that return or statement unless [he] such person has set forth therein all the particulars for which provision is made in the prescribed form.”. 25 30 35 Amendment of section 91 of Act 94 of 1990, as amended by sections 23 and 25 of Act 9 of 1993, section 56 of Act 26 of 1994 and section16 of Act 36 of 2000 40

Section 64Verify source

§ 65Section 91 of the principal Act is hereby amended-Substitution

Section 91 is amended to make certain non-compliance and false-information conduct an offence, and to set fines, imprisonment, and daily penalties for late or incorrect submissions.

65. Section 91 of the principal Act is hereby amended- ( a ) by the substitution for subsection (1) of the following subsection: “( 1) Any person who- ( a ) fails to comply with a direction under section 7; (aA) in [completing] the completion of any questionnaire contemplated in the furnishing of any prescribed in section information contemplated in section 60(5) furnishes the Re,’ w t r a r with any information which to the knowledge of such person is untrue or misleading in any material respect[,]; or l(1A)jc) or 45 70 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 Act No. 19,2003 BANKS AMENDMENT ACT, 2003 (b) contravenes or fails to comply with a provision of section 7(3), (4) or (5), 34,35,37(1), 38(1), 39,41,42(1), 52(1) or (4), 53,55,58,59, 60(5)(a)(i), 60(5)(b)(i), 61(2), 65, 66,67, 70(2), (2A) or (7B), 70A, 72, 73, 75, 76, 77, 78(1) or (3), 79, 80 or 84(2), shall be guilty of an offence.”; (b) by the substitution for subsection (4) of the following subsection: 5 “(4) Any person convicted of an offence in terms of- section 1(1A)(d), 11(2), [18A(6) or] 18A(7), 22(4) or 60(5)(a)(i) or (b)(i) read with subsection (l)(b) of this section, shall be liable to a fine [not exceeding RlOO 0001 or to imprisonment for a period not exceeding [five] ten years or to both imprisonment; [or] section 17(6), 21, 22(3) or 83(3)(aj, 84(8) or subsection (excluding the offence in terms of subsection (l)(b), referred to in paragraph (a)), shall be liable to a fine [not exceeding R10 0001 or to imprisonment for a period not exceeding [six months] five years or to both [such] 2 fine and such i m p r i s o n m e n t s (8), 32(4)(a), 69A(14), 78(2), 82(3), (l), (2) or (3) of this section [such] 2 fine and such 10 15 (c) any other provision of this Act in respect of which no specific penalty has been prescribed imprisonment for a period not exceeding and such imprisonment.”; shall be liable to a fine or to five years or to both a fine 20 (c) by the substitution for subsection (6) of the following subsection: “(6) If any person fails to submit to the Registrar or to fcmish the return, statement, report or other document or Registrar with any information in accordance with a requirement period determined by or under extended by the Registrar under section 8(2)(a), within the extended period, the Registrar may impose upon [him] such person by way of a notice in writing a fine not exceeding [RlOO] RlOOO for every day during which such failure continues.”; of this Act within the this Act or, if that period has been 25 30 (d) by the insertion after subsection (6) of the following subsection: “(6A) If any person submits to the Registrar or furnishes the Registrar results in that person having to revise, with any return, statement, report or other document or information accordance with a requirement of this Act containing materially incorrect or inaccurate information that correct or resubmit such a return, statement, report or other document or information, the Registrar may impose upon such person notice in writing a fine not exceeding RlOOO for every day during which 40 such a return, statement, report or other document or information has not been revised, corrected or resubmitted to the satisfaction Registrar.” ; and (e) by the substitution for subsection (7) of the following subsection: by way of a of the 35 in “(7) A fine imposed under subsection (6) or (6A) shall be paid to the Registrar within such period as may be specified in the notice, and if the 45 person concerned fails to pay the fine within the specified period the Registrar may by way of civil action in a competent court recover from such person the amount of the Registrar may in the circumstances consider justified.”. fine or any portion thereof which the Amendment of section 92 of Act 94 of 1990, as amended by section 57 of Act 26 of 50 1994

Section 65Verify source

§ 66Section 92 of the principal Act is hereby amended-Short title

A standing committee member holds office for the period the Minister determines.

66. Section 92 of the principal Act is hereby amended- ( a ) by the substitution for subsection (2) of the following subsection: “(2) A member of the standing committee shall hold office for such period as the Minister may determine, and shall reappointment on the expiration member.” : of [his] be eligible for 55 term of office of such a (b) by the deletion of subsection (4). 72 No. 25294 GOVERNMENT GAZETTE, 5 AUGUST 2003 ~ _ _ _ _ _ Act No. 19,2003 BANKS AMENDMENT ACT, 2003 Short title

Section 66Verify source

§ 67This Act is called the Banks Amendment Act, 2003.Short title

This section gives the Act its short title: the Banks Amendment Act, 2003.

67. This Act is called the Banks Amendment Act, 2003.

Section 67Verify source

Legislative relationships

13 referenced instruments

Names are derived from the stored provision headings and citation-enrichment layer. Treat this as a research index and verify each relationship against the source text.

A–F

7 instruments

Act. 28. Section 41 of the principal Act
Section 28
audit committee rules for section 64 of the principal Act
Section 44
Banks Act, 1990
Section 1
Chapter X of the Companies Act
Section 42
Companies Act
Sections 14, 19, 27, 28, 30, 36, 40, 46, 47, 64
Companies by that bank in accordance with that Act
Section 38
Financial Institutions Act
Sections 3, 60

G–M

2 instruments

Inspection of Financial Institutions Act
Section 48
Maintenance and Promotion of Competition Act, 1979
Section 25

N–S

3 instruments

principal Act
Sections 22, 23, 34, 39
South African Reserve Bank Act, 1989
Section 63
Stock Exchanges Control Act, 1985
Section 26

T–Z

1 instrument

To amend the Banks Act, 1990
Section 1

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