1. Banks Act Amendment Bill, 2003 Bulk of amendments “his”, “him”, “himself”, “chairman”, “he” Gender neutral – “person” to “him/her”, “his/her” Gender Sensitivity

2. Banks Act Amendment Bill, 2003 Exchequer Act - Public Finance Management Act, 1999 - “liquid assets” : securities ito PFM “to fund the National Government” Inspection of Financial Institutions Act, 1998 (1984) - sections 6, 69, 84 Amended Legislation

3. Banks Act Amendment Bill, 2003 Regulations relating to branches - sections 1 & 18A DI020 – Registrar to require “at any time” - section 1(1A) – not only with new appointment Circulars – also for distribution of information - section 6(4) Due diligence at expense of bank - section 7 Existing Practices

4. Banks Act Amendment Bill, 2003 Regulations relating to banks - sections 12, 16 & 43 Revocation of authorisation – 6 months (12 months) - section 14 (section 16) Name “bank” – also divisions, brands & products - sections 22(1) & 22(5) include branches/rep offices Illegal deposit-taking by persons not registered as a bank - section 81 – include branches Existing Practices (cont.)

5. Banks Act Amendment Bill, 2003 Supreme Court – High Court - sections 25, 28, 37(5), 54(8) & 81(1) Amended Names

6. Banks Act Amendment Bill, 2003 Consultation with Competition Commission (37(2)(b)) - Competition Act concurrent jurisdiction (“may” consult) Parliamentary procedure to amend Companies Act - section 51(3) Deletions

7. Banks Act Amendment Bill, 2003 Certain non-bank investments by controlling companies not to exceed 40% of share capital & reserves of bank and controlling company on a consolidated basis as prescribed by regulation Section 50 – Controlling Company Investments

8. Banks Act Amendment Bill, 2003 Enabling regulations relating to representative offices - section 34 Enabling compliance function - section 60A Enabling corporate governance - sections 1 and 60B Subordinated Legislation

9. Banks Act Amendment Bill, 2003 Compliance function - section 60A - bank shall establish independent compliance function - headed by compliance officer - perform function with reasonable care and skill - Registrar may set requirements in regulations Subordinated Legislation (cont.)

10. Banks Act Amendment Bill, 2003 Corporate Governance - section 1 - irt management of a bank/controlling company - includes all structures, processes, policies, systems & procedures - whereby bank/controlling company is governed. Subordinated Legislation (cont.)

11. Banks Act Amendment Bill, 2003 Corporate Governance - section 60B - officers establish and maintain - adequate & effective process of corporate governance - consistent with nature, complexity and risks inherent in bank - Registrar may set requirements in regulations Subordinated Legislation (cont.)

12. Banks Act Amendment Bill, 2003 “officers” = directors, CEO, executive officers & secretary officers owe fiduciary duty and duty of care & skill to bank - act bona fide for benefit of bank - avoid conflict of interests - possess knowledge and skill reasonably expected - exercise care in carrying out functions Section 60 – Duties of Directors

13. Banks Act Amendment Bill, 2003 Registrar may institute action ito section 424 Companies Act - against officers knowingly carrying on reckless business - amount recovered applied: - expenses incurred by Registrar - off-set amounts paid by Registrar or DIS - pro rata payment of losses of depositors Section 60 – Legal Action by Registrar

14. Banks Act Amendment Bill, 2003 Non-executive directors - bank gives Registrar written notice of nomination & DI020 - 30 days prior to appointment - Registrar may object to chairperson within 20 days - bank shall not appoint / appointment has no legal effect - disputes settled by arbitration – section 60(6) Section 60 – Appointment of Officers

15. Banks Act Amendment Bill, 2003 Executive officers - bank gives Registrar written notice of appointment & DI020 - Registrar may object to chairperson within 20 days - appointment terminated within 14 days - disputes settled by arbitration – section 60(6) Section 60 – Appointment of Officers

16. Banks Act Amendment Bill, 2003 Registrar may terminate appointment of current officers - if he has reason to believe - officer is no longer fit & proper - or not in public interest to continue with appointment Section 60 – Current Officers

17. Banks Act Amendment Bill, 2003 Registrar notifies officer concerned also CEO and chairperson Officer concerned - written response within 14 days Registrar gives decision in writing within 14 days thereafter Disputes referred to AFSA for arbitration Arbitrator confirms termination and termination = immediate or does not confirm termination and appointment continues Arbitrator’s finding is final and not subject to section 9 review Section 60(6) – Procedure

18. Banks Act Amendment Bill, 2003 Registrar approves auditor of bank & controlling company Appointment shall be for period and on conditions as as prescribed Grounds for refusal or withdrawal of approval Section 61 – Appointment of Auditors

19. Banks Act Amendment Bill, 2003 Further functions may be prescribed by regulation Section 64 – Audit Committee

20. Banks Act Amendment Bill, 2003 Board to appoint at least 3 members (2 non-executive) to Risk Committee Functions (to assist board): - to evaluate adequacy/efficiency of risk policies, practices - to identify build up/concentration of risks - to develop risk mitigation strategy - to ensure annual risk assessment is undertaken - to regularly monitor all key risks/performance indicators - facilitate and promote communication on above matters - establish independent risk management function/training - further functions as prescribed by Regulations Section 64A – Risk Committee

21. Banks Act Amendment Bill, 2003 Consist of ALL non-executive directors Functions (to assist board): - to evaluate adequacy/efficiency of corporate governance - to maintain board continuity programme - performance/succession planning - regular review of mix of skills & experience - annual self assessment of board - nomination of successors to board - terminate appointment of delinquent directors - ensure compliance with laws, regs, codes & practises - further functions as prescribed by Regulations Section 64B – Corporate Governance Committee

22. Banks Act Amendment Bill, 2003 Sections 70(2)(a)(ii) & 70(2B)(a)(ii)(aa) - delete (1)(a)(ii) in reference to section 75 Section 73(1)(b) - insert “relating to any private sector non-bank person” Section 76 - insert “of any company” after the word “shares” Clarifications

23. Banks Act Amendment Bill, 2003 Restriction of investments in debentures etc by banks Limited to 10% of amount prescribed by Regulations Section 77 – Restricted Investments

24. Banks Act Amendment Bill, 2003 Banks shall not lend money against security of own shares Or against security of controlling company shares Section 78(1)(b) – Undesirable Practices

25. Banks Act Amendment Bill, 2003 Bank shall not pay out dividends from share capital Without prior written approval of Registrar Section 78(1)(k) – Undesirable Practice

26. Banks Act Amendment Bill, 2003 Costs of inspectors and fund managers Relating to inspection of unregistered persons Remuneration as determined by Registrar Registrar may recover cost from person inspected Section 84(6) – Recovery of Costs of Inspection

27. Banks Act Amendment Bill, 2003 R100 000 and/or 5 years to fine in court’s discretion and/or 10 years R10 000 and/or 6 months to R100 000 in court’s discretion and or 5 years Fines for late returns R100 to R1000 for every day Section 91 – Increased Penalties

28. Banks Act Amendment Bill, 2003 If any person submits return, statement, report etc to Registrar in terms of the Act and information is incorrect or inaccurate Registrar may impose a fine of R1000 per day that the return etc is not revised, corrected or resubmitted Section 91(6A) – Incorrect Information