Draft Legislation - proposed amendment of SA Reserve Bank Act - Government control of the Central Bank

The South African Reserve Bank Amendment Bill, 2010 provides for amendments to the South African Reserve Bank Act, 1989 for government control of the South African Reserve Bank. The proposed amendments provide inter alia that: (a) The Reserve Bank will be managed by a board of fifteen directors, including a governor and three deputy governors; (b) Eight of the fifteen directors, including the governor and deputy governors, will be appointed by the President of the Republic of South Africa, in some case after consultation with the Minister of Finance; (c) The remaining seven directors will be appointed by a newly established panel comprising mainly government appointees (directly or indirectly through the National Economic, Development and Labour Council) from certain persons nominated by the shareholders of the Reserve Bank; and (d) The executive authority of the Reserve Bank board is vested in those members of the board appointed directly by the President (i.e. the governor and deputy governors) whilst the powers of the other directors are limited to the "corporate governance" of the bank which is defined to include determining accounting and administration policies, budgets, reporting and retirement fund matters. This amendment comes at a time when the Reserve Bank has been criticized by government and labour for the relative strength of the Rand against major currencies (see for example the Minister of Finance's 2010 budget speech).

Draft legislation - proposed amendment of the Banks Act

The Banks Amendment Act, 2010 provides for amendments to the Banks Act, 1990. Most of the proposed amendments are intended to replace references to the Companies Act, 1973 and its provisions with references to the Companies Act, 2008 and its provisions, expected to come into effect later this year. Other proposed amendments are:

1. A new ground for revoking a banking licence will be a contravention of the Financial Centre Intelligence Centre Act, 2001 (which imposes a duty to report suspicious transactions to combat money laundering and tax evasion);

2. From the Memorandum on the objects of the Banks Amendment Bill it appears that the Reserve Bank disapproves of the practice amongst banks of giving the title of director of to someone who is not actually a director of the board of the bank and proposes outlawing this practice entirely. Although, the prohibition would apply only to the South African branches of international banks, staff members with the offending title visiting the Reserve Bank will presumably need to be more careful about handing out their business cards;

3. The role of audit committees under section 64A of the Banks Act, 1990 is extended to provide for the nomination of auditors, their remuneration, sourcing non-audit services, reporting and receiving complaints;

4. Banks and bank controlling companies must establish and maintain remuneration committees comprising three non-executive directors to undertake functions relating inter alia to determining and assessing remuneration policy of bank staff.

Strate - Securities custody, clearing and settlement - Revised fees

Strate, the securities depository that provides custody, clearing and settlement services in respect of South African uncertificated securities published a new fee schedule in April 2010. State's fees are set out in the following directives:

1. Directive SAF - Strate Fees 2010 - Equities;

2. Directive SGH - Fees - Money market Securities; and

3. Directive FSC - Strate Fees Bonds.

For further information concerning any item in this publication please contact Jurgens Bezuidenhout at JB@JurgensB.co.za

For information about Jurgens Bezuidenhout see www.Jurgens-Bezuidenhout.com