REPUBLIC OF SOUTH AFRICA

CONDUCT OF FINANCIAL INSTITUTIONS BILL

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(As introduced in the National Assembly (proposed section ); explanatory summary of
Bill published in Government Gazette No. of ) (The English text is the official
text of the Bill)
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(MINISTER OF FINANCE)

Draft September 2020

For Public Consultation

[B -2020]
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040818nim

BILL

To provide for a regulatory framework for the conduct of financial institutions

that will—

- protect financial customers, including by promoting the fair treatment and

protection of financial customers by financial institutions;

- support fair, transparent and efficient financial markets;

- promote trust and confidence in the financial sector;

- support innovation and the development of and investment in sustainable

innovative technologies, processes and practices;

- support sustainable competition in the provision of financial products and

financial services;

- promote financial inclusion;

- promote transformation of the financial sector; and

- assist the South African Reserve Bank in maintaining financial stability;

and to provide for matters connected therewith.

ARRANGEMENT OF SECTIONS

CHAPTER 1

INTERPRETATION, OBJECTS AND APPLICATION

PART 1
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INTERPRETATION

1. Definitions

2. Interpretation

PART 2

OBJECT AND APPLICATION OF ACT

3. Object of Act

4. General application of Act

5. Application of Act to prudentially regulated financial groups and financial

conglomerates

6. Application of Act to retirement funds and activities related to retirement funds

7. Exemptions from application of Act, or part, provision or requirement of Act

PART 3

COMPLIANCE BY FINANCIAL INSTITUTIONS

8. Compliance

CHAPTER 2

LICENSING

9. Power to grant licenses

10. Licensing per authorisation categories and subcategories

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11. Institutional form and structure requirements for licensees

CHAPTER 3

APPOINTMENT, LISTING AND DEBARMENT OF REPRESENTATIVES

12. Appointment of representatives

13. Requirements for appointment of representatives and duties of licensee

14. Requirements for representatives

15. Debarment of representatives by licensees

CHAPTER 4

CULTURE AND GOVERNANCE

16. Application of Chapter

PART 1

PRINCIPLES RELATING TO CULTURE AND GOVERNANCE AND OBLIGATIONS

OF GOVERNING BODY

17. Principles relating to culture and governance for financial institutions

18. Obligations of governing body

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PART 2

GOVERNANCE ARRANGEMENTS

19. Governance Arrangements

PART 3

REMUNERATION AND COMPENSATION PRACTICES AND MANAGEMENT OF

CONFLICTS OF INTEREST

20. Remuneration and compensation practices

21. Oversight and management of conflicts of interest

22. Disclosure by financial institutions of interest in related and inter-related parties

and other undertakings

PART 4

TRANSFORMATION POLICY

23. Transformation plan

PART 5

KEY PERSONS

24. Fitness and propriety and appointment of key person

25. Non-compliance by key person

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CHAPTER 5

FINANCIAL PRODUCTS AND FINANCIAL SERVICES

26. Principles for provision of financial products and financial services

27. Additional principles in relation to financial customers

28. Oversight arrangements

CHAPTER 6

ADVERTISING AND DISCLOSURE

29. Principles for advertising

30. Advertising

31. Disclosure

CHAPTER 7

POST-SALE BARRIERS AND OBLIGATIONS

32. Principles relating to post-sale barriers and post-sale obligations

33. Limiting unreasonable post-sale barriers

34. Post-sale obligations

35. Service levels

CHAPTER 8

SAFEGUARDING ASSETS AND OPERATIONAL REQUIREMENTS

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36. Application of Chapter

PART 1

SAFEGUARDING

37. Principles for persons dealing with trust property or assets of financial institutions

38. Declaration of interest

39. Investment of trust property

40. Segregation of trust property from property of financial institution

PART 2

OPERATING CAPITAL AND OPERATIONAL ABILITY

41. Operating capital

42. Operational ability

PART 3

CERTAIN TRANSACTIONS AND STRUCTURE

43. Conducting business other than licensed activities

44. Transfer, fundamental transaction or change of institutional form, acquisitions

and disposals

45. Registration of shares in name of nominee

46. Alteration of Memorandum of Incorporation or equivalent constitution, deed or

founding instrument of financial institution, and change of name of financial

institution
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CHAPTER 9

REPORTING

47. Application of Chapter

PART 1

REPORTING AND PUBLIC DISCLOSURE

48. Information for supervisory purposes

49. Public disclosures by financial institution

50. Incomplete, incorrect, false or misleading information

51. Information concerning beneficial interests

PART 2

ACCOUNTING RECORDS, FINANCIAL STATEMENTS, VERIFICATION OR

AUDITING AND INDEPENDENT REVIEW AND RETENTION OF RECORDS

52. Financial year of financial institution

53. Accounting records and financial statements

54. Auditing or independently reviewed annual financial statements

55. Retention of records

PART 3

AUDITORS
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56. Appointment of auditor

57. Duties of auditor

CHAPTER 10

CREDIT RATING SERVICES

58. Definitions
59. Application and purpose of Chapter
60. Use of credit ratings
61. Exemption of certain applicants from providing information for licensing
62. Use of credit ratings after suspension or revocation of licences
63. Requirements for endorsements of credit ratings
64. Liability of credit rating agency
65. Independence
66. Savings of rights

CHAPTER 11

GENERAL PROVISIONS

PART 1

MAKING OF CONDUCT STANDARDS AND RELATIONSHIP OF ACT AND

CONDUCT STANDARDS TO RULES

67. Conduct standards made by Authority

68. Relationship of Act and conduct standards to rules

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PART 2

APPLICATIONS AND NOTIFICATIONS

69. Applications

70. Notifications

PART 3

OFFENCES

71. Offences

CHAPTER 12

FINAL PROVISIONS

72. Review of Act

73. Savings

74. Transitional arrangements regarding licensing

75. Transitional arrangements regarding public sector retirement funds

76. Transitional arrangements regarding repealed legislation

77. Amendment of Schedules

78. Amendment of laws

79. Short title and commencement

SCHEDULE 1

CATEGORIES AND SUBCATEGORIES OF ACTIVITIES REQUIRING LICENSING

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SCHEDULE 2

INSTITUTIONAL FORM

SCHEDULE 3

ACTIVITIES OF REPRESENTATIVES

SCHEDULE 4

TRANSITIONAL ARRANGEMENTS IN RESPECT OF LICENSING

SCHEDULE 5

LAWS AMENDED AND REPEALED

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CHAPTER 1

INTERPRETATION, OBJECTS AND APPLICATION

PART 1
INTERPRETATION

Definitions

1. (1) In this Act, unless the context otherwise indicates, words and

expressions that are not defined in this subsection that are defined in the Financial

Sector Regulation Act, 2017 (Act No. 9 of 2017), have the same meaning ascribed to

them in terms of that Act, and—

''accounting records'' has the meaning defined in section 1 of the Companies Act;

''activity'' means an activity listed in Schedule 1 and includes a sub-activity listed in

that Schedule;

“advertising” means any communication published through any medium and in any

form, by itself or together with any other communication, which is intended to create

public interest in the business, financial products or financial services of a financial

institution, or to persuade the public (or a part of the public) to transact in relation to a

financial product or financial service of the financial institution in any manner, but which

does not purport to provide detailed information to or for a specific financial customer

regarding a specific financial product or financial service, and “advertise” and

“advertisement” have corresponding meanings;

''Auditing Profession Act'' means the Auditing Profession Act, 2005 (Act No. 26 of

2005);
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“authorised user” has the meaning defined in section 1(1) of the Financial Markets

Act;

''Authority'' means the Financial Sector Conduct Authority established in terms of

section 56 of the Financial Sector Regulation Act;

''claim'' means a demand exercised by a person in respect of a financial product,

irrespective of whether or not the person’s demand is valid;

''collective investment scheme'' has the meaning defined in section 1(1) of the

Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002);

''Companies Act'' means the Companies Act, 2008 (Act No. 71 of 2008);

''complainant'' means a person who submits a complaint, who has a direct interest in

the agreement, financial product or financial service to which the complaint relates, or a

person acting on behalf of a person referred to in paragraphs (a) to (f), and includes a—

(a) financial customer or the financial customer’s successor in title;

(b) beneficiary or the beneficiary’s successor in title;

(c) person whose life is insured under an insurance policy;

(d) person that pays any contribution or money in respect of a financial product or

financial service;

(e) member or member spouse of a pension fund, insurance group scheme (or other

type of member-based product or scheme); or

(f) potential financial customer or potential member of a pension fund, insurance

group scheme (or other type of member-based product or scheme), whose

dissatisfaction relates to the relevant application, approach, solicitation or

advertising or marketing material referred to in the definition of “potential financial

customer”;
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“commercial sponsor” means a licensed financial institution that establishes a

retirement fund, with the intention that the financial institution, or another financial

institution within the same financial group, will provide financial products or financial

services to the retirement fund, once established, or its members;

“commercially sponsored fund” means a retirement fund that is established by a

commercial sponsor;

''complaint'' means an expression of dissatisfaction by a person to a financial

institution or, to the knowledge of the financial institution, to the financial institution’s

service provider relating to a financial product or financial service provided or offered

by that financial institution, which indicates or alleges, regardless of whether the

expression of dissatisfaction is submitted together with or in relation to a query by a

financial customer, that—

(a) the financial institution or its service provider has contravened or failed to

comply with an agreement, a law, a rule, or a code of conduct which is binding

on the financial institution or to which it subscribes;

(b) the financial institution’s or its service provider’s maladministration or wilful or

negligent action or failure to act, has caused the person harm, prejudice,

distress or substantial inconvenience; or

(c) the financial institution or its service provider has treated the person unfairly;

''competence'' includes experience, qualifications and continuous professional

development;

''conduct standard'' means a conduct standard prescribed by the Authority as

contemplated in section 67 of this Act;

''control function” has the meaning defined in section 1(1) of the Financial Sector

Regulation Act, and includes the senior management function;

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''Co-operatives Act'' means the Co-operatives Act, 2005 (Act No. 15 of 2005);

''financial institution'' has the meaning defined in section 1(1) of the Financial Sector

Regulation Act, but does not include a market infrastructure;

''financial instrument'' has the meaning defined in section 1(1) of the Financial Sector

Regulation Act, and includes a foreign financial instrument;

''financial product'' has the meaning defined in section 2 of the Financial Sector

Regulation Act, and includes a foreign financial product;

''Financial Sector Regulation Act'' means the Financial Sector Regulation Act, 2017

(Act No. 9 of 2017);

''financial service'' has the meaning defined in section 3 of the Financial Sector

Regulation Act;

''financial statements'' has the meaning defined in section 1 of the Companies Act;

''fit and proper requirements'' means—

(a) in relation to a natural person, requirements relating to—

(i) honesty and integrity;

(ii) good standing;

(iii) competence, including—

(aa) experience;

(bb) qualifications;

(cc) knowledge of financial products, financial instruments, foreign

exchange, foreign financial products, and financial services, as the

case may be;

(dd) knowledge of financial sector laws, as assessed through—

(A) examinations;

(B) continuous professional development; and

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(C) professional designation or membership;

(b) in relation to a significant owner, requirements relating to—

(i) honesty and integrity;

(ii) good standing; and

(iii) financial standing;

“licensed financial institution” means a financial institution that is licensed under this

Act;

''licensee'' means a person that has obtained a licence in accordance with section 10;

''Minister'' means the Minister of Finance;

“participant” has the meaning defined in section 1(1) of the Financial Markets Act;

“payment service provider” means a person who is authorised under this Act to

provide payment services as defined in Schedule 1;

''portfolio'' means a group of assets including any amount of cash in which financial

customers acquire, pursuant to a collective investment scheme or an alternative

investment fund, a participatory interest or a participatory interest of a specific class

which as a result of its specific characteristics differs from another class of participatory

interests;

''potential financial customer'' means a person who has—

(a) applied to, or otherwise approached, a financial institution or a related party or

representative of the financial institution to become a financial customer;

(b) been solicited by a financial institution to become a financial customer; or

(c) received advertising in relation to any financial product or financial service;

''prescribed'' means prescribed by the Authority in a conduct standard as

contemplated in section 67;

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“proprietary trading” means the buying and selling of financial instruments or foreign

exchange by a financial institution for its own account;

''prudentially regulated financial group or financial conglomerate'' means a

banking group referred to in the Banks Act, an insurance group referred to in the

Insurance Act, or a financial conglomerate designated in terms of section 160 of the

Financial Sector Regulation Act that is subject to regulation and supervision by the

Prudential Authority, and a reference to “prudentially regulated financial group and

financial conglomerate” has a similar meaning;

''prudentially regulated financial institution'' means a financial institution that is

subject to regulation and supervision by the Prudential Authority, but does not include a

market infrastructure;

''public sector retirement fund" means a retirement fund to which the State, or to

which a national or provincial public entity, or a national or provincial business

enterprise as those terms are defined in section 1 of the Public Finance Management

Act, or a municipality or municipal entity as defined in section 2 of the Local

Government: Municipal Systems Act, 2000 (Act No. 32 of 2000), contributes;

''related service'' means any service or benefit provided or made available by a

financial institution or any associate of that financial institution, together with or in

connection with any financial product or benefit;

''representative'' means any person, including a person employed by a representative,

who performs an activity listed in Schedule 3 for or on behalf of a financial institution in

terms of an employment contract or any other mandate or agreement, but excludes a

person rendering a clerical, technical, administrative, legal, accounting or other service

in a subsidiary or subordinate capacity, which service—

(a) does not require judgment on the part of the latter person; or
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(b) does not lead a financial customer to any specific transaction in respect of a

financial product in response to general enquiries;

“research service” means the provision of analytical, evaluative or research, as a

business or a part of a business, for the purposes of distilling information in respect of

or assessing the desirability or unfeasibility of a particular financial investment, financial

product, financial instrument, foreign exchange or financial service, or the provider of a

financial product, financial instrument or financial service.

''retail financial customer'' means a financial customer that is—

(a) a natural person; or

(b) a juristic person, whose asset value or annual turnover is less than the threshold

value as prescribed after consideration of any similar threshold values

determined under the Consumer Protection Act and the National Credit Act;

“retirement fund” has the meaning defined in section 1(1) of the Retirement Funds

Act;

“Retirement Funds Act” means the Retirement Funds Act, 1956 (Act No. 24 of

1956);1

''service provider'' means any person (whether or not that person is the representative

or other agent of a financial institution) with whom a financial institution has an

arrangement relating to the marketing, distribution, administration or provision of

financial products or related services;

''supervised entity'' has the meaning defined in section 1(1) of the Financial Sector

Regulation Act, but does not include a market infrastructure;

''third party'' means a person that has entered into a third-party arrangement with a

financial product provider;

1This definition and the definition of “retirement fund” are to align with the proposed consequential
amendment in Schedule 5 of the short title of the Pension Funds Act to be the Retirement Funds Act.
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''third party arrangement'' means an arrangement between a financial institution and

another person in terms of which the other person may market or offer a financial

product or financial service of the first-mentioned person under its brand;

''this Act'' includes the Schedules to this Act, and conduct standards prescribed in

terms of this Act;

''transformation of the financial sector'' means transformation as envisaged by the

Financial Sector Code for Broad-Based Black Economic Empowerment issued in terms

of section 9(1) of the Broad-Based Black Economic Empowerment Act, 2003 (Act No.

53 of 2003); and

“trust property” means any corporeal or incorporeal, movable or immovable asset

invested, held, kept in safe custody, controlled, administered or alienated by a financial

institution for, or on behalf of, a financial customer.

(2) In this Act, unless the context indicates otherwise, a word or

expression derived from, or that is another grammatical form of, a word or expression

defined in this Act has a corresponding meaning.

Interpretation

2. (1) This Act must be interpreted and applied in a manner that—

(a) gives effect to the object of this Act set out in section 3;

(b) promotes the achievement of the object of the Financial Sector Regulation Act set

out in section 7 of that Act;

(c) gives effect to the achievement of the objective of the Authority set out in section

57 of the Financial Sector Regulation Act; and

(d) gives effect to the principles contained in Chapters 4 to 8 of this Act.

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(2) When interpreting, applying or complying with this Act, a court, the

Authority or any other person may, to the extent that is practicable, and with due

consideration to the South African context, consider relevant international standards

relating to the achievement of the object of this Act.

(3) If, in terms of this Act, information or a document is required to be

published, disclosed, produced or provided by a financial institution, it is sufficient,

unless otherwise prescribed, if—

(a) an electronic original or a reproduction of the information or document is published,

disclosed, produced or provided by electronic communication in a manner and

form that allows the information or document to be printed by the recipient within

a reasonable time and at a reasonable cost; or

(b) a notice of the availability of that information or document, summarising its content

and satisfying any prescribed requirements, is delivered to each intended recipient

of the information or document, together with instructions for receiving the

complete information or document.

PART 2
OBJECT AND APPLICATION OF ACT

Object of Act

3. (1) The object of this Act is to establish a consolidated, comprehensive

and consistent regulatory framework for the conduct of financial institutions that will

support the Authority in the achievement of its objective and functions as set out in

sections 57 and 58 of the Financial Sector Regulation Act.

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(2) When performing functions in terms of this Act, the Authority must take

into account and seek to promote the object of this Act.

General application of Act

4. (1) A financial institution that provides a financial product or a financial

service is subject to this Act.

(2) This Act applies to supervised entities, including, to the extent

provided for in this Act, supervised entities that are not financial institutions.

Application of Act to prudentially regulated financial groups and financial

conglomerates

5. (1) This Act applies to prudentially regulated financial groups and

financial conglomerates to the extent provided for in this Act.

(2) The power of the Authority to make conduct standards in terms of this Act

extends to making such standards to be complied with by holding companies of

prudentially regulated financial groups or financial conglomerates.

(3) The Authority may only make a conduct standard referred to in subsection

(2) after having consulted with the Prudential Authority and the Reserve Bank.
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Application of Act to retirement funds and activities related to retirement funds

6. A commercial sponsor is not required to be licensed in terms of this Act,

but the Authority may prescribe conduct standards regulating and imposing

requirements on commercial sponsors of commercially sponsored funds.

Exemptions from application of Act, or part, provision or requirement of Act

7. (1) The Authority may, on application by a financial institution,

key person, representative or contractor, or on its own initiative, exempt financial

institutions, key persons, representatives, or contractors from the application of this Act,

or a part, provision or requirement of this Act—

(a) to promote the proportional application of this Act or a part, provision or

requirement of this Act as contemplated in section 58(5A) of the Financial Sector

Regulation Act;

(b) where practicalities impede the application of a part, provision or requirement of

this Act;

(c) where any existing Act of Parliament also wholly or partially regulates an activity;

(d) for developmental, financial inclusion and transformation objectives in order to

facilitate the progressive or incremental compliance with this Act by a financial

institution; or

(e) in order to provide scope for innovation, the development and investment in

innovative technologies, processes, and practices.

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(2) The Authority may grant an exemption to different categories,

subcategories, types or kinds of financial institutions, key persons, representatives, or

contractors, or to one or more specific financial institutions, key persons,

representatives, or contractors.

(3) An exemption granted in terms of this section may be granted for a

specified period and subject to conditions.

PART 3

COMPLIANCE BY FINANCIAL INSTITUTIONS

Compliance

8. (1) (a) A financial institution, a key person, a representative, or a

contractor must have arrangements in place to comply with the requirements of this Act

on an ongoing basis, and to identify any non-compliance with those requirements.

(b) If the Authority reasonably believes that the effectiveness of

arrangements in place to comply with requirements requires further investigation, the

Authority may direct a financial institution to perform an independent review of the

arrangements by a person who is approved by the Authority at the cost of the financial

institution.

(2) The Authority may direct a financial institution, or the governing

body or other key persons of the financial institution, or a representative or contractor,

to strengthen or effect improvements to the arrangements in place to comply with

requirements in this Act.

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(3) A financial institution, key person, representative, or contractor that

has identified, or is informed or made aware, that it has materially failed to comply with

a requirement in terms of this Act must, without delay, notify the Authority of the failure

and the reasons for the failure.

(4) This section does not limit any other action that the Authority may

take in terms of this Act or the Financial Sector Regulation Act.

CHAPTER 2

LICENSING

Power to grant licenses

9. (1) A person may not perform an activity listed in Schedule 1 unless

that person has been issued with a licence in terms of this Act or has been appointed

as a representative of a financial institution that is licensed under this Act.

(2) (a) The Authority may, on application, grant a licence under this Act.

(b) Sections 113(2) to 116, 118A and 124 of the Financial Sector Regulation Act

applies with the necessary changes to the licensing process under this Act.

(c) Sections 117 and 118 of the Financial Sector Regulation Act apply to

licensees and licences granted under this Act.

(d) Licences granted under this Act may be varied, suspended or revoked by

the Authority in accordance with sections 119 to 123 of the Financial Sector Regulation

Act.
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Licensing per authorisation categories and subcategories

10. (1) A financial institution may only obtain one licence under this Act.

(2) A licensee under this Act—

(a) may only perform the activities for which it is authorised; and

(b) must perform the activities for which the institution is authorised in accordance

with the requirements applicable in respect of each of the activities and sub-

activities, financial products, financial instruments, foreign exchange, and

financial customers, where applicable, in terms of—

(i) this Act;

(ii) conduct standards; and

(iii) the conditions of the licence.

(3) A financial institution may only enter into an outsourcing arrangement

with a contractor for the performance of an activity if the contractor is—

(a) licensed under this Act and authorised to perform that activity; or

(b) appointed as a representative under Chapter 3 of this Act to perform that activity,

provided that the activity is listed in Schedule 3.

Institutional form and structure of requirements for licensees

11. The institutional form and structure requirements applicable to applicants

for licences under this Act are set out in Schedule 2.

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CHAPTER 3

APPOINTMENT, LISTING AND DEBARMENT OF REPRESENTATIVES

Appointment of representatives

12. A person may not act or offer to act as a representative, unless that

person is appointed by a licensed financial institution as its representative.

Requirements for appointment of representatives and duties of licensee

13. (1) A licensee may only appoint a person as a representative,

if—

(a) the person is to perform an activity listed in Schedule 3;

(b) the person is competent to act, and complies with conduct standards relating

to—

(i) fit and proper requirements;

(ii) other requirements that may be prescribed; and

(c) the appointment does not—

(i) materially increase any risk to the licensee;

(ii) materially impair the governance arrangements of the licensee, including

the licensee’s ability to manage its risks and meet its legal and regulatory

obligations;

(iii) compromise continuous and satisfactory service to financial customers;

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(iv) prevent or hinder the licensee from acting in the best interest of financial

customers; and

(v) result in key decision-making responsibilities being removed from the

licensee; and

(d) the person complies with the requirements in conduct standards for the

reappointment of a debarred person as a representative, if that person was

previously debarred in terms of section 15.

(2) A licensee must ensure that—

(a) its representatives—

(i) continue to comply with the requirements in subsection (1)(b); and

(ii) comply with all requirements of this Act as well as other laws applicable to

the performance of the activities for which they are appointed; and

(b) the continuation of the appointment referred to in subsection (1) does not result

in any of the matters in subsection (1)(c).

(3) A licensee is responsible, to the same extent as if it had expressly

permitted it, for anything done or omitted by its representative in respect of the

rendering of an activity listed in Schedule 3.

(4) The licensee must maintain a register of representatives which

must—

(a) contain the information prescribed; and

(b) be updated in the form and manner and within the intervals as prescribed.

(5) The Authority may maintain and publish a list with the information

referred to in subsection (4) of all representatives.

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Requirements for representatives

14. (1) A representative must, prior to performing an activity listed in

Schedule 3, provide confirmation, certified by the licensee of which it is a

representative, to a financial customer that —

(a) an employment contract or other mandate or agreement to represent the

licensee exists; and

(b) the licensee accepts responsibility for those activities of the representative

performed within the scope of, or in the course of implementing, any contract,

mandate or agreement.

(2) A representative may not perform an activity or contract in respect

of an activity, other than in the name of the licensee of which it is a representative.

Debarment of representatives by licensees

15. (1) (a) A licensee must debar a person from rendering financial

services if the person is or was, as the case may be, a representative of the licensee, if

the licensee is satisfied on the basis of available facts and information that the person—

(i) does not meet, or no longer complies with, the requirements referred to in

section 13(1)(b); or

(ii) has contravened or failed to comply with any provision of this Act, the Financial

Sector Regulation Act, or another financial sector law in a material manner;

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(b) The reasons for a debarment in terms of paragraph (a) must

have occurred and become known to the licensee while the person was a

representative of the licensee.

(2) (a) Before effecting a debarment in terms of subsection (1), the

licensee must ensure that the debarment process is lawful, reasonable and

procedurally fair.

(b) If a licensee is unable to locate a person in order to deliver a

document or information under subsection (3), after taking all reasonable steps to do

so, including dissemination through electronic means where possible, delivering the

document or information to the person’s last known e-mail or physical business or

residential address will be sufficient.

(3) A licensee must—

(a) before debarring a person—

(i) give adequate notice in writing to the person stating its intention to debar

the person, the grounds and reasons for the debarment, and any terms

attached to the debarment, including, in relation to unconcluded business,

any measures stipulated for the protection of the interests of financial

customers;

(ii) provide the person with a copy of the licensee’s written policy and

procedure governing the debarment process; and

(iii) give the person a reasonable opportunity to make a submission in

response;

(b) consider any response provided in terms of paragraph (a)(iii), and then take a

decision in terms of subsection (1); and

(c) immediately notify the person in writing of—

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(i) the licensee’s decision;

(ii) the person’s rights in terms of Chapter 15 of the Financial Sector

Regulation Act; and

(iii) any formal requirements in respect of proceedings for the reconsideration

of the decision by the Tribunal.

(4) Where the debarment has been effected as contemplated in

subsection (1), the licensee must—

(a) immediately withdraw any authority which may still exist for the person to act on

behalf of the licensee;

(b) where applicable, remove the name of the debarred person from the register

referred to in section 14(4);

(c) immediately take steps to ensure that the debarment does not prejudice the

interest of financial customers, and that any unconcluded business of the

debarred person is properly attended to;

(d) in the form and manner determined by the Authority, notify the Authority within

five days of the debarment; and

(e) provide the Authority with the grounds and reasons for the debarment in the

format that the Authority may require within 15 days of the debarment.

(5) A debarment in terms of subsection (1) in respect of a person who

no longer is a representative of the licensee must be commenced within six months

from the date the person ceased to be a representative of the licensee.

(6) For the purposes of debarring a person as contemplated in

subsection (1), the licensee must have regard to information relating to the conduct of

the person that is furnished by the Authority, the Ombud or any other interested person.
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(7) The Authority may, for the purposes of record keeping, require any

information to be submitted to the Authority, including the information referred to in

subsection (4)(d) and (e), to enable the Authority to maintain and continuously update a

central register of all persons debarred in terms of subsection (1), and that register must

be published on the website of the Authority, or by means of any other appropriate

public media.

(8) A person who is debarred in terms of subsection (1) may not

provide financial services or act as a representative of any licensee, unless the person

has complied with the requirements prescribed for the reappointment of a debarred

person as a representative of a licensee and been reappointed as a representative.

CHAPTER 4

CULTURE AND GOVERNANCE

Application of Chapter

16. This Chapter applies to—

(a) a licensed financial institution in addition to any other governance

requirements imposed on that financial institution under another Act; and

(b) proprietary trading and research services performed by a licensed

financial institution.
 32

PART 1

PRINCIPLES RELATING TO CULTURE AND GOVERNANCE AND OBLIGATIONS

OF GOVERNING BODY

Principles relating to culture and governance for financial institutions

17. (1) A licensed financial institution must conduct its business in a

manner that —

(a) promotes fair treatment of financial customers;

(b) enhances and supports the efficiency and integrity of financial markets;

(c) supports trust and confidence in the financial sector; and

(d) promotes transformation in a manner reasonably consistent with its

transformation plan, developed in terms of section 23.

(2) When fulfilling its obligations in subsection (1), a licensed financial

institution must—

(a) conduct its business with integrity;

(b) conduct its business honestly, fairly, and with due skill, care and diligence;

(c) identify and promote a corporate culture that takes into account ethics and

aims to ensure that the fair treatment of financial customers and fair

market practices, as the case may be, are central to the values and

corporate culture of the financial institution;

(d) organise and control its affairs responsibly and effectively;

(e) maintain adequate financial and other resources;

 33

(f) avoid or, where avoidance is not possible, manage, mitigate and disclose

conflicts of interest;

(g) deal with the Authority in an open and cooperative manner; and

(h) perform its activity or activities transparently.

Obligations of governing body

18. (1) The governing body of a licensed financial institution is accountable

for compliance with the requirements of this Act.

(2) The governing body must —

(a) endorse and is ultimately responsible for corporate culture within the financial

institution;

(b) endorse and is ultimately responsible for the establishment, implementation,

subsequent reviews of, and continued internal compliance with, governance

arrangements within the financial institution; and

(c) ensure that the identified corporate culture and governance arrangements are

appropriately embedded in the financial institution.

PART 2

GOVERNANCE ARRANGEMENTS
 34

Governance arrangements

19. (1) A licensed financial institution must adopt, document, implement,

and monitor the effectiveness of governance arrangements that are reasonably

necessary to ensure adherence to the requirements in this Chapter.

(2) The governance arrangements referred to in subsection (1) must—

(a) promote accountability of members of the governing body and key

persons;

(b) be approved by and be subject to the oversight of the governing body of

the financial institution;

(c) ensure that key persons possess the necessary skills, knowledge and

expertise to fulfil their functions, and perform those functions fairly, and

with integrity, honesty, and due skill, care and diligence;

(d) provide for mechanisms to identify and, where appropriate, remove

persons whose conduct materially increases the risk of the licensed

financial institution not achieving the principles in section 17;

(e) be proportionate to the nature, size, scale and complexity of the conduct

risks or business model of, and activities performed by, the financial

institution;

(f) demonstrate how the licensed financial institution will comply with this

Chapter and standards relating to this Chapter;

(g) at least address—

(i) roles, responsibilities and duties of the governing body and key

persons;
 35

(ii) record keeping;

(iii) communication with the Authority;

(iv) management processes and responsibilities;

(v) management of control functions;

(vi) remuneration and compensation practices referred to in section 20;

(vii) arrangements relating to conflicts of interest as required by section

21;

(viii) the transformation plan required by Part 4 of this Chapter;

(ix) financial product and financial service oversight arrangements as

required by Chapter 5 and

(x) processes and procedures for the approval of advertising material as

required by Chapter 6; and

(h) address and provide for prescribed matters.

PART 3

REMUNERATION AND COMPENSATION PRACTICES AND MANAGEMENT OF

CONFLICTS OF INTEREST

Remuneration and compensation practices

20. (1) This section applies to any remuneration, compensation or

consideration for the rendering of any authorised activity or service that is—

(a) offered or provided, directly or indirectly, by a licensed financial institution or a

person on behalf of a licensed financial institution;

 36

(b) accepted, directly or indirectly, by a licensed financial institution or an associate

of a licensed financial institution; or

(c) accepted, directly or indirectly, by any other person, including a representative,

contractor or service provider, from a licensed financial institution.

(2) Remuneration, compensation or consideration referred to in

subsection (1) must—

(a) be reasonable and commensurate with the actual authorised activity performed

or service provided;

(b) not result in any authorised activity or service being remunerated more than

once; and

(c) not be structured in a manner that impedes the fair treatment of a financial

customer or the efficiency and integrity of the financial markets, or is contrary to

the identified corporate culture of the financial institution.

Oversight and management of conflicts of interest

21. (1) A licensed financial institution must have arrangements that

provide for the effective oversight of conflicts of interest.

(2) Conflict of interest arrangements must—

(a) clearly define where actual or potential conflicts of interest may arise;

(b) define the roles and responsibilities of persons accountable for the management

and oversight of conflicts of interest;

(c) set requirements relating to how conflicts of interest must be disclosed and

documented to the governing body, within the financial institution and to financial

customers;
 37

(d) provide for corrective actions that must be taken for non-compliance with the

arrangements;

(e) provide for adequate processes and procedures for transactions with related

parties; and

(f) address and provide for any additional matters relating to conflict of interest

arrangements that have been prescribed.

Disclosure by financial institutions of interest in related and inter-related parties

and other undertakings

22. (1) A financial institution, at the request of the Authority, must provide

the Authority with information relating to the financial institution’s related and inter-

related parties, or any joint ventures or partnerships that the financial institution

participates in, or intends to enter into.

(2) The Authority may, in light of information received in terms of a request

under subsection (1), take any action that the Authority is authorised to take in terms of

this Act or the Financial Sector Regulation Act.

PART 4

TRANSFORMATION PLAN

Transformation plan

23. If a licensed financial institution is subject to or has undertaken to comply

with the requirements of the Broad-Based Black Economic Empowerment Act, 2003
 38

(Act No. 53 of 2003) and the Financial Sector Code for Broad-Based Black Economic

Empowerment issued in terms of section 9(1) of that Act, it must have a plan in place to

meet its commitments in terms of promoting transformation of the financial sector in line

with those requirements.

PART 5

KEY PERSONS

Fitness and propriety and appointment of key person

24. Key persons must, at all times, comply with prescribed fit and proper

requirements.

Non-compliance by key person

25. (1) The Authority may, if it reasonably believes that a key person does

not comply or no longer complies with the requirements in terms of this Act, in addition

to any other action that the Authority may take under this Act or the Financial Sector

Regulation Act, direct the financial institution to make arrangements that are

satisfactory to the Authority to address the non-compliance within a specified period or

subject to appropriate conditions.

(2) Arrangements referred to in subsection (1) may include—

(a) providing additional education or training to that key person;

(b) utilising external resources to support that key person;

(c) outsourcing the functions and duties of that key person; or

 39

(d) suspending or removing a person from the appointment as a key person.

(3) If a licensed financial institution fails to make arrangements contemplated

in subsection (2) in order to address the non-compliance of a key person, the Authority,

in addition to any other action that it may take under this Act, may—

(a) impose additional reporting requirements on the financial institution;

(b) vary the financial institution’s licensing conditions;

(c) suspend or withdraw the financial institution’s licence; or

(d) after giving the key person a reasonable opportunity to be heard, —

(i) direct the financial institution to terminate the appointment of the key

person and;

(ii) replace the key person with another person, if deemed necessary, for the

period and subject to the conditions that the Authority may determine,

after having consulted the Prudential Authority in the case of a

prudentially regulated financial institution.

(4) Where a conduct standard requires the approval of the

appointment of a key person, the appointment takes effect only if the Authority

approves the appointment.

CHAPTER 5

FINANCIAL PRODUCTS AND FINANCIAL SERVICES

 40

Principles for provision of financial products and financial services

26. (1) When providing financial products and financial services, a

financial institution or a representative must ensure that the products and services

are—

(a) appropriate for targeted or impacted financial customers;

(b) provided in a manner that is as objective as possible; and

(c) provided in a manner that supports the delivery of appropriate

financial products and financial instruments to those financial

customers.

(2) A financial institution must ensure that its financial customers are

provided with financial products and financial services, as the case may be, that

perform as that institution has led its financial customers to expect, through the

information, representations and advertising provided by or on behalf of the institution to

those financial customers.

(3) If a financial institution identifies circumstances that give rise to the

material risk of a financial product or financial service being unsuitable for targeted

financial customers, of financial products or financial services not performing as

financial customers of those products and services were led to expect, or any other

unfair outcomes to its financial customers, it must take remedial action to reasonably

mitigate the risk.

(4) A financial institution must ensure that—

 41

(a) where applicable, the personnel responsible for the design of financial products

or development of financial services possess the necessary skills, knowledge

and expertise to fulfil their functions; and

(b) a new financial product or financial service, or any material variation of an

existing financial product or financial service, is internally approved, and in

accordance with any requirements prescribed relating to the approval of new

financial products or financial services, before the financial product or financial

service is marketed or offered to financial customers.

Additional principles in relation to retail financial customers

27. (1) A financial institution that provides financial products or financial

services to retail financial customers must—

(a) enter into a written agreement with the financial customer, whenever possible;

and

(b) always act within the mandate given by that financial customer in terms of the

agreement.

(2) When designing, developing or making a material change to a financial

product or a financial service, a financial institution must—

(a) make use of adequate and relevant information on the needs of the retail

financial customers at whom the financial product or a financial service is

targeted; and

(b) undertake a thorough assessment by competent persons with necessary skills of

the main characteristics of the new or varied financial product or service to ensure

that the financial product or service—

 42

(i) is consistent with the financial institution’s business

model, risk management approach and applicable

conduct standards;

(ii) targets the retail financial customers for whose needs

the product or service is likely to be appropriate, while

taking reasonable measures to limit access by retail

financial customers for whom the product or service is

likely to be inappropriate; and

(iii) is appropriate, taking into account the fair treatment of

retail financial customers; and

(c) ensure that the financial product or financial services provide, where appropriate,

sufficient flexibility to respond to reasonably expected changes in a financial

customer’s needs during the lifetime of the product or service.

(3) When undertaking the assessment referred to in subsection (2)(b), a

financial institution must also,—

(a) in the case of a financial product, take into account all intended

distribution methods; and

(b) in the case of both financial products and services, take into account

related disclosure documents.

(4) Where a financial institution, including a commercial sponsor of a

commercially sponsored fund, provides financial products or financial services to a

retirement fund or similar member based entity, or to another financial customer that is

acting for or on behalf of another retail financial customer, all requirements in

subsection (1) relating to retail financial customers apply equally in relation to the
 43

members of that retirement fund or similar member based entity or in relation to those

other retail financial customers.

Oversight arrangements

28. (1) A financial institution must establish and implement oversight

arrangements to approve, monitor and review the design, development, suitability and

provision of its financial products and financial services on an on-going basis.

(2) The oversight arrangements referred to in subsection (1) must—

(a) support compliance with section 26, and provide for approval of the oversight

arrangements by the governing body of the financial institution;

(b) aim to prevent conflicts of interest and the incentivisation of behaviour which

could threaten the fair treatment of financial customers or fair and efficient

financial markets, and ensure objectivity and impartiality;

(c) appropriately take into account risks to financial customers or groups of

financial customers at whom the financial product or financial service is

targeted;

(d) allocate clear roles and responsibilities to persons who are responsible for, or

partly responsible for, establishing and implementing the oversight

arrangements;

(e) ensure appropriate record keeping, monitoring and analysis of processes and

procedures relating to the design, development, suitability and provision of

financial products and services, as well as regular and ad hoc reporting to the

governing body of the financial institution and any relevant committee on—
 44

(i) identified financial customer related risks and trends, poor financial

customer outcomes, and actions taken in response to those risks, trends

and outcomes;

(ii) identified risks that may threaten the efficiency and integrity of financial

markets;

(iii) the effectiveness and outcomes of those processes and procedures; and

(f) include appropriate measures and procedures to ensure the financial

institution’s compliance with this Chapter.

(3) The oversight arrangements may vary depending on the nature,

size, scale or complexity of the conduct risks or business model of, and activities

performed by, the financial institution.

(4) A financial institution must regularly review the oversight

arrangements to ensure that these remain effective and document any changes to the

oversight arrangements.

CHAPTER 6

ADVERTISING AND DISCLOSURE

Principles for advertising and disclosure

29. (1) A financial institution must ensure that financial products and

financial services are promoted and marketed to financial customers in a way that is

clear, fair, unambiguous and not misleading or fraudulent.

 45

(2) Before, during and after the conclusion of a contract of

engagement or agreement for the provision of a financial product, a financial service, or

the participation in a product, a financial customer must be given adequate, clear and

accurate information, and be kept appropriately informed, to place the financial

customer in a position to make informed decisions regarding the financial product or

financial service.

Advertising

30. (1) A financial institution must, prior to publishing advertising material,

take reasonable measures to ensure that the information provided in the advertising

material complies with this Chapter and conduct standards prescribed for the purposes

of implementing this Chapter.

(2) A financial institution must at all times ensure that any publication

of advertising material which relates to its business, activities, financial products or

financial services, that another person publishes on behalf of the financial institution, or

of which the financial institution is aware or ought to be aware, complies with this

Chapter and conduct standards prescribed for the purposes of implementing this

Chapter.

(3) A financial institution remains responsible for the manner in which a

financial product or a financial service rendered by it is promoted or marketed, even

where the financial institution relies on another person to promote or market the

financial product, instrument or service on its behalf.

(4) Advertising material of a financial institution must—

(a) comply with section 29(1); and

 46

(b) be appropriate to the needs and reasonably assumed level of

knowledge of the financial customers at whom it is targeted.

Disclosure

31. (1) Before, during and after the conclusion of a contract for the

provision of a financial product or a financial service, a financial institution must make a

financial customer aware of all relevant facts that could reasonably be expected to

influence the financial customer’s decisions relating to the financial product or financial

service, including, in relation to a retail financial customer,—

(a) benefits and risks in relation to the financial product or financial service;

(b) all costs to the financial customer in relation to the supply of that product or

service;

(c) contractual obligations on the financial customer and the financial institution;

(d) consequences for each party should there be a breach of contract; and

(e) recourse options for the financial customer in the case of a dispute with the

financial institution, or a related party or representative in relation to its supply of

a financial product or financial service.

(2) A financial institution must make disclosures to financial customers

that—

(a) use language that is clear, plain and unambiguous, and is appropriate for the

target market;

(b) are adequate, appropriate, timely, relevant and complete;

(c) are factually correct and not misleading or deceptive;

 47

(d) promote understanding of the financial product or financial service being

provided;

(e) promote comparison across similar financial products or financial services; and

(f) takes into account—

(i) the nature and complexity of the financial product or financial service concerned;

and

(ii) the reasonably assumed level of knowledge, understanding and experience of

financial customers at whom the disclosure is targeted.

(3) A financial institution must at all times ensure that any disclosure

which relates to its business, activities, financial products or financial services, that

another person publishes on behalf of the financial institution, or of which the financial

institution is aware or ought to be aware, complies with this Chapter and conduct

standards prescribed for the purposes of implementing this Chapter.

CHAPTER 7

POST-SALE BARRIERS AND OBLIGATIONS

Principles relating to post-sale barriers and post-sale obligations

32. (1) A financial institution may not impose unreasonable post-sale

barriers on financial customers, including barriers that may prevent financial customers

from holding a financial institution accountable for—

(a) its contractual obligations:

(b) expectations created that are not being met; or

 48

(c) unfair treatment pertaining to a financial product, financial instrument,

foreign exchange or financial service that is being provided.

(2) A financial institution must, after the point of contracting with a

financial customer, continue to promote the fair treatment of that financial customer,

including in relation to how that contract may be terminated and after the contract is

terminated.

Limiting unreasonable post-sale barriers

33. (1) A financial institution may not impose post-sale barriers on financial

customers that may unreasonably prevent financial customers from—

(a) changing to another financial product, financial instrument or financial service,

whether individually, or as a group of members of a retirement fund or other

similar member-based entity;

(b) changing to another financial institution;

(c) submitting a claim; or

(d) making a complaint.

(2) To ensure that financial customers do not face unreasonable post-

sale barriers, a financial institution must ensure that—

(a) financial customers have access to, and are provided with, relevant information

regarding the financial products or financial instruments that they have

purchased, or the financial services that they are being provided, on an ongoing

basis;

(b) where possible and appropriate, financial customers are provided with financial

products and financial instruments that are appropriately flexible and portable;
 49

(c) financial customers are provided with efficient and effective complaints

management that resolves their complaints in relation to financial products,

financial instruments and financial services in a fair and expeditious manner;

(d) the financial institution has systems in place to monitor complaints, and

processes that enable the financial institution to pro-actively identify and

manage conduct risks, effect improved financial customer outcomes, and

prevent recurrences of poor outcomes and errors;

(e) financial customers are provided with claims management processes that

promote claims being handled in a fair, transparent, and expeditious manner;

(f) financial customers are advised of, and have access to, effective internal and,

where appropriate, external dispute resolution mechanisms to resolve disputes

relating to financial products, financial instruments and financial services;

(g) financial customers do not face unreasonable barriers when terminating a

contract in respect of a financial product, financial instrument or financial service,

and are provided with an efficient and fair termination process; and

(h) financial customers are not subject to unreasonable fees, charges or penalties

when a contract is terminated.

Post-sale obligations

34. (1) A financial institution may only terminate the contractual

relationship between the financial institution and a financial customer in a fair manner,

and in accordance with procedures and requirements that may be prescribed.

(2) Amounts owing to or unclaimed benefits of a financial customer

must be treated as amounts being held in trust by the financial institution on behalf of
 50

the financial customer, and must be handled by the financial institution in accordance

with the requirements of this Act and other applicable legislation.

Service levels

35. A financial institution must—

(a) provide acceptable levels of service support for financial products, financial

instruments and financial services that are provided, including in relation to

responses to enquiries and any transaction or engagement that occurs after the

initial sale of a financial product or financial instrument, or the initial provision of a

financial service to a financial customer;

(b) provide service that is fair, reliable, transparent and consistent with the

reasonable expectations of the financial customer that have been created by the

information and representations provided by or on behalf of the financial

institution to the financial customer; and

(c) provide acceptable levels of protection of safety and security in relation to the

financial products, financial instruments and financial services provided, and in

relation to a financial customer’s personal information.

CHAPTER 8

SAFEGUARDING ASSETS AND OPERATIONAL REQUIREMENTS

Application of Chapter

36. (1) Part 1 of this Chapter applies to a financial institution, or a

 51

nominee company, or key person or any member of the governing body of a financial

institution or nominee company, who invests, holds, keeps in safe custody, controls,

administers or alienates any funds of the financial institution or any trust property.

(2) Parts 2 and 3 of this Chapter do not apply to—

(a) prudentially regulated financial institutions, other than authorised

users and participants; and

(b) prudentially regulated financial groups that are subject to financial

soundness requirements imposed under a financial sector law

other than this Act.

PART 1

SAFEGUARDING

Principles for persons dealing with trust property or assets of financial

institutions

37. A financial institution, any member of its governing body, or any of its

employees or agents, who invests, holds, keeps in safe custody, controls, administers

or alienates any funds or assets of the financial institution or any trust property —

(a) must, with regard to the funds of the financial institution, observe the utmost

good faith and exercise proper care and diligence;

(b) must, regarding trust property, observe the utmost good faith and exercise

proper care and diligence required of a trustee in the exercise or discharge of the
 52

trustee’s powers and duties, and ensure that the trust property is adequately

safeguarded;

(c) must at all times deal with trust property strictly in accordance with the mandate

given to the financial institution;

(d) may not alienate, invest, pledge, hypothecate or otherwise encumber or make

use of trust property, or furnish any guarantee in a manner calculated to gain,

directly or indirectly, any improper advantage for any person to the prejudice of

the financial institution or other person for, or on whose behalf, the financial

institution is acting;

(e) must account for trust property properly and promptly, and when documents of

title are lodged with the financial institution, it must immediately provide written

confirmation of receipt of the documents, which contains a description of the

documents that is sufficient to identify the documents;

(f) must, when trust property is received without the mediation of a bank, issue a

written confirmation of receipt of the trust property; and

(g) must, record transactions or agreements in writing, and deliver the original or a

copy of the agreement to the financial customer or other person for, or on whose

behalf, the financial institution is acting.

Declaration of interest

38. (1) Any member of the governing body of a financial institution, or any

of its employees or agents who takes part in a decision to invest any of the funds of the

financial institution, or any trust property, in a person or venture in which that person

has a direct or indirect financial interest, must declare that interest in writing to the
 53

governing body of the financial institution, indicating the nature and extent of the

interest, before a decision is made.

(2) For the purposes of subsection (1), "invest" includes—

(a) the purchase of shares in a company, or an interest in a close corporation or

partnership;

(b) the granting of a secured or unsecured loan; or

(c) acquiring a financial interest in an agreement or other matter in which the

financial institution or the group of companies of which it is a part has a material

interest.

(3) A declaration of interest made in terms of subsection (1) must be

recorded in the minutes of the meeting of the governing body at which the declaration is

made or considered.

Investment of trust property

39. (1) A financial institution, any member of its governing body, or any of

its employees or agents, may not cause any trust property to be invested otherwise

than in the name of—

(a) the person for, or on whose behalf, the financial institution is acting;

(b) the financial institution in its capacity as administrator, trustee, curator or agent;

or

(c) a nominee.

(2) (a) Despite subsection (1)—

 54

(i) where the Memorandum of Incorporation of a company has as a special

condition under section 15(2) of the Companies Act which prohibits the

registration of its shares or debentures in the name of—

(aa) a trust;

(bb) a financial institution in its capacity as administrator, trustee or curator; or

(cc) any nominee; and

(ii) where those shares or debentures form part of trust property administered by a

financial institution,

those shares or debentures must be registered in the name of a member of the

governing body of that financial institution.

(b) The member of the governing body must hold those shares

or debentures in a fiduciary capacity on behalf of the person for, or on whose behalf,

the financial institution is acting.

(c) Prior to the registration of any shares or debentures in the

name of a member of the governing body as contemplated in paragraph (a), the

financial institution concerned must furnish security to the satisfaction of the Master of

the High Court, if security has not already been furnished in terms of the Trust Property

Control Act, 1988 (Act No. 57 of 1988).

Segregation of trust property from property of financial institution

40. (1) A financial institution must—

(a) keep trust property separate from funds or assets belonging to it; and
 55

(b) In its accounting records and financial statements, clearly indicate the trust

property as being property belonging to a specified person for, or on whose

behalf, the financial institution is acting; and

(c) in addition to, and simultaneously with the financial statements referred to in

section 53, submit to the Authority a report, by the auditor who performed the

audit, which confirms, in the form and manner determined by the Authority by

notice on the web site for different categories of financial institutions—

(i) the amount of money and assets at year end held by the institution on behalf

of financial customers;

(ii) that the money and assets were throughout the financial year kept separate

from those of the business of the financial institution, and report any instance

of non-compliance identified in the course of the audit and the extent of the

non-compliance; and

(iii) any other information required by the Authority.

(2) Despite anything to the contrary in any law or the common law,

trust property invested, held, kept in safe custody, controlled or administered by a

financial institution under no circumstances form part of the funds or assets of the

financial institution.

(3) Despite subsection (1), the Authority may prescribe—

(a) different segregation requirements in respect of different—

(i) types of trust property; or

(ii) financial institutions;

(b) operating and management requirements relating to segregation.

 56

PART 2

OPERATING CAPITAL AND OPERATIONAL ABILITY

Operating capital

41. (1) A financial institution must at all times maintain sufficient financial

resources of an adequate amount and quality to carry out its activities, fulfil its

obligations and comply with all legal requirements, and to ensure that there is no risk

that its liabilities cannot be met as they fall due.

(2) The assets of a financial institution must at all times exceed its

liabilities.

(3) A financial institution must have sound, effective and

comprehensive strategies, processes and systems to assess and maintain, on an

ongoing basis, the amounts, types and distribution of financial resources that it

considers adequate to cover the nature and level of the risks to which it is exposed, or

is likely to be exposed in the future.

(4) In addition to what is provided in subsection (3), a financial

institution that holds trust property, or that collects, holds or receives any monies in

respect of a financial product, must at all times comply with any additional asset,

working capital and liquidity requirements that are prescribed.

(5) A financial institution that has identified a failure to comply with this

section must, without delay—

(a) notify the Authority of the failure and the reasons for the failure;
 57

(b) within 30 days after the notification referred to in paragraph (a), submit a

compliance remediation plan to the Authority for approval that sets out the

measures that the financial institution will implement within a four month-period

to remedy any non-compliance.

(6) The Authority may, where it identifies a failure by a financial

institution to comply with this section, direct the financial institution to submit a

compliance remediation plan to the Authority as referred to in subsection (5)(b).

(7) The Authority may, if appropriate, extend the four-month period

referred to in subsection (5)(b) by two months and, in exceptional circumstances,

extend that period by an appropriate period of time, taking into account all relevant

factors.

(8) A financial institution whose compliance remediation plan was

approved as contemplated in subsection (5)(b) must submit a monthly progress report

to the Authority that sets out the measures taken and the progress made with

implementing the compliance remediation plan.

(9) The Authority may, until a compliance remediation plan is

implemented—

(a) restrict or prohibit certain activities or transactions of the financial institution; or

(b) impose conditions or limitations on the financial institution or governing body.

(10) The Authority may—

(a) require the financial institution to demonstrate that the operational capital

requirements provided for in this section and any other prescribed requirements

are being complied with;

(b) if the Authority reasonably believes that the adequacy of the operational capital

requirements of a financial institution requires further investigation, direct the

 58

financial institution to secure an independent review of the operational capital

requirements by a person who is approved by the Authority at the cost of the

financial institution.

(11) The Authority may direct a financial institution, or the governing

body or other key persons of the financial institution, to strengthen or effect

improvements to its operational capital requirements.

(12) This section does not limit any other action that the Authority may

take in terms of this Act.

Operational ability

42. (1) A financial institution must have and be able to maintain the

operational ability to fulfil the responsibilities imposed by this Act on financial

institutions, including—

(a) a fixed business address in the Republic;

(b) adequate access to communication facilities, including at least a full-time

telephone or cell phone service, and typing and document duplication facilities;

(c) adequate storage and record keeping systems for the safe-keeping of records,

business communications and correspondence, in accordance with the

Protection of Personal Information Act, 2013 (Act No. 4 of 2013);

(d) an account with a bank registered in terms of the Banks Act, including, where

required by this Act, a separate bank account for trust property; and

(e) a financial institution who is an accountable institution as defined in the Financial

Intelligence Centre Act must have in place all the necessary policies, procedures
 59

and systems to ensure full compliance with that Act and other applicable anti-

money laundering or terrorist financing legislation.

(2) A financial institution must ensure that internal control structures,

processes, procedures and controls in relation to the financial institution’s operational

ability are in place, which include:

(a) Access rights and data security on electronic data, where applicable;

(b) physical security of premises, assets and records, where applicable;

(c) system application testing, where applicable;

(d) disaster recovery and business continuity planning, including back-up

procedures on electronic data, where applicable; and

(e) appropriate recruitment and training for key persons, employees, representatives

and other persons as required by this Act.

(3) A financial institution must have and be able to maintain the

operational ability to fulfil the responsibilities imposed by this Act, including oversight of

financial services provided by representatives of the financial institution, or other

financial institutions and service providers who are undertaking the sales and

distribution of a financial product or financial instrument.

PART 3

CERTAIN TRANSACTIONS AND STRUCTURE

Conducting business other than licensed activities

43. (1) A financial institution that belongs to a category, subcategory or

type of financial institution that is determined for the purposes of this subsection may
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not, without the approval of the Authority, conduct any business other than the activity

or activities for which it is licensed under this Act, including any activity or a part of an

activity performed on behalf of another financial institution.

(2) A financial institution that belongs to a category, subcategory or

type of financial institution that is determined for the purposes of this subsection may

not, without the approval of the Authority, conduct any business, including business

similar to the activity or activities for which it is licensed under this Act, outside the

Republic.

(3) Despite any approval under subsection (1) or (2), the Authority

may, after having consulted the Prudential Authority in the case of an authorised user or

participant, and with the concurrence of the Reserve Bank in the case of a systemically

important financial institution or a payment service provider, direct a financial institution

to cease conducting business referred to in subsection (1) or (2), if the Authority

reasonably believes that the business may introduce a risk or risks that cannot be

appropriately mitigated or may be detrimental to the financial customers of the

institution.

Transfer, fundamental transaction or change of institutional form, acquisitions

and disposals

44. (1) A financial institution that belongs to a category, subcategory or

type of financial institution that is determined for the purposes of this section may only

transfer assets and liabilities relating to the activity for which it is authorised to another

person, with the approval of the Authority, and subject to the requirements that the

Authority may determine.

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(2) A financial institution may not, without the approval of the

Authority—

(a) participate in any fundamental transaction or compromise contemplated in Part A

of Chapter 5 or section 155 of the Companies Act; or

(b) convert from one type of corporate form to another, or in any other way change

the type of person it was on the date that it was licensed under this Act.

(3) The Authority may only grant an approval referred to under

subsection (1) or (2) if—

(a) the Authority is satisfied—

(i) that the transfer, transaction or change will not impede the fair treatment

of financial customers or market efficiency and integrity; and

(ii) that any prescribed procedures have been complied with;

(b) in the case of an authorised user or a participant, the Prudential Authority has

been consulted; and

(c) in the case of a systemically important financial institution or a payment service

provider, the Reserve Bank has concurred.

(4) The Authority may—

(a) prescribe the processes that a financial institution must comply with in respect of

transfers, transactions or changes, which may include processes for informing

and consulting financial customers; and

(b) appoint a person, at the cost of the financial institution, to assess the transfer,

transaction or change and express a view on the desirability or otherwise of the

transfer, transaction or change.

(5) A transfer, transaction or change referred to in subsection (1) or (2)

that is approved by the Authority is binding on and enforceable against all persons.
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(6) Any person in charge of a deeds registry or other office in which

any mortgage bond or movable or immovable property is registered which will be

transferred in accordance with an approved transfer, transaction or change referred to

in subsection (1) or (2) must, on receipt of the relevant bond, title deed or registration

certificate and a certified copy of the Authority’s approval, take the measures necessary

to effect the transfer.

(7) A transfer, transaction or change referred to in subsection (1) or (2)

may not be effected without the approval of the Authority, with the concurrence of the

Prudential Authority in the case of an authorised user or a participant, as well as with

the concurrence of the Reserve Bank in the case of a systemically important financial

institution or a payment service provider.

(8) A financial institution must, prior to making a material acquisition or

disposal, notify the Authority.

(9) The Authority must prescribe what constitutes a material

acquisition or disposal for the purposes of subsection (8).

(10) (a) The Authority may issue a directive to a financial institution in

relation to a material acquisition or disposal, if the Authority reasonably believes that the

acquisition or disposal will impede—

(i) the delivery of fair outcomes to financial customers; or

(ii) the ability of the Authority to supervise the financial institution and its related and

inter-related parties appropriately.

(b) A directive may direct the financial institution to undertake

specified measures to address the concerns referred to in paragraph (a).

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(c) If a directive has been issued to an authorised user or a

participant, the Authority must also provide a copy of the directive to the Prudential

Authority.

(d) If a directive has been issued to a systemically important

financial institution or a payment service provider, the Authority must also provide a

copy of the directive to the Reserve Bank.

Registration of shares in name of nominee

45. (1) A financial institution that is a profit company registered under the

Companies Act may not, without the approval of the Authority—

(a) allot or issue any of its shares to, or register any of its shares in the name of, a

person other than the intended holder of a beneficial interest;

(b) register a transfer of any of its shares to a person other than the intended holder

of a beneficial interest.

(2) The Authority may prescribe the circumstances in which approval

under subsection (1) is not required.

Alteration of Memorandum of Incorporation or equivalent constitution, deed or

founding instrument of financial institution, and change of name of financial

institution

46. (1) A licensed financial institution which is a company, and which

belongs to a category, subcategory of financial institution that is determined for the

purposes of this section, must obtain the approval of the Authority prior to adopting—
 64

(a) any alteration of the financial institution’s Memorandum of Incorporation

in terms of section 16 of the Companies Act; or

(b) any change of the name of the financial institution in terms of section

16(8) of the Companies Act.

(2) (a) Any alteration to the constitution, deed or founding

instrument of a financial institution licenced under this Act that is not a company, that is

equivalent to the Memorandum of Incorporation of a company, must be approved by the

Authority.

(b) Any change in the name of any financial institution licenced

under this Act that is not a company must be approved by the Authority.

(3) The Authority must not grant any application referred to in

subsection (1) and (2) if it is of the opinion—

(a) that the proposed alteration is inconsistent with any provision of this Act or other

applicable legislation, or is undesirable in so far as it concerns the activity or

activities of the financial institution;

(b) the proposed change in the name of the financial institution is unacceptable

because it—

(i) is identical to that of another financial institution;

(ii) so closely resembles that of another financial institution that the one is

likely to be mistaken for the other;

(iii) is identical to or so closely resembles that under which another financial

institution was previously licensed, and reasonable grounds exist for

objection to its use;

(iv) is misleading; or

(v) is undesirable.
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(4) Any alteration or change referred to in subsection (1) or (2) without

the approval of the Authority is void.

CHAPTER 9

REPORTING

Application of Chapter

47. Parts 2 and 3 of this Chapter do not apply to—

(a) a bank as defined in section 1(1) of the Banks Act;

(b) a mutual bank as defined in section 1(1) of the Mutual Banks Act, 1993

(Act No. 124 of 1993);

(c) a co-operative bank as defined in the Co-operative Banks Act, 2007 (Act

No. 40 of 2007); or

(d) an insurer as defined in section 1(1) of the Insurance Act.

PART 1

REPORTING AND PUBLIC DISCLOSURE

Information for supervisory purposes (prescribed returns)

48. (1) In addition to any specific or general requirement provided for

elsewhere in this Act, a financial institution must provide the Authority with any
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information that the Authority may require, in the medium, form and manner, and at the

intervals prescribed, for the supervision and enforcement of this Act.

(2) The requirements referred to in subsection (1) may—

(a) apply generally or to a particular financial institution; and

(b) may differentiate between different—

(i) types of financial institutions;

(ii) types of activities;

(iii) categories, subcategories or types of financial customers; or

(iv) financial products or financial services.

(3) A financial institution must, when providing information, ensure that

the information is—

(a) complete in all material respects;

(b) comparable and consistent from one reporting period to another;

(c) relevant, reliable and comprehensible; and

(d) not misleading, false or deceptive.

(4) The Authority may impose an administrative penalty in the case of any failure

by a financial institution to submit to the Authority or any other person within a period

specified in terms of subsection (1) or in a directive or condition imposed by the

Authority in terms of the Act, any scheme, statement, report, return or other document

or information required in terms of subsection (1) to be submitted, not exceeding

R5 000 or another amount prescribed for every day during which the failure continues.

Public disclosures by financial institution

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49. (1) A financial institution must annually, by no later than six months

after its financial year end, publicly disclose the prescribed quantitative and qualitative

information in full, or by way of prominent references to information equivalent in nature

and scope disclosed publicly under any other law or legal obligation, in the form and

manner that may be prescribed.

(2) In prescribing the quantitative and qualitative information in

accordance with subsection (1), the Authority may differentiate between different —

(a) types of financial institutions;

(b) types of activities;

(c) categories, subcategories or types of financial customers; or

(d) financial products or financial services.

(3) (a) The Authority may approve the non-disclosure of specific

information, if the disclosure of the information—

(i) may afford the competitors of the financial institution undue advantage;

(ii) is subject to contractual obligations of secrecy and confidentiality;

(iii) may negatively impact on the financial soundness of the financial institution;

(iv) may negatively impact on the financial stability of the financial services sector;

(v) relates to non-compliance with this Act that is not material; or

(vi) relates to a matter in which the public does not have an interest.

(b) If the Authority approves the non-disclosure of specific

information, it may direct the financial institution to include a statement to this effect,

and the reasons for the non-disclosure of the information, in its disclosure.

(c) The Authority may not make an approval regarding non-

disclosure by—
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(i) prudentially regulated institutions unless the Prudential

Authority has concurred with the approval; and

(ii) systemically important financial institutions and payment

service providers unless the Reserve Bank has concurred

with the approval.

(4) (a) In the event of any major development affecting the

relevance of the information disclosed in accordance with subsection (1), a financial

institution must publicly disclose appropriate information on the nature and effects of

that major development, unless the Authority has approved in terms of subsection (3)

that disclosure need not be made.

(b) For the purposes of paragraph (a), ''a major development''

means any material non-compliance with this Act, or a review, investigation or

verification required by the Authority to be disclosed in accordance with this Act.

(c) In the circumstances referred to in paragraph (a), a financial

institution must immediately publicly disclose the extent of non-compliance, an

explanation of the reasons for the non-compliance, the consequences of the non-

compliance, and the remedial measures taken by the financial institution, unless the

Authority has approved that disclosure need not take place.

(5) (a) The Authority may, in addition to subsection (1), at any time,

require a financial institution to publish information in the form, and within the time

limits, that the Authority may determine, if the publication—

(i) is in the interest of financial customers or prospective financial customers;

(ii) is in the public interest; or

(iii) would support the integrity of the financial services sector.

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(b) If a financial institution fails to comply with a requirement

under paragraph (a) within the time limit set in terms of that paragraph, the Authority

may itself publish the information, after giving the financial institution reasonable time to

make representations as to why it should not be published.

Incomplete, incorrect, false or misleading information

50. (1) If the Authority reasonably believes that any information provided to

the Authority in terms of this Act is incomplete, incorrect, false or misleading, after

providing the financial institution with appropriate information to indicate why it believes

that the information is incomplete, incorrect, false or misleading, the Authority may—

(a) direct the financial institution to provide the Authority, within a specified period,

with specified information or documents, to complete or correct the information

provided to the Authority; or

(b) reject the information, and direct the financial institution to provide the Authority,

within a specified period, with new information which is in the opinion of the

Authority complete and correct.

(2) If the Authority reasonably believes that information, or a part of the

information, requires further investigation, it may direct the financial institution to secure

a report containing the information required by the Authority from a person who is

approved by the Authority, at the cost of the financial institution, by a specified date, or

within a specific period, and in the form and manner determined by the Authority.

Information concerning beneficial interests

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51. (1) A financial institution must, when required to do so by the Authority,

provide the Authority with any information the Authority may require, in the form and

manner determined by the Authority, in respect of—

(a) the names of its shareholders, other holders of a beneficial interest, and the size

of their shareholding and other beneficial interests, as the case may be; and

(b) the name of any person who, directly or indirectly, has the power to require the

shareholders referred to in paragraph (a) to exercise their rights as shareholders

in the financial institution.

(2) A person, or any person acting on behalf of that person, must, at

the request of a financial institution, provide the financial institution with the information

it may require for the purposes of complying with subsection (1), if—

(a) shares in a financial institution are registered in that person’s name; or

(b) that person wishes to have shares in a financial institution allotted, issued or

registered in that person’s name.

(3) The Authority must prescribe what constitutes a beneficial interest

for the purposes of this section.

PART 2

ACCOUNTING RECORDS, FINANCIAL STATEMENTS, VERIFICATION OR

AUDITING AND INDEPENDENT REVIEW AND RETENTION OF RECORDS

Financial year of financial institution

52. (1) A financial institution may not change its financial year end without

the approval of the Authority.

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(2) Despite subsection (1), the Authority’s approval is not necessary

where a change of a financial year end has been approved by the Prudential Authority.

(3) Where a change of a financial year end was approved by the

Prudential Authority, the financial institution must inform the Authority of that approval

within 14 days of the approval being granted.

Accounting records and financial statements

53. (1) A financial institution must—

(a) maintain full and proper accounting records on a continual basis, brought up to

date monthly; and

(b) annually prepare, in respect of the relevant financial year of the financial

institution, financial statements that—

(i) fairly represent the state of affairs of the financial institution’s business;

(ii) refer to any material matter which has affected or is likely to affect the

financial affairs of the financial institution;

(iii) reflects those matters that are determined by the Authority; and

(iv) are in the format determined by the Authority.

(2) The Authority may issue a guidance notice in terms of section 141

of the Financial Sector Regulation Act regarding what constitutes a “material matter”

referred to in subsection (1)(b)(ii).

(3) Sections 28, 29 and 30 of the Companies Act apply to the

accounting records, financial statements and annual financial statements of any

financial institution referred to in this section, including a financial institution that is not a

company.
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(4) The Authority may determine additional statements or reports that

must be included in the annual financial statements of a financial institution after having

consulted with any relevant regulatory authority.

Auditing or independently reviewed annual financial statements

54. (1) A financial institution must cause to be audited or independently

reviewed, as required under section 30 of the Companies Act, —

(a) its annual financial statements referred to in section 53; and

(b) the information as prescribed referred to in Part 1 of this Chapter.

(2) A financial institution must submit its audited annual financial

statements to the Authority and make them available to the public within the prescribed

period after its financial year-end.

(3) Those financial institutions that are not companies must, if so

required by the Authority in a conduct standard, comply with the independent review

requirements of section 30 of the Companies Act.

Retention of records

55. (1) A financial institution must have in place and implement a

framework for the retention of data and records, in accordance with—

(a) the Protection of Personal Information Act, 2013 (Act No. 4 of 2013);

(b) requirements prescribed in conduct standards in relation to the activities

that the financial institution is authorised to provide; and

(c) other applicable legislation.

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(2) Where data and records are maintained by a service provider or

any third party, the records and data remain the property of the financial institution and

must be made available to the financial institution free of charge.

PART 3

AUDITORS

Appointment of auditor

56. (1) (a) A financial institution must appoint and at all times have an

auditor approved in terms of the Auditing Profession Act who has no direct or indirect

financial interest in the business of the financial institution.

(b) Sections 90 to 93, inclusive, of the Companies Act apply to a

financial institution referred to in paragraph (a).

(2) (a) The appointment of an auditor is subject to the approval of

the Authority in the form and manner prescribed.

(b) Paragraph (a) does not apply in respect of the

reappointment of an auditor that does not involve a break in the continuity of the

appointment.

(c) Where the appointed auditor is a firm defined under the

Auditing Profession Act, both the firm and the partner who takes responsibility for the

financial institution must be approved by the Authority.

(d) The Authority’s approval of a firm as defined under the

Auditing Profession Act does not lapse due to a change in the membership of the firm, if

at least half of the members of the firm, after the change, were members when the
 74

appointment of the firm was approved by the Authority, and the partner that takes

responsibility for the financial institution is not affected by this change.

(3) (a) Auditors must, at all times, comply with prescribed fit and

proper requirements.

(b) The Authority may, if it reasonably believes that an auditor

does not comply or no longer complies with the requirements referred to paragraph (a),

in addition to any other action that the Authority may take under this Act, direct the

financial institution to terminate the appointment of the auditor.

(4) (a) If a financial institution referred to in subsection (1) for any

reason fails to appoint an auditor under subsection (1), the Authority may, despite the

Companies Act, appoint an auditor for that financial institution.

(b) A person or firm appointed under paragraph (a) is deemed

to have been appointed by that financial institution in accordance with this Act.

(5) A financial institution must notify the Authority of the termination of

the appointment of an auditor, within 14 days of the termination.

(6) Any auditor of a financial institution who resigns or whose

appointment is terminated must submit to the Authority—

(a) a written statement on the reasons for the resignation or the reasons that the

auditor believes are the reasons for the termination; and

(b) any report contemplated in section 45(1)(a) and (3)(c) of the Auditing Profession

Act that the auditor would, but for the termination, have had reason to submit.
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Duties of auditor

57. (1) The auditor must, in addition to the requirements of the Financial

Sector Regulation Act, without delay submit a detailed written report to the Authority,

and to the governing body of the financial institution, on any matter of which the auditor

becomes aware in the performance of the auditor’s functions and duties referred to in

section 56(6), and which, in the opinion of the auditor—

(a) may be contrary to the governance requirements of this Act, or amounts to

inadequate maintenance of internal controls;

(b) in respect of a significant owner of the financial institution, constitutes a

contravention of any section of this Act.

(2) The auditor of a financial institution must—

(a) audit the annual financial statements of a financial institution in the manner

prescribed;

(b) perform the duties and functions assigned to the auditor of a financial institution

under this Act, the Companies Act and the Auditing Profession Act; and

(c) perform any other duties or functions prescribed.

CHAPTER 10

CREDIT RATING SERVICES2

2 This Chapter is for consideration, and discussion of where credit rating services should be regulated can
take place. This content could be incorporated into the appropriate legislation that is agreed upon.
 76

Definitions3

58. For the purposes of this Chapter, unless the context otherwise indicates,

“credit rating” means an opinion regarding the creditworthiness of—

(a) an entity;

(b) an issuer of a security or a financial instrument;

(c) a security or a financial instrument; or

(d) a sovereign state,

using an established and defined ranking system of rating categories, excluding any

recommendation to purchase, sell or hold any security or financial instrument, and

includes a rating outlook;

“credit rating agency” means a financial institution authorised to provide credit rating

services as defined in Schedule 1 of this Act;

“credit rating services” means gathering and collecting of data and information,

analysis, evaluation, approval, issuing for review of the data and information for the

purposes of providing a credit rating, but excluding credit scores, credit scoring systems

or similar assessments related to obligations arising from consumer, commercial or

industrial relationships;

“credit score” means a measure of creditworthiness derived from summarising and

expressing data based only on a pre-established statistical system or model, without

any additional substantial rating-specific analytical input from a rating analyst;

“external credit rating” means a credit rating issued by an external credit rating

agency;

3 Currently, for consideration, these definitions are included here for ease of reference. Depending upon
the discussions regarding the placement of provisions relating to Credit Rating Services, these definitions
might be moved to clause 1.
 77

“external credit rating agency” means a person who provides credit rating services

and who is authorised or registered by a regulatory authority whose regulatory

framework has been recognised as equivalent by the Authority under section 255A of

the Financial Sector Regulation Act;

“public regulation” means any legislation, including subordinate legislation, or any

registration, licence, directive or similar authorisation issued by a regulatory authority or

pursuant to any statutory authority;

“rating category” means a rating symbol, such as a letter symbol or a numerical

symbol which might be accompanied by appending identifying characters, used in a

credit rating to provide a relative measure of risk to distinguish the different risk

characteristics of the type of rated entity, issuer or financial instrument or other asset;

“rating outlook” means an opinion regarding the likely direction of a credit rating over

the short term, the medium term or both;

“regulated person” means a person that has been granted authority to conduct

business or activities by a regulatory authority;

“regulatory authority” means an organ of state as defined in section 239 of the

Constitution responsible for the supervision or enforcement of legislation dealing with

the regulation of institutions and the provision of financial services, or a similar body

designated in the laws of a country other than the Republic to supervise and enforce

the legislation of that country;

“regulatory purposes” means the use of credit ratings for the specific purpose of

complying with national legislation or the listings requirements made by an exchange

under section 11 of the Financial Markets Act;

“securities” means securities as defined in section 1(1) of the Financial Markets Act;

“sovereign rating” means a credit rating where—

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(a) the entity rated is a state or a provincial or local authority of the state; or

(b) the issuer of the debt or financial obligation, debt security; or other financial

instrument is a state, or a provincial or a local authority of the state; or

(c) a special purpose vehicle of a state;

“structured finance instrument” means a financial instrument or other asset resulting

from a securitisation transaction or other structured financial transaction or scheme; and

“unsolicited credit rating” means a credit rating assigned by a credit rating agency

other than upon request.

Application and purpose of Chapter

59. (1) The regulatory framework set out in this Chapter applies to

credit rating agencies.

(2) A credit rating agency must comply—

(a) with this Chapter; and

(b) Chapters of this Act that are indicated in Schedule 1 in the column with the heading

“Chapters of Act applicable to the Activity ”, in connection with row for the “financial

markets activities” sub-activity of “credit rating services.

(3) The purpose of this Chapter is to protect the integrity, transparency and

reliability of the credit rating process and credit ratings.

(4) This Chapter does not create a general obligation for—

(a) all securities or financial instruments to be credit-rated;

(b) credit rating agencies and financial customers to invest only in entities, securities

or financial instruments that are credit-rated.

(5) This Chapter does not apply to private credit ratings and private credit

rating services produced pursuant to an individual order and provided exclusively to the
 79

person who placed the order and which are not intended for public disclosure or

distribution by subscription.

Use of credit ratings

60. (1) Where a regulated person uses credit ratings for regulatory

purposes, the regulated person must only use credit ratings that are—

(a) issued or endorsed by a credit rating agency; or

(b) issued by an external credit rating agency of an equivalent foreign jurisdiction as

defined in section 1(1) of the Financial Sector Regulation Act, and with whose

regulatory authority, the Authority has entered into a supervisory cooperation

arrangement under section 255C of the Financial Sector Regulation Act.

(2) The Authority may prescribe additional requirements in respect of the use

of credit ratings for regulatory purposes.

Exemption of certain applicants from providing information for licensing

61. The Authority may exempt an applicant under Chapter 2 of this Act, who,

or whose holding company, or a related company in the same group, is registered,

authorised or approved by a foreign regulatory authority as a credit rating agency, from

providing some or all of the information required under Chapter 2, if—

(a) the applicant requests an exemption;

(b) the applicant provides proof of the registration, authorisation or approval; and

(c) the Authority is satisfied that the registration, authorisation or approval was

granted in accordance with public regulation that is equivalent to this Act.

Use of credit ratings after suspension or revocation of licences

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62. (1) Credit ratings issued by a credit rating agency whose licence has

been suspended or revoked under section 120 or section 121 of the Financial Sector

Regulation Act, may continue to be used for regulatory purposes for—

(a) 14 days after the publication of the notice of suspension or revocation on the

Authority’s website, if credit ratings of the credit rating agency were also issued by

other credit rating agencies under this Chapter; or

(b) three months after the publication of the notice of suspension or revocation on the

Authority’s website, if no credit ratings of the credit rating agency were issued by

other credit rating agencies.

(2) The Authority may extend the period referred to in subsection (1)(b), in order to

mitigate any potential market disruption or to ensure financial stability.

Requirements for endorsement of external credit ratings

63. (1) A credit rating agency may, subject to the approval of the Authority,

endorse external credit ratings, if—

(a) the credit rating services resulting in the issuing of the credit rating to be endorsed

are undertaken partly or entirely—

(i) by the credit rating agency; or

(ii) by an external credit rating agency belonging to the same group as that

credit rating agency; and

(b) the ability of the Authority to assess and monitor the compliance of the external

credit rating agency with the regulatory framework established in terms of this Act

is not limited;
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(c) the credit rating agency provides the Authority, on the Authority’s request, with all

information necessary to enable the Authority to monitor, on an ongoing basis,

compliance with this Act; and

(d) there is an objective reason for the credit ratings to be issued in a country other

than the Republic, or by an external credit rating agency.

(2) A credit rating endorsed under this section is deemed—

(a) to be a credit rating issued by a credit rating agency; and

(b) to have been issued when the credit rating is published on the website of the

credit rating agency or by other means, or is distributed by subscription and

presented and disclosed in accordance with the requirements of this Act.

(3) A credit rating agency that endorsed a credit rating under this section

remains fully responsible for that credit rating and for compliance with this Act.

(4) (a) A credit rating agency must apply to the Authority for the approval of

the external credit rating agencies whose credit ratings it intends to endorse under this

section.

(b) If the Authority is of the opinion that a credit rating cannot be endorsed in

accordance with this section or the requirements of this Chapter, the Authority may

instruct the credit rating agency not to endorse the credit rating.

(5) A credit rating agency may not use endorsement with the intention of

avoiding the requirements of this Act.

(6) The Authority must maintain a list on the official website of external credit

rating agencies whose ratings may be endorsed in terms of this section.

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Liability of credit rating agency

64. (1) A credit rating agency may be delictually liable, in respect of a

credit rating issued or credit rating services performed in the ordinary course of

business in terms of this Chapter, for any loss, damages or costs sustained as a result

of that credit rating or credit rating service.

(2) Subsection (1) does not affect any additional or other liability of a

credit rating agency to a financial customer or member of the public, arising from a

contractual relationship or the application of any law.

Independence

65. No person, including the Authority, may hinder, interfere with, obstruct or

improperly attempt to influence a credit rating, the content of a credit rating, or any

methodology, model or key assumption used by a credit rating agency to derive a credit

rating.

Savings of rights

66. No provision of this Chapter, and no act performed under or in terms of

any provision of this Chapter, may be construed as affecting any right of a person to

seek appropriate legal redress in terms of the common law or any other relevant

legislation, whether relating to civil or criminal matters, in respect of a credit rating or

credit rating agency.

 83

CHAPTER 11

GENERAL PROVISIONS

PART 1

MAKING OF CONDUCT STANDARDS AND RELATIONSHIP OF ACT AND

CONDUCT STANDARDS TO RULES

Conduct standards made by Authority

67. (1) The Authority may make conduct standards for and in respect of—

(a) financial institutions required to be licensed under this Act; and

(b) persons referred to in section 106(1) of the Financial Sector Regulation

Act that are subject to this Act as provided in section 4.

(2) A conduct standard prescribed for the purposes of this Act must be aimed

at achieving the object of this Act, the objective of the Authority in terms of section 57 of

the Financial Sector Regulation Act, and supporting the performance of the Authority’s

functions in terms of section 58 of that Act.

(3) Without limiting the generality of subsection (1), a conduct standard in

terms of this Act may be made in respect of any matter referred to in section 106(5), (6),

(7) and (10) and section 108 of the Financial Sector Regulation Act.

(4) Section 106(3), (4) (8) and (9) of the Financial Sector Regulation Act

applies to conduct standards made under this Act.

(5) Despite Chapters 5 to 7 of this Act, a conduct standard referred to in

subsection (1) may define or classify a category or type of financial customer with the
 84

purpose of allowing a financial institution to not comply with one or more requirement

contained in Chapters 5 to 7 of this Act or any requirement contained in a conduct

standard—

(a) in respect of the category or type of financial customer so defined or

classified; and

(b) subject to and in accordance with any conditions, requirements or

circumstances provided for in the conduct standard.

Relationship of Act and conduct standards to rules

68. In the event of any inconsistency between a provision of this Act or a

conduct standard prescribed under this Act, and a rule made by a market infrastructure

under the Financial Markets Act, or a rule under the National Payment System Act, that

relates to the conduct of financial institutions as regulated in terms of the Conduct of

Financial Institutions Act, the provision of Conduct of Financial Institutions Act or the

conduct standard prescribed in terms of this Act prevails.

PART 2

APPLICATIONS AND NOTIFICATIONS

Applications

69. (1) A written application must be submitted to the Authority—

(a) in respect of any application for approval under this Act, other than an application

for a licence;
 85

(b) if any determination, decision, exemption or the performance of any other act is

required by the Authority under this Act.

(2) A written application referred to in subsection (1) must be—

(a) submitted in the form and manner that may be determined by the Authority; and

(b) accompanied by the information that may be determined by the Authority; and

(c) accompanied by the fee that may be prescribed by the Authority.

(3) A person must promptly amend an application referred to under

subsection (1) and inform the Authority if any information provided to the Authority on

application becomes inaccurate prior to the Authority approving or declining an

application.

(4) The Authority, in respect of any application referred to in

subsection (1)—

(a) may—

(i) require a person to furnish additional information, to verify that

information, or verify any information that accompanied the application, in

the manner specified by the Authority; and

(ii) take into consideration any other information, derived from whatever

source, including information provided by the Prudential Authority, the

Reserve Bank, or “another regulator” as defined in section 1(1) of the

Financial Sector Regulation Act;

(b) must, after considering the application—

(i) grant the application, if the Authority reasonably believes that the person

complies with the requirements for that application; or

(ii) refuse the application, if the Authority reasonably believes that the person

does not comply with the requirements for that application; and
 86

(c) where an application is refused, must notify the applicant of the refusal.

(5) The Authority may grant any application subject to any conditions.

(6) Any approval, determination, decision, exclusion or exemption

granted by the Authority is valid only if it is in writing.

(7) If the Authority under subsection (4)(a)(i) required a person to

furnish additional information or required a person to verify any information, the

Authority does not need to consider the application further, until the person has

furnished or verified the information.

Notifications

70. Any notification by a person under this Act must be—

(a) submitted in the form and manner; and

(b) accompanied by the information,

that may be determined by the Authority.

PART 3

OFFENCES

Offences

71. (1) A person required to be licensed in terms of this Act, and who is

not licensed, commits an offence and is liable on conviction to a fine not exceeding

R15 million or imprisonment for a period not exceeding 10 years, or to both a fine and

imprisonment.
 87

(2) A person who contravenes section 12(1) commits an offence and is

liable on conviction to a fine not exceeding R 10 million or imprisonment for a period not

exceeding 10 years, or to both a fine and imprisonment.

(3) A person who contravenes section 37(a) to (d) commits an offence

and is liable on conviction to a fine not exceeding R 100 million or imprisonment for a

period not exceeding 20 years, or to both a fine and imprisonment.

(4) A person who contravenes section 39 commits an offence and is

liable on conviction to a fine not exceeding R 50 million or imprisonment for a period

not exceeding 10 years, or to both a fine and imprisonment.

(5) A financial institution who contravenes section 40(1) commits an

offence and is liable on conviction to a fine not exceeding R10 million or imprisonment

for a period not exceeding 5 years, or to both a fine and imprisonment.

CHAPTER 12

FINAL PROVISIONS

Review of Act

72. (1) The National Treasury, after having consulted the Authority, must—

(a) regularly assess of the impact and effectiveness of this Act, and in

particular, whether the object of this Act is being achieved; and

(b) where necessary, develop amendments to this Act or develop new

legislation to be tabled in Parliament by the Minister, to address

 88

shortcomings identified and promote the effectiveness of the Act and the

achievement of the object of the Act.

(2) The Authority must within a reasonable period assess the

effectiveness of conduct standards prescribed in terms of this Act, and where necessary

amend or prescribe new standards to address deficiencies identified.

Savings

73. (1) Anything done under a section, subsection or paragraph of an Act

amended or repealed by this Act remains valid—

(a) to the extent that it is not inconsistent with this Act; and

(b) until anything done under this Act overrides it.

(2) Any matter prescribed under a section of an Act amended or

repealed by this Act remains valid and enforceable and is considered to have been

prescribed under this Act as a conduct standard—

(a) to the extent that it is not inconsistent with this Act; and

(b) until it is repealed or replaced by a conduct standard prescribed under this Act.

(3) An authorisation, approval, registration, consent or similar

permission given in terms of a financial sector law for which the Authority is the

responsible authority and in force immediately before the effective date, remains in

force for the purposes of the financial sector law, but may be amended or revoked by

the Authority in terms of this Act.

(4) A regulatory instrument, Notice, rules or any other form of

subordinate legislation made in terms of a financial sector law for which the Authority is

the responsible authority on the effective date, and which are in force on the effective
 89

date remain in force, but may be amended, replaced or revoked by conduct standards

prescribed under this Act or another financial sector law.

(5) A Regulation made or issued in terms of a financial sector law for

which the Authority is the responsible authority on the effective date and in force

immediately before the effective date, remains in force despite the repeal of

that financial sector law, but may be amended until revoked by the Minister and

replaced by a conduct standard prescribed in terms of this Act.

Transitional arrangements regarding licensing

74. Schedule 4 sets out transitional arrangements in relation to licensing in

terms of this Act.

Transitional arrangements regarding public sector retirement funds

75. (1) This Act applies to all retirement funds.

(2) A public sector retirement fund which at the date when this section

comes into effect is licenced in terms of the Retirement Funds Act must be licensed in

terms of this Act, in accordance with item 3 of Schedule 4 and applicable conduct

standards that may be prescribed.

(3) (a) A public sector retirement fund which at the date of

commencement of this section is not registered in terms of the Retirement Funds Act,

must apply to be licensed in terms of this Act, in accordance with item 4 of Schedule 4

of this Act and conduct standards that may be prescribed, subject to any exemptions

granted and conditions imposed by the Authority in terms of this Act.

 90

(b) A public sector retirement fund referred to in paragraph (a) must

also apply to be licensed in terms of the Retirement Funds Act, in accordance with the

requirements and transitional arrangements provided for in terms of that Act.

(4) (a) Legislation which is in force at the date of commencement of

this provision, which provides for the establishment and operation of a public sector

retirement fund which is not already licenced in terms of the Retirement Funds Act,

must be amended to the extent necessary to align with this Act and the requirements

prescribed in terms of this Act, as well as the requirements of the Retirement Funds

Act, but subject to any exemptions that may be granted by the Authority, within 3 years

from the date of commencement of this provision.

(b) The rules of a public sector retirement fund referred to in paragraph (a)

must also be amended, to the extent necessary to align with requirements under this

Act and the Retirement Funds Act, but subject to any exemptions granted and

conditions imposed by the Authority in terms of this Act or the Retirement Funds Act,

within a prescribed period from the date of commencement of this provision.

Transitional arrangements regarding repealed legislation

76. (1) A supervisory on-site inspection or investigation in terms of, or in

relation to compliance with or contraventions of, the Long-term Insurance Act, 1998 (Act

No. 52 of 1998), the Short-term Insurance Act, 1998 (Act No. 53 of 1998), the Financial

Institution (Protection of Funds) Act, 2001 (Act No. 28 of 2001), the Financial Advisory

and Intermediary Services Act, 2002 (Act No. 37 of 2002), and the Credit Rating

Services Act, 2012 (Act No. 24 of 2012), that is pending and not yet concluded

immediately before the date on which this provision comes into effect, may be
 91

continued and concluded by the Authority in terms of the relevant provisions of Chapter

9 of the Financial Sector Regulation Act.

(2) Despite the repeal of the Long-term Insurance Act, 1998 (Act No.

52 of 1998), the Short-term Insurance Act, 1998 (Act No. 53 of 1998), the Financial

Institution (Protection of Funds) Act, 2001 (Act No. 28 of 2001), the Financial Advisory

and Intermediary Services Act, 2002 (Act No. 37 of 2002), and the Credit Rating

Services Act, 2012 (Act No. 24 of 2012), any pending proceedings before the Tribunal,

a court, or an arbitrator or any other person or body, which are not determined before

the date on which this provision comes into operation, may be continued and concluded

before the Tribunal, court, arbitrator, or other person or body, as the case may be.

Amendment of Schedules

77. (1) The Minister may, by Notice in the Gazette, amend Schedule 1 to

ensure that the licensing framework appropriately accommodates—

(a) a new category of financial product that has been designated in terms of section

2 of the Financial Sector Regulation Act;

(b) a new category of financial service that has been designated in terms of section

3 of the Financial Sector Regulation Act;

(c) the addition or deletion of a sub-activity;

(d) the amendment of the definition of an activity or a subcategory of activity.

(2) The Minister may, by Notice in the Gazette, amend Schedules 2 and 3 to

appropriately align with amendments that may be made to Schedule 1.

 92

(3) Any amendment of Schedule 1 referred to in subsection (1)(c) and (d)and

any amendments to Schedules 2 or 3 referred to in subsection (2) must, before

publication in the Gazette, be submitted to Parliament for its approval.

Amendment of laws

78. The Acts listed in Schedule 5 are amended or repealed as set out in that

Schedule.

Short title and commencement

79. (1) This Act is called the Conduct of Financial Institutions Act, 2021,

and comes into effect on a date determined by the Minister by notice in the Gazette.

(2) Different dates may be determined by the Minister in respect of the

coming into effect of—

(a) different provisions of this Act and the Schedules to this Act;

(b) different provisions of this Act in respect of different categories of financial

institutions, financial products, financial services, or other persons; and

(c) the repeal or amendment of different provisions of a law repealed or amended by

this Act.
 93

SCHEDULE 1

CATEGORIES AND SUBCATEGORIES OF ACTIVITIES REQUIRING LICENSING

1. In this Schedule, the activities listed in the table have the meanings

defined in the column headed “Definition” in the table, and—

“asset class” means a group of financial products, financial instruments or foreign

exchange that have similar characteristics; and

“input data” means the data in respect of the value or price of one or more underlying

assets, interests or elements that is used in providing a benchmark to determine the

benchmark.

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
1 Providing a a. Providing a Providing a financial product as A financial product 1-2, 4-9,
financial participatory defined in section 2 of the Financial provider that is not 11- 12.
product interest in a Sector Regulation Act, excluding a a medical
collective health service benefit referred to in scheme.
investment subsection (1)(h) of that section
scheme Licensed credit
providers will be
b. Providing a 1-2, 4-6, 8-
subject to limited
participatory 9, 11-12
chapters of the
interest in an
COFI Bill as
alternative
specified in the
investment
FSRA.
fund
c. Providing a life Includes providers 1-2, 4-9,
policy or non- of alternative 11- 12
life insurance investment funds,
policy as including non-
defined in the retail hedge funds,
Insurance Act

4 The descriptor column in this table is for the purpose of providing clarity and facilitating engagement
regarding the application of the Bill. This column will not form part of the Schedule in the version of the Bill
that will be tabled in Parliament.
 94

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
d. Providing a private equity 1-9, 11- 12
deposit as funds, REITs,
defined in the infrastructure;
Banks Act retail hedge funds
to remain under
e. Lending CIS framework. 1-2, 4,
The Manco for an sections 29
AIF is seen as the and 30 of
provider and is chapter 6,
therefore the 8-9, 11-12
f. Providing licence holder; 1-2, 4-9,
retirement fund limited chapters of 11- 12
benefits the COFI Bill
g. Providing apply. 1-2, 4, 9,
credit in terms 11-12
of a credit Includes also
agreement providers of non-
retail credit i.e.
lending; limited
chapters of COFI
Bill apply.

Provision can be
made by for
“opting out” of
provisions by
counterparties as
a category of
financial
customer, as
currently provided
for by ODP
regulations under
FMA

Medical schemes
are not subject to
the COFI Bill
pending the
outcome of policy
engagement
between DOH and
NT.

This changes the

scope of the
“financial product”
definition,
although the
activities added
will not be subject
to prudential
oversight by the
PA.
 95

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
2. Distribution a. Sales and Providing a facility or performing a Giving effect to 1-9, 11-12
execution service or any other act (other than the selling and
the performance of another take-up of
authorised activity defined in this financial products,
Schedule) – non-retail loans,
(a) as a result of which a person financial
may enter into, offers to enter instruments,
into or enters into any foreign exchange
transaction in respect of a and payment
financial product, financial services; includes
instrument, foreign exchange or brokers trading on
payment service; or or off exchange
(b) with a view that a person (where simply
acquire, buy, sell, deal, trade, acting on
invest or disinvest in, replace or instruction).
vary one or more financial
products, financial instruments, Includes activities
foreign exchange or payment performed by
services. Authorised
Dealers,
Authorised
Dealers with
Limited Authority,
traditional
Treasury
Outsourcing
Companies
(TOCs) and Agent
TOCs.

Medical schemes
are excluded; but
an intermediary
that performs this
activity is not
excluded.

This changes
scope of “financial
services”
definition, in
relation to lending
and forex.
b. Aggregation Providing a facility or performing a No descriptor 1-9, 11-12
and service or any other act (other than required
comparison the performance of another
services authorised activity defined in this
Schedule) aimed at aggregating
information that enables the public to
compare similar financial products’
or financial instruments’ prices,
benefits or features
3. Financial Providing a recommendation, Providing advice 1-9,11- 12
Advice guidance or proposal, by any means in relation to a: Excepting
 96

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
or medium, to any person or group of - financial for:
persons- product
(a) in respect of — - financial -Advice in
(i) the acquisition of a instrument relation to
financial product, - foreign lending
financial instrument, exchange, which are
foreign exchange, - payment 1-2, 4,
payment service or service sections 29
asset class; - asset and 30 of
(ii) an investment, class (to Chapter 6,
participation, capture 8-9, 11-12
subscription, asset
contribution or consultant
commitment in a s)
financial product,
financial instrument, Advice given
foreign exchange or in relation to
payment service or lending is
asset class; subject to
(iii) the allocation of an limited
investment or part of an chapters.
investment in a financial
product, financial Note that
instrument, foreign advice given
exchange or asset in relation to
class; medical
(iv) the variation of any term schemes and
or condition applying to retail credit is
a financial product, captured.
financial instrument,
foreign exchange,
payment service or
asset class;
(v) the replacement,
disposal, termination or
disinvestment of any
financial product,
financial instrument,
foreign exchange,
payment service or
asset class;
(vi) maintaining or holding a
financial product,
financial instrument,
financial instrument,
foreign exchange,
payment service or
asset class;
(vii) the underwriting or
exercising of any rights
conferred by a financial
product, financial
instrument, foreign
exchange or payment
service;
 97

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
(b) on the conclusion of any other
transaction, including a loan or
cession, aimed at the incurring
of any liability or the acquisition
of any right or benefit in respect
of any financial product,
financial instrument, foreign
exchange or payment service;
(c) in respect of the selection by a
person of one or more financial
product providers or financial
service providers; and
irrespective of whether or not the
advice—
(aa) is furnished in the course
of or incidental to financial
planning in connection
with the affairs of the
financial customer; or
(bb) results in any of the acts
referred to in paragraph
(a) to (c), as the case may
be, being effected.

4. Discretionar (a) obtaining a mandate from a Investment 1-9, 11-12

y Investment financial customer to apply an management in
Managemen agreed level of decision respect of asset
t5 making, on behalf of the selection is the
financial customer, after case where the
establishing and agreeing the manager is given
financial customer’s investment a mandate by a
objectives and investment risk consumer,
appetite; corporate or
(b) identifying, selecting, acquiring another financial
or disposing of financial institution and in
products, financial instruments terms of that
or foreign exchange (or mandate can
identifying and selecting other exercise
investment managers to discretion.
perform this activity)—
(i) in accordance with an Investment
investment strategy and management in
investment objectives set relation to
out in the mandate; manager selection
(ii) in accordance with any is the this case
parameters, limits, where the
thresholds or other discretion granted

5 The FSCA, through its Retail Distribution Review (RDR) process, is in the process of consulting
stakeholders on a definition of this activity. The FSCA has identified a need to define the activity
in a way that distinguishes it more clearly from the broader situation (contemplated in the current
FAIS Cat II license criteria) of simply holding a mandate from a financial customer to make
decisions regarding the purchase of or investment in financial products. Input on the activities that
comprise "true" investment management to be included in such a definition is invited. This
proposed categorisation is in line with the proposals in the RDR policy paper.
 98

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
instructions set out in the in terms of the
mandate; and mandate is in
(c) handing any assets of the relation to
financial customer over to a managers.
custodian or nominee for
safekeeping.

5. Administrati . Operating a Arranging, safeguarding, A provider of what 1-9, 11-12

on a. linked administering and distributing is typically
investment financial products, and financial understood to be
platform instruments, of more than one a “LISP”, and
financial product provider, or does not include
provider of financial instruments an exchange as
through the method of bulking and provided for in the
by giving effect to instructions of a FMA.
financial customer, but, excluding an
exchange as defined in section 1(1)
of the Financial Markets Act or a
service which is ancillary to the
activity of discretionary investment
management.
b. Retirement Receiving, controlling or managing A retirement fund 1-9, 11-12
fund self- contributions and benefits by a does its own
administration retirement fund in accordance with administration.
the rules of the retirement fund.
c. Third-party Receiving, controlling or managing A retirement fund 1-9, 11-12
retirement fund contributions and benefits on outsources
administration behalf of a retirement fund, administration to
in accordance with the rules another entity; this
of the retirement fund entity must be
licenced.
d. General Administration includes-- All other 1-9, 11-12
administration (a) administering, maintaining administration
or servicing a financial services.
product, lending
agreement, financial
instrument;
(b) collecting or accounting for
moneys payable by a person
other than insurance
premiums in respect of a
financial product, lending
agreement, financial
instrument
(c) receiving, submitting or
processing the claims of a
person in respect of a
financial product, lending
agreement, or financial
instrument; and
excludes operating an
investment platform,
retirement fund self-
administration and third-
party fund administration
 99

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity

6. Fiduciary or Holding assets on behalf of financial No descriptor 1-9, 11-12

custodian customers, or keeping trust property required.
service in safe custody

7. Payment Providing a payment service in the The definition of 1-9, 11-12

service National Payment System Act, 1998 payment services
(Act No. 78 of 1998) or successor in the FSR Act is
legislation. likely to be
replaced by a
definition of such
in the new NPS
Bill, that is being
developed to
replace the
existing NPA Act.
The content of this
activity will
therefore be
aligned with the
definition of
“payment service”
in the governing
NPS law.

A service provided
to financial
customers to
ensure a payment
happens,
excluding clearing
and settlement. It
should
accommodate
banks and non-
banks, as per the
NPS Policy
Review.
Generally, means
the “front end” of
the national
payment system
i.e. financial
customer facing.
8. Debt Collecting debt that is owed in terms Persons collecting 1-9, 11-12
Collection of a credit agreement, whether on on debt that
Service your own or on another’s behalf. originates from a
loan issued under
the NCA,
including
attorneys; other
debt collection is
excluded.
 100

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
9. Financial a. Underwriting (a) Underwriting or placing of No descriptor 1-2, 4, 8-9,
Market and placement financial instruments, required. 11-12
Activities6 participatory interests in a
collective investment scheme or
participatory interests in an
alternative investment fund, on
a firm commitment basis, being
the act of seeking subscribers
or purchasers on behalf of an
issuer or a transferor of such
instruments or interests with a
guarantee in subscriptions or
purchases;
(b) Placing of financial instruments,
participatory interests in a
collective investment scheme or
participatory interests in an
alternative investment fund,
without a firm commitment
basis, being the act of seeking
subscribers or purchasers on
behalf of an issuer or a
transferor of the instruments or
interests without guaranteeing it
any amount in subscriptions or
purchases.
b. Custody and (a) Holding financial instruments Services provided 1-2, 4-5,
administration and participatory interests in by a participant in sections 29
service a collective investment the settlement and 30 of
scheme in custody on behalf system, as chapter 6,
of another person by pertains to: 9, 11-12
maintaining securities - maintaining an
account; and account in the
(b) administering corporate CSD for a
action or other event financial
affecting the rights or customer that
benefits in respect of reflects
financial instruments and financial
participatory interests in a instruments /
collective investment securities
scheme owned by that
financial
customer
- effecting
corporate
action for
financial
customers, in
relation to
financial
instruments/se
curities owned

6 The scope and definitions of these sub-activities will be further informed by the Financial Markets
Review currently being undertaken.
 101

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
by that
financial
customer.
c. Providing over- Originating, issuing, or making a An ODP 1-2, 4-9,
. the-counter market in over-the-counter 11-12
derivative derivatives, as a principal. Provision can be
instruments made for “opting
out” of provisions
by counterparties
as a category of
financial
customer, as
currently provided
for by ODP
regulations under
FMA
d. Providing other Originating, issuing, or making a Providing an OTC 1-2, 4-9,
over-the- market in over-the-counter financial financial 11-12
counter instruments other than derivatives, instrument that is
financial as a principal. not a derivative.
instruments or
foreign Provision can be
exchange made for “opting
out” of provisions
by counterparties
as a category of
financial
customer, as
currently provided
for by ODP
regulations under
FMA

e. Providing a Providing a benchmark by – No descriptor 1-2, 4, 8-9,

benchmark (a) administering the arrangements required 11-12
for determining a benchmark;
(b) collecting, analysing or This changes the
processing input data for the scope of the
purpose of determining a “financial
benchmark; or services”
(c) determining a benchmark definition.
through the application of a
formula or other method of
calculation or by an assessment
of input data provided for that
purpose, but excluding a
benchmark provided by—
(i) A central bank;
(ii) a public entity, where it
contributes data to, provides,
or has control over the
provision of benchmarks the
provision of benchmarks for
public policy purposes,
including measures of
 102

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
employment, economic
activity, and inflation;
(iii) a central counterparty,
where it provides reference
prices or settlement prices
used for central counterparty
risk-management purposes
and settlement;
(iv) the provision of a single
reference price for any
financial instrument by the
press, other media and
journalists where they
merely publish or refer to a
benchmark as part of their
journalistic activities with no
control over the provision of
that benchmark;
(v) a person that grants or
promises to grant credit in
the course of that person’s
trade, business or
profession, only insofar as
that person publishes or
makes available to the public
that person’s own variable or
fixed borrowing rates set by
internal decisions and
applicable only to financial
contracts entered into by
that person or by a company
within the same group with
their respective financial
customers;
(vi) a commodity benchmark
based on submissions from
contributors of which the
majority are entities who are
not licensed financial
institutions and in respect of
which both the following
conditions apply:
the benchmark is referenced
by financial instruments for
which a request for
admission to trading on an
exchange has been made or
which are traded on an
exchange;
(vii) the total notional value of
financial instruments
referencing the benchmark
does not exceed an amount
still to be determined by the
Authority;
 103

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
(viii) an index provider, who is
unaware that the index, by
reference, is used to—
(A) determine the amount
payable under a financial
instrument or a financial
contract;
(B) determine the value of a
financial instrument;
(C) measure the performance
of an investment fund
with the purpose of
tracking the return of the
index, to—
(aa) define the asset
allocation of
the portfolio; or
(bb) compute the
performance
fees;

f. Credit rating Gathering, collecting of data, and No descriptor 1-2, 4,

services information analysis, evaluation, required. sections 29
approval, issuing for review of the and 30 of
data and information for the chapter 6,
purposes of providing an opinion 8-12
regarding the creditworthiness of—
(a) an entity;
(b) a security or financial
instrument; or
(c) an issuer of a security or a
financial instrument; or
(d) a sovereign state,
using an established and defined
ranking system of rating categories,
excluding any recommendation to
purchase, sell or hold any security or
financial instrument, and includes a
rating outlook; but excluding credit
scores, credit scoring systems or
similar assessments related to
obligations arising from consumer,
commercial or industrial
relationships.
g. Third party The management of another juristic Captures the 1-2, 4, 8-9
treasury person's financial operations, activities of a
management provided that the company is not a traditional TOC,
wholly owned subsidiary or a rather than an
financial institution in the same group Agent TOC (which
of companies, which management is captured under
includes cash flows, assets and the activity of
investments, in order to support that “Distribution”).
company's liquidity position and
mitigate its operational, financial and Provision can be
reputational risk made for “opting
 104

ACTIVITY SUB- DEFINITION DESCRIPTOR4 Chapters

ACTIVITY of Act
applicable
to the
Activity
out” of provisions
by counterparties
as a category of
financial
customer, as
currently provided
for by ODP
regulations under
FMA

This changes
scope of “financial
services”
definition
10 Corporate A Providing proposals or guidance, Investment 1-4,
dvisory valuation, analysis or solutions, by banking activities, sections 29
Services any means or medium, in respect of excluding and 30 of
a juristic person’s – research and Chapter 6,
(a) changes in capital structure, lending; should 8-9, 11-12
including the arrangement not include
and structuring of debt and attorneys
equity; providing
(b) mergers, acquisitions or corporate legal
disposals, including potential support.
mergers, acquisitions or
disposals ; or Provision can be
(c) any other advice in relation made for “opting
to industrial strategy.7 out” of provisions
by counterparties
as a category of
financial
customer, as
currently provided
for by ODP
regulations under
FMA

This changes
scope of “financial
services”
definition.

7 This definition is not intended to include legal advice

 105

SCHEDULE 2

INSTITUTIONAL FORM

ACTIVITY ACTIVITY SUBCATEGORY REQUIRED

CATEGORY INSTITUTIONAL FORM
1. Providing a financial a. Providing a participatory interest in a A person incorporated in
product collective investment scheme terms of the Companies
Act.8

b. Providing a participatory interest in an A person incorporated in

alternative investment fund terms of the Companies
Act.9
c. Providing a life policy or non-life Institutional form as
insurance policy as defined in the required in terms of
Insurance Act section 22(1)(a) of the
Insurance Act, 2017 (Act
No. 18 of 2017).
d. Providing a deposit as defined in the Institutional form as
Banks Act required –
(a) in terms of section
1(1) of the Banks
Act, 1990 (Act No. 94
of 1990);
(b) by the Prudential
Authority in respect
of an institution
conducting the
business of a bank
by means of a
branch in the
Republic as referred
to in section 18A(1)
of the Banks Act,
1990 (Act No. 94 of
1990);
(c) in terms of section
1(1) of the Mutual
Banks Act, 1993 (Act
No. 124 of 1993) in
respect of a mutual
bank;

8 This is intended to refer to the manager of the collective investment scheme.

9 This is intended to refer to the management company of the alternative investment fund, and it is not
intended to limit the overall structure of the alternative investment fund.
 106

ACTIVITY ACTIVITY SUBCATEGORY REQUIRED

CATEGORY INSTITUTIONAL FORM
(d) in terms of section
1(1) of the Co-
operative Banks Act,
2007 (Act No. 40 of
2007) and
requirements
prescribed in terms
of that Act in respect
of a co-operative
bank or a co-
operative financial
institution.
A co-operative financial
institution must also
comply with section
40B(2) of the Co-
operative Banks Act and
register as a co-operative
bank if it reaches a
prescribed amount of
members’ deposits.
e. Lending A person incorporated in
terms of the Companies
Act.
f. Providing retirement fund benefits As per section 4B of the
Retirement Funds Act
(as the Pension Funds
Act will be amended to
be renamed)
g. Providing credit in terms of a credit As permitted in terms of
agreement the National Credit Act.
2. Distribution a. Sales and execution Any institutional form.10
b. Aggregation and comparison services A person incorporated in
terms of the Companies
Act.
3. Financial Advice Any institutional form.11
4. Discretionary A person incorporated in
investment terms of the Companies
management Act.

10 NOTE: Please note that legal forms for sole proprietors and partnerships will be allowed, but the following
limitations will apply to these institutional forms:
• the number of representatives that may act on the licence of financial services provider with such an
institutional form will be limited (e.g. maximum of 4 representatives);
• a financial services provider with such an institutional form will not be allowed to receive, hold or in any
manner deal with funds of financial customers.
• Sole proprietors with a greater number of representatives would be provided a transitional period within
which to either reduce the number of representatives to below the specified maximum, or to become
incorporated in terms of the Companies Act.
11 NOTE: Same as for the activity of Distributing financial products, sub-activity a. (sales and execution).
 107

ACTIVITY ACTIVITY SUBCATEGORY REQUIRED

CATEGORY INSTITUTIONAL FORM
5. Administration a. Operating a linked investment platform A person incorporated in
terms of the Companies
Act.
b. Retirement fund self-administration A person incorporated in
terms of the Companies
Act.
c. Third-party retirement fund A person incorporated in
administration terms of the Companies
Act.
d. General administration Any institutional form
except a sole proprietor
or partnership.
6. Fiduciary or Custodian Public company as
Service defined in section 1 of
the Companies Act.

7. Payment Service As permitted in terms of

the National Payment
System Act, 1998 (Act
No. 78 of 1998), or
successor legislation
8. Debt Collection Any institutional form12
Service
9. Financial Market a. Underwriting and placement A person incorporated in
Activities terms of the Companies
Act
b. Custody and administration service A person incorporated in
terms of the Companies
Act 13

c. Providing over-the-counter derivative Juristic person, as

instruments defined in the Financial
Markets Act, as a person
incorporated in terms of
the Companies Act, a
foreign company or
another form of body
corporate.
d. Providing other over-the-counter Juristic person, as
financial instruments defined in the Financial
Markets Act, as a person
incorporated in terms of
the Companies Act, a
foreign company or

12 In terms of the Debt Collectors Act, 1998 (Act No. 114 of 1998), a natural or a juristic person is permitted to register
as a debt collector.
13
NOTE:
This sub-activity would include –
• “authorised users” as defined in the FMA because of the function listed in paragraph (d) of the definition of
“securities services”;
• “participant” as defined in the Financial Markets Act- i.e. a person authorised by a licensed central securities
depository to perform custody and administration services or settlement services or both, in terms of the
depository rules, and includes an external participant, where appropriate.
This sub-activity would therefore apply to “participants” as defined.
 108

ACTIVITY ACTIVITY SUBCATEGORY REQUIRED

CATEGORY INSTITUTIONAL FORM
another form of body
corporate.

e. Providing a benchmark A person incorporated in

terms of the Companies
Act.
f. Credit rating service A person incorporated in
terms of the Companies
Act or an external
company under the
Companies Act.
g. Third party treasury management A person incorporated in
terms of the Companies
Act
10. Corporate Advisory A person incorporated in
Services terms of the Companies
Act
 109

SCHEDULE 3

ACTIVITIES OF REPRESENTATIVES

ACTIVITIES AND SUBCATEGORIES OF ACTIVITIES WHICH MAY BE PERFORMED

BY A PERSON AS A REPRESENTATIVE AND THE REQUIRED INSTITUTIONAL
FORM OF THE PERSON, WHICH WOULD REQUIRE THE REPRESENTATIVE TO BE
APPROVED

Activity Category Activity Subcategory Institutional Form

Distribution Sales and Execution Any institutional form
Financial Advice Any institutional form*
Discretionary Investment A natural person
Management
Administration General Administration A natural person
Debt Collection Service A natural person
* The prescribed institution form may change depending on the finalisation of the
RDR project.
 110

SCHEDULE 4

TRANSITIONAL ARRANGEMENTS IN RESPECT OF LICENSING

Definitions and interpretation

1. (1) In this Schedule, unless the context indicates otherwise—

''effective date'' means the date fixed by the Minister in accordance with section 76 of

this Act that sections 74, 75 and this Schedule or a provision of this Schedule comes

into operation;

''previous Act'' means the financial sector law listed in Schedule 2 of the Financial

Sector Regulation Act for which the Authority is designated as the responsible authority

immediately before the effective date of the amendment to that Schedule through this

Act; and

''previously licensed financial institution'' means a financial institution that is

licensed under a previous Act.

(2) A reference in this Schedule to an item or a sub-item by number is

a reference to the corresponding item or sub-item of this Schedule.

2. (1) The Authority must, within two months of the effective date, publish

a framework that the Authority will implement to give effect to items 3(2) and 4(1).

(2) The framework referred to in sub-item (1) must be—

(i) reasonable and fair; and

(ii) allow for sufficient engagement with applicants for licences and authorisation

under this Schedule.

 111

(3) The Authority may in the framework referred to in sub-item (1)

provide for different processes and timeframes in respect of different categories of

applicants for licences and licensing activities in Schedule 1.

(4) The Authority must within a period of 3 years after the effective

date, or another date as determined by the Minister by notice in the Government

Gazette –

(a) subject to item 3(2), grant all previously licensed financial

institutions a licence in accordance with this Act; and

(b) process all applications for licenses and authorisations in terms of

this Schedule.

Continuation of previously licensed financial institutions where a financial sector

law required licensing for business similar to activities and sub-activities listed in

Schedule 1

3. (1) As of the effective date of this item, every previously licensed

financial institution that was, immediately before that date, licensed under the previous

Act continues to exist as a licensed financial institution in terms of the previous Act, as if

it had been licensed under this Act and authorised to perform an activity or sub-activity

that is similar to the business for which it was licensed under the previous Act, and may

continue to conduct the business for which it was licensed under the previous Act,

subject to and in accordance with the requirements of this Act and the requirements of

the Previous Act, until it is—

(a) granted a licence under this Act and authorised to perform the similar

activity or sub-activity; or
 112

(b) directed by the Authority in terms of sub-item (3) to cease performing the

activity or sub-activity.

(2) (a) The Authority must licence and authorise a previously

licensed financial institution to perform activities and sub-activities referred to in

Schedule 1 that is similar to the business for which it was licensed under the previous

Act, if the previously licensed financial institution, immediately prior to the effective date,

was actively and prudently conducting business similar to that activity or sub-activity.

(b) Despite paragraph (a), and subject to any limitations relating

to an activity or sub-activity provided for in this Act, a previously licensed financial

institution that applies for a licence under this Act, may only be issued a licence in terms

of this Act to perform activities or a category or sub-activities that it is permitted to be

licensed for in terms of this Act.

(3) If the Authority does not licence and authorise a previously licensed

financial institution to perform an activity or sub-activity set out in Schedule 1 that is

similar to the business that the previously licensed financial institution was licensed for

on the effective date because—

(a) the previously licensed financial institution did not immediately prior to the

effective date perform that activity or sub-activity; or

(b) of the application of sub-item 3(b), the Authority must direct the previously

licensed financial institution to make arrangements to the satisfaction of the

Authority to—

(i) cease performing the activity or sub-activity;

(ii) discharge its obligations under all contracts entered into in respect of that

activity or sub-activity before the decision of the Authority not to licence

and authorize the activity or sub-activity; or

 113

(iii) ensure the orderly resolution of that business of the financial institution; or

(iv) transfer that business to another financial institution under section 44 of

this Act by a specified date.

Authorisation for activities or sub-activities where a financial sector law did not

require licensing

4. (1) A person who, as a regular feature of that person’s business,

performs an activity or sub-activity in terms of Schedule 1 and who is not currently

licensed with the Authority and authorised to perform business in that activity or sub-

activity, must within 4 months of the effective date of this item apply, in accordance with

this Schedule, for—

(a) a licence in terms of this Act, if the person is not already regarded as

having been licensed under this Act in terms of item 3(1); and

(b) authorisation to perform that activity or sub-activity.

(2) A person referred to in sub-item (1) may continue performing the activity

or sub-activity which it was performing as a regular feature of its business immediately

before the effective date of this item, without the person being licensed under this Act to

perform that activity or sub-activity, up until—

(a) the period to submit an application referred to in sub-item 1 has expired

without the person submitting an application; or

(b) an application referred to in sub-item (1) has been granted or declined.

 114

SCHEDULE 5

LAWS AMENDED AND REPEALED

Part 1
Amendment of Pension Funds Act, 1956 (Act No. 24 of 1956)

General replacement of terms in Act 24 of 1956

1. Act 24 of 1956 is amended by substituting, in the following provisions—

(a) for the term “pension fund” of the term “retirement fund”, wherever the term may appear:

The long title of the Act; section 1(1), the definition of “disclosure”; section 2(1), (3), (4); 7A(4)(b); 9(4)(c) and
(5); the heading of section 13A and 13B (substitution for “pension funds” of “retirement funds”; Sections
13B(1); 18A; 19(5C); 29A(1) and the heading to section 29A; 32; 37D(4); 40;

(b) for the term “fund” of the term “retirement fund”, wherever the term may appear, including in the headings to
the sections:

Section 1(1), the definitions of “actuarial surplus”, “beneficiary”, “benefit”, “complainant”, “complaint”,
“contingency reserve account”, “conversion”, “deferred pensioner”, “employer”, “employer surplus account”-
except in paragraph (c) where “fund return” is referred to, “fair value”, “financial year”, “fund return” but not the
title of the term or in paragraph (c) where there is the reference to “fund member policies”, “investment
reserve account”- only the initial reference to “fund”, and not in the references to “fund return” , “member
surplus account”- only the initial use of the term “fund”, and not where used as “fund return”, “non-member
spouse”, “officer”, “pensioner”, “principal employer”, “registered”, “reserve account”, “rules”, “stakeholder”,
“statutory actuarial valuation”, “surplus apportionment date”, “valuation exempt” ; Sections 2(1), (2)(b) and (4);
7A(1) and (2); 7B(1)(the words preceding paragraph (a)), (a) and (b) (the words preceding subparagraph (i));
7C(1), (2)(a) and (f); 7D(1)(a), (c), (d) and (f); 8(2)(c)(e), (3), (4), (5)(c)(i) and (iv)(dd) and (d); 9(4); 9B; 11;
12(1)(a), (3) and (4); 13A(2) to (7), (9), (10); 13B(5), (6), (7A), (8), (10);14(1)(c), (e) (7)(a) (the first and sole
use of “fund”, and not where “retirement annuity fund” is referred to) (8) (the words preceding paragraph (a),
and substituting for “transferee funds” of “transferee retirement funds in paragraphs (a) and (aA)”); 14A; 14B
(excluding the references to “fund return” in subsections (1)(b) and (2)(a)(ii) and (4)(b)(i));15(4); 15A(1) and
(3) (excluding the reference to “fund return” in subsection (3)); 15B(1), (3)(a)(ii), (iii) and (iv) (substitution of
“funds” for “retirement funds”), (3)(b), (4); (5) (excluding the reference to “fund return” in paragraph (b)); (6)(a)
to (d) , (9), (11) to (13); 15C; 15D(1); 15E;15G(1); 15H(1); 15I, in the words preceding paragraph (a) and
paragraph (c)(i) and (ii); 15J(1) and (3)(d); 15K(1)(a) and (e), (2), (3), (6A)(c), (9)(d)(ii), (11), (12)(a), (15);
16(3), (3A), (4), (5), (6), (8), (9); 18(1), (1A), (3), (4), (5); 19(4A), (4B), (5), (5B)(other than the reference to
“funds” in paragraph (a)), (5C), (5D)(a), (6)(a); 20(1); 21; 24; 26(1) and (2); 28; 28A(1); 29(5), (6), (8), and
substitute in (6A) for the term “fund’s” of the phrase “registered fund’s”; 29A; 30 (including the heading to the
section); 32A(1); 35; 36 (including substituting for “funds” of “retirement funds” in subsection (2); 37(1)(b);
37A;37D (1) to (3) and (6); 40B, including where “funds” is referred to, but not in relation to the terms “”defined
benefit category of fund” and “fund return”;

(c) for the term “registered fund” of the term “licensed retirement fund”, wherever the term may appear:

Sections 8(1) and 8(2)(a) and (b); 9(1) and (2); 9A(1) and (3);10; 11(2); 12(1), (5), (6); 13; 13A(1);14(1) (the
words preceding paragraph (a), and paragraph (d)),(8)(b)(i) and (ii) (substituting “registered funds” for
“licensed retirement funds”);14A(1); 15(1) to (3); 16(1), (5), (8); 18(1), (1A); 19(4), (5)(a), (5B), (5C); 20(1) and
(3); 22(3); 28(1); 30(3); 35; 37A(1); 37B; 37C(2)(a); 37D(1);

(d) for the term “registration” of the term “licensing”, wherever the term may appear:

Sections 8(3); 11(1); 16(3A), (4); 21(1)(a);

(e) for the term “registered” of the term “licensed”, wherever the term may appear:

Sections 16(3) and (3A); 29A(1), as well as substituting the term “unregistered” for “unlicensed”;
32(1); 37(1)(b);

(f) for the term “register” of the term “licence” in section 32(3); and
 115

(g) for the term “registrar” of the term “Authority”, wherever the term may appear:

Section 1(1), the definitions of “administrator”, “contingency reserve account”, “financial year”, “valuator” ;
Section 2(4); 8(2)(a),(3), (5) and (6); 9(2)(b), (4) and (5); 9B(1) and (2); 10; 11(3)(a);12; 13A(5) and (6);
13B(1) and (1A)(c), (1B), (5)(g), (6), (8) to (10); 14(1), (2)(b), (5), (6), (7)(b)(ii)(aa, (9); 15 15B(1), (3)(b)(ii),
(4)(a), (5)(c) and (d)(ii), (6), (9), (11) to (13); 15E(2); 15F(1) and (2); 15J; 15K(1) to (3), (5), (6A)(c), (10), (11),
(13) and (15); 16(1), (2), (5), (6), (8) and (9); 18(1A), (2), (3), (4), (5)(b) and (c); 18A; 19(4A), (5D) and (6)(a);
20 (including the heading of the section); 21 (including the heading of the section); 22; 23 (including the
heading of the section); 24; 26(1), (2), (4) and (5); 27; 28; 28A; 29(1), (7) and (8); 29A(2)(c); 32 (including in
the heading of the section); 32A (including the heading of the section).

Amendment of section 1(1) of Act 24 of 1956

2. Section 1(1) of Act 24 of 1956 is amended—

(a) by substituting for the definition of “administrator”:

‘“administrator” means a person [approved by the Authority in terms of section 13B (1)] licensed by the
Authority under the Conduct of Financial Institutions Act for retirement fund self-administration as defined in
Schedule 1 of that Act;’;

(b) by substituting for the definition of “audit exempt fund”:

‘“audit exempt fund” means a retirement fund which has been exempted by the [registrar] Authority in
terms of section 2(5) from being required to be subject to audit;’;

(c) by substituting for the definition of “Authority”:

‘“Authority” means the Financial Sector Conduct Authority established in terms of section 56 of the Financial
Sector Regulation Act until the date contemplated in section 292(1) of the Financial Sector Regulation
Act, after which it means the Prudential Authority established by section 32 of the Financial Sector
Regulation Act;’;

(d) by substituting for the definition of “beneficiary fund”:

‘“beneficiary fund” means [a fund referred to in paragraph (c) of the definition of “pension fund
organisation] any arrangement established with the object of receiving, administering, investing and paying
benefits that became payable to a dependant or nominee in terms of section 37C, or in respect of the
employment of a member on behalf of beneficiaries, or that became otherwise payable to natural persons on
the death of an insured person in terms of one or more policies of insurance and payable on the death of
more than one member of one or more retirement funds, on the death of any of their members;’;

(e) by substituting for the definition of “board”:

‘“board”, means the board of a retirement fund contemplated in section 4D, and 7A, 7B and 26(2) [of this
Act];’;

(f) by inserting following the definition of “board member”:

‘“Central Unclaimed Retirement Benefit Fund” means the Fund established under section 4D;’;

(g) by inserting following the definition of “complaint”:

‘“Conduct of Financial Institutions Act” means the Conduct of Financial Institutions Act, 2021 (Act No. [--]
of 2021;’;

(h) by substituting for the definition of “contribution holiday”:

‘“contribution holiday”, in relation to a—

 116

(a) defined benefit category of a fund, means payment by the employer of less than the contribution rate
the valuator recommends be payable by the employer, taking into account the circumstances of the
retirement fund and ignoring any surplus or deficit; or
(b) defined contribution category of a fund, means payment by the employer of less than the employer
contribution rate defined in the rules prior to application of any credit balance in any employer reserve
account as defined in the rules or employer surplus account;’;

(i) by inserting following the definition of “credit agreement”:

‘“credit rating agency” means a credit rating agency as defined in section 58 of the Conduct of Financial
Institutions Act;’;

(j) by substituting for the definition of “defined benefit category of a fund”:

‘“defined benefit category of a fund” means a category of a retirement fund other than a defined
contribution category of a fund;’;

(k) by substituting for the definition of “defined contribution category of a fund”:

‘“defined contribution category of a fund” means a category of members whose interest in the retirement
fund has a value at least equal to—
(a) the contributions paid by the member and by the employer in terms of the rules of the retirement
fund that determine the rates of both their contributions at a fixed rate;
(b) less [such] the reasonable expenses [as] that the board determines;
(c) plus any amount credited to the member’s individual account upon the commencement of the
member’s membership of the retirement fund or upon the conversion of the category of the fund to
which the member belongs from a defined benefit category to a defined contribution category of a
fund or upon the amalgamation of [his or her] the member’s retirement fund with any other
retirement fund, if any, other than amounts taken into account in terms of subparagraph (d);
(d) plus any other amounts lawfully permitted, credited to or debited from the member’s individual
account, if any, as increased or decreased with fund return: Provided that the board may elect to
smooth the fund return;’;

(l) by deleting the definition of “fund”;

(m) by substituting for the definition of “member”;

‘“member” [in relation to] means any member or former member of a retirement fund[—
(a) a fund referred to in paragraph (a) or (c) of the definition of “pension fund organisation”,
means any member or former member of the association by which [such] the fund has been
established;
(b) a fund referred to in paragraph (b) of that definition, means a person who belongs or belonged
to a class of persons for whose benefit that fund has been established],
but does not include any person who has received all the benefits which may be due to that person
from the retirement fund and whose membership has thereafter been terminated in accordance with the
rules of the retirement fund;’;

(n) by inserting following the definition of “normal retirement age”:

‘“occupational fund” means a retirement fund established by a principal employer, or by the principal
employer in a group of companies where two or more of the employers in the group participate in the fund, for
the benefit of the employees of those employer(s);’;

(o) by substituting for the definition of “pension fund”:

‘“pension fund” means a [pension fund organisation] retirement fund where a member may elect to
receive a lump sum payment up to one-third of the member’s individual account of the member’ benefit upon
retirement;’;

(p) by deleting the definition of “pension fund organisation”;

(q) by inserting following the definition of “pension preservation fund”:

‘“prescribed” means prescribed by the Authority in a conduct standard, by the Prudential Authority in a
prudential standard, or in a joint standard;’;
 117

(r) by substituting for the definition of “pension preservation fund”:

‘“pension preservation fund” means [a fund that is a—

(a) pension preservation fund as defined in section 1 of the Income Tax Act, 1962 (Act No. 58
of 1962); or
(b) pension fund as defined in section 1 of the Income Tax Act, 1962 (Act No. 58 of 1962), doing
the business of a pension preservation fund as prescribed by the Commissioner in terms of
that Act;] pension fund established for the purpose of preserving the benefits of former members
of other retirement funds whose memberships have terminated in those other retirement funds;’;

(s) by inserting following the definition of “Protected Disclosures Act”:

‘“provident fund” means a retirement fund where a member may receive the member’s full benefit upon
retirement;’;

(t) by inserting following the definition of “provident preservation fund” of the following definition:

‘“provident preservation fund” means [a fund that is a—

(a) provident preservation fund as defined in section 1 of the Income Tax Act, 1962 (Act No. 58
of 1962); or
(b) provident fund as defined in section 1 of the Income Tax Act, 1962 (Act No. 58 of 1962),
doing the business of a provident preservation fund as prescribed by the Commissioner in
terms of that Act;] a provident fund established for the purpose of preserving the benefits of
former members of other retirement funds, whose memberships have terminated in those other
retirement funds;’;

(u) by inserting following the definition of “prudential standard”:

'“public sector retirement fund" means a retirement fund to which the State, or to which a national or
provincial public entity, or a national or provincial business enterprise as those terms are defined in
section 1 of the Public Finance Management Act, or a municipality or municipal entity as defined in
section 2 of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000), contributes;’;

(v) by substituting for the definition of “retirement annuity fund”:

‘“retirement annuity fund” means [a retirement annuity fund as defined in section 1 of the Income Tax
Act, 1962 (Act No. 58 of 1962)] a retirement fund established for the purpose of providing life annuities for
the members of the retirement annuity fund or annuities for the dependants or nominees of deceased
members where a member may elect to receive a lump sum payment up to one-third of the member’s
individual account of the member’s benefit upon retirement;’;

(w) by inserting following the definition of “retirement annuity fund”:

‘“retirement fund“ means any arrangement established with the primary object of providing annuities or lump
sum payments on retirement of a member or for payments of benefits to beneficiaries upon the death of a
member;’;

(x) by inserting following the definition of “statutory actuarial valuation”:

‘“sub-fund” means that section of an umbrella fund that is defined in terms of a set of special rules applicable
to that employer that participates in the umbrella fund;’;

(y) by inserting following the definition of “Tribunal”:

‘“umbrella fund” means a retirement fund which provides for the participation of more than one employer
that are not associated with each other; and’;

(z) by substituting for the definition of “unclaimed benefit”:

‘“unclaimed benefit” means—

(a) any benefit, other than a benefit referred to in paragraphs (aA), (b), (c) and (d), not paid by a
retirement fund to a member, former member or beneficiary within 24 months of the date on
which it in terms of the rules of the retirement fund, became legally due and payable;
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(aA) a share of a death benefit payable to a beneficiary under section 37C not paid within 24 months
from the date on which the retirement fund [became aware of the death of the member or
such longer period as may be reasonably justified by the board of the fund in writing]
allocated that share to the beneficiary;
(b) in relation to a benefit payable as a pension or annuity, any benefit which has not been paid by
a retirement fund to a member, former member or beneficiary within 24 months of—
(i) the expiry date of any guarantee period for pension payments provided for in the rules of
the retirement fund; or
(ii) the date on which any pension payment or annuity legally due and payable in terms of the
rules of the retirement fund became unpaid;
(c) [in relation to a benefit] an amount payable to a former member [who cannot be traced in
accordance with section 15B (5)(e), any benefit that has become legally due and payable
to a former member] in terms of a surplus apportionment scheme approved in terms of this
Act but not paid to that former member within 24 months of the date on which it became legally
due and payable;
(d) any [benefit that remained unclaimed or unpaid] amount payable to a member, former
member or beneficiary [when a fund applies for cancellation of registration in terms of
section 27 or where the liquidator is satisfied that benefits remain unclaimed or unpaid,]
of a retirement fund in liquidation when the liquidator is satisfied that it will not be paid within six
months after the finalisation of the liquidation; or
(e) any amount payable [that remained unclaimed or unpaid] to a non-member spouse but
which has not been paid within 24 months from the date of the deduction contemplated in
section 37D(4)(a)(ii),
but does not include a benefit due to be transferred as part of a transfer of business in terms of section
14, where an annuity is purchased in respect of a pensioner or otherwise in terms of this Act;’; and

(aa) by substituting for the definition of “unclaimed benefit fund”:

‘“unclaimed benefit fund” means [a fund that is established for the receipt of unclaimed benefits
contemplated in the definitions of a pension preservation fund and a provident preservation fund in
section 1 of the Income Tax Act, 1962 (Act No. 58 of 1962);] an arrangement established with the object of
receiving, administering, investing and paying unclaimed benefits;’.

Repeal of section 1(2) of Act 24 of 1956

3. Section 1(2) of Act 24 of 1956 is repealed.

Amendment of section 1A(4)(b) of Act 25 of 1956

4. Section 1A(4) of Act No. 24 of 1956 is amended by substituting for paragraph (b):

“(b) a reference to the Authority determining the matter in writing [and registering the determination in
the Register].”.

Amendment of section 1B of Act 24 of 1956

5. Section 1B of Act No. 24 of 1956 is amended by substituting for the section:

“Regulatory instruments

1B. For the purposes of the definition of “regulatory instrument” in section 1 (1) of the Financial
Sector Regulation Act, any matter prescribed by the Authority [in respect of which notice in the Gazette is
specifically required by this Act] is a regulatory instrument.”.

Amendment of section 2 of Act 24 of 1956

6. Section 2 of Act No. 24 of 1956 is amended—

(a) by deleting paragraph (a) in subsection (2);

(b) by substituting in subsection (2) for paragraph (b):

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“(b) Despite any other provision of this Act, the first statutory actuarial valuation of a fund
[registered] licensed in accordance with paragraph (a) must be undertaken at the end of the first financial
year following [registration] licensing or [such other] another date approved by the Authority.”

(c) by substituting in subsection (4)(a) for the words preceding subparagraph (i):

“(a) The provisions of this Act, other than [section three and subsections (1) and (2) of section
four] section 4(1) and (2), [shall] do not apply in relation to a [pension] retirement fund if the head office of
the association which carries on the business of that retirement fund, or, as the case may be, of every
employer who is a party to [such] that retirement fund, is outside the Republic, if—”; and

(d) by substituting in subsection (4) for paragraph (b):

“(b) The [registrar] Authority may from time to time require any person carrying on the business in the
Republic of a [pension] retirement fund referred to in paragraph (a), to submit to the [registrar such]
Authority those returns and information in connection with that business [as] that the [registrar] Authority
may specify, and if at any time the [registrar] Authority is no longer satisfied [as regards] regarding any of
the matters specified in paragraph (a),[ he] the Authority may advise the person accordingly by notice
transmitted [to him] by registered post, and [thereupon] the provisions of this Act [shall] then apply in
relation to [such] that retirement fund.”.

Substitution of section 4 of Act 24 of 1956

7. Section 4 of Act 24 of 1956 is amended by substituting for the section:

“[Registration] Licensing of [pension] retirement funds

4. (1) Every [pension] retirement fund must, prior to commencing any [pension] retirement fund
[business] activities –
(a) apply to the [registrar] Authority for [registration] licensing under this Act; and
(b) be provisionally or finally [registered] licensed under this Act.
(2) An application under subsection (1) [shall] must be accompanied by the particulars and the fee prescribed.
(3) The [registrar] Authority must, if the retirement fund has complied with the prescribed requirements and
the [registrar] Authority is satisfied that the [registration] licensing of the retirement fund is desirable in the public
interest, [register] licence the fund provisionally and forward to the applicant a certificate of provisional [registration]
licensing, which [provisional registration] takes effect on the date determined by the retirement fund or, if no [such]
date has been determined by the retirement fund, on the date of registration by the [registrar] Authority.
(4) If after considering [any such] an application the [registrar] Authority is satisfied that the fund complies
with the conditions prescribed, [he shall] the Authority must [register such] licence the retirement fund and send to
the applicant a certificate of [registration] licensing as well as a copy of the rules of the retirement fund bearing an
endorsement of the date of [registration] licensing.
(5)(a) If the [registrar] Authority deems it necessary, the [registrar] Authority may—
(i) request a [pension] retirement fund to furnish additional information in respect of its application
under subsection (1); or
(ii) require a [pension] retirement fund to verify the information provided in its application under
subsection (1).
(b) If a [pension] retirement fund fails to furnish or verify the information contemplated in paragraph (a) within
60 days from the date of the request, its application under subsection (1) lapses.
(6) Subject to the provisions of subsection (7), the provisional [registration] licensing of a fund under
subsection (3) [shall be] is valid for a period of [five years] one year, but may in the discretion of the [registrar]
Authority and subject to [such] any conditions and limitations [as he] that the Authority may consider desirable, be
renewed from time to time for periods not exceeding twelve months at a time and not exceeding five years in [the
aggregate] total.
(7) Whenever a retirement fund which is provisionally [registered] licensed under this section has complied
with all the requirements specified in subsection (4), the [registrar shall register] Authority must licence the retirement
fund and transmit to it a certificate of [registration] licensing as well as a copy of its rules [with the date of registration
duly endorsed thereon] bearing an endorsement of the date of licensing, and [thereupon] the retirement fund [shall
cease] then ceases to be provisionally [registered] licensed.
(8) No retirement fund [shall] may be [registered] licensed or provisionally [registered] licensed under this
Act except as provided in this section.”.

Substitution of section 4A of Act 24 of 1956

8. Section 4A of Act 24 of 1956 is amended by substituting for the section:

“Application of Act to public sector retirement funds

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4A. (1) This Act applies to all public sector retirement funds.
(2) (a) A public sector retirement fund which at the date of commencement of this section is not registered in
terms of this Act, must apply for licensing in terms of section 4 of this Act, within a prescribed period after the
date of commencement of this provision, and may be registered subject to any exemptions granted and
conditions imposed by the Authority.
(b) A public sector retirement fund referred to in paragraph (a) must also apply to be licensed in terms of the
Conduct of Financial Institutions Act, 2021, in accordance with the requirements and transitional arrangements
provided for in terms of that Act.
(3) (a) Legislation which is in force at the date of commencement of this provision, which provides for the
establishment of a public sector retirement fund, must be amended to the extent necessary to align with this Act
and requirements prescribed in terms of this Act as well as the requirements of the Conduct of Financial
Institutions Act, 2021, but subject to any exemptions granted and conditions imposed by the Authority, within 3
years from the date of commencement of this provision.
(b) The rules of a pension fund referred to in paragraph (a) must also be amended, to the extent necessary
to align with requirements under this Act and the Conduct of Financial Institutions Act, but subject to any
exemptions granted and conditions imposed by the Authority in terms of this Act, within a prescribed period from
the date of commencement of this provision.
(4) Legislation that may be enacted subsequent to the date on which this section comes into operation that
establishes a public sector retirement, must, subject to any exemptions granted and conditions imposed by the
Authority in terms of this Act or the Conduct of Financial Institutions Act, 2021 —
(a) be consistent with this Act and the Conduct of Financial Institutions Act, 2021 and
(b) provide that the fund that is established and its rules must comply with requirements prescribed in
terms of this Act and the Conduct of Financial Institutions Act, 2021.
(5) The Authority may make conduct standards and the Prudential Authority may make prudential standards
to give effect to this section and sections 4B and 4C, including conduct standards the carrying on the activities of a
public sector retirement fund referred to in subjection (2) from the date of the application for licensing until the date of
licensing of the public sector retirement fund.”.

Substitution of section 4B of Act 24 of 1956

9. Section 4B of Act 24 of 1956 is amended by substituting for the section:

“Effect of [registration] licensing of [pension] public sector retirement fund referred to in section 4A(2)

4B. (1) On the [registration] licensing of a [pension] public sector retirement fund referred to in section
4A(2), it [shall become] becomes a juristic person.
(2) Subject to the provisions of subsections (3) and (4), the [registration] licensing of a [pension]
public sector retirement fund referred to in section 4A(2) [shall] does not affect the assets, rights, liabilities,
obligations and membership of [such pension] the public sector retirement fund.
(3) [Regulations] Standards referred to in section 4A(4) may also provide for the termination of the
membership of certain persons of a [pension] public sector retirement fund referred to in section 4A(2) which has
been [registered] licensed, and for their membership of any other [pension] public sector retirement fund, and the
passing of the obligations of the first-mentioned public sector retirement fund towards dependants and nominees of
members [thereof] to the last-mentioned [pension] public sector retirement fund.”.

Substitution of section 4C of Act 24 of 1956

10. Section 4C of Act 24 of 1956 is amended by substituting for the section:

“Transfer to [pension] public sector retirement fund referred to in section 4A(2) of its assets held by another

4C. (1) If any person holds any assets on behalf of a [pension] public sector retirement fund referred to in
section 4A(2), or has [on behalf of any such pension fund] invested any assets in any stock, debentures,
securities or financial instruments on behalf of a public sector retirement fund referred to in section 4A(2),, [he shall]
the person must, on production [to him] of the certificate of provisional [registration] licensing or the certificate of
[registration in respect of such pension] licensing of the public sector retirement fund—
(a) transfer those assets into the name of [such pension] the public sector retirement fund;
(b) take [such] any necessary steps [as may be necessary] to ensure that on [such] the stock, debentures,
securities or financial instruments issued in [his] the person’s name and in any relevant register, [such]
endorsements are made [as] that may be necessary to show that the ownership in [such] the stock,
debentures, securities or financial instruments vests in [such pension] the public sector retirement fund;
and
(c) if requested [thereto by such pension] by the public sector retirement fund, transfer to [such] the fund the
stock, debentures, securities or financial instruments vested in it.
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(2) No registration fee or costs [shall be] are payable in respect of any transfer or endorsement
referred to in subsection (1).”

Insertion of section 4D in Act 24 of 1956

11. Act 24 of 1956 is amended by inserting following section 4C:

“Central Unclaimed Retirement Benefit Fund

4D. (1) A juristic person called the Central Unclaimed Retirement Benefit Fund is hereby established.
(2) The provisions of this Act apply, to the extent that they can be applied, to the Central Unclaimed
Retirement Benefit Fund, except where specifically excluded.
(3) Despite section 7A of this Act, the board of the Central Unclaimed Retirement Benefit Fund
consists of six board members, who must be appointed by the Authority after following a transparent and
public process to identify suitable board members and alternate board members.
(4) The Authority may appoint an alternate board member to act in the absence or during incapacity
of an appointed board member.
(5) A person may not be appointed as a member or alternate member if such a person is a
disqualified person as contemplated in paragraphs (b) to (k) of the definition of ‘disqualified person’ in section
1(1) of the Financial Sector Regulation Act.
(6) A member or alternate member of the board holds office for five years, but may be reappointed
at the expiry of a term.
(7) The board must appoint the chairperson of the board from its members.
(8) The Authority may subject to the Promotion of Administrative Justice Act, 2000 (Act No. 3 of
2000), remove the board or board member if—
(i) the board or board member(s) is no longer able to fulfil the duties as a board or board member;
(ii) the board or board member (s) is considered to be a disqualified person;
(iii) the board or board member(s) has failed to perform satisfactorily any duty imposed by this Act, or
to comply with a lawful requirement of the Authority or a commissioner appointed by the Court
under this Act; or
(iv) for any other reason, if the board or board member(s) is no longer suitable to be the board or board
member(s) of the fund concerned.
(9) A court may, on application by any interested person, remove a board or board member(s) from
office if the Authority fails to do so in any of the circumstances mentioned in subsection (8) or for any other
good cause.
(10) In addition to the object of a board of a fund set out in section 7C of this Act, the board of the
Central Unclaimed Retirement Benefit Fund, must—
(a) accept and consolidate unclaimed benefits held by funds on behalf of members and beneficiaries;
(b) ensure that the Central Unclaimed Retirement Benefit Fund is administered to achieve its
objectives to trace and pay beneficiaries;
(c) ensure that proper records are maintained for the determination and tracing of members and
beneficiaries; and
(d) pay benefits from the Central Unclaimed Retirement Benefit Fund to identified members and
beneficiaries.
(11) (a) The board of the Central Unclaimed Retirement Benefit Fund must appoint an administrator
that is approved in terms of the Conduct of Financial Institutions Act in accordance with a procurement process
that is fair, equitable, transparent and competitive.
(b) The Board of the Central Unclaimed Retirement Benefit Fund must develop and maintain a
procurement policy that conforms to the requirements in subparagraph (a).
(12) (a) The Authority must approve the rules of the Central Unclaimed Retirement Benefit Fund.
(b) The rules must be in the prescribed format and comply with the requirements prescribed in
standards in so far as those requirements may be applied.
(13) The Authority must publish a Notice in the Gazette that sets out—
(a) the purposes for which an unclaimed benefit, that remained unclaimed for a period of at least thirty
years from date of receipt of the benefit by the Central Unclaimed Retirement Benefits Fund, may be
utilised; and
(b) the process that the Authority must follow when determining the purpose for which such unclaimed
benefit may be utilised, including that –
(i) the Authority must give reasonable notice of the intention to make unclaimed benefits of the Central
Unclaimed Retirement Benefit Fund available for projects or causes for the benefit of the retirement
fund industry or communities within the retirement fund industry and request interested parties to
make submissions of possible projects or causes for which such unclaimed funds can be utilised;
(II) submissions to access funds that remained unclaimed as per subparagraph (a), must be referred
to the administrative action committee established under section 87 of the Financial Sector
Regulation Act, if such a committee has been established, for its consideration and
recommendation.
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(14) The provisions of section 26(1) to (3) and (5), and sections 27 to 29 of this Act do not apply to the Central
Unclaimed Retirement Benefit Fund.”.

Substitution of section 5 of Act 24 of 1956

12. Section 5 of Act 24 of 1956 is amended by substituting for the section:

“Effect of [registration] licensing of [pension] retirement fund

5. (1) Upon the [registration] licensing of a retirement fund under this Act—
(a) [of a fund which is a pension fund organization in terms of paragraph (a) of the definition of
“pension fund organization” in subsection (1) of section one], the retirement fund [shall], under the
name by which it is [so registered] licensed, [and in so far as its activities are concerned with any
of the objects set out in that definition], [become] becomes a body corporate capable of suing and
being sued in its corporate name and of doing all [such] things [as] that may be necessary for or
incidental to the exercise of its powers or the performance of its functions in terms of its rules;
(b) [of a fund which is a pension fund organization in terms of paragraph (b) of the said definition,]
all the assets, rights, liabilities and obligations pertaining to the business of the retirement fund [shall],
notwithstanding anything contained in any law or in the memorandum, articles of association, constitution
or rules of any body corporate or unincorporate having control of the business of the retirement fund, [be]
are deemed to be assets, rights, liabilities and obligations of the retirement fund to the exclusion of any
other person, and no person [shall] may have any claim on the assets or rights or be responsible for any
liabilities or obligations of the retirement fund, except in so far as the claim has arisen or the responsibility
has been incurred in connection with transactions relating to the [business] activities of the retirement
fund;
(c) [of any fund,] the assets, rights, liabilities and obligations of the retirement fund (including any assets
held by any person in trust for the retirement fund), as existing immediately prior to its [registration]
licensing, [shall] vest in and devolve upon the [registered] licensed retirement fund without any formal
transfer or cession[.];
(d) which is an umbrella fund, of which the rules provide for the assets, rights, liabilities and obligations in
respect of each participating employer to be maintained separately in a sub-fund—
(i) the assets and liabilities corresponding to members employed by a participating employer,
members and pensioners who were previously employed by that employer and their
beneficiaries, must be held separately in each sub-fund;
(ii) any provision of the Act relating to—
(aa) the determination of minimum benefits, minimum individual reserves, minimum pension
increases of members;
(bb) the determination, application, distribution and transfer of actuarial surplus;
(cc) the funding of any shortfall between the assets and liabilities; and
(dd) member and employer surplus accounts,
must apply to each sub-fund separately, although an umbrella fund may maintain accounts at fund level.
(1A) A fund operating as an umbrella fund at the effective date of this amendment must comply with the
provisions of section 5(1)(d)(i) and (ii) within 12 months from that date.
(1)bis The officer in charge of a deeds registry in which is registered any deed or other document relating to
any asset or right which in terms of [paragraph (c) of] subsection (1)(c) vests in or devolves upon a [registered]
licensed retirement fund [shall] must, upon production [to him] by the retirement fund of its licensing certificate [of
registration] or [of] provisional [registration] licensing certificate, as the case may be, and of the deed or other
document [aforesaid], without payment of transfer duty, stamp duty, registration fees or charges, make the
endorsements [upon such] on the deed or document and the alterations in [his] the registers that are necessary [by
reason of such] as a result of the vesting or devolution.
(2) (a) Subject to paragraph (b), all moneys and assets belonging to a [pension] retirement fund [shall] must
be kept by that retirement fund, and every retirement fund [shall] must maintain [such] books of account and other
records [as] that may be necessary for the purpose of [such] the retirement fund[:].
(b) [Provided that such money] Money and assets of a retirement fund may, subject to [such] conditions
[as] that may be prescribed, also be kept in the name of the [pension] retirement fund by one or more of the following
institutions or persons[, namely -] :
[(a)] (i) [an] An authorised user as defined in section 1 of the Financial Markets Act, 2012 (Act No. 19 of
2012);
[(b)] (ii) [a long-term insurer registered in terms of the Long-term Insurance Act, 1998 (Act No. 52 of
1998)] an insurer defined in the Insurance Act, 2017 (Act No. 18 of 2017) licensed to conduct life
insurance business;
[(bA)](iii) a manager of a domestic or foreign collective investment scheme registered under the Collective
Investment Schemes Control Act, 2002 (Act No. 45 of 2002);
[(c)] (iv) a bank registered under the Banks Act, 1990 (Act No. 94 of 1990);
[(d)] (v) a financial institution licensed under the Conduct of Financial Institutions Act to perform a fiduciary
or custodian service or a nominee company; or
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[(e)] (vI) a person or investment vehicle approved by the [registrar] Authority subject to such conditions as
the [registrar] Authority may determine.
(3) For the purposes of this section, a nominee company is a company which—
(a)(i) has as its principal object to act as representative of any person;
(ii) is precluded by its Memorandum of Incorporation from incurring any liabilities other than those to
persons on whose behalf it holds property;
(iii) has entered into an irrevocable agreement with another person in terms of which [such] the other
person has undertaken to pay all expenses of and incidental to its formation, activities, management
and liquidation; and
(iv) has been approved by the [registrar] Authority , subject to [such] those conditions [as] that the
[registrar] Authority may impose, including any guarantee for the fulfilment of any obligation in
respect of the holding of [such] property, the generality of the [afore-going] above provisions not
being restricted by the provisions of this paragraph;
(b) is incorporated under the Companies Act where the Memorandum of Incorporation contains a
reference to paragraph (a)(i) and (ii) as a restrictive condition contemplated in section 15(2)(b) of the
Companies Act.
(4) Notwithstanding the provisions of subsection (2), the [registrar] Authority may permit money and assets
to be kept in the name of [a nominee company] the institutions referred to in subparagraph (2)(b)(v) on behalf of the
[pension] retirement fund.”.

Repeal of section 6 of Act 24 of 1956

13. Section 6 of Act 24 of 1956 is repealed.

Substitution of section 7 of Act 24 of 1956

14. Section 7 of Act 24 of 1956 is amended by substituting for the section:

“Registered office

7. (1) Every [registered] licensed retirement fund [shall] must have a registered office in the
Republic.
(2) Process in any legal proceedings against any [such] licensed retirement fund may be served
by leaving it at the registered office, and in the event of [such] the registered office having ceased to exist,
service upon the [registrar] Authority [shall be] is deemed to be service upon the licensed retirement
fund.”.

Substitution of section 7A of Act 24 of 1956

15. Section 7A of Act 24 of 1956 is amended by substituting for the section:

“Board of fund

7A. (1) [Notwithstanding] Despite the rules of a retirement fund, every retirement fund [shall]
must have a board consisting of at least four board members, at least 50% of whom the members of the
retirement fund [shall] must have the right to elect, subject to subsection (3).
(1A) The composition of the board [shall] must at all times comply with the requirements of the
rules of the fund and any vacancy on [such] the board [shall] must be filled within [such] the prescribed
period [as prescribed].
(2)(a) Subject to subsection (1), the constitution of a board, the election procedure of the members
mentioned in that subsection, the appointment and terms of office of the members, the procedures at
meetings, the voting rights of members, the quorum for a meeting, the breaking of deadlocks and the
powers of the board [shall] must be set out in the rules of the fund[: Provided that if]
(b) If a board consists of four members or less, all the members [shall constitute] constitutes a
quorum at a meeting.
(3)[(a) A board member appointed or elected in accordance with subsection (1), must attain
such levels of skills and training as may be prescribed by the Authority by notice in the Gazette,
within six months from the date of the board member’s appointment] Only a person that complies with
the prescribed fit and proper requirements may be appointed or elected as a board member.
[(b) A board member must retain the prescribed levels of skills and training referred to
in paragraph (a), throughout that board member’s term of appointment.]
(4) A board member must—
(a) within 21 days of removal as board member for reasons other than the expiration of that
board member’s term of appointment or voluntary resignation, submit a written report to
the Authority detailing the board member’s perceived reasons for the termination;
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(b) on becoming aware of any material matter relating to the affairs of the [pension]
retirement fund which, in the opinion of the board member, may seriously prejudice the
financial viability of the retirement fund or its members, inform the Authority [thereof] in
writing.”.

Substitution of section 7B of Act 24 of 1956

16. Section 7B of Act 24 of 1956 is amended by substituting for the section:

“Exemptions

7B.(1) The Authority may on written application and the payment of the prescribed fee by [of] a
retirement fund and subject to [such] those conditions [as] that may be determined by the Authority—
(a) authorise a retirement fund to have a board consisting of less than four board members if [such]
that number is impractical or unreasonably expensive[: Provided that],but the members of the
fund [shall] must have the right to elect at least 50 percent of the board members;
(b) exempt a retirement fund from the requirement that the members of the retirement fund have the
right to elect members of the board, if the retirement fund—
(i) has been established for the benefit of employees of different employers referred to in the
definition of “pension fund” and “provident fund” [as defined in section 1 of the Income
Tax Act, 1962 (Act No. 58 of 1962)];
(ii) is a retirement annuity fund;
(iii) is a beneficiary fund; or
(iv) is a pension preservation fund or a provident preservation fund [as defined in section 1
of the Income Tax Act, 1962].
(2) The Authority may withdraw an exemption granted under subsection (1)(a) or (1)(b) if a
retirement fund no longer qualifies for [such] the exemption.”.

Substitution of section 7C of Act 24 of 1956

17. Section 7C of Act 24 of 1956 is amended by substituting for the section:

“Object of board
7C. (1) The object of a board [shall] must be to direct, control and oversee the operations of a
retirement fund in accordance with this Act, and any other [the] applicable laws and the rules of the fund.
(2) In pursuing its object, the board [shall] must—
(a) take all reasonable steps to ensure that the interests of members in terms of the rules of
the retirement fund and the provisions of this Act and are protected at all times, especially
in the event of an amalgamation or transfer of any business contemplated in section 14,
splitting of a fund, termination or reduction of contributions to a fund by an employer,
increase of contributions of members and withdrawal of an employer who participates in a
fund;
(b) act with due care, diligence and good faith;
(c) avoid conflicts of interest;
(d) act with impartiality in respect of all members and beneficiaries;
(e) act independently;
(f) have a fiduciary duty to members and beneficiaries in respect of accrued benefits or any
amount accrued to provide a benefit, as well as a fiduciary duty to the retirement fund, to ensure that the
retirement fund is financially sound and is responsibly managed and governed in accordance with the rules
and this Act; and
(g) comply with any other prescribed requirements.”.

Amendment of section 7D of Act 24 of 1956

18. Section 7D of Act 24 of 1956 is amended by repealing subsection (1).

Repeal of section 7E of Act 24 of 1956

19. Section 7E of Act 24 of 1956 is repealed.

Substitution of section 8 of Act 24 of 1956

20. Section 8 of Act 24 of 1956 is amended by substituting for the section:

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“Principal officer and deputy principal officer

8. (1) Every [registered] licensed retirement fund [shall] must have a principal [executive]
officer, who complies with the prescribed fit and proper requirements.
(1A) A principal officer has a fiduciary duty to the fund and its members and must—
(a) be independent and have the requisite knowledge of, or experience in, relevant laws;
(b) be appointed by the fund;
(c) oversee the proper execution of resolutions taken by the board of the fund;
(d) report to the board on matters requiring the board’s attention and resolution;
(e) provide the board collectively and trustees individually with guidance as to their duties,
responsibilities and powers;
(f) make the board aware of any law relevant to or affecting the fund;
(g) report to the board any failure on the part of the fund or a board member to comply with the registered
rules of the fund or relevant laws;
(h) ensure that minutes of all board meetings and the meetings of any committees are properly recorded;
(i) be the official contact person for the Authority with the fund unless the circumstances of the fund
dictate otherwise;
(j) independently satisfy themselves as to the veracity of documents required to be submitted to the
Authority by the fund in terms of this Act;
(k) be accountable to the Authority.
(1B) Nothing contained in subsection (1A) may be construed to mean that the board or a board
member is divested or relieved of their responsibilities in terms of this Act.
(2)(a) The principal officer of [registered] licensed retirement fund [shall] must be an individual who
is resident in the Republic, and if the principal officer is absent from the Republic or unable for any reason to
discharge any duty imposed upon the principal officer by any provision of this Act, the [registered] licensed
retirement fund [shall] must, in the manner directed by its rules, appoint another person to be its principal
officer within [such] the period [as] that may be prescribed by the [registrar] Authority, after the
commencement of a continuing absence or inability to discharge any duty by the principal officer.
(b) A [registered] licensed retirement fund may appoint a deputy principal officer.
(c) The principal officer may, in writing and in accordance with a system of delegation set out in the
rules, delegate any of the principal officer’s functions under this Act and the rules of the [registered] licensed
retirement fund to the deputy principal officer, subject to conditions that the principal officer must determine
(cA) A person may only be appointed as a principal officer or a deputy principal officer who complies
with the prescribed fit and proper requirements.
(d) The principal officer is not divested or relieved of a function delegated under paragraph (c) and
the principal officer may withdraw the delegation at any time.
(e) If a fund has appointed a deputy principal officer, the deputy principal officer acts as principal
officer when the principal officer is absent from the Republic or unable for any reason to discharge any duty
of the principal officer in terms of this Act, until the fund formally in the manner directed in its rules appoints a
new principal officer.
[(3) Every fund must within 30 days after the registration of a fund or within 30 days
after the appointment of a principal officer give the Authority written notice of the appointment by
furnishing the Authority with the prescribed information in respect of the appointee.
(4) Despite anything to the contrary in any law or in any agreement, the appointment by a
fund of a principal officer is subject to the condition that the appointment may be terminated under
subsection (5)(b) and the fund must make any appointment subject to this condition.
(5)(a) The Authority , subject to the Promotion of Administrative Justice Act, 2000 (Act
No. 3 of 2000), may, if the Authority reasonably believes that a principal officer is not, or is no
longer, a fit and proper person to hold that office, or if it is not in the public interest that the principal
officer holds or continues to hold such office, object to the appointment of a principal officer,
stating the grounds for the objection, and provide such to the chairperson of the board and to the
appointee.
(b) If the Authority objects to an appointment in terms of paragraph (a), the board
must terminate the appointment within 30 days of the Authority informing the board of the
finalisation of the processes and procedures provided for in the Promotion of Administrative Justice
Act, 2000 (Act No.3 of 2000).
(c) The Authority may for purposes of assessing if a principal officer is not, or is no
longer, a fit and proper person in accordance with paragraph (a), have regard to—
(i) the competence and soundness of judgment of the person for the fulfilment of the
responsibilities of the particular office and type of fund;
(ii) the diligence with which the person concerned is likely to fulfil those responsibilities;
(iii) previous conduct and activities of the person in business or financial matters; and
(iv) any evidence that the person—
(aa) after 27 April 1994 has been convicted in the Republic or elsewhere of theft, fraud, forgery
or uttering a forged document, perjury, an offence under the Prevention and Combating of
Corrupt Activities Act., 2004 (Act No. 12 of 2004), an offence under the Prevention of
Organised Crime Act, 1998 (Act No. 121 of 1998), or any offence involving dishonesty;
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(bb) has been convicted of an offence committed after the Constitution of the Republic of South
Africa, 1993 (Act No. 200 of 1993), took effect, and sentenced to imprisonment without the
option of a fine;
(cc) has contravened the provisions of any law the object of which is the protection of the public
against financial loss;
(dd) is a former principal officer of a fund and whose actions contributed to that fund’s inability
to pay its debts or caused financial loss to its members;
(ee) has taken part in any business practices that, in the opinion of the Authority , were
deceitful, prejudicial, or otherwise improper (whether unlawful or not) or which otherwise
brought discredit to that person’s methods of conducting business; or
(ff) has taken part in or been associated with any other business practices, or conduct that
casts doubt on his or her competence and soundness of judgement.
(d) The Authority may request any person to assist him or her in assessing whether a person is
fit and proper to act as a principal officer of a fund.]
(6) A principal officer of a fund must—
(a) within 21 days of his or her appointment being terminated, other than [in accordance with the
condition referred to in subsection (5)(b)] as a result of an action taken by the Authority in terms
of section 25(2)(d) of the Conduct of Financial Institution Act, submit a written report to the Authority
detailing the principal officer’s perceived reasons for the termination; and
(b) on becoming aware of any matter relating to the affairs of the pension fund which, in the opinion of
the principal officer, may prejudice the fund or its members, inform the Authority [thereof ]in writing.”.

Amendment of section 9 of Act 24 of 1956

21. Section 9 of Act 24 of 1956 is amended—

(a) by substituting for subsection (3):
“(3)(a) The Authority may refuse an application for the Authority’s approval of the appointment of
an auditor if the application seeks the re-appointment of an auditor who has already served as auditor of the
retirement fund in question for the prescribed number of years;
(b) The Authority may withdraw any approval of the appointment of an auditor previously granted
by the Authority under this section, if the auditor—
(i) has been convicted of an offence of which dishonesty is an element;
(ii) is under investigation by the Independent Regulatory Board for Auditors; or
(iii) fails to disclose any direct or indirect interests which may constitute a conflict of interest in
respect of the auditor’s duties.
(c) Upon the withdrawal of an approval in terms of paragraph (b). the functions and responsibilities
of an auditor in respect of a retirement fund must immediately cease.
(d) A person appointed to replace an auditor whose approval has been withdrawn in terms of
subsection (b) must be appointed for the remainder of the period for which the auditor whom the person
replaces was appointed and is subject to the same conditions as the original appointment.”; and

(b) by substituting in subsection (4) for paragraph (a):

“(a) within 21 days of [his or her] the auditor’s appointment being terminated, other than in accordance
with [section 8(5)] subsection (3), submit a written report to the Authority detailing the auditor’s
perceived reasons for the termination;”.

Substitution of section 11 of Act 24 of 1956

22. Section 11 of Act 24 of 1956 is amended by substituting for the section:

“Rules

11. The rules of a retirement fund which applies to be licensed must be in the prescribed format and
form and must comply with the prescribed requirements.”.

Amendment of section 12 of Act 24 of 1956

23. Section 12 of Act 24 of 1956 is amended—

(a) by substituting for subsection (4):

“(4) If the [registrar] Authority finds that any [such] alteration, rescission or addition is not
inconsistent with this Act and is satisfied that it is financially sound, [he shall] the Authority must register the
alteration, rescission or addition and return a copy of the resolution to the principal officer with the date of
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registration endorsed thereon, and [such] the alteration, rescission or addition, as the case may be, [shall
take] takes effect [as] from the date determined by the retirement fund concerned or, if no date has been
[so] determined, [as] from the [said] date of [registration] licensing.”; and

(b) by substituting in subsection (6) for paragraph (b):

“(b) If a registered fund fails to furnish the information requested by the [registrar] Authority within [180
days from the date of that request] the period determined by the Authority, any submission for approval of
an alteration, rescission, addition or consolidation of the rules of that fund lapses.”.

Amendment of section 13A(3)(a)(iii) of Act 24 of 1956

24. Section 13A(3) of Act 24 of 1956 is amended by substituting in paragraph (a) for subparagraph (iii):

“(iii) in the case of a fund contemplated in section 15(4) that has been exempted from the provisions of
sections 5(2) and 9 because, in operating as a fund, its assets consist exclusively of one or more
policies of insurance with an insurer [carrying on long-term insurance business as
contemplated in the Insurance Act, 1943, shall] licensed to conduct life insurance business
under the Insurance Act, 2017 (Act No. 18 of 2017), must be forwarded to the insurer concerned in
such manner as to have the insurer receive the contribution not later than seven days after the end
of that month.”.

Repeal of section 13B of Act 24 of 1956

25. Section 13B of Act 24 of 1956 is repealed.

Amendment of section 14 of Act 24 of 1956

26. Section 14 of Act 24 of 1956 is amended —

(a) by substituting in paragraphs (b) and (d) of subsection (1) for the term “he”, of the term “the Authority”;

(b) by substituting for subsection (5):

“(5) Any application for approval of a scheme lodged with the [registrar] Authority in terms of
subsection (1)(a) [shall lapse] lapses if the [registrar] Authority requests further information and no
satisfactory response is received from either the transferor or the transferee fund, as the case may be,
within a period [of 180 days from the date of such request] determined by the Authority.”;

(c) by substituting for subsections (8) and (9):

“(8) With effect from the commencement of the Pension Funds Amendment Act, 2007, subsection (1)
does not apply—
(a) where the affected members were duly informed of a proposed transaction and any objection the
members may have, has been resolved to the satisfaction of the board of the fund concerned[,]; and
[(a)] (i) both transferor and transferee retirement funds are valuation exempt; or
[(aA) both transferor and transferee funds are beneficiary funds; or]
[(b)](ii) the transferor, [or] transferee fund, or other person or trust contemplated in the Trust
Property Control Act, 1988 (Act No. 57 of 1988) is neither [registered] licensed nor required
to [register] be licensed under this Act and the other fund is valuation exempt[,]; or
(b) in the case of unclaimed benefit members; and,
furthermore, that—
[(i)](aa) [such registered] those licensed retirement funds keep proper records of all such
transactions;
[(ii)](bb) [such registered] those licensed retirement funds comply with any further requirements as
the [registrar] Authority may prescribe;
[(iii)](cc) the assets and liabilities are transferred within [180 days] a period prescribed of the
effective date of transfer; and
[(iv)](dd) any assets transferred must be increased or decreased with fund return from the effective
date until the date of final settlement.
(9) Notwithstanding subsections (1) and (8), the [registrar] Authority may on application and
payment of the prescribed fee exempt a transaction contemplated in subsection (1) from the provisions of this
section, subject to such requirements or conditions as may be [prescribed] determined. “; and

(d) by inserting following subsection (9):

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“(10) An exemption granted in terms of subsection (9) may be issued to apply generally or be
limited in its application to a particular retirement fund or kind of retirement fund, which may, for the
purposes of this subsection, be defined in relation to either a category or type of retirement fund or in any
other manner.”.

Amendment of sections 14(7)(b)(ii) and 14B(3)(c)(i) and (ii) of Act 24 of 1956

27. Sections 14(7)(b)(ii) and 14B(3)(c)(i) and (ii) of Act 24 of 1956 are amended by substituting for the phrase
“Long Term Insurance Act, 1998)” for the phrase “Insurance Act, 2017 (Act No. 18 of 2017)”.

Amendment of section 15 of Act 24 of 1956

28. Section 15 of Act 24 of 1956 is amended—

(a) by substituting for subsection (1):

“(1) Subject to the provisions of subsection (4), every [registered] licensed retirement fund [shall]
must, within [six] four months as from the expiration of every financial year, furnish to the [registrar]
Authority [such] the statements in regard to its revenue, expenditure and financial position [as] that may be
prescribed, duly audited and reported on by the auditor of the fund;”;

(b) by substituting in subsection (3):

“(3) If the [registrar] Authority is of the opinion that any document furnished by a [registered]
licensed fund in terms of subsection (1) does not correctly reflect the revenue and expenditure or the
financial position (as the case may be) of the fund, [he] the Authority may reject the [said] document,
and in that event—
(a) [he shall] the Authority must notify the fund concerned of the reasons for such rejection; [and]
(b) the fund [shall be] is deemed not to have furnished the [said] document to the [registrar]
Authority [: Provided that in such event]; and
(c) the [ reg ist ra r] Authority may apply the provisions of section [thirty-three] 33, even
though the period concerned may have expired before application is made for extension.”;

(c) by substituting for subsection (4):

“(4) If a retirement fund has been exempted as contemplated in section [2(5)(a)] 281 of the
Financial Sector Regulation Act, the [registrar]Authority may authorise [such] the retirement fund
to furnish to [him or her] the Authority, instead of the statements referred to in subsection (1), the
information prescribed;”; and

(d) by inserting following subsection (4):

“(5) A licensed retirement fund or categories of licensed retirement funds must submit to the
Authority the regulatory reports or information in the format and within the periods that the Authority may
determine.”.

Amendment of section 16(5) of Act 24 of 1956

29. Section 16 of Act 24 of 1956 is amended by substituting in subsection (5) for the term “he” of the term “the
Authority”.

Amendment of section 18(3) and (4) of Act 24 of 1956

30. Section 18(3) and (4) of Act 24 of 1956 is amended by substituting for the terms “he” and “him” of the term
“the Authority”.

Amendment of section 18A of Act 24 of 1956

31. Section 18A of Act 24 of 1956 is amended—

(a) by substituting for subsection (1):

“(1) Notwithstanding the provisions of the Companies Act or any other law under which a [pension]
retirement fund [or an administrator] is incorporated, Chapter 6 of the Companies Act [shall], applies,
 129

subject to this section and section 166BM of the Financial Sector Regulation Act, and with the necessary
changes, [apply] in relation to the business rescue of a [pension] retirement fund [or an administrator,
whether or not it is a company].”;

(c) by repealing subsections (2) to (5); and

(d) by substituting for subsection (6):

“(6) As from the date upon which a business rescue practitioner is appointed, the business rescue
practitioner of a [pension] retirement fund [or an administrator shall] may not provide new benefits, unless
the practitioner has been granted permission to do so by a court.”.

Amendment of section 19 of Act 24 of 1956

32. Section 19 of Act 24 of 1956 is amended—

(a) by substituting in subsection (5)(a) for the words preceding subparagraph (i):

“(5)(a) A [registered] licensed retirement fund may, if its rules so permit and subject to those
conditions that may be prescribed [prudential standards], grant a loan to a member by way of investment
of its funds or furnish a guarantee in favour of a person other than the fund in respect of a loan granted or to
be granted by such other person to a member to enable the member—"; and

(b) by substituting in subsection (6) for paragraph (a):

“(a) The [registrar] Authority may, on application by a fund and the payment of the prescribed fee,
under exceptional circumstances, and [on such] subject to conditions and for [such] the periods [as he]
that the Authority may determine, temporarily exempt any retirement fund from compliance with any
provision of subsection (5) or (5B)(a).”.

Amendment of section 20(3) of Act 24 of 1956

33. Section 20 of Act 24 of 1956 is amended by substituting for subsection (3):

“(3) Any person who is required in terms of any provision of this Act to furnish to the [registrar]
Authority—
(a) any original document, [shall] must also furnish [such] additional copies [thereof], not
exceeding three in number, [as] that may be [prescribed by regulation or as the registrar
may require] determined by the Authority;
(b) a copy of any document, [shall] must furnish one copy [thereof] that is certified as correct—
(i) in the case of a [registered] licensed retirement fund, by its principal officer; and
(ii) in any other case, by the person by whom [such] the copy is required to be furnished,
together with so many additional copies as may be determined, [not exceeding three, as may be
prescribed by regulation or as the registrar may require] by the Authority,”.

Amendment of section 21 of Act 24 of 1956

34. Section 21 of Act 24 of 1956 is amended by substituting for the term “him” of the term “the Authority”.

Amendment of section 22 of Act 24 of 1956

35. Section 22 of Act 24 of 1956 is amended by substituting for the term “he” of the term “the Authority”.

Substitution of section 26 of Act 24 of 1956

36. Section 26 of Act 24 of 1956 is amended by substituting for the section:

“[Registrar]Authority may intervene in management of fund

26. (1) Without limiting what a directive of a financial sector regulator may include, the Authority may, through a
directive, direct that the rules of a retirement fund, including rules relating to the appointment, powers, remuneration (if
any) and removal of the board, be amended if the retirement fund—
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(a) is not in a sound financial condition or does not comply with the provisions of this Act or the regulations
affecting the financial soundness of the retirement fund;
(b) has failed to act in accordance with the provisions of section 18; or
(c) is not being managed in accordance with this Act or the rules of the retirement fund.
(2) Where a retirement fund has no properly constituted board contemplated in section 7A or has no valid
exemption granted to it in terms of section 7B, and—
(a) has failed to constitute a board in terms of section 7A [after 90 days written notice] within the period
determined by the [registrar] Authority; or
(b) [where,] for whatever reason, a retirement fund cannot properly constitute a board that is compliant with
the provisions of this Act [or where a board fails to comply with any requirements prescribed by the
registrar in terms of section 7A(3)],
the [registrar] Authority may, notwithstanding the rules of the retirement fund, at the cost of the fund or administrator,
[(a)](i) appoint [so many] one or more persons as the [registrar] Authority considers appropriate to [the board of the
fund or appoint so many persons as may be necessary to make up the full complement or quorum of the
board;] perform the functions of a board; and
[(b)](ii) assign to [such] the board [such specific] additional duties [as] that the [registrar] Authority [deems
expedient] considers appropriate.
(2A) A person that is appointed under subsection (2) must comply with the requirements that may be
prescribed in standards.
(3) A board constituted in terms of subsection (2) must—
(a) properly constitute a board in terms of section 7A or obtain an exemption in terms of section 7B;
(b) fulfil all the objects and duties of a board contemplated in this Act and the rules of the retirement fund;
(c) comply with any additional duties as determined by the Authority; and
(d) hold office—
(i) until the Authority is satisfied that the retirement fund has properly constituted a [valid] board in
terms of section 7A [and the registrar has relieved the former board in writing of its duties];
or
(ii) until the Authority has granted an exemption in terms of section 7B and a board has been properly
constituted; or
(iii) in the event that a board cannot be properly constituted, until –
(aa) the Authority has approved the appointment of a liquidator; or
(bb) the licence of the retirement fund has been cancelled.
(3A) (a) Where a board fails to comply with any requirements of a financial sector law, the Authority may, after
giving the board a reasonable opportunity to be heard, at the cost of the retirement fund appoint a statutory manager
to the board of the retirement fund without the consent of the board.
(b) The retirement fund’s or the board’s agreement to the appointment of the statutory manager in terms of
paragraph (a) is not required.
(c) Subsections (2) to (7) of section 166BJ of the Financial Sector Regulation Act apply with the necessary
changes to the appointment of a statutory manager under this section by the Authority.
(4) If the [registrar] Authority has reason to believe that a board member is not or is no longer fit and proper
to hold office, the [registrar] Authority may, after giving the board member a reasonable opportunity to be heard—
(a) direct the board member to vacate office; and
(b) replace that board member with another person for the period and subject to the conditions that the
[registrar] Authority may [prescribe] determine.
(5) In the circumstances described in subsection (4), the retirement fund [shall] must cause the vacancy to
be filled in accordance with the provisions of section 7A and the rules of the retirement fund, failing which the [registrar]
Authority may adopt the course set out in subsection (2).
(6) The Authority may—
(a) appoint an independent person conforming to the requirements set out in subsection (2A) to the board
contemplated in section 7A, if it is in the interest of the fund, or the members of the fund, to do so;
(b) assign to that person those duties that the Authority considers appropriate;
(c) determine the remuneration, costs and fees as deemed appropriate;
(d) assess or appoint an independent person to assess the remuneration, costs and fees to determine if the
remuneration, costs and fees are reasonable.”.

Substitution of section 27 of Act 24 of 1956

37. Section 27 of Act 24 of 1956 is amended by substituting for the section:

“Cancellation, [or] suspension and reinstatement of [registration] licence

27. (1) The [registrar shall] Authority must cancel the [registration] licence of a retirement fund—
(a) on proof [to his satisfaction] that the retirement fund has ceased to exist; or
(b) if the [registrar] Authority and the retirement fund [are agreed] agree that the retirement fund was
[registered] licensed by mistake [in circumstances not amounting to fraud:].
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(1A) (a) [Provided that in the circumstances stated in paragraph (b), the registrar] The Authority may
suspend the [registration in lieu] licence of a retirement fund instead of cancelling it, if [he is] satisfied that by
so doing the retirement fund will [be furnished with] have an opportunity of rectifying the [said mistake] cause
for the suspension in a manner consistent with the provisions of this Act,
(b) If the fund [does rectify such mistake] rectifies the cause for suspension [to the satisfaction of the
registrar, the latter shall thereupon], the Authority may [reinstate the said registration] withdraw [such] the
suspension [as] from the date determined by the [registrar] Authority.
(c) [but if] If the [mistake] cause for suspension is not rectified within a period specified by the
[registrar he shall] the Authority, the Authority may cancel the [registration] licence of the retirement fund.
(2) The [registrar] Authority may apply to the court for the cancellation or suspension of the
[registration] licence of a retirement fund if—
(a) the retirement fund has wilfully and after notice from the [registrar] Authority violated any provision
of this Act; or
(b) the [registrar] Authority is of the opinion, as a result of an investigation under section [twenty-five]
25, that the [registration] licence should be cancelled or suspended.
(3) The court may cancel the [registration] licence of the retirement fund or suspend [such
registration] the licence for [such] a period as it thinks fit, and may attach to [such] the cancellation or
suspension [such] conditions [as] that it thinks are desirable, or may make any other order which in the
circumstances it thinks is desirable.
(4) Unless the court otherwise orders, the costs of the [registrar] Authority in or in connection with
the application [shall] must be paid by the retirement fund and [shall] must be a first charge upon the
assets of [such] the retirement fund.
(5) The Authority may reinstate the licence of a retirement fund which was cancelled in accordance
with subsection (1) with retrospective effect to the date of cancellation, if satisfied that the retirement fund
had not ceased to exist or that the cancellation was as a result of a genuine error or was effected by
mistake.
(6) The reinstatement of the licence of a retirement fund as contemplated in subsection (5) restores
the fund to the position it would have been in had the licence not been cancelled.”.

Substitution of section 28 of Act 24 of 1956

38. Section 28 of Act 24 of 1956 is amended by substituting for the section:

“Voluntary dissolution of retirement fund

28. (1)(a) Subject to the provisions of this section, a [registered] licensed retirement fund may be
terminated or dissolved, whether wholly or in part, in the circumstances (if any) specified for that purpose in
its rules, and in the manner provided by those rules.
(b) In [such an] the event of the voluntary termination or dissolution of a retirement fund as
contemplated in paragraph (a), the assets of the retirement fund, or, in the case of the partial termination of
the retirement fund, those assets of the retirement fund attributable to the members connected to the
participating employer whose withdrawal from the retirement fund has caused its partial termination (as the
case may be), [shall] must, subject to the provisions of this section, be distributed in the manner provided
by those rules.
(2) A liquidator [shall] must be appointed in the manner directed by the rules, or, if the rules do not
contain directions [as to such an] regarding the appointment of a liquidator, by the board, but [such] the
appointment [shall] must be subject to the approval of the [registrar] Authority, and the period of liquidation
[shall] must be deemed to commence [as] from the date of [such] the approval.
(3) During [such] the liquidation the provisions of this Act [shall] continue to apply to [such] the
retirement fund as if the liquidator were the board.
(4) (a) The liquidator [shall as soon as may be possible], must, within a period not exceeding 60
days or another period agreed to by the Authority in writing, deposit for approval with the [registrar]
Authority the prescribed preliminary accounts [prescribed], signed and certified as correct by the liquidator,
and showing—
(i) the assets and liabilities of the retirement fund as at the commencement of the liquidation, or, in
the case of the partial termination of the retirement fund, the assets and liabilities of the retirement
fund attributable to the members connected to the participating employer whose withdrawal from
the retirement fund has caused its partial termination; and
(ii) [as well as] the manner in which it is proposed to realize the assets and to discharge the liabilities,
including any liabilities and contingent liabilities to or in respect of members[, or, in the case of
the partial termination of the fund, the assets and liabilities of the fund attributable to the
members connected to the participating employer whose withdrawal from the fund has
caused its partial termination].
(b) In discharging the liabilities and contingent liabilities to or in respect of members referred to in
paragraph (a)(ii), full recognition [shall] must be accorded to—
(i) the rights and reasonable benefit expectations of the persons concerned;
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(ii) the payment of additional benefits [the payment of] by the retirement fund which has become an
established practice;
(iii) the payment of minimum benefits referred to in section 14A.
(5) [If deemed fit, the registrar] The Authority may direct the liquidator to–
(a) amend the preliminary accounts;
(b) furnish a report [, drawn up] by an independent valuator or other competent person nominated by the
[registrar on] Authority, dealing with those aspects of the preliminary accounts that the Authority
deems necessary; or
(c) address any other enquiries that the Authority deems necessary.
(6) [The] Once approved, the Authority must give notification on the web site of the Authority that the
preliminary accounts and report (if any) referred to in subsection (5) [shall] lie open for inspection by
interested persons for a period of 30 days at the office of the [registrar] Authority and at the registered office
of the retirement fund, and where the registered office of the retirement fund is not in the district in which the
office of the [registrar] Authority is situate, at the office of the magistrate of the district in which the registered
office of the retirement fund is situate.
(7) (a) The [registrar shall] Authority must direct the liquidator to publish a notice, at the cost of
[such a] the retirement fund, in the Gazette and in a newspaper circulating in the district in which the
registered office of the retirement fund is situated and in which is stated the period during which and the
places at which the preliminary accounts and report (if any) [shall] lie open for inspection by interested
persons.
(b) The notice [shall] must call upon any interested persons who have any objection to the
preliminary accounts and report (if any) to lodge their objections in writing with the [registrar] Authority within
the period stated in the notice, which period [shall] may not be shorter than 14 days, calculated [as] from the
last day on which those documents lie open for inspection.
(7A) (a) If, in the case of a particular retirement fund or a particular participating employer whose
withdrawal from the retirement fund has caused its partial termination, the [registrar] Authority is satisfied on
reasonable grounds that there exist special circumstances which justify exemption from the provisions of
subsections (6) and (7), the [registrar] Authority, having due regard to the rights of interested persons, may
exempt the retirement fund from all or any of the provisions of those subsections if deemed expedient in the
circumstances.
(b) [Such an] An exemption in terms of paragraph (a) [shall] must be subject to the conditions
determined from time to time by the [registrar] Authority [by notice in the Gazette].
(8) (a) If no objections are lodged [with the registrar] in terms of subsection (7), [he shall] the
Authority must direct the liquidator to complete the liquidation.
(b) The liquidator must distribute the benefits due to members and beneficiaries within a period not
exceeding 60 days after the date directed by the Authority.
(c) If after the expiry of six months from the date contemplated in paragraph (b), the liquidator is
satisfied that benefits are and will remain unclaimed benefits, the liquidator must transfer those benefits to an
unclaimed benefit fund.
(9)(a) The Authority may—
(i) [If] if objections are lodged [with the registrar] in terms of subsection (7), [the registrar may,]
after considering the [said] objections, direct the liquidator to amend the preliminary accounts;
or
(ii) give [such] any other directions relating to the liquidation [as he thinks] that the Authority
deems fit[,].
(b) [provided such directions are] Directions issued by the Authority in terms of paragraph
(a) may not be inconsistent with the rules of the retirement fund or this section, and any [such] direction
[shall be] is binding upon the liquidator.
(10) (a) The liquidator [shall] must within fourteen days of [the] receipt [by him] of any direction of the
[registrar in terms of subsection (9)] Authority, post a copy [thereof] of the direction to every member,
shareholder and creditor of the retirement fund.
(b) [and the] The liquidator or any person aggrieved by any direction of the [registrar] Authority
may apply [by motion to the court within twenty-eight days after such direction has been
communicated to the liquidator, for an order to set aside the registrar’s decision, and the court may
confirm the said decision or make such order as it thinks fit] to the Tribunal for reconsideration of the
decision in accordance with the provisions of the Financial Sector Regulation Act.
(11) (a) If the [registrar] Authority is satisfied that [his] the directions, in so far as they have not
been varied or set aside by the [court have been given effect to, he shall] Tribunal or the decision of the
Tribunal has not been set aside by a court, it must direct the liquidator to complete the liquidation as
contemplated in subsection (8)(b) and (c).
(b) If the Authority’s directions have been varied or set aside by the Tribunal, the liquidation must
proceed on the basis of the Tribunal’s decision.
(12) Within 30 days after the expiration of the date determined in subsections (8) or (11)
[completion of the liquidation], the liquidator [shall] must lodge with the [registrar] Authority the final
accounts prescribed, signed and certified as correct by the liquidator and showing—
(a) the assets and liabilities of the retirement fund, as at the commencement of the liquidation, or, in the
case of the partial termination of the retirement fund, those assets and liabilities of the retirement
 133

fund which, at the commencement of the liquidation, are attributable to the members connected to
the participating employer whose withdrawal from the retirement fund has caused its partial
termination; and
(b) the manner in which the assets have been realized and the liabilities (including any liabilities and
contingent liabilities to or in respect of members) have been discharged.
(12A) Notwithstanding any provision to the contrary in this section, the [registrar] Authority, on
good cause shown, may authorise the liquidator, subject to any conditions that the [registrar] Authority may
impose and prior to the submission of the final accounts and report (if any)—
(a) to make payment of any amounts to the members and beneficiaries of a retirement fund; or
(b) where the liquidator is satisfied that benefits are and will remain unclaimed benefits, to transfer
[such] those benefits to an unclaimed benefit fund.
[(13) The provisions of the Companies Act shall apply with the necessary changes to the
dissolution of a fund in terms of this section, in so far as the said provisions relate to a voluntary
winding-up in terms of the said Act, and in so far as the said provisions are applicable and not
inconsistent with any provisions of this Act.]
(14) All claims against the retirement fund [shall] must be proved to the satisfaction of the
liquidator, subject to a right of appeal to the court, and the liquidator may require any claim to be made on
affidavit.
(15) The [registrar] Authority, if satisfied that the liquidator’s accounts in respect of the retirement
fund are correct and that the liquidation has been completed, [shall] must—
(a) cancel the [registration] licence of the retirement fund, in the case where the retirement fund is
wholly terminated, whereupon the retirement fund [shall] must be dissolved; or
(b) in the case of the partial dissolution of the retirement fund, only confirm the completion of the partial
liquidation of the retirement fund.
(16) For the purposes of this section, “participating employer” means any employer who
participates in the scheme or arrangement whereby a retirement fund has been established.
(17) The [registrar may prescribe the circumstances under which a fund may be exempted
from the provisions of this section] Authority may exempt a retirement fund from any of the provisions of
this section and must prescribe the circumstances and requirements to be complied with for [such] an
exemption to be granted.
(18) (a) The provisions of this section do not apply to a beneficiary fund, retirement annuity fund and
unclaimed benefit fund.
(b) The [registrar] Authority may prescribe matters that must be provided for in the rules of a
beneficiary fund regarding voluntary dissolution and the transfer of remaining assets on voluntary
dissolution.
(19) A liquidator may not be absent from the Republic for a period exceeding 30 days unless—
(a) the Authority has, before the departure of the liquidator from the Republic, granted permission to the
liquidator in writing to be absent; and
(b) the liquidator complies with any conditions that the Authority may deem fit to impose.
(20)(a) The Authority may, subject to the Promotion of Administrative Justice Act, 2000 (Act No. 3 of
2000), remove a liquidator if—
(i) the liquidator is not, or is no longer, a fit or proper person to hold that office;
(ii) the liquidator has failed to perform satisfactorily any duty imposed by this Act, or to comply with a
lawful requirement of the Authority;
(iii) the estate of the liquidator has become insolvent;
(iv) that the liquidator has become mentally or physically incapable of performing duties satisfactorily as
liquidator; or
(v) for any other reason, if the liquidator is no longer suitable to be the liquidator of the fund concerned.
(b) A court may, on application by any interested person, remove a liquidator from office if the Authority
fails to do so in any of the circumstances mentioned in subsection (a) or for any other good cause.
(21) (a) Where a liquidator has been removed in accordance with subsection (20) or a vacancy has
occurred for any other reason, the Authority may appoint a suitable person as liquidator to fill the vacancy.
(b) If the Authority is of the opinion that the remaining liquidator or liquidators will be able to complete
the liquidation of the fund, the Authority may dispense with the appointment of a liquidator to fill the vacancy and
may direct the remaining liquidator or liquidators to complete the liquidation.
(22) The Authority must give notice on the Authority’s website of the removal of the liquidator and the
appointment of another person to fill the vacancy, if any.”.

Amendment of section 29 of Act 24 of 1956

39. Section 29 of Act 24 of 1956 is amended—

(a) by substituting for subsections (1) and (2):

“(1) If the Authority is of the opinion that a retirement fund is in such an unsound financial condition
that any scheme as contemplated by section [eighteen] 18 would be ineffective, impracticable or
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unsatisfactory or otherwise the Authority believes it is in the interests of members to do so as contemplated

in section 166BO of the Financial Sector Regulation Act, [he] the Authority may apply to the court for an
order that the whole or any part of the business of the fund be wound up, and section 166BN of the
Financial Sector Regulation Act applies, with the necessary changes to an application under this
subsection.
(2) (a) Any creditor of a [registered] licensed retirement fund who is unable to obtain payment of
[his] the creditor’s claim after recourse to the ordinary process of law may apply to the court for an order that
the whole or any part of the business of the retirement fund be wound up, and sections 166 BN and 166 BO(2)
of the Financial Sector Regulation Act, applies, with the necessary changes to an application under this
subsection. [: Provided that a]
(b) A creditor [shall] may not make application except by leave of the court, and the court [shall]
may not grant such leave unless the creditor has given security to an amount specified by the court for the
payment of the costs of the application and of any opposition [thereto] to the application, and has
established prima facie the desirability of the order for which [he] the creditor wishes to apply.”;

(b) by repealing subsection (4);

(c) by substituting for subsections (5), (6) and (6A):

“(5) The court may direct that the [aforementioned] provisions of the Companies Act referred to
in section 166BN of the Financial Sector Regulation Act may, for the purposes of the winding-up be suitably
modified in any particular case if, having regard to the circumstances of the retirement fund concerned, it
would be impracticable or unnecessarily onerous to comply with the [said] provisions in every particular
case, and that in spite of [such] the modification, the interests of the creditors of the retirement fund will be
sufficiently safeguarded.
(6) In the winding-up of the whole or any part of the business of a retirement fund, the value of
the interests of the members or of the various groups of members of the retirement fund, and the value of
any benefits due by the retirement fund to persons other than members, [shall] must be ascertained in such
manner as the court may direct.
(6A) In giving any order or direction under this section the court [shall] must have regard to any
recommendation which may have been made by the retirement fund’s valuator, if any, and accord full
recognition to the rights and reasonable benefit expectations of the persons concerned and to additional
benefits the payment of which by the retirement fund has become an established practice.”;

(d) by repealing subsection (7); and

(e) by substituting for subsection (8):

“(8) If, where the court has ordered that the whole business of the retirement fund be wound up,
the [registrar] Authority is satisfied that the winding-up of [such a] the retirement fund has been completed,
[he shall] the Authority must cancel the [registration] licence of the fund, [and thereupon] after which the
retirement fund [shall] will be deemed to be dissolved.”.
.
Amendment of section 29A of Act 24 of 1956

40. Section 29A of Act 24 of 1956 is amended by substituting for the heading of the section and subsection (1):

“Winding-up of [unregistered pension] unlicensed retirement fund

(1) If a person carries on the business of a [pension] retirement fund which is not [registered]
licensed under this Act, the [registrar] Authority may apply to the court for the sequestration or liquidation of that
person and the [unregistered] unlicensed fund, whether or not the person or fund is solvent, in accordance
with—
(a) the Insolvency Act, 1936 (Act No. 24 of 1936);
(b) the Companies Act;
(c) the Close Corporations Act, 1984 (Act No. 68 of 1984); or
(d) the law under which that person is incorporated.”.

Amendment of section 30 of Act 24 of 1956

41. Section 30 of Act 24 of 1956 is amended—

(a) by substituting in subsection (1) for the words preceding paragraph (a):

“(1) In applying the provisions of the Companies Act in terms of section [28 or] 29, and 166BN and
166BO of the Financial Sector Regulation Act —"; and
 135

(b) by substituting in subsection (2) for the term “him” of the phrase “the shareholder”.

Substitution of section 31 of Act 24 of 1956

42. Section 31 of Act 24 of 1956 is amended by substituting for the section:

“Carrying on business of [unregistered] unlicensed [pension fund organization] retirement fund

and use of designation “retirement fund” or “pension fund

31.[(1) No person shall] A person may not—

(a) ......
(b) carry on the business of a [pension] retirement fund, unless that retirement fund has been
provisionally or finally [registered] licensed under this Act;
(c) carry on the business of a [ pension] retirement fund for [ such] t he period and subject to
[ such] the conditions [ as] that may be prescribed after the date on which the person who
applied for [registration] licensing of the fund is advised by the Authority that the application
for[registration] licensing has been rejected; or
(d) apply to that person’s business a name which includes the words “retirement fund” or “pension
fund” or any other name which is calculated to indicate that that person carries on the business
of a [pension] retirement fund, unless [such] that business is provisionally or finally [registered]
licensed as a [pension] retirement fund under this Act[,].
[(2) If at the commencement of this Act any person applied to his business any such
name as is referred to in paragraph (d) of subsection (1) and he, after the commencement of
this subsection, changes such name and produces any deed or document bearing such name
and licensed in any deeds registry, to the officer in charge of that registry, and satisfies the
said officer that such name was changed by virtue of the provisions of the said paragraph
(d), the said officer shall, without any charge, substitute the new name for the previous name
on such deed or document and in all the relevant registers in the said registry.]”.

Substitution of section 32 of Act 24 of 1956

43. Section 32 of Act 24 of 1956 is amended by substituting for the section:

“[Registrar] Authority may require [unregistered] unlicensed retirement funds to furnish information

32. (1) The [registrar] Authority may by notice in writing require any person whom he has reason to suspect
is carrying on the business of a [pension] retirement fund which is not [registered] licensed under this Act, to
transmit to [him] the Authority, within a period stated in [such] the notice, a copy of the rules, if any, under
which [such] the person is operating, together with a copy of the last annual accounts recorded by [such] the
person, and [such] the further information [as] that the [registrar] Authority may require.
(2) If [such] the person fails to comply, to the satisfaction of the [registrar] Authority, with the
requirements of the [registrar] Authority, the [registrar] Authority may investigate the affairs or any part of the
affairs of the [said] person, or appoint an inspector to hold [such] an investigation and to report the result of
his investigation to the [registrar] Authority, and the provisions of section 25, [shall] with the necessary
changes, [apply] applies to every [such] investigation, and the [registrar] [shall be] is entitled to recover from
the person concerned all expenses necessarily incurred in connection with the investigation, unless [such] the
investigation shows that [such] the person is not carrying on the business of a [pension] retirement fund.
(3) If it appears from enquiries made by the [registrar] Authority in terms of subsection (1) or of any
investigation made in terms of subsection (2), that the person concerned is carrying on the business of a
[pension] retirement fund, the [registrar shall] Authority must [register] licence the fund provisionally,
[whereafter] and the provisions of this Act [shall] then apply to the [said] retirement fund.”.

Repeal of section 32A of Act 24 of 1956

44. Section 32A of Act 24 of 1956 is repealed.

Insertion of section 36A in Act 24 of 1956

45. Section Act 24 of 1956 is amended by inserting following section 36:

“Standards
 136

36A. (1) The Authority may prescribe in standards on any matter that is appropriate and necessary
for achieving the purposes of this Act.
(2) The Authority may determine administrative and penalty fees in respect of matters contemplated
in this Act and, in relation to those fees, the person by whom the fee must be paid, the manner of payment
of the fees, and, where necessary, the interest payable in respect of overdue fees.
(3) Different standards may be issued to apply generally or be limited in its application to a category
of funds, which may, for the purposes of this subsection, be defined in relation to either a category or type of
fund or in any other manner.”.

Amendment of section 37A of Act 24 of 1956

46. Section 37A of Act 24 of 1956 is amended by inserting following subsection (4):
“(5) Unclaimed benefits may not be reduced or utilised for any other purpose by a fund.”

Amendment of section 37C of Act 24 of 1956

47. Section 37C of Act 24 of 1956 is amended—

(a) by substituting for subsection (1):

“37C. (1) (a) Despite anything to the contrary contained in any law or in the rules of a licensed
retirement fund, and subject to subparagraph (b), any benefit payable by the retirement fund on the death of
a member, does not form part of the assets in the estate of the member.
(b) A benefit payable as a pension to the spouse or child of the member in terms of the rules of a
licensed retirement fund must be dealt with in terms of the rules.
(c) A benefit payable by the retirement fund on the death of a member as referred to in this subsection
must be dealt with, after complying with sections 19(5)(b)(i), 37A(3) and 37D, as follows:
(i) When the retirement fund becomes aware of the death of the member, the retirement fund must
use its best endeavours to trace dependants of the deceased members.
(ii) Where the retirement fund has successfully traced a dependant or dependants, the benefit must be
paid to the dependant or, as may be deemed equitable by the fund, to one of the dependants or in
proportions to some of or all the dependants, within two months of the fund tracing the dependant.
(iii) If the retirement fund cannot trace any dependant of the member within 12 months after the
retirement fund became aware of the death of the member, and the member has designated in
writing to the retirement fund a nominee who is not a dependant of the member, to receive the
benefit or a portion of the benefit that is specified by the member in writing to the retirement fund,
the benefit or the portion of the benefit must be paid to such the nominee, subject to subparagraph
(iv).
(iv) In the case where a member has designated a nominee who is not a dependant as set out in
subparagraph (iii), and the aggregate amount of the debts in the estate of the member exceeds the
aggregate amount of the assets in the member’s estate, —
(aa) the amount of the benefit that is equal to the difference between the aggregate amount of
debts and the aggregate amount of assets must be paid into the estate; and
(bb) the balance of the benefit or the balance of the portion of the benefit that is specified by the
member as contemplated by subparagraph (iii) must be paid to the nominee.
(v) If a member has a dependant and the member has also designated in writing to the retirement fund
a nominee to receive the benefit or a portion of the benefit that is specified by the member in writing
to the retirement fund, the fund must within 12 months of the death of the member pay the benefit
or a portion of the benefit to the dependant or nominee in the proportions that the board may deem
equitable, subject to subparagraph (vi).
(vi) (aa) Subparagraph (v) only applies to the designation of a nominee made on or after 30 June 1989.
(bb) In respect of a designation made on or after 30 June 1989, this subparagraph does not prohibit
a retirement fund from paying the benefit, either to a dependant or nominee contemplated in this
subparagraph or, if there is more than one dependant or nominee, in proportions to any or all of those
dependants and nominees.
(vii) If the retirement fund does not become aware of or cannot trace any dependant of the member
within 12 months of the death of the member, and—
(aa) the member has not designated a nominee; or
(bb) the member has designated a nominee to receive a portion of the benefit in writing to the
retirement fund,
the benefit or the remaining portion of the benefit after payment to the designated nominee, must be
paid into the estate of the member or, if no inventory in respect of the member has been received by
the Master of the Supreme Court in terms of section 9 of the Administration of Estates Act, 1965 (Act
No. 66 of 1965), into the Guardian’s Fund or unclaimed benefit fund.
 137

(viii) If the deceased is a pensioner who receives an in-fund living annuity or a life annuity which has a
guaranteed period and the pensioner dies within this period,--
(aa) any benefit must be paid to the pensioner’s nominees, if any;
(bb) where the pensioner has not designated any nominees, it must be paid into the estate of the
member or, if no inventory in respect of the member has been received by the Master of the
Supreme Court in terms of section 9 of the Administration of Estates Act, 1965 (Act No. 66 of
1965), into the Guardian’s Fund or unclaimed benefit fund.”; and

(b) by substituting for subsection (3):

“(3) (a) Any benefit dealt with in terms of this section, payable to a minor dependant or
minor nominee, may be paid in more than one payment in [such] the amounts [as] that the board
may from time to time consider appropriate and in the best interests of [such] the dependant or
nominee.[: Provided that interest at a reasonable rate, having regard to the fund]
(b) Fund return [earned by the fund,] [shall] must be added to the outstanding balance
at [such] the times [as] that the board may determine.[: Provided further that any]
(c) Any balance owing to [such a] the dependant or nominee at the date on which [he or
she] the dependant or nominee—
(a) attains the age of majority as determined in the Children’s Act, 2005 (Act No. 38 of 2005);
(b) attains another age that is agreed to between the fund and the beneficiary, but not exceeding
21 years of age; or
(c) dies,
whichever occurs first, [shall] must be paid in full.”.

Amendment of section 37D of Act 24 of 1956

48. Section 37D of Act 24 of 1956 is amended—

(a) by substituting in subsection (1)(a) for the words preceding subparagraph (i):

“(1)(a) deduct any amount due on the benefit in question by the member in accordance with the Income
Tax Act, 1962 (Act No. 58 of 1962), and Tax Administration Act (Act No. 28 of 2011); and any
amount due to the fund in respect of—";

(b) by substituting in subsection (1)(b) for the words preceding subparagraph (i):

“(b) deduct any amount due by a member to his employer [on the date of his retirement or on which he
ceases to be a member of the fund,] on the date on which the member’s employment with a
participating employer in a fund is terminated, in respect of—";

(c) by substituting in subsection (1) for paragraph (d):

(d) deduct from a member’s or deferred pensioner’s benefit, member’s interest or minimum individual
reserve, deferred pensioner or the capital value of a pensioner’s pension after retirement, as the case
may be—
(i) any amount assigned from [such] the benefit or individual reserve to a non-member spouse
in terms of a decree granted under section 7(8)(a) of the Divorce Act, 1979 (Act No. 70 of
1979) or in terms of any order made by a court in respect of the division of assets of a
marriage under [Islamic law] the Marriage Act, 1961 (Act No. 68 of 1961), the Recognition
of Customary Marriages Act, 1998 (Act No. 68 of 1997), or the Civil Union Act, 2006 (Act
No. 17 of 2006), or the tenets of a religion pursuant to its dissolution;
(iA) any amount payable in terms of a maintenance order as defined in section 1 of the
Maintenance Act, 1998 (Act No. 99 of 1998); and
(iB) any amount payable as maintenance in terms of an interim maintenance order granted by
the court in terms of rule 43 of the High Court Rules.”;

(d) by inserting in subsection (3) following paragraph (a):

“(aA) For the purposes of a deduction in terms of subsection (1)(d), read with subsection (6), where
the member has an outstanding housing loan granted by the fund or in respect of which the fund
granted a guarantee, the member’s pension interest is deemed to be the amount as
contemplated in the definition of section 1 of the Divorce Act or as contemplated in subsection
(6), reduced by the outstanding loan amount as at the date of divorce, irrespective of whether the
outstanding amount is due and payable.
 138

(aB) A reduction referred to in paragraph (aA) will apply only if the loan or guarantee was granted
prior to the granting of the order as contemplated in section 7(8) of the Divorce Act.
(aC) A retirement fund may not, without the consent of the member’s spouse, grant a loan or
guarantee if the fund is aware that a divorce action in respect of the member is pending.
(aD) In respect of a deduction referred to in subsection (1)(d)(iA), the retirement fund must pay the
maintenance, as directed in the maintenance order—
(aa) as a lump sum in respect of arrear maintenance;
(bb) in monthly payments in respect of future maintenance or annually in advance
where a fund is unable to make monthly payments.”;

(e) by substituting in subsection (4)(a) for subparagraph (i):

“(i) must be deducted by—

(aa) the [pension] retirement fund or [pension] retirement funds named in or identifiable from
the decree;
(bb) the [pension] retirement fund or [pension] retirement funds to which the [pension]
retirement fund referred to in item (aa) transferred the pension interest referred to in the
decree; or
(cc) the portion paid to the spouse and the portion to be transferred to a retirement fund or
retirement funds on his or her behalf;”; and

(f) by substituting for subsection (6):

“(6) Despite paragraph (b) of the definition of “pension interest” in section 1(1) of the Divorce Act, 1979
(Act No. 70 of 1979), the portion of the pension interest of a—
(a) member of a pension preservation fund or a provident preservation fund;
(b) member that preserves the member’s benefit in a pension preservation fund or a provident
preservation fund; or
(c) [a] deferred pensioner of a pension preservation fund or provident preservation fund,
that is assigned to a non-member spouse, refers to the equivalent portion of the benefits to which that member
would have been entitled to in terms of the rules of the retirement fund if—
(i) [his or her] the member’s membership of the fund terminated[,]; or
(ii) the member elected to withdraw his preserved benefit fund; or
(iii) the member or the deferred pensioner retired,
on the date on which the decree was granted.”.

Amendment of section 41 of Act 24 of 1956

49. Section 41 of Act 24 of 1956 is amended by substituting for the phrase “Pension Funds Act, 1956” for the
phase “Retirement Funds Act, 1956”.

Part 2
Repeal of Friendly Societies Act, 1956 (Act No. 25 of 1956)

Repeal of Act 25 of 1956

1. Act 25 of 1956 is repealed.

References to friendly societies in Acts

2. Any reference to a friendly society in an Act of Parliament must, on the repeal of the Friendly Societies Act,
1956, be construed as a reference to a financial co-operative registered under the Cooperatives Act, 2005.

Part 3
Amendment of Transnet Pension Funds Act, 1990 (Act No. 62 of 1990)

1. Amendment of section 13 of Act No. 62 of 1990

Section 13 of Act No. 62 of 1990 is amended by substituting for the section:

“Registration and application of [Pension Funds] Act, 1956

 139

13. (1) The [Registrar of Pension Funds] Financial Sector Conduct Authority may, on
request by the Transport Pension Fund, register the Transport Pension Fund in terms of section 4 of the
[Pension] Retirement Funds Act, 1956, and may, for the purposes of such request, regard the Transport Pension
Fund as a [“pension fund organization”] retirement fund as defined in section 1 (1) of that Act.
(2) Upon such registration—
(a) the whole of the [Pension] Retirement Funds Act, 1956, shall become applicable to the Transport
Pension Fund; and
(b) the provisions of sections 7 to 11 of this Act shall cease to be applicable.”.

Part 4
Amendment of Banks Act, 1990 (Act No. 94 of 1990)

Amendment of section 1(1) of Act No. 52 of 1990

1. Section 1(1) of Act No. 52 of 1990 is amended—

(a) by substituting in the definition of “deposit” for the phrase “Pension Funds Act, 1956 (Act No. 24 of 1956)” of the
phrase “Retirement Funds Act, 1956 (Act No. 24 of 1956)”; and

(b) by substituting in the definition of “deposit” for the phrase “pension fund” of the phrase “retirement fund”, and
for the phrase “Pension Funds Act, 1956 (Act No. 24 of 1956)” of the phrase “Retirement Funds Act, 1956 (Act
No. 24 of 1956)”.

Part 5
Amendment of Labour Relations Act, 1995 (Act No. 66 of 1995)

Amendment of section 197(4) of Act No. 66 of 1995

1. Section 197(4) of Act No. 66 of 1995 is amended by substituting for the phrase “Pension Funds Act, 1956 (Act
No. 24 of 1956)” of the phrase “Retirement Funds Act, 1956 (Act No. 24 of 1956)”.

Part 6
Amendment of Government Employees Pension Fund Law, 1996 (Proclamation No. 21 of 1996)

Amendment of section 1 of Proclamation 21 of 1996

1. Section 1 of Proclamation 21 of 1996 is amended by substituting in the definition of “approved retirement fund”
for the phrase “pension fund organisation” of the phrase “retirement fund”, and for the phrase “Pension Funds
Act, 1956 (Act No. 24 of 1956)” of the phrase “Retirement Funds Act, 1956 (Act No. 24 of 1956)”.

Part 7
Repeal of Long-term Insurance Act, 1998 (Act No. 52 of 1998)

Repeal of Act 52 of 1998

1. Act 52 of 1998 is repealed.

Part 8
Repeal of Short-term Insurance Act, 1998 (Act No. 53 of 1998)

Repeal of Act 53 of 1998

1. Act 53 of 1998 is repealed.

Part 9
Amendment of Medical Schemes Act, 1998 (Act No. 131 of 1998)

Amendment of section 44 of Act 131 of 1998

1. Section 44 of Act 131 of 1998 is amended—

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(a) by substituting for subsections (2) to (4):

“(2) The Registrar, or such other person authorised by him or her, shall in addition to the powers and
duties conferred or imposed upon him or her by this Act, have all the powers and duties conferred or imposed
upon an [inspector]investigator appointed under [section 2 of the Inspection of Financial Institutions Act,
1984 (Act No. 38 of 1984)] section 134 of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), as if
he or she has been appointed an [inspector] investigator under that Act.
(3) Any reference in this Act to an inspection made under this section [shall] must also be construed
as a reference to [an] supervisory on-site inspection or investigation made under [the Inspection of Financial
Institutions Act, 1984] Chapter 9 of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017).
(4) The Registrar may order [an inspection in terms of this section]—
(a) an investigation in terms of section 134 of the Financial Sector Regulation Act, if he or she
is of the opinion that such an [inspection] investigation will provide evidence of any
irregularity or of non-compliance with this Act by any person; or
(b) a supervisory on-site inspection in terms of section 132 of the Financial Sector Regulation
Act, for purposes of routine monitoring of compliance with this Act by a medical scheme or
any other person.”; and

(b) by substituting for subsection (7):

“(7) The Registrar may, if he or she, on account of any statement, document or information furnished
to him or her by virtue of subsection (4), deems it necessary in the interest of the members of the medical
scheme concerned, and, after consultation with the [Financial Services Board] Financial Sector Conduct
Authority established by [section 2 of the Financial Services Board Act, 1990 (Act No. 97 of 1990)] section
56 of the Financial Sector Regulation Act, by notice in writing direct the medical scheme to furnish to him or
her a report compiled by an actuary, in the form and relating to the matters specified by the Registrar in the
notice.”.

Amendment of section 56 of Act 131 of 1998

2. Section 56 of Act 131 of 1998 is amended by substituting for subsections (2) and (3):

“(2) The provisions of [the Financial Institutions (Investment of Funds) Act, 1984 (Act No. 39 of
1984)] sections 166BI(4)(c) and 166BK of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), insofar
as those provisions relate to the appointment of a curator in terms of the said Act, and insofar as they are not
inconsistent with the provisions of this Act, shall apply with the necessary changes to the appointment of a
curator of a medical scheme in terms of this section.
(3) In the application of the [Financial Institutions (Investment of Funds) Act, 1984] Financial
Sector Regulation Act, 2017 as provided for by subsection (1)—
(a) a reference to [a company and the registrar] an institution, and to a financial sector
regulator or a responsible authority, in section [1 of the Financial Institutions (Investment
of Funds) Act, 1984, shall] 166BK of the Financial Sector Regulation Act must be
construed as a reference also to a board of trustees and the Registrar, respectively;
[(b) a reference in that Act to a director, official, employee or agent shall be construed as
a reference also to a member of the board of trustees or the principal officer, as the
case may be; and]
(c) a reference in [that Act] section 166BK of the Financial Sector Regulation Act to [a
financial] an institution shall be construed as a reference also to a medical scheme.”.

Part 10
Repeal of Financial Institutions (Protection of Funds) Act, 2001 (Act No. 28 of 2001)14

Repeal of Act 28 of 2001

1. Act 28 of 2001 is repealed.

Part 11
Repeal of Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002)

14 The repeal of the Financial Institutions (Protection of Funds) Act will be timed to coincide with the
commencement of the proposed Chapter 12B of the Financial Sector Regulation Act, which will incorporate
some of the matters that are currently addressed in the Financial Institutions (Protection of Funds) Act into
the Financial Sector Regulation Act.
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Repeal of Act 37 of 2002

1. Act 37 of 2002 is repealed, with the exception of section 1(1) and Part I of Chapter VI (sections 20 to 31).

Part 12
Amendment of Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002)

Amendment of section 1(1) of Act 45 of 2002

1. Section 1(1) of Act 45 of 2002 is amended—

(a) by inserting in the definition of “administration” following paragraph (d):

“(e) the administration of assets, including trade confirmation, trade settlements, income
accruals and receipts, valuation of assets, pricing of participatory interests, reconciliations
and conducting due diligence evaluations pertaining to assets; and
(f) the maintenance of the register of investors and the distribution of any income to
investors.”;

(b) by substituting for the definition of “auditor”:

‘“auditor” means a person registered under the [Public Accountants’ and Auditors’ Act, 1991
(Act No. 80 of 1991),] Public Audit Act, 2004 (Act No. 25 of 2004) and appointed by a manager in
terms of [section 73] section 25;’;

(c) by substituting for the definition of “Authority”:

‘“Authority” means the Financial Sector Conduct Authority established by section 56 of the
Financial Sector Regulation Act until the date contemplated in section 292(1) of the Financial
Sector Regulation Act, after which it means the Prudential Authority established by section 32 of
the Financial Sector Regulation Act;’;

(d) by substituting for the definition of “exchange”:

‘“exchange” means an exchange licensed under [the Stock Exchanges Control Act, 1985 (Act
No. 1 of 1985), the Financial Markets Control Act, 1989 (Act No. 55 of 1989),] the Financial
Markets Act, 2012, or an exchange outside the Republic [referred to in section 45];’;

(e) by inserting following the definition of “person”:

‘''prescribed'' means a matter determined in a standard by a financial sector regulator in terms of

this Act or another financial sector law;’; and

(f) by inserting following the definition of “regulation”:

‘“related party” means a juristic person is related to another juristic person if —

(a) either of them directly or indirectly controls the other, or the business of the other; or
(b) either is a subsidiary of the other; or
(c) a person directly or indirectly controls each of them, or the business of each of them;’.

Substitution of section 1B of Act 45 of 2002

2. Section 1B of Act 45 of 2002 is amended by substituting for the section:

“Regulatory instruments

1B. [(1)] For the purposes of the definition of “regulatory instrument” in section 1(1) of the Financial
Sector Regulation Act, any matter prescribed by the Authority [in respect of which notice in the Gazette
is specifically required by this Act] is a regulatory instrument.”.

Repeal of sections 2, 3, 4 and 6 of Act 45 of 2002

3. Sections 2, 3, 4 and 6 of Act 45 of 2002 are repealed.

Substitution of section 15 of Act 45 of 2002

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4. Section 15 of Act 45 of 2002 is amended by substituting for the section:

“15. Powers of [registrar] Authority [after investigation]

(1) If it is in the interests of the investors of a collective investment scheme or members of the
public, the Authority may--
(a) apply to the court under the Companies Act for the winding-up of a manager or of a collective
investment scheme, and sections 166 BN and 166 BO of the Financial Sector Regulation Act
apply to such an application;
(b) ..........
(c) apply to the court under [section 5 of the Financial Institutions (Protection of Funds) Act,
2001 (Act No. 28 of 2001),] section 166 BK of the Financial Sector Regulation Act for the
appointment of a curator for the business of the manager or for the business of a portfolio;
(d) require a manager to appoint, in accordance with the [registrar’s] Authority’s directions, in place
of the serving trustee or custodian, a competent person nominated by the registrar;
(e) require a manager to take steps, in accordance with the [registrar’s] Authority’s directions and
the provisions of section 102, for the winding-up of a portfolio of its collective investment scheme,
and for the realisation of the assets and the distribution of the net proceeds [thereof] of the
winding-up, together with any income accruals or other moneys available for distribution among
the investors in proportion to their respective participatory interests;
(f) direct a manager or trustee or custodian to take any steps, or to refrain from performing or
continuing to perform any act, in order to terminate or remedy any irregularity or undesirable
practice or state of affairs disclosed by an investigation or inspection;
(g) direct a manager to withdraw from the administration of a collective investment scheme or
portfolio, [whereupon] in which case the trustee or custodian must in accordance with the
[registrar’s] Authority’s directions but subject to this Act arrange for another manager to take
over the administration of the collective investment scheme or portfolio;
(h) if a person administers a collective investment scheme in contravention of this Act, apply to the
court to have the collective investment scheme wound up, in which case the court may make any
order it considers appropriate for the winding-up of the collective investment scheme, and
sections 166 BN and 166 BO of the Financial Sector Regulation Act apply to such an application;
(i) instruct a manager to wind up a portfolio or amalgamate a portfolio with another portfolio;
(j) if a manager fails to comply with a written request, direction or directive by the Authority under
this Act or the Financial Sector Regulation Act, do or cause to be done all that a manager was
required to do in terms of the request, direction or directive of the Authority.
(2) [ The registrar may oppose any application in terms of the Companies Act for-
(a) the winding-up of a manager; or
(b) ........
(c) the winding-up of a portfolio of a collective investment scheme in terms of section 102.]
(3) [ Any person who intends to make an application contemplated in subsection (2) must give
timeous notice of such application to the registrar.]
(4) A person who refuses or fails to comply with a request or direction referred to in paragraphs (d), (e), (f)
or (g) of subsection (1) is guilty of an offence and on conviction liable to a fine not exceeding R10 million
or to imprisonment for a period not exceeding 10 years, or to both such fine and such imprisonment.”.

Substitution of section 16 of Act 45 of 2002

5. Section 16 of Act 45 of 2002 is amended by substituting for the section:

“Cancellation or suspension of registration of manager

16. (1) The [registrar] Authority may, subject to subsection (2), cancel the registration of a manager
under this Act if—
(a) [he or she] the Authority is satisfied that the manager has contravened or failed to comply with any
provision of this Act, or any direction or requirement given or imposed under this Act or the
Financial Sector Regulation Act, and that [such] the contravention or failure has resulted or may
result in serious prejudice to the interests of the public or of investors;
(b) [he or she] the Authority is satisfied, upon completion of an investigation or inspection in terms of
[section 14] the Financial Sector Regulation Act, that the manner in which a manager carries on
the business of a collective investment scheme is unsatisfactory or undesirable or not calculated to
serve the best interests of its investors;
(c) it is apparent that the registration of the manager was obtained through misrepresentation; or
(d) a manager is wound up, either voluntarily or by the court,
or may, on any ground referred to in paragraph (a), (b) or (c), suspend the registration of a manager for a
period not exceeding 12 months at a time, subject to [such] the conditions [as] that the [registrar] Authority
may determine.
 143

(2) The [registrar] Authority may not cancel or suspend the registration of a manager on any ground
contemplated in subsection (1)(a), (b) or (c) unless [he or she] the Authority has—
(a) notified the manager of [his or her] the intention and of the grounds [upon which he or she
proposes to do so] for the suspension;
(b) allowed the manager to make representations [to him or her] in connection with the proposed
cancellation or suspension; and
(c) afforded the manager a reasonable opportunity to rectify or eliminate the defect, irregularity or
undesirable practice.
(3) An application for registration as a manager by a company whose registration has been cancelled under
this section must be dealt with as if it were its first application for registration.
(4) (a)If the registration of a manager is cancelled in terms of subsection (1)(a), (b) or (c), the provisions of
this Act or the Financial Sector Regulation Act [with regard to] regarding the continuance or the winding-up of
the portfolio of a collective investment scheme or the winding-up of the manager apply[: Provided that the
registrar].
(b) The Authority may in [any such] a case referred to in paragraph (a) direct the former manager to defray
in whole or in part the expenses incurred in continuing the administration of the collective investment scheme, or
in realising any of its assets, and also any remuneration to which a trustee or custodian may be entitled.
(5) If the registration of a manager has been suspended under subsection (1), the manager may not, during
the period of suspension, issue any fresh participatory interests, but must, in respect of participatory interests
issued, continue the administration of the collective investment scheme and deal with [such] those interests in
all respects as it would have been bound to do had its registration not been suspended.”.

Repeal of section 17 and sections 25 to 38 of Act 45 of 2002

6. Section 17 and sections 25 to 38 of Act 45 of 2002 are repealed.

Amendment of section 42 of Act 45 of 2002

7. Section 42 of Act 45 of 2002 is amended—

(a) by substituting for the heading of the section, both in the body of the Act, and similarly substituting in
item 42 in the Arrangement of Sections:

“‘Procedure for registration of manager of collective investment scheme in securities and

approval of deed and collective investment scheme and portfolio”;

(b) by substituting for subsections (3) and (4):

“(3) If the [registrar] Authority is satisfied that the —

(a) deed which the applicant proposes to prepare for the purposes of the collective investment
scheme in securities does not contain anything inconsistent with this Act; and
(b) proposed directors, management, trustee or custodian and auditors are qualified as required
by or under this Act,
[he or she] the Authority must, subject to subsection (4) and on [such] the conditions [as he or
she] that may [determine] be determined, approve the deed, the collective investment scheme,
any portfolios under the scheme and register the applicant as a manager and issue to it a certificate
of registration in the form determined by the [registrar] Authority.
(4) The [registrar] Authority may not register any company as a manager, or approve a deed or
collective investment scheme or portfolio under this section, unless [he or she is] satisfied that—
(a) [such] the company, deed and collective investment scheme [complies] comply with
subsection (3);
(aA) the directors of the company and its shareholders comply with the fitness and propriety
requirements prescribed by the Authority;
(b) [such] the company is fit to assume the duties and responsibilities of a manager; and
(c) the registration of [such] the company as a manager will be in the public interest.”; and

(c) by inserting following subsection (5):

“(6) A manager registered under this section must apply to the Authority for approval of a new
portfolio in accordance with this section.”.

Amendment of section 43(1) of Act 45 of 2002

8. Section 43 of Act 45 of 2002 is amended by substituting for subsection (1):

"(1) A manager may not without the prior approval in writing of the [registrar] Authority —
 144

(a) change the name under which it is registered under this Act [or change its shareholding or
directors];
(b) use or refer to itself by a name other than the name under which it is [so] registered or a literal
translation [thereof] that name;
(c) use or refer to itself by an abbreviation or a derivative of [such] that name; [or]
(d) change the name of its collective investment scheme in securities or any portfolio administered
by it as approved by the [registrar] Authority;
(e) change its direct or indirect shareholding; or
(f) change its directors.”.

Amendment of section 44(2) of Act 45 of 2002

9. Section 44 of Act 45 of 2002 is amended by substituting for subsection (2):

“(2) When a manager is unable to determine a market price for a security, whether listed on an
exchange or not, for the purposes of a collective investment scheme in securities, a fair market price for
[such] that security must[, at the request of such manager,] be determined [by a stockbroker who is a
member of a licensed exchange] as prescribed by the Authority.”.

Amendment of section 65 of Act 45 of 2002

10. Section 65 of Act 45 of 2002 is amended—

(a) by the substitution in subsection 1 for paragraph (b):

“(b) a copy of the approval or registration by the relevant equivalent foreign jurisdiction as defined in section
1(1) of the Financial Sector Regulation Act authorising the foreign collective investment scheme to act
as such is submitted;”; and

(b) by substituting for subsection (2):

“(2) A scheme approved in terms of subsection (1) must, for the purposes of [section 15A of the
Financial Services Board Act, 1990 (Act No. 97 of 1990)] the Financial Sector Levies Act, 2020, be
regarded as a financial institution and the provisions of that [section] Act apply, with the necessary changes
required by the context, to [such a] the scheme.”.

Amendment of section 69(1)(d) of Act 45 of 2002

11. Section 69(1) of Act 45 of 2002 is amended by substituting for paragraph (d):

“(d) an institution which is [registered as an insurer under the Long- term Insurance Act, 1998 (Act No.
52 of 1998)] licensed as an insurer under the Insurance Act, 2017 (Act No. 18 of 2017).”.

Amendment of section 70(1) of Act 45 of 2002

12. Section 70 of Act 45 of 2002 is amended by inserting in subsection (1) following paragraph (h):

‘(hA) prepare any other report determined by the Authority;’.

Amendment of section 71 of Act 45 of 2002

13. Section 71 of Act 45 of 2002 is amended by substituting for the section:

“Status of Assets

For the purposes of this Act any—

(a) money or other assets received from an investor; and
(b) an asset of a portfolio,
are regarded as being trust property for the purposes of [the Financial Institutions (Protection of
Funds) Act, 2001 (Act No. 28 of 2001)] part 1 of chapter 8 of the Conduct of Financial Institutions Act,
and a manager, its authorised agent, trustee or custodian must deal with such money or other assets in
terms of this Act and the deed and in the best interests of investors.”.
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Amendment of section 74 of Act 45 of 2002

14. Section 74 of Act 45 of 2002 is amended—

(a) by substituting in subsection (1) for paragraph (a):

“(a) maintain the accounting records and prepare annual financial statements in [conformity with
generally accepted accounting practice] a manner that satisfies the financial reporting
standards, as they may be prescribed;”;

(b) by substituting in subsection (2) for paragraph (c):

“(c) ensure that the financial statements are properly drawn up so as to fairly represent the financial
position, and that the results of the operations of the manager and every portfolio of its
collective investment scheme [are in accordance with generally accepted accounting
practice and in the manner required by] satisfy the financial reporting standards as to form
and content, if any standards are prescribed in terms of this Act.”; and

(c) by substituting for subsection (3):

“(3) When the auditor of a collective investment scheme has conducted an audit in terms of
subsection (2), he or she must report to the manager that the accounting records and the annual
financial statements have been [examined in accordance with generally accepted auditing
standards and in the manner required by] audited in compliance with applicable requirements of
this Act and state whether in [his or her] the auditor’s considered opinion they fairly present the
financial position and the results of the operations of the manager and its collective investment
scheme.”.

Amendment of section 75(1)(b) of Act 45 of 2002

15. Section 75(1) of Act 45 of 2002 is amended by substituting for paragraph (b):

“(b) submit a copy of [such] the report to the [registrar if there is reasonable cause to believe that
such report is or might be of material significance to the registrar] Authority.” .

Amendment of section 93 of Act 45 of 2002

16. Section 93 of Act 45 of 2002 is amended —

(a) by substituting in subsection (1) for paragraph (b):

“(b) [auditor’s fees,] fees incurred by the auditor for services contemplated under section 74 or
services that may be required by the Authority, bank charges, trustee and custodian fees and
other levies or taxes;’’; and

(b) by substituting in subsection (1) for paragraph (e):

“(e) any costs incurred as a result of a collective investment scheme [in property] being listed on
an exchange.”; and

(c) by substituting for subsection (2):

“(2) Amounts other than those referred to in subsection (1) may not be deducted by a manager
from a portfolio unless determined by the [registrar] Authority.”.

Substitution of section 96 of Act 45 of 2002

17. Section 96 of Act 45 of 2002 is amended by substituting for the section:

“Power of manager to borrow money to bridge insufficient liquidity in a portfolio

96. (a) In the case where insufficient liquidity exists in a portfolio or where assets cannot be realised [to
repurchase or cancel participatory interests] to meet the portfolio’s obligations in relation to the
administration of a scheme with regard to the settlement of buying and sale transactions and the repurchase
or cancellation of participatory interests, the manager of a collective investment scheme in securities may
 146

borrow the necessary funds for [such] the repurchase or cancellation on security of the assets and for the
account of the portfolio in question, from a [registered] licensed financial institution at the best commercial
terms available and until assets can be realised to repay [such a] the loan[: Provided that the].
(b) The maximum amount [so] borrowed in terms of paragraph (a) may not exceed 10 per cent of the
market value of [such] the portfolio at the time of borrowing.”.

Amendment of section 98(2)(a) of Act 45 of 2002

18. Section 98(2) of Act 45 of 2002 is amended by substituting for paragraph (a):

“(2) (a) The parties to a deed may by supplemental deed amend a deed, but no amendment of a deed
is valid unless—
(i) the consent [thereto] to the amendment of a majority in value of investors has been
obtained in the manner prescribed in the deed; and
(ii) the Authority approved the amendment.”.

Repeal of section 100 of Act 45 of 2002

19. Section 100 of Act 45 of 2002 is repealed.

Amendment of section 102 of Act 45 of 2002

20. Section 102 of Act 45 of 2002 is amended by substituting for subsection (6):

“(6) Despite the provisions of the Companies Act [, 1973 (Act No. 61 of 1973)], this section and sections
103 and 104 of this Act must be applied to the winding-up of a portfolio of an open-ended investment company and
none of the assets of a portfolio administered by such a company may be utilised for the payment of any claim of a
creditor of the company.”.

Substitution of section 104 of Act 45 of 2002

21. Section 104 of Act 45 of 2002 is amended by substituting for the section:

“Separation of assets of portfolio handed to or received by manager, trustee or custodian

104. (1) A manager must have a separate bank account for the purposes of receiving money from
investors to acquire a participatory interest or interests.
(2) For the purposes of a claim against a manager, trustee or custodian, there must be excluded from
the assets of the manager, trustee or custodian—
(a) any money or other assets handed to that manager, trustee or custodian or its authorised
agents by an investor for the sale or repurchase of a participatory interest; and
(b) the assets of a portfolio.
(3) A manager must maintain records in accordance with section 74 in respect of money and
assets received in terms of subsection (1) and must, in addition to and simultaneously with the financial
statements referred to in section 74, submit to the Authority a report, by the auditor, which confirms that:
(a) the amount of money at year end held by the manager on behalf of investors;
(b) the money received was throughout the financial year kept separate from the assets of the
manager or trustee or custodian, and report any instance of non-compliance identified in the
course of the audit and the extent of the non-compliance.”.

Repeal of section 111A of Act 45 of 2002

22. Section 111A of Act 45 of 2002 is repealed.

Amendment of section 112 of Act 45 of 2002

23. Section 112 of Act 45 of 2002 is amended by—

(a) substituting for subsection (1):

“(1) The Minister may delegate any power conferred upon [him or her] the Minister by this Act to the
Director-General: Finance or any other officer in the National Treasury, [the Board, an association] or
the [registrar] Authority.”;

(b) by repealing subsection (2); and

(c) substituting for subsection (4):

 147

“(4) Any delegation under subsection (1) [ or (2)(a)] does not prohibit the exercise of the power
in question by the Minister [,association] or Authority, as the case may be.”.

Substitution of section 114

24. Section 114 of Act 45 of 2002 is amended by substituting for the section:

“Regulations by Minister and [notices by registrar] standards by the Authority

(1) The Minister may make regulations as to any matter which is required or permitted by this Act to be
prescribed under this Act.
(2) The Minister may make different regulations—
(a) in respect of [manager which is or a manager which is not a member of an association]
different types of managers, different types of collective investment schemes or different types
of portfolios;
(b) prescribing, generally, any matter, whether or not connected with any matter specified in
subsection (1), which is necessary or expedient to prescribe or to regulate in order for the
objects of this Act to be achieved, but the generality of this provision is not limited by subsection
(1).
(3) The [registrar] Authority may, for the purposes of this Act, [by notice in the Gazette determine]
prescribe—
(a) the records to be kept and furnished to the [registrar] Authority by a manager;
(b) the forms, returns, documents or information and the manner and time limits for the lodgement
with or transmission to the [registrar] Authority or any other person;
[(c) the manner in which and the period within which
(i) application for the renewal of an association licence must be made; or
(ii) notice must be given of the issue, cancellation or suspension of an association
licence;]
(d) ……….
(e) rules for the conduct of a collective investment scheme by a manager [who is not a member
of an association]; and
(f)(i) the circumstances under which the manager of a collective investment scheme in securities
may suspend the repurchase of participatory interests and the conditions of [such] the
suspension[: Provided that any];and
(ii) the amount that the aggregate amount or value, any offer of participatory interests for
repurchase by an investor[, of does] may not exceed [specified by the registrar], on the day
of such offer[, is excluded from any suspension].
(4) The [registrar] Authority may [issue] prescribe different [notices] standards--
(a) in respect of [a manager which is or a manager which is not a member of an association]
different types of managers, different types of collective investment schemes or different types
of portfolios;
(b) [determining] prescribing, generally, any matter, whether or not connected with any matter
specified in subsection (3), which is necessary or expedient to [determine] prescribe in order
for the objects of this Act to be achieved, but the generality of this provision is not limited by
subsection (3).
(5) ………..
(6) ………..
(7) A regulation may provide for penalties for a contravention [thereof] of or failure to comply
[therewith] with the regulation.”.

Part 13
Amendment of Co-operatives Act, 2005 (Act No. 14 of 2005)

Amendment of section 1(1) of Act 14 of 2005

1. Section 1(1) of Act 14 of 2005 is amended by inserting following the definition of “Department”:

‘“financial sector law” means a “financial sector law” as defined in section 1(1) of the Financial Sector
Regulation Act;
“Financial Sector Regulation Act” means the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017);
“financial sector regulator” means a “financial sector regulator” as defined in section 1(1) of the Financial
Sector Regulation Act, 2017;
“financial services” means any “financial service” as defined in section 3(1) of the Financial Sector
Regulation Act;”’.
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Substitution of section 5A of Act 14 of 2005

2. Section 5A of Act 14 of 2005 is amended by substituting for the section:

“Application of Co-operative Banks Act

5A. The Co-operative Banks Act, 2007, applies to any co-operative bank or co-operative financial
institution that is registered under that Act.”.

Amendment of section 8 of Act 14 of 2005

3. Section 8 of Act 14 of 2005 amended--

(a) by substituting for subsection (1):

“(1) Subject to subsection (1A), [A]a co-operative may amend its constitution by a special resolution.”; and

(b) by inserting following subsection (1):

“(1A) a financial co-operative, other than a co-operative bank, that is authorised, licensed or registered
under a financial sector law may not amend its constitution without the approval of the relevant financial
sector regulator under which the financial cooperative has been authorised, licensed or registered.”.

Amendment of section 50 of Act 14 of 2005

4. Section 50 of Act 14 of 2005 is amended by inserting following subsection (6):

“(7) Notwithstanding the requirements contained in this section, a financial co-operative, other than a
co-operative bank, that is authorised, licensed or registered under a financial sector law is subject to the
requirements relating to the appointment of an auditor under the relevant financial sector law and in the case
of any conflict between those requirements and this section, the requirements in the relevant financial sector
law will prevail.”

Repeal of section 94 of Act 14 of 2005

5. Section 94 of Act 14 of 2005 is repealed.

Amendment of Schedule 1 to Act 14 of 2005

6. Schedule 1 to Act 14 of 2005 is amended—

(a) by substituting for subitem (2) of item 1 of Part 3:

“(2) A financial [] co-operative is a co-operative whose main objective is to provide financial

services to its members[, and includes a credit union, co-operative bank, savings and credit co-
operative or other financial services].”;

(b) by deleting items 2A, 3, 4 and 5 and 8 of Part 3;

(c) by inserting following item 2A in Part 3:

“3A. Subject to item 2A, Registration under this Act does not exempt a financial co-operative from
a requirement to be registered, licensed or authorised under any financial sector law, unless the financial
co-operative is specifically exempted from being registered or authorised under the financial sector law
concerned.”;

(d) by substituting for subitem (1) of item 6 of Part 3:

“(1) The registrar may, in consultation with [the Registrar of Banks, the Registrars of Long-term
or Short-term Insurance,]a financial sector regulator or the Registrar of Medical Schemes, as the case
may be, direct that all co-operatives, to whom this part applies, or any category of co-operative to whom this
part applies, other than a co-operative bank, belong to a secondary co-operative that will act as a self-
regulatory body, in compliance with any requirement for exemption from any provision of [the Banks Act,
1990 (Act No. 94 of 1990), the Long-term Insurance Act, 1998 (Act No. 52 of 1998), or Short-term
 149

Insurance Act, 1998 (Act No. 53 of 1998),] a financial sector law or the Medical Schemes Act, 1998 (Act
No. 131 of 1998).”;

(e) by substituting for item 6A of Part 3:

“6A. The registrar may, in consultation with [the registrar of Banks, the registrars of Long-
term Insurance or Short-term Insurance,] a financial sector regulator or the registrar of Medical Schemes,
as the case may be, direct that all co-operatives, to whom this part applies, or any category of co-operative
to whom this part applies, other than a co-operative bank, must provide a recommendation letter from the
financial sector regulator or the registrar of medical schemes [as contemplated in the Banks Act, 1990
(Act No. 94 of 1990),] in compliance with any requirement for exemption from any provision of [the Banks
Act, 1990 (Act No. 94 of 1990), the Long-term Insurance Act, 1998 (Act No. 52 of 1998), the Short-
term Insurance Act, 1998 (Act No. 53 of 1998),] the Financial Sector Regulation Act, a financial sector
law, or the Medical Schemes Act, 1998 (Act No. 131 of 1998).”;

(f) by substituting for subitem (1) of item 7 of Part 3:

“(1) The Minister may, in consultation with the Minister of Finance, [the Co-operative Bank
Supervisor, the Registrar of Banks or the Registrars of Long-term or Short-term Insurance,]a
financial sector regulator or the Registrar of Medical Schemes, as the case may be, make regulations
regarding any matter relating to the operation or administration of financial services co-operatives or any
category of financial services co-operatives.”;

(g) by substituting for item 8 of Part 3:

“8. For the purposes of this Part, “financial service” means any financial service as defined in
section 3 of the Financial Sector Regulation Act [or banking service] that a co-operative may be licensed
in terms of a financial sector law or other legislation to provide to its members, and includes [the provision
of long-term and short-term insurance, as envisaged in terms of the Long-term Insurance Act, 1998
(Act No. 52 of 1998), or the Short-term Insurance Act, 1998 (Act No. 53 of 1998), and] the business of a
medical scheme, as envisaged in terms of the Medical Schemes Act, 1998 (Act No. 131 of 1998)[, or
funeral services, as envisaged in the Friendly Societies Act, 1956 (Act No. 25 of 1956)].”; and

(h) by inserting following item 8 in Part 3:

“9. Insuring life of unborn or minor

(a) No financial services co-operative shall insure the life of an unborn or minor before that
minor attains the age of fourteen years for any sum of money which, either alone or together with any
amount which to the knowledge of the said financial services co-operative is payable on the death of
that unborn or minor by any other persons carrying on insurance business within the meaning of the
Insurance Act, No. 18 of 2017, exceeds—
(i) R10,000 in respect of an unborn or minor under six years of age; or
(ii) R30,000 in respect of a minor that older than the age of six but younger than the age of
fourteen.
(b) Where a financial services cooperative has insured the life of an unborn or minor referred to in
sub-item (a) for a benefit not consisting of a sum of money, it shall for the purposes of this item be deemed
to have insured the life of that unborn or minor for a sum of money equal to the value of that benefit.
(c) The provisions of this item shall not be construed so as to prohibit insurance which provides for
the payment, on the death of any unborn or minor which is under the age of fourteen years, of a sum not
exceeding in the aggregate all the contributions paid in respect of that insurance, plus interest on each
contribution at a rate not exceeding seven and a half per cent per annum, compounded annually.”.

Part 14
Amendment of Financial Markets Act, 2002 (Act No. 19 of 2012)

Amendment of section 1 of Act 19 of 2012

1. Section 1(1) of Act 19 of 2012 is amended—

(a) by inserting following the definition of “Companies Act”:

‘“Conduct of Financial Institutions Act” means the Conduct of Financial Institutions Act, 2021;’;
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(b) by substituting for the definition of ‘financial institution’;

‘“financial institution” means—

(a) any [pension fund organisation registered] retirement fund licensed in terms of the [Pension]
Retirement Funds Act, 1956 (Act No. 24 of 1956), or [any person referred to in section 13B of
that Act] a financial institution licensed under the Conduct of Financial Institutions Act to
[administering] administer the securities of [such a pension fund] a retirement fund or the
disposition of benefits provided for in the rules of [such a pension fund] a retirement fund;
(b) any [friendly society registered in terms of the Friendly Societies Act, 1956 (Act No. 25 of
1956), or any person in charge of the management of the affairs of such a society] financial co-
operative registered in terms of the Co-operatives Act, 2005 (Act No. 14 of 2005);
(c) any collective investment scheme as defined in section 1 of the Collective Investment Schemes
Control Act, 2002 (Act No. 45 of 2002), or any manager or nominee in relation to such a scheme;
(d) any [long-term or short-term insurer registered as such under the Long-term Insurance Act,
1998 (Act No. 52 of 1998), or the Short-term Insurance Act, 1998 (Act No. 53 of 1998),
respectively] insurer licensed under the Insurance Act, 2017 (Act No. 18 of 2017); and
(e) a bank;’; and

(c) by deleting the definition “Financial Institutions (Protection of Funds) Act”.

2. Amendment of section 3 of Act 19 of 2012

Section 3 of Act 19 of 2012 is amended by inserting following subsection (6):

“(7) A market infrastructure must, when making rules that relate to the conduct of financial institutions as
regulated in terms of Conduct of Financial Institutions Act, promote and facilitate compliance with that Act and any
standard prescribed in terms that Act.”

Amendment of section 6(3)(m)(iii)(aa) of Act 19 of 2012

3. Section 6(3)(m)(iii) of Act 19 of 2012 is amended by substituting for item (aa):

“(aa) is based in an equivalent foreign jurisdiction as defined in [terms of section 6A] section 1(1) of
the Financial Sector Regulation Act and is authorised by the supervisory authority of [such] that
jurisdiction;”.

Repeal of sections 6A, 6B and 6C of Act 19 of 2012

4. Sections 6A, 6B and 6C of Act 19 of 2012 are repealed.

Amendment of section 15 of Act 19 of 2012

5. Section 15 of Act 19 of 2012 is amended by substituting for subsection (2):

“(2) Any funds received or held by an exchange for the purpose of maintaining the insurance,
guarantee or compensation fund or other warranty contemplated in section 8(1)(h), are for all intents and
purposes considered to be “trust property” as defined in the [Financial Institutions (Protection of Funds)
Act] section 1(1) of the Conduct of Financial Institutions Act and part 1 of chapter 8 that Act applies, with
the necessary changes, to those funds.”.

Amendment of section 17 of Act 19 of 2012

6. Section 17 of Act 19 of 2012 is amended--

(a) by substituting for subsection (1):

“(1) The exchange rules must be consistent with this Act, the Financial Sector Regulation Act4, the
Conduct of Financial Institutions Act, and any standard made in terms of this Act, [or] the Financial Sector
Regulation Act, or the Conduct of Financial Institutions Act.”; and

(b) by substituting in subsection (2)(a) for the words preceding paragraph (a) and subparagraph (i):

“(2) The exchange rules must provide—

(a) for equitable criteria for authorisation and exclusion of authorised users, which criteria must be consistent
with fit and proper requirements prescribed under the Conduct of Financial Institutions Act, and, in
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particular, that no person may be admitted as an authorised user or allowed to continue [such] that
person’s business as an authorised user unless the person—
(i) [is of good character and high business integrity or, in the case of a corporate body, is
managed by persons who are of good character and high business integrity; and] has been
appropriately licensed under the Conduct of Financial Institutions Act;”.

Amendment of section 21(3) of Act 19 of 2012

7. Section 21 of Act 19 of 2012 is amended by substituting for subsection (3):

“(3) Funds held in a trust account and any funds which have not been deposited into a trust account
as envisaged in subsection (1) but which are identifiable as belonging to a specific person, are considered to
be “trust property” as defined in [the Financial Institutions (Protection of Funds) Act] section 1(1) of the
Conduct of Financial Institutions Act, and part 1 of chapter 8, and that Act applies, with the necessary changes,
to those funds, subject to this section.”.

Amendment of section 22(3) of Act 19 of 2012

8. Section 22 of Act 19 of 2012 is amended by substituting for subsection (3):

“(3) Any securities held by an authorised user for or on behalf of another person must be
identifiable as belonging to a specific person and are considered to be trust property as defined in [the
Financial Institutions (Protection of Funds) Act] section 1(1) of the Conduct of Financial Institutions Act,
and part 1 of chapter 8 of that Act applies, with the necessary changes, to those securities.”.

Amendment of section 35 of Act 19 of 2012

9. Section 35 of Act 19 of 2021 is amended--

(a) by substituting for subsection (1):

“(1) The depository rules must be consistent with this Act, the Financial Sector Regulation Act4, the
Conduct of Financial Institutions Act, and any standard made in terms of this Act, [or] the Financial Sector
Regulation Act, or the Conduct of Financial Institutions Act.”; and

(b) by substituting in subsection (2)(b) for the introductory words and subparagraph (i):

“(b) for equitable criteria for authorisation and exclusion of participants, which criteria must be
consistent with fit and proper requirements prescribed under the Conduct of Financial Institutions
Act, and, in particular, that no person may be admitted as a participant or allowed to continue
[such] that person’s business as a participant unless the person—
(i) [is of good character and high business integrity or, in the case of a corporate
body, is managed by persons who are of good character and high business
integrity; and] has been appropriately licensed under the Conduct of Financial Institutions
Act;”.

Amendment of section 36(5) of Act 19 of 2012

10. Section 36 of Act 19 of 2012 is amended by substituting for subsection (5):

“(5) Any securities held by a central securities depository, participant or nominee for or on behalf
of another person, must be segregated and identifiable as belonging to a specific person and are
considered to be trust property as defined in [the Financial Institutions (Protection of Funds) Act]
section 36(1) of the Conduct of Financial Institutions Act, and part 1 of chapter 8 of that Act applies, with the
necessary changes, to those securities.”.

Amendment of section 49A(2) of Act 19 of 2012

11. Section 49A of Act 19 of 2012 is amended by substituting for subsection (2):

“(2) An external central counterparty from an equivalent foreign jurisdiction as defined in section 1(1)
of the Financial Sector Regulation Act may apply to the Authority for a licence.”.

Amendment of section 51 of Act 19 of 2012

12. Section 51 of Act 19 of 2012 is amended by substituting for subsection (2):

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“(2) Any funds received or held by an independent clearing house or a central counterparty for
the purpose of maintaining the insurance, guarantee, compensation fund or other warranty contemplated in
section 49(2)(b), are for all intents and purposes considered to be “trust property” as defined in [the
Financial Institutions (Protection of Funds) Act] section 1(1) of the Conduct of Financial Institutions Act,
and part 1 of chapter 8 of that Act applies, with the necessary changes, to those funds.”.

Amendment of section 56A(2) of Act 19 of 2012

13. Section 56A of Act 19 of 2012 is amended by substituting for subsection (2):

“(2) An external trade repository from an equivalent foreign jurisdiction as defined in section 1(1) of the
Financial Sector Regulation Act may apply to the Authority for a licence.”.

Substitution of section 96 of Act 19 of 2012

14. Section 96 of Act 19 of 2012 is amended by substituting for the section:

“Powers of Authority after supervisory on-site inspection or investigation

96. After a supervisory on-site inspection or an investigation has been conducted, the Authority may, in
order to achieve the objects of this Act referred to in section 2-
(a) if the respondent is a company-
(i) apply to the court under [section 81 of the Companies Act] section 166BO of the Financial
Sector Regulation Act for the winding-up of the respondent as if the Authority were a creditor of
the respondent;
(ii) apply to the court under [section 131 of the Companies Act] section 166BM of the Financial
Sector Regulation Act to begin business rescue proceedings in respect of the respondent as if
the Authority were a creditor of the respondent;]
(b) [subject to section 5 of the Financial Institutions (Protection of Funds) Act,] apply to the court for
the appointment of a curator for the business of the respondent under section 166BK of the Financial
Sector Regulation Act;
(bA) appoint a statutory manager under section 166BJ of the Financial Sector Regulation Act;
(c) direct the respondent to take any steps, or to refrain from performing or continuing to perform any act, in
order to terminate or remedy any irregularity or state of affairs disclosed by the supervisory on-site
inspection or investigation;
(d) direct the respondent to prohibit or restrict specified activities, performed in terms of this Act, of a
director, managing executive, officer or employee of the respondent, if the Authority believes that the
director, managing executive, officer or employee is not fit and proper to perform such activities; or
(e) hand the matter over to the National Director of Public Prosecutions, provided that the contravention or
failure constitutes an offence in terms of this Act.”.

Substitution of section 100 of Act 19 of 2012

15. Section 100 of Act 19 of 2012 is amended by substituting for the section:

“Winding-up or sequestration by court

100. (1) Despite any other law and subject to section 3(1) of this Act and Chapter 12B of the Financial
Sector Regulation Act, an order for the winding-up [or sequestration of the estate] of a regulated person
may be granted by the court on the application of-
(a) the regulated person;
(b) one or more of the regulated person’s creditors;
(c) if the regulated person is an exchange, a central securities depository or an independent clearing
house, one or more authorised users, participants or clearing members, as the case may be;
(d) jointly, any of or all the parties mentioned in paragraphs (a), (b) and (c);
(e) the business rescue practitioner of the regulated person;
(f) the provisional curator or curator of a regulated person; or
(g) the Authority.
(2) A regulated person which is a company or other corporate body may be wound up, subject to
[section 102] section 166BK(14) of the Financial Sector Regulation Act, according to [the Companies Act]
part 4 of chapter 12B of the Financial Sector Regulation Act [and the estate of a regulated person who is a
natural person or partnership may be sequestrated according to the Insolvency Act].
[(3) Despite the Companies Act—
(a) any resolution or court application made under the Companies Act in respect of a
regulated person must be filed with or served on the Authority, as the case may be, and
must be approved by the Authority prior to the filing or serving thereof;
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(b) in relation to a court application in respect of a regulated person, the Authority may file
affidavits and other documents relating to, and may appear and be heard at the hearing
of, the application;
(c) a company may file a resolution under section 80 of the Companies Act in respect of a
regulated person only after the Authority has approved the resolution; and
(d) the certificate referred to in section 82(1) of the Companies Act in respect of a regulated
person must also be filed with the Authority.
(4) A court may not grant a liquidation order in respect of a regulated person without the
approval of the Authority.
(5) If the Authority does not approve the resolutions of the regulated person made under
section 80 of the Companies Act, the Authority may apply-
(a) for the liquidation and winding-up of the regulated person under section 81 of that Act; or
(b) to court for placing that regulated person under curatorship in terms of the Financial
Institutions (Protection of Funds) Act.
(6) A regulated person may not be placed in liquidation or sequestration while under
curatorship, unless the curator applies for such liquidation or sequestration.]”.

Substitution of section 101 of Act 19 of 2012

16. Section 101 of Act 19 of 2012 is amended by substituting for the section:

“Business rescue

101. (1) Subject to section 3 of this Act and part 3 of chapter 12B of the Financial Sector Regulation
Act, the [The] court may grant a business rescue order in respect of a regulated person which is a company
or other corporate body on the application of the persons referred to in section 100(1), except a curator
referred to in [section 102(1)] section 166BK of the Financial Sector Regulation Act .
[(2) (a) Section 100(3), (4), (5) and (6) apply, with the changes required by the context, to a court
application for or a resolution on business rescue.
(b) For the purpose of paragraph (a), any reference to section 80 of the Companies Act in
section 100(3), (4), (5) and (6) must be construed as a reference to section 129 of that Act and any
reference to liquidation or sequestration in those sections must be construed as a reference to
business rescue.
(3) The Companies Act applies, subject to section 103, to business rescue proceedings relating
to a regulated person that is a company.]”.

Substitution of section 102 of Act 19 of 2012

17. Section 102 of Act 19 of 2012 is amended by substituting for the section:

“Appointment of curator

102. (1) Despite any other law, and subject to section 3(1) of this Act, the court may appoint a curator in
terms of [section 5 of the Financial Institutions (Protection of Funds) Act] section 166BK of the Financial
Sector Regulation Act in respect of any regulated person.
[(2) The Financial Institutions (Protection of Funds) Act applies to the management and control
of a regulated person by a curator appointed under this section
(3) If a curator is appointed under this section, no business rescue or liquidation proceedings
under the Companies Act or sequestration proceedings under the Insolvency Act may be commenced
in respect of that regulated person until the appointment of the curator is terminated, or with the leave
of the court.]”.

Repeal of section 103 of Act 19 of 2012

18. Section 103 of Act 19 of 2012 is repealed.

Part 15
Repeal of Credit Rating Services Act, 2012 (Act No. 24 of 2012)

Repeal of Act 24 of 2012

1. Act 24 of 2012 is repealed.

Part 16
Amendment of Financial Sector Regulation Act, 2017 (Act No. 9 of 2017)
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Amendment of long title of Act 9 of 201715

1. The long title of Act 9 of 2017 is amended by substituting:

''To establish a system of financial regulation by establishing the Prudential Authority and the
Financial Sector Conduct Authority, and conferring powers on these entities; to preserve and
enhance financial stability in the Republic by conferring powers on the Reserve Bank; to establish
the Financial Stability Oversight Committee; to provide for the establishment of a framework for the
resolution of designated institutions to ensure that the impacts or potential impact of a failure of a
designated institution on financial stability are managed appropriately; to designate the Reserve
Bank as the resolution authority; to establish a deposit insurance scheme, including a Corporation
for Deposit Insurance; to provide a framework for the recovery and exit of financial institutions from
the financial sector; to ensure that the impacts and potential impacts of financial institutions in
recovery and on exit from the financial sector on the efficiency and integrity of the financial markets
and on financial customers are managed appropriately; to regulate and supervise financial product
providers and financial services providers; to improve market conduct in order to protect financial
customers; to provide for co-ordination, co-operation, collaboration and consultation among the
Reserve Bank, the Prudential Authority, the Financial Sector Conduct Authority, the Corporation for
Deposit Insurance, the National Credit Regulator, the Financial Intelligence Centre and other organs
of state in relation to financial stability and the functions of these entities; to establish the Financial
System Council of Regulators and the Financial Sector Inter-Ministerial Council; to provide for
making regulatory instruments, including prudential standards, conduct standards and joint
standards; to make provision for the licensing of financial institutions; to make comprehensive
provision for powers to gather information and to conduct supervisory on-site inspections and
investigations; to make provision in relation to significant owners of financial institutions and the
supervision of financial conglomerates in relation to eligible financial institutions that are part of
financial conglomerates; to make provision for designated institutions in connection with resolution
matters; to make provision for financial institutions in relation to recovery and exit from the financial
sector; to provide for powers to enforce financial sector laws, including by the imposition of
administrative penalties; to provide for the protection and promotion of rights in the financial sector
as set out in the Constitution; to establish the Ombud Council and confer powers on it in relation to
ombud schemes; to provide for coverage of financial product and financial service providers by
appropriate ombud schemes; to establish the Financial Services Tribunal as an independent tribunal
and to confer on it powers to reconsider decisions by financial sector regulators, the Ombud
Council and certain market infrastructures; to establish the Financial Sector Information Register
and make provision for its operation; to provide for information sharing arrangements; to create
offences; to provide for regulation-making powers of the Minister; to amend and repeal certain
financial sector laws; to make transitional and savings provisions; and to provide for matters
connected therewith.”.

Amendment of section 1(1) of Act 9 of 2017

2. Section 1(1) of Act 9 of 2017 is amended—

(a) by inserting following the definition of “administrative penalty order”:

‘“alternative investment fund” means an arrangement, but excluding a collective investment scheme,
constituted in any legal form, including in a company, in terms of a contract, by means of a trust or a
partnership, or in terms of a statute, which—
(a) raises capital from two or more financial customers to facilitate the participation or interest in,
subscription, contribution or commitment to, a fund or portfolio, with a view to investing it in
accordance with a defined investment policy for the benefit of the financial customers; and
(b) the financial customers share the risk and the benefit of investment in proportion to their participation
or interest in, subscription, contribution or commitment to, the fund;

''another regulator'' means—

(a) the Council for Debt Collectors established in section 2 of the Debt Collectors Act, 1998 (Act No.
114 of 1998);
(b) the Council for Medical Schemes;
(c) the National Credit Regulator; or
(d) the registrar as defined in section 1(1) of the Co-operatives Act, who is the Commissioner of the
Companies and Intellectual Property Commission, appointed in terms of section 189 of the
Companies Act;’;

15This amendment to the long title is aligned with the amendment to the long title contained in the Financial
Sector Laws Amendment Bill, 2020.
 155

(b) by inserting following the definition of “collective investment scheme”:

‘“commercial sponsor” has the meaning defined in section 1(1) of the Conduct of Financial Institutions Act;

‘“commercially sponsored fund” has the meaning defined in section 1(1) of the Conduct of Financial
Institutions Act;’;

(c) by inserting following the definition of “Competition Commission”:

‘“Conduct of Financial Institution Act” means the Conduct of Financial Institutions Act, 2021 (Act No. [--] of
2021);’;

(d) by inserting following the definition of “credit agreement” --

‘“credit rating agency” means a credit rating agency as defined in section 58 of the Conduct of Financial
Institutions Act;’;

(e) by inserting following the definition of “enforceable undertaking”:

‘“equivalent foreign jurisdiction” means a foreign jurisdiction determined in terms of section 255A;’;

(f) by substituting for the definition of “financial instrument”:

‘“financial instrument” means—

(a) a share as defined in section 1 of the Companies Act;
(b) a depository receipt and other equivalent instruments;
(c) a debt instrument such as a debenture or a bond, but not a credit agreement;
(d) money market securities as defined in section 1(1) of the Financial Markets Act;
(e) a derivative instrument as defined in section 1(1) of the Financial Markets Act; [or]
(f) a [warrant certificate,] securitization instrument; or
(g) [other] another instrument or certificate acknowledging, conferring or creating rights to subscribe to,
acquire, dispose of, or convert, the financial instruments referred to in paragraphs (a) to (e) or credit;’;

(g) by substituting in the definition of ''governing body'' for paragraph (a)(v):

“(v) the board of a [pension] retirement fund referred to in section 7Aof the [Pension] Retirement Funds
Act;”;

(h) by inserting in the definition of ''key person'':

“(g) the principal officer and deputy principal officer of a retirement fund; ”

(i) by inserting following the definition of “legal practitioner”:

‘”lending” means providing credit in terms of a lending agreement that is not regulated in terms of the
National Credit Act;’;

(j) by substituting for the definition of “outsourcing arrangement”:

‘“outsourcing arrangement”, in relation to a financial institution, means an arrangement between a financial

institution and another person for the provision to or for the financial institution of any of the following—
(a) a control function;
(b) a function that a financial sector law requires to be performed or requires to be performed in a
particular way or by a particular person; and
(c) a function or an activity that is integral to the nature of a financial product or financial service that the
financial institution provides, or is integral to the nature of the market infrastructure[;],
but does not include[—]
[(i)] a contract of employment between the financial institution and a person referred to in paragraph (a) or
(b) of the definition of “staff member”[; or
(ii) an arrangement between a financial institution and a person for the person to act as a
representative of the financial institution];’;

(k) by substituting in paragraph (a) of the definition of ''ombud'' for the word “Pension” of the word “Retirement”;
 156

(l) by deleting the definition of ''Pension Funds Act'';

(m) by substituting for the definition of ''representative'”:

‘“representative” has the meaning defined in section 1(1) of the Conduct of Financial Institutions Act;”;

(n) by inserting following the definition of ''responsible authority'':

‘“retirement fund” has the meaning defined in section 1(1) of the Retirement Funds Act;

“Retirement Funds Act” means the Retirement Funds Act, 1956 (Act 24 of 1956);’;

(o) by substituting for the definition of ''supervised entity'':

‘“supervised entity” means each of the following—

(a) A licensed financial institution;
(b) a person with whom a licensed financial institution has entered into an outsourcing arrangement;
[and]
(c) a representative of a financial institution;
(d) the employer of any member of a retirement fund as referred to in section 13A of the Retirement
Funds Act, for the powers to be exercised in terms of Chapters 7, 9, 10 and 13 of this Act;
(e) a commercial sponsor of a commercially sponsored fund as defined in section 1(1) of the Conduct
of Financial Institutions Act; and
(f) a contributor to a benchmark;’.

Amendment of section 2 of Act 9 of 2017

3. Section 2 of Act 9 of 2017 is amended—

(a) by inserting in subsection (1) following paragraph (a):

“(aA) a participatory interest in an alternative investment fund”;

(bB) lending;”;

(b) by substituting in subsection (1) for paragraphs(b) and (c):

“(b) [a long-term policy as defined in [section 1(1) of the Long-term Insurance Act or] a life
insurance policy as defined in section 1 of the Insurance Act;
(c) [a short-term policy as defined in section 1(1) of the Short-term Insurance Act or] a non-life
insurance policy as defined in section 1 of the Insurance Act;”;

(c) by substituting in subsection (1)(d) for subparagraphs (i) and (ii):

“(i) a [pension fund organisation] retirement fund as defined in section 1(1) of the [Pension]
Retirement Funds Act, to a member of the [organisation] retirement fund by virtue of
membership;”;
(ii) a [friendly society as defined in section 1(1) of the Friendly Societies Act] financial co-
operative registered in terms of the Co-operatives Act, 2005 (Act No. 14 of 2005), to a member of
the [society] co-operative;”; and

(d) by inserting following subsection (1):

“(1A) For the purposes of sections 33 and 34, a participatory interest in an alternative investment
fund and lending are not financial products.”.

Substitution of section 3 of Act 9 of 2017

4. Section 3 of Act 9 of 2017 is amended by substituting for the section:16

“Financial services
3. (1) In this Act, “financial service” means any of the following activities, each as defined in
Schedule 1 of the Conduct of Financial Institutions Act:

16This amendment is intended to align the definition of financial services with what will be provided in
Schedule 1 of the Bill, as the current descriptions of services in the definition are not arranged and
described clearly in alignment with the activities that will be licensed going forward.
 157

(a) distribution;
(b) financial advice;
(c) discretionary investment management;
(d) administration;
(e) fiduciary or custodian service;
(f) payment service;
(g) debt collection service;
(h) financial markets activities; and
(i) corporate advisory services.
(2) A service provided by a market infrastructure is not a financial service, unless designated by regulations
in terms of Regulations in subsection (3).
(3) If doing so will facilitate the object of this Act set out in section 7, the Regulations may designate as a
financial service—
(a) any service that is not regulated in terms of a specific financial sector law, if the service, that is
provided in the Republic, relates to—
(i) a financial product, a foreign financial product, a financial instrument or a foreign financial
instrument;
(ii) an arrangement that is in substance an arrangement for lending, making a financial investment or
managing financial risk, all as contemplated in section 2(2) to (4); or
(b) a service provided by a market infrastructure.
(4) Regulations designating a financial service in terms of subsection (3) may specify the financial sector
regulator that is the responsible authority for the financial service.”.

Amendment of section 57(b) of Act 9 of 2017

5. Section 57(b) of Act 9 of 2017 is amended by substituting for the words preceding subparagraph (i):

“(b) protect financial customers, including by—".

Amendment of section 58 of Act 9 of 2017

6. Section 58 of Act 9 of 2017 is amended—

(a) by inserting in subsection (1) following paragraph (e):

“(eA) promote, to the extent consistent with achieving the objective of the Financial Sector Conduct Authority,
transformation of the financial sector, including through co-operating and collaborating with the Broad-
Based Black Economic Empowerment Commission established by section 13B of the Broad-Based
Black Economic Empowerment Act, 2003 (Act No. 53 of 2003);”;

(b) by inserting following subsection (5):

“(5A) The Financial Sector Conduct Authority must—

(a) adopt a licensing framework;
(b) prescribe conduct standards;
(c) develop and implement its supervisory approach;
(d) enforce compliance with this Act and other financial sector laws in respect of which it is the
responsible authority; and
(e) consider the granting of exemptions under this Act and other financial sector laws in respect of
which it is the responsible authority,
in a manner that—
(i) promotes the object of this Act and other financial sector laws,
(ii) supports the achievement of the objective of the Financial Sector Conduct Authority in section 57 and
its functions in section 58; and
(iii) takes into account, and is proportionate to—
(aa) the nature, size, scale or complexity of the conduct risks or business model of, or
activities performed by, the financial institutions or persons to which the matters
referred to in paragraphs (a) to (e) are applied;
(bb) achieving the purpose of the requirement; and
(cc) the significance of risks to the achievement of the object of this Act, the object of
the Conduct of Financial Institutions Act, and the Financial Sector Conduct
Authority’s objectives.”; and

(c) by inserting following subsection (6):

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“(6A) When prescribing requirements in terms of this Act, the Conduct of Financial Institutions
Act, or another financial sector law, and when applying requirements contained in this Act, the Conduct of
Financial Institutions Act or another financial sector law, the Authority must consider—
(a) the content of applicable requirements contained in other legislation; and
(b) the likely impact of requirements that are proposed to be prescribed, and the actual impact of
requirements that are imposed on financial institutions, prudentially regulated financial groups and
financial conglomerates as defined in section 1(1) of the Conduct of Financial Institutions Act, or
other persons to whom the requirements apply.”.

Amendment of section 71(5) of Act 9 of 2017

7. Section 71 of Act 9 of 2017 is amended by substituting for subsection (5):

“(5) (a) Any power or duty of the Financial Sector Conduct Authority may be delegated to the Prudential
Authority by a section 77 memorandum of understanding in accordance with a framework and system of
delegation developed by the financial sector regulators to ensure that any delegation does not constrain the
Prudential Authority or the Financial Sector Conduct Authority from achieving their respective objectives as set
out in sections 33 and 57.
(b) For the purposes of the effective implementation of and the achievement of the object of the
Conduct of Financial Institutions Act, any power or duty of the Financial Sector Conduct Authority in terms of
this Act or the Conduct of Financial Institutions Act may be delegated to “another regulator” as defined in
section 1(1) of this Act by a memorandum of understanding in accordance with a framework and system of
delegation developed by the Financial Sector Conduct Authority to ensure that any delegation does not
constrain the Financial Sector Conduct Authority from achieving its objective as set out in section 57, or the
achievement of the Object of this Act or the Conduct of Financial Institutions Act.”;

Amendment of section 77 of Act 9 of 2017

8. Section 77 of Act 9 of 2017 is amended by inserting following subsection (6):

“(7) In order to facilitate the implementation of the Conduct of Financial Institutions Act in relation to
financial institutions and supervised entities subject to regulation by “another regulator” as defined in section
1(1) of this Act, the Authority may enter into a memorandum of understanding with “another regulator”, and
engage in any co-operation, collaboration and co-ordination arrangements that the Authority may agree with
that other regulator.”.

Substitution of section 106 of Act 9 of 2017

9. Section 106 of Act 9 of 2017 is amended by substituting for the section:

“Conduct standards

106. (1) The Financial Sector Conduct Authority may make conduct standards for and in respect of—
(a) supervised entities; and
[(a) financial institutions;
(b) representatives of financial institutions;]
[(c)](b) key persons of financial institutions;
[(d) contractors;](c) holding companies of financial conglomerates; and
(d) significant owners.
(2) A conduct standard must be aimed at one or more of the following—
(a) achieving the objectives of the Financial Sector Conduct Authority in section 57; or
[(a) Ensuring the efficiency and integrity of financial markets;
(b) ensuring that financial institutions and representatives treat financial customers fairly;
[(c) ensuring that financial education programs, or other activities promoting financial literacy are
appropriate;]
[(d)](b) reducing the risk that financial institutions, representatives, key persons and contractors engage in
conduct that is or contributes to financial crime[;].
[(e) assisting in maintaining financial stability;
(f) achieving the object of this Act.]
(3) When making conduct standards, the Authority may consider –
(a) the nature, size, scale or complexity of the conduct risks or business model of, or activities
performed by, the financial institutions or persons to whom the requirements apply; and
(b) the content of applicable requirements contained in other legislation and the impact of requirements
on financial institutions and prudentially regulated financial groups and financial conglomerates to
whom the requirements apply.
(4) A conduct standard or requirements in a conduct standard may—
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(a) differentiate between or be limited in application to particular categories, subcategories, kinds or

types of—
(i) financial institutions, key persons, representatives, contractors or supervised entities;
(ii) financial products, or financial instruments; or
(iii) activities or subcategories of activities as defined in section 1(1) or referred to in Schedule
1 of the Conduct of Financial Institutions Act;
(b) differ based on category or subcategories of financial customers.
[(3)](5) Without limiting the generality of subsections (1) and (2), a conduct standard may be made on any
of the following matters:
(a) [Efficiency and integrity requirements for financial markets;
(b) measures] Measures to combat abusive practices;
[(c)](b) requirements [for the fair treatment of financial customers, including] in relation to—
(i) the design and suitability of financial products and financial services;
(ii) [the promotion]advertising, marketing and distribution of [, and advice in relation to,]
financial products and services;
(iii) advice in relation to financial products and financial services;
(iv) post-sales barriers in relation to financial products, including, but not limited to—
(aa) the provision of redress for financial customers;
(bb) access to information by financial customers;
[(iii)](v) the resolution of complaints and disputes concerning those products and services,
including redress;
[(iv)](vi) the disclosure of information to financial customers; and
[(v)](vii) principles, guiding processes and procedures for the refusal, withdrawal or closure of a
financial product or a financial service by a financial institution in respect of one or more
financial customers, taking into consideration relevant international standards and
practices, and subject to the requirements of any other financial sector law or the
Financial Intelligence Centre Act, including—
(aa) disclosures to be made to the financial customer; and
(bb) reporting of any refusal, withdrawal or closure to a financial sector regulator;
(viii) the composition and suitability of fees or any other charges to financial customers;
(c) requirements and restrictions relating to the appointment and debarment of representatives;
(d) the design, suitability, implementation, monitoring and evaluation of financial education programs, or
other initiatives promoting financial literacy;
(e) with regards to credit rating agencies, with respect to—
(i) the independence of credit rating agencies and the avoidance of conflicts of interest;
(ii) the quality and integrity of credit ratings;
(iii) the presentation of credit ratings;
(iv) additional obligations in relation to credit ratings of structured finance instruments;
(v) the responsibilities of credit rating agencies to investors and the public;
(vi) the limitation on shareholding or other interest in a credit rating agency;
(vii) organisational requirements to ensure that business interest does not impair the independence
and integrity of its credit ratings or the accuracy of its credit rating services;
(viii) methodologies, models and key rating assumptions of credit rating agencies;
(ix) requirements regarding a code of conduct; and
(x) the endorsement of external credit ratings;
[(e)] (f) matters on which a regulatory instrument may be made by the Financial Sector Conduct Authority in
terms of a specific financial sector law;
[(f)](g) any other matter that is appropriate and necessary for achieving any of the aims set out in
subsection (2).
(6) Conduct standards may include requirements aimed at ensuring that, where financial products are
provided to retirement funds, or similar member-based entities, where appropriate—
(a) protections afforded to financial customers also apply in relation to the members of retirement funds or
similar member-based entities; and
(b) obligations imposed on financial institutions that provide products are also imposed, where appropriate, on
commercial sponsors of commercially sponsored funds.
[(4)](7) A conduct standard may declare specific conduct in connection with a financial product or a financial
service to be a prohibited practice or unfair business conduct if the conduct—
(a) is or is likely to be materially inconsistent with the fair treatment of financial customers;
(b) is deceiving, misleading or is likely to deceive or mislead financial customers;
(c) is unfairly prejudicing or is likely to unfairly prejudice financial customers or a category of financial
customers; or
(d) impedes in any other way the achievement of any of the objectives of a financial sector law.
[(5)](8) (a) In relation to a credit provider regulated in terms of the National Credit Act, a conduct standard
may only be made in relation to a financial service provided in relation to a credit agreement and matters provided for
in section 108.
(b) A conduct standard referred to in paragraph (a) may only be made after consultation with the National
Credit Regulator.
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(9) The Authority may make a conduct standard that imposes requirements on financial institutions that are
subject to conduct regulation by “another regulator” as defined in section 1(1) of this Act in terms of other legislation,
after having consulted the other regulator.
(10) The Authority may prescribe requirements in relation to supervised entities which are not licensed
financial institutions involved in the activities of a retirement fund, in order to ensure the protection of members,
pensioners, and beneficiaries of pension funds as defined in section 1(1) of the Retirement Funds Act, and that the
activities of a retirement fund comply with the requirements of the Conduct of Financial Institutions Act.
”.

Substitution of section 107 of Act 9 of 2017

10. Section 107 of Act 9 of 2017 is amended by substituting for the section:

''Joint standards

107. (1) The Prudential Authority and the Financial Sector Conduct Authority may make joint standards
with each other on any matter in respect of which either of them has the power to make a standard.
(2) The Financial Sector Conduct Authority may make joint standards with the Reserve Bank in
respect of financial institutions that provide a payment service or a financial service in relation to forex, on any
matter in respect of which the Financial Sector Conduct Authority or Reserve Bank has the power to make,
issue or in any other manner impose requirements on those financial institutions through standards, directives
or any similar legislative instrument.''.

Amendment of section 108(1) of Act 9 of 2017

11. Section 108 of Act 9 of 2017 is amended by substituting for subsection (1):

“108. (1) To achieve the respective objectives of the financial sector regulators as set out in sections 33 and 57,
the standards referred to in sections 105, 106 or 107 may be made on any of the following additional matters—
(a) Fit and proper person requirements, including in relation to—
(i) personal character qualities of honesty and integrity;
(ii) competence, including experience, qualifications and knowledge; and
(iii) financial standing;
(b) governance, including in relation to—
(i) the obligations, composition, membership and operation of governing bodies and of
substructures of governing bodies; and
(ii) the roles[ and], responsibilities and duties of governing bodies and their substructures
and members;
(iii) a governance framework and matters which must be addressed in a governance
framework;
(iv) transformation and matters which must be addressed in a transformation plan;
(c) the appointment, duties, responsibilities, remuneration and compensation practices and
arrangements, reward, incentive schemes and, subject to applicable labour legislation, the
suspension and dismissal of, members of governing bodies and of their substructures, and of key
persons;
(d) [the appointment, duties, responsibilities, remuneration, reward, incentive schemes and,
subject to applicable labour legislation, the suspension and dismissal of, key persons]
limitations or restrictions on ownership of a financial institution;
(e) the operation of, and operational requirements for, financial institutions and operational capital
requirements in respect of financial institutions that are not prudentially regulated;
(f) financial management, including—
(i) accounting, actuarial and auditing requirements;
(ii) asset, debt, transaction, acquisition and disposal management; and
(iii) financial statements, updates on financial position, and public reporting and disclosures;
(g) risk management and internal control frameworks and requirements;
(h) the control functions of financial institutions, including the outsourcing of control functions;
(i) record-keeping and data management by financial institutions and representatives;
( j) reporting by financial institutions and representatives to a financial sector regulator;
(k) outsourcing by financial institutions, including outsourcing arrangements;
(l) insurance arrangements, including reinsurance, of financial institutions and guarantees and
professional indemnity insurance or fidelity insurance that must be held by financial institutions;
(m) the amalgamation, merger, acquisition, disposal and dissolution of financial institutions;
(n) recovery, resolution and business continuity of financial institutions;
(o) requirements for identifying, avoiding, overseeing and managing conflicts of interest and disclosures
of interests;
(p) requirements for the safekeeping and handling of assets, including requirements pertaining to the
approval and supervision of nominees and custodians;
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(q) requirements relating to institutional structures;

(r) requirements for notification to, reporting to, or approval by, authorisation by, registration by or
listing by a financial sector regulator in respect of specified matters, including—
(i) ongoing reporting requirements;
(ii) a framework for the reporting of contraventions;
(iii) the manner in which remediation must be effected;
(iv) in respect of actions, activities, transactions and financial product or financial service
related contracts and appointments;
(s) licensing in terms of a financial sector law, including—
(i) transitional arrangements in relation to licensing;
(ii) institutional and structural form requirements;
(iii) local presence requirements for foreign financial entities;
(iv) requirements regarding combinations, or limitations, of activities in respect of which a
financial institution may be licensed;
(v) requirements to prevent misleading of financial customers or other abuses in relation to
licensing.
(t) fees for the purposes of funding the performance of specific functions under this Act or another financial
sector law, as envisaged in section 237.”.

Amendment of section 111 of Act 9 of 2017

12. Section 111 of Act. 9 of 2017 is amended—

(a) by inserting following subsection (4):

“(4A) A person may not in any manner make use of any licence or copy of a licence for business purposes
where the licence or an applicable authorisation under the licence has been suspended, withdrawn, lapsed
or cancelled.
(4B) A person may not, without the approval of the responsible authority, apply to that person’s
business or undertaking a name or description which includes words that may be prescribed by the
responsible authority in standards as implicitly or inherently conveying that a person is licenced in terms of
this Act, or authorised to perform an activity, or any derivative of those words, unless that person is licensed
in terms of a financial sector law and authorised to perform the activity.”;

(b) by substituting for subsection (6):

“(6) For the purposes of subsections (4), (4B) and (5), a person whose licence has been suspended
or revoked is not licensed.”; and

(c) by inserting following subsection (7):

“(8) The responsible authority may take into consideration the requirement for licensing of a
particular applicant or a category or type of applicant by “another regulator” as specified in section 1(1) or
that financial sector law, when—
(a) determining and implementing licensing requirements, processes and procedures;
(b) making standards in relation to licensing; and
(c) considering licence applications.”.

Substitution of section 112 of Act 9 of 2017

13. Section 112 of Act 9 of 2017 is amended by substituting:

“Interpretation

112. In this Part—

“application” means an application for a licence required in terms of section 111(1)(b) or (2) [or], section 162
or the Conduct of Financial Institutions Act;

“licence” means a licence required in terms of section 111(1)(b) or (2) or section 162 or the Conduct of
Financial Institutions Act;

“licensee” means a person licensed in terms of section 111(1)(b) or (2) or section 162 or the Conduct of
Financial Institutions Act.”.
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Amendment of section 113 of Act 9 of 2017

14. Section 113 of Act 9 of 2017 is amended—

(a) by substituting for subsection (2):

“(2) The application must—

(a) be in writing and in a form approved or accepted by the responsible authority; and
(b) include or be accompanied by the information and documents:-
(i) required in the form; or
(ii) required by the responsible authority; and
(c) be accompanied by the prescribed fee.”; and

(b) by inserting following subsection (2):

“(3) The responsible authority, prior to licensing, may require a person to change its proposed name
(or a translation, shortened form or derivative of the proposed name), if the proposed name—
(a) is identical to that of another financial institution;
(b) closely resembles that of another financial institution that the one is likely to be mistaken for the
other;
(c) is identical to or closely resembles that under which another financial institution was previously
licensed, and reasonable grounds exist for objection to its use;
(d) is misleading; or
(e) is undesirable.”.

Substitution of section 115 of Act 9 of 2017

15. Section 115 of Act 9 of 2017 is amended by substituting for the section:

“Relevant matters for application for licence

“115. (1) The matters to be taken into account in relation to an application for a licence include—
(a) the objective of the responsible authority as set out in section 33 or 57;
(b) the financial and other resources of and available to the applicant;
(c) fit and proper person requirements applicable to the applicant and to any key person or significant
owner of the applicant;
(d) the governance and risk management arrangements of the applicant; [and]
(dA) applicable requirements regarding institutional form and structure of applicants;
(e) whether the applicant made a statement that is false or misleading, including by omission, in or in
relation to the application[.] ; and
(f) any other matter prescribed in standards.
(2) The responsible authority may determine that an applicant who, or whose holding company, or a related
company in the group of companies, is registered, authorised or approved by a financial sector regulator or “another
regulator” as specified in section 1(1) or another financial sector law from providing some or all of the information
required under section 114 or subsection (1), if—
(a) the applicant provides proof of that registration, authorisation or approval; and
(b) the responsible authority is satisfied that that registration, authorisation or approval was granted in
accordance with public regulation that is equivalent to this Act.”.

Amendment of section 116(2) of Act 9 of 2017

16. Section 116(2) of Act 9 of 2017 is amended by inserting preceding paragraph (a):

“(Aa) the applicant complies with the requirements contemplated in section 115;“.

Insertion of section 118A in Act 9 of 2017

17. Act 9 of 2017 is amended by inserting following section 118:17

“Conditions of licences

118A. (1) A licence may be given subject to conditions specified in the licence or in the notice of the
grant or issue of the licence given to the licensee.

17 This section is the existing section 280 of the Financial Sector Regulation Act, which is being moved to
sit in the Licensing Chapter to which it relates.
 163

(2) A suspension, cancellation or revocation of a licence in terms of a financial sector law may be
subject to conditions specified in the notice of the suspension, cancellation or revocation given to the
licensee.
(3) Contravention of a condition in terms of subsection (2) does not affect the suspension,
cancellation or revocation of the licence.
(4) In this section, a reference to a licence must be read as including a reference to a consent,
agreement, approval or permission of any kind in terms of a financial sector law.”.

Amendment of section 119(4) of Act 9 of 2017

18. Section 119 of Act 9 of 2017 is amended by substituting for subsection (4):

“(4) If a variation of a licence condition results in a licensee no longer being licensed for a specific
activity or sub-activity, financial product, financial instrument or financial customer as contemplated in a
financial sector law, the responsible authority may direct the licensee to make arrangements to the
satisfaction of the authority to—
(a) discharge its obligations entered into in respect of that category or sub-activity, financial product,
financial instrument or financial customer before the variation;
(b) ensure the orderly resolution of that business of the licensee; or
(c) transfer that business to another licensee that is licensed for that activity by a specified date.”.

Substitution of section 126 of Act 9 of 2017

19. Section 126 of Act 9 of 2017 is amended by substituting for the section:

''Concurrence and consultation of financial sector regulators and Reserve Bank on licensing matters

126. (1) The responsible authority may not take any of the actions specified in subsection [(2)](4) with
regard to a—
(a) systemically important financial institution;
(b) financial institution that provides a payment service; or
(c) financial institution that performs a financial service in relation to foreign exchange, which financial
institution is also regulated by the Reserve Bank for a similar activity,
unless[–
(a) the other financial sector regulator has concurred; and
(b) if the action relates to or affects a systemically important financial institution,] the Reserve Bank
has concurred.
(2) The responsible authority may not take any of the actions specified in subsection [(2)](4) with
regard to a market infrastructure, unless the other financial sector regulator has concurred;
(3) For all other financial institutions, the responsible authority may take any of the actions specified in
subsection (4) after having consulted with the other financial sector regulator.
[(2)](4) The actions are—
(a) issuing a licence;
(b) varying, suspending or revoking a licence, however these are described in the relevant financial
sector law; and
(c) granting an exemption in terms of section 281.”.

Amendment of section 127 of Act 9 of 2017

20. Section 127 of Act 9 of 2017 is amended by inserting following subsection (2):

“(3) A licensed financial institution may not change its name or any shortened form or derivative of the
name of the licensee that is used in conducting business without the approval of the Authority.”.

Amendment of section 135(1)(a) of Act 9 of 2017

21. Section 135 of Act 9 of 2017 is amended by substituting in subsection (1) for paragraph (a)—

“(a) reasonably suspects that [a person may have contravened, may be contravening or may be
about to contravene,] a financial sector law for which the financial sector regulator is the
responsible authority, has been contravened, may be in the process of being contravened or may
be about to be contravened; or”.

Insertion of section 139A in Act 9 of 2017

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22. Act 9 of 2017 is amended by inserting following section 139:

“Recovery of costs

139A. A financial sector regulator may recover costs and expenses reasonably incurred in connection
with an investigation from —
(a) financial institution that is the subject of the investigation, after having considered the results of
the exercise of the powers; or
(b) any person, when it appears, after considering the outcome of the investigation, that the person
was knowingly a party to the carrying on of the affairs of the financial institution in a manner that
constituted an irregularity, non-compliance or contravention.”.

Amendment of section 141 of Act 9 of 2017

23. Section 141 of Act 9 of 2017 is amended—

(a) by inserting following subsection (1):

“(1A) The Prudential Authority and the Financial Sector Conduct Authority may publish joint guidance
notices on the application of a financial sector law in respect of any matter of common interest.”; and

(b) by substituting for subsection (2):

“(2) Guidance notices in terms of subsection (1) and (1A) are for information, and are not binding.”.

Amendment of section 142 of Act 9 of 2017

24. Section 142 of Act 9 of 2017 is amended by inserting following subsection (9):

“(10) The Prudential Authority and the Financial Sector Conduct Authority may, in accordance with
subsection (2) to (8), publish joint interpretation rulings regarding the interpretation or application of a financial
sector law in respect of any matter of common interest.”.

Amendment of section 144(3)(e) of Act 9 of 2017

25. Section 144(3) of Act 9 of 2017 is amended by substituting for paragraph (e):

“(e) remedying the effects of a contravention of a financial sector law or the person’s involvement in
financial crime, including by that the financial institution must provide appropriate redress to
financial customers .”.

Amendment of section 152 of Act 9 of 2017

26. Section 152 of Act 9 of 2017 is amended by inserting following subsection (1):

“(1A) Without limiting the scope of subsection (1), the responsible authority for a financial sector
law may apply to the High Court, and the Court may grant any appropriate order or relief, including
making the following orders:
(a) An order compelling any financial institution to comply with any law or to cease
contravening a law;
(b) an order compelling any financial institution to comply with a lawful request, directive or
instruction made, issued or given by the authority under a financial sector law;
(c) an order to prevent concealment, removal, dissipation or destruction of specified assets;
(d) an interim order to a person to cease trading or to seize and remove assets for safe
custody, in order to protect financial customers while an investigation is underway or to
enable the responsible authority to exercise any other legal remedy;
(e) a declaratory order regarding the interpretation of a provision of this Act or another
financial sector law, or the business of a financial institution, or any matter that will directly
or indirectly assist in achieving the objective of the responsible authority.
(1B) (a) An application by a responsible authority seeking an order referred to in subsection (1A)(c)
and (d) may be made on an ex parte basis.
(b) An application referred to in paragraph (a) may be made in chambers.”.
 165

Amendment of section 153 of Act 9 of 2017

27. Section 153 of Act 9 of 2017 is amended by inserting in subsection (1) following paragraph (d)—

“(e) no longer complies with prescribed fit and proper requirements.”.

Insertion of Part 7 in Chapter 10 of Act 9 of 2017

28. Act 9 of 2017 is amended by inserting in Chapter 10 following Part 6 (section 156):

“Part 7
Urgent actions
Take-down notices

156A. (1) The responsible authority may issue to a service provider, defined in section 70 of the
Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002), a take-down notice
contemplated in section 77 of that Act; if a person is conducting, advertising, soliciting or marketing a
business on the internet—
(a) in contravention of a financial sector law for; or
(b) in a manner that is likely to lead to prejudice to financial customers; or harm to the financial system.
(2) For purposes of section 77 of the Electronic Communications and Transactions Act, 2002
(Act No. 25 of 2002), the responsible authority is a ‘complainant’ as contemplated in that section.
(3) Before issuing the take-down notice as contemplated in subsection (1), the responsible
authority must inform the service provider of its intention to issue the take-down notice and provide the
services provider with an opportunity to make submissions.
(4) The period contemplated in subsection (3) must be five business days, but may be
reduced if the authority determines that this period is likely to defeat the object of the take-down notice.
(5) Where the responsible authority is aware of the identity of the person referred to in subsection (1),
the authority must inform that person of the intention to issue the take-down notice as contemplated in
subsection (3).
(6) In deciding whether or not to issue the take-down notice, the responsible authority must take into
account any submissions made by the service provider and the person referred to in subsection (1).

Prevention of the removal or dissipation of assets

156B. (1)The responsible authority may, if it reasonably suspects that—

(a) a person—
(i) has contravened, may be contravening or may be about to contravene, a provision of a law
in a material respect; or
(ii) is likely to be in an unsound financial position, and
(b) there is an urgent imperative to protect –
(i) the interest of the customers of the institution; or
(ii) the safety and soundness of the institution,
direct any person in writing not to -
(c) proceed with a transaction or proposed transaction related to the suspected contravention; or
(d) remove or dissipate the assets of the institution or of the customers of the institution,
for a period not exceeding 10 business days from the date of the direction or until the responsible
authority exercises any other power under a law, whichever date is soonest.
(2) The consultation requirements prescribed in section 146 of this Act apply with the necessary
changes to a directive under this Part.”.

Insertion of Chapter 12B in Act 9 of 201718

29. Act 9 of 2017 is amended by inserting following Chapter 12A:

“CHAPTER 12B
RECOVERY AND EXIT FROM THE FINANCIAL SECTOR

Interpretation and application of Chapter

18This amendment is aligned with the insertion of Chapter 12A into the Financial Sector Regulation Act
which is contained in the Financial Sector Laws Amendment Bill, 2020.
 166

166BI. (1) In this Chapter, —

‘institution’ means a financial institution, other than—

(a) a designated institution as defined in section 29A,
(b) an insurer as defined in section 1(1) of the Insurance Act, or
(c) a financial co-operative as defined in section 1(1) of the Co-operatives Act, 2005 (Act
No. 14 of 2005).
(2) This Chapter applies to institutions, subject to subsection (3).
(3) This Chapter applies to—
(a) regulated persons as defined in section 1(1) of the Financial Markets Act, 2012 (Act No. 24 of
2012), only to the extent provided in sections 3(1), and in accordance with sections 100 to 103 of
that Act;
(b) managers of collective investment schemes as defined in section 1(1) of the Collective Investment
Schemes Control Act, 2002 (Act No. 45 of 2002), only in respect of sections 166BK, 166BN and
166BO, and in accordance with section 15 of the Collective Investment Schemes Control Act;
(c) retirement funds only in respect of sections 166BM, 166BN and 166BO, and in accordance with
sections 18A, 29 and 30 of the Retirement Funds Act.
(4) A measure provided for in this Chapter may only be exercised in respect of institutions to which
this Chapter applies by the responsible authority, after having consulted the other financial sector regulator.

Part 1
Statutory management

Appointment of statutory manager

166BJ. (1) Despite any other financial sector law or other legislation relating to insolvency, the responsible
authority may by agreement with an institution licensed under a financial sector law and without the intervention of a
court, appoint a statutory manager for that institution, if it appears that—
(a) the institution—
(i) has in a material respect failed to comply with a financial sector law, or has repeatedly failed to comply
with a financial sector law;
(ii) is likely to have a material deterioration in its financial position;
(iii) does not conform to prescribed solvency requirements ; or
(iv) is maladministered; and
(b) it is advisable to appoint a statutory manager in order to protect—
(i) the interests of the financial customers of the institution;
(ii) the safety and soundness of other financial institutions in general;
(iii) the fairness, efficiency, integrity and orderliness of the financial markets.
(4) The statutory manager of an institution—
(a) must be allowed full access to the accounting records, financial statements and other information relating to
the affairs of the institution;
(b) must participate in the management of the affairs of the institution with its executive directors or managers;
(c) has the final decision, in the event of a disagreement between the statutory manager and the executive
directors or managers of the institution; and
(d) is entitled to receive remuneration from the institution as agreed on.
(5) (a) The statutory manager and the institution must manage the affairs of the institution in the most
economically efficient manner possible and, as soon as practicable, report to the responsible authority who appointed
the statutory manager, and indicate what steps should be taken to ensure that the institution—
(i) complies with the law;
(ii) becomes financially sound; and
(iii) is properly administered.
(b) If the statutory manager considers that it is not practicable to take steps in terms of paragraph (a), the
statutory manager must report to the financial sector regulator who appointed the statutory manager and must
indicate—
(i) whether steps should be taken to transfer the relevant business or a part of the business of the
institution to another appropriate institution, and if so, on what terms; or
(ii) whether the institution should be wound up or placed under curatorship.
(6) The statutory manager and the institution must comply with instructions issued by the financial sector
regulator who appointed the statutory manager from time to time in relation to the statutory manager's functions, and
report to a financial sector regulator should the statutory manager be hindered in giving effect to any instructions.
(7) The statutory manager of an institution is not liable for loss suffered by the institution, unless it is
established that the loss was caused by the statutory manager's fraud, dishonesty or wilful failure to comply with the
law.
 167

(8) The provisions of this section must not to be construed as limiting any of the powers of a financial sector
regulator provided for elsewhere in this Act or another financial sector law.
(9) If a statutory manager is appointed under this section, no business rescue or winding-up proceedings
may be commenced in respect of the institution until the appointment of the statutory manager is terminated.

Part 2
Curatorship

Appointment of curator

166BK. (1) The responsible authority may, on an ex parte basis, apply to the High Court having jurisdiction for
the appointment of a curator to take control of, and to manage the whole or any part of, the business of an institution.
(2) Upon an application in terms of subsection (1), the court may—
(a) on good cause shown, provisionally appoint a curator to take control of, and to manage the whole or any part
of, the business of the institution, on the conditions, and for the period, that the court deems fit; and
(b) simultaneously grant a rule nisi calling upon the institution and other interested parties to show cause on the
return day why the appointment of the curator should not be confirmed.
(3) On application by the responsible authority or the institution, the court may anticipate the return day, if not
less than 48 hours' notice of the application has been given to the other party.
(4) If, at the hearing pursuant to the rule nisi, the court is satisfied that it is desirable to do so, it may confirm
the appointment of the curator.
(5) The court may, for the purposes of a provisional appointment in terms of subsection (3)(a) or a final
appointment in terms of subsection (4), make an order with regard to—
(a) the suspension of legal or foreclosure proceedings against the institution for the duration of the curatorship;
(b) the authority of the curator to investigate the affairs of the institution or any related, inter-related or associated
entity;
(c) the powers and duties of the curator;
(d) the remuneration of the curator;
(e) the costs relating to any application made by the responsible authority;
(f) the costs incurred by the responsible authority in respect of any supervisory on-site inspection or investigation
conducted in terms of this Act;
(g) the method of service or publication of the order; or
(h) any other matter which the court deems necessary.
(6) (a) Any person, on good cause shown, may make an application to court to set aside or alter any
decision made, or any action taken, by the curator, a financial sector regulator with regard to any matter arising out
of, or in connection with, the control and management of the business of an institution which has been placed under
curatorship.
(b) A person who makes an application contemplated in paragraph (a) must give notice of not less than 48
hours of the application to the responsible authority, or the curator, as the case may be, and the responsible authority
or curator is entitled to be heard at the application.
(c) The court may, on application and good cause shown, cancel the appointment of the curator at any time.
(7) (a) Despite subsections (1) to (6), the responsible authority may on good cause shown, by agreement
with an institution, and without the intervention of the court, appoint a curator for the purpose set out in subsection
(1).
(b) The terms of the appointment contemplated in paragraph (a) must be set out in a letter of appointment
issued by the responsible authority to the curator and—
(i) must include—
(aa) the powers and duties of the curator, including that the curator takes over the control and
management of the institution;
(bb) the remuneration of the curator; and
(ii) may include any other matter agreed upon between the responsible authority and the institution .
(c) The rights of any creditor or financial customer of the institution are not affected by the appointment of a
curator in terms of paragraph (a).
(8) An appointment in terms of subsection (7) lapses—
(a) if the responsible authority, after consultation with the curator, withdraws the letter of appointment; or
(b) by order obtained at the instance of the institution in terms of subsection (6)(c).
(10) The curator acts under the control of the responsible authority, and in accordance with guidelines made
by a financial sector regulator, and the curator may apply to the responsible authority for instructions with regard to
any matter arising out of, or in connection with, the control and management of the business of the institution.
(11) The curator must furnish the responsible authority with the reports or information concerning the affairs of
the institution that the responsible authority may require.
(12) In addition to, and subject to, any powers or functions that may be afforded by a court to a curator on
appointment under subsection (1), a curator on appointment—
(a) is vested with the power to take and implement any decision in respect of the institution that would have
required an ordinary resolution or a special resolution of shareholders or members of the institution in terms of
the provisions of the—
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(i) Companies Act;

(ii) Co-operatives Act;
(iii) Memorandum of Incorporation, or the equivalent constitution, deed or founding instrument of an
institution that is not a company; or
(iv) rules of any exchange licensed under the Financial Markets Act on which any securities of the
financial institution are listed;
(b) is vested with all executive powers which would ordinarily be vested in, and exercised by, the key persons
(other than an auditor or the head of a control function) of the institution whether by law or in terms of its
Memorandum of Incorporation, or the equivalent constitution, deed or founding instrument of an institution that
is not a company, and the present key persons must be divested of all powers in relation to the business;
(c) must take immediate control of, manage and investigate the business and operations of and concerning the
institution, together with all assets, interests and liabilities relating to the business, subject to the control of the
responsible authority in accordance with subsection (8), and with all the rights and obligations that relate to
the management of the business and operations of the institution;
(d) must at all times give consideration to the best interests of the financial customers of the institution;
(e) must exercise the powers vested in the curator with a view to conserving the business and, with the prior
approval of the responsible authority , may—
(i) alienate or dispose of any of the property or transfer any of the assets and liabilities or business of the
institution;
(ii) cancel any guarantee issued by the institution prior to the institution being placed under curatorship,
excluding a guarantee which the institution is required to make good within a period of 30 days from
the date of the appointment of the curator; and
(iii) raise funding on behalf of the institution, despite any contractual obligations of the institution, to provide
security over the assets of the institution in respect of the funding;
(f) must continue to conduct the business for which the institution is licensed, but may not enter into new
contracts for the provision of financial products or financial services, without the approval of the responsible
authority;
(g) must take custody of the cash, cash investments, shares, other securities or investments held or administered
by the institution and of other property (movable or immovable) or effects belonging to, or held by or on
instructions of, the institution or any entity directly or indirectly controlled by, affiliated to or associated with the
institution;
(h) must notify the responsible authority should the curator deem it necessary or expedient that an application be
made to the court—
(i) for the extension of the curator’s powers to any other company (including any holding company or
subsidiary) or other related or inter-related person or person associated with the institution;
(ii) for the winding-up of the institution; or
(iii) for any relief as envisaged in this Act or another financial sector law against the institution, or any of its
key persons;
(i) may, at the curator’s discretion, and depending on available resources, make full or part payments to financial
customers in identified circumstances, after the prior approval of the responsible authority has been obtained;
(j) may conduct any investigation with a view to locating the assets belonging to, administered or controlled by
the institution, including assets held by way of securities, in cash or liquid form;
(k) may incur reasonable expenses and costs that may be necessary or expedient for the curatorship and control
of the institution and operations of the institution, and to pay expenses and costs from the assets held,
administered or under the control of the institution;
(l) may engage, after consultation with the responsible authority, as the case may be, the assistance of a legal,
accounting, administrative, or other professional or technical nature, that the curator may reasonably deem
necessary for the performance of the curator’s duties, and the curator may defray reasonable charges and
expenses incurred from the assets held or under control of the institution;
(m) may institute or prosecute any legal proceedings on behalf of the institution, and defend any litigation against
the institution;
(n) may invest funds that are not required for the immediate purposes of the business, with a bank registered
under the Banks Act, 1990 (Act No. 94 of 1990), or other liquid instrument approved by the responsible
authority;
(o) may take control of and operate or freeze existing banking accounts of the institution and of its subsidiaries or
related persons, and of any director of the institution, insofar as any money belonging to the institution has
been deposited into that banking account;
(p) may open and operate any new banking accounts for the purposes of the curatorship; and
(q) may claim all costs, charges and other expenditure reasonably incurred by the curator in the execution of
duties in terms of this section, including the curator’s own remuneration, as administration costs, in the event
of the winding-up of the institution ensuing.
(12) A curator, when acting in accordance with subsection (11), must consider the expected effect on the
creditors of the institution and whether—
(a) creditors are treated in an equitable manner; and
(b) when acting under subsection (11)(e)(i), a reasonable probability exists that a creditor will not incur greater
losses, as at the date of the proposed disposal, transfer, or disposal and transfer, than would have been
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incurred if the institution had been wound-up on the date of the proposed disposal, transfer, or disposal and
transfer.
(13) A claim for damages in respect of any loss sustained by, or damage caused to, any person as a result of
the cancellation of a guarantee referred to in subsection (11)(e)(ii), other than a guarantee that constitutes an
insurance obligation under a life insurance policy a defined in the Insurance Act, or provision of security, may be
instituted against the institution after the expiration of a period of six months from the date of the cancellation.
(14) An institution may not begin or enter business rescue or be wound-up while under curatorship, unless
the curator applies for the business rescue or winding-up.

Part 3
Business Rescue

Application of Companies Act to business rescue

166BL. (1) Despite any other law under which an institution is established or incorporated, Chapter 6 of the
Companies Act applies, subject to this section, and with the necessary changes, in relation to an institution , to the
exclusion of any similar provisions under the Co-operatives Act, or any other law under which an institution is
established or incorporated, and in an application or resolution taken in respect of business rescue proceedings, the
responsible authority is deemed to be an affected person.
(2) In the application of Chapter 6 of the Companies Act—
(a) a reference to the Commission must be construed as a reference also to the responsible authority;
(b) the reference to creditors must be construed as a reference also to the financial customers);
(c) a reference to debt must be construed as including any liability in respect of financial customers;
(d) a reference relating to the inability of an institution to pay all its debts, must be construed as relating also to
its inability to comply with the financial soundness requirements of applicable legislation; and
(e) in addition to any question relating to the business of an institution, it must be considered if any proposed
action is in the interests of the financial customers.

Business rescue applications and resolutions

166BM. (1) The responsible authority may make an application under section 131 of the Companies Act in
respect of an institution, if the authority reasonably believes that it is in the interests of the institution’s financial
customers.
(2) (a) If an application to a court for an order relating to the business rescue of an institution is made by an
affected person other than a financial sector regulator, —
(i) the application may not be heard, unless copies of the notice of motion and of all accompanying
affidavits and other documents filed in support of the application have been lodged with the
responsible authority at least 14 days before the application is set down for hearing;
(ii) the responsible authority may, if it reasonably believes that the application is not in the interests of the
financial customers , join the application as a party and file affidavits and other documents in
opposition to the application.
(b) Any order granted by the court in circumstances where paragraph (a)(i) has not been complied with is
void.
(3) (a) Any resolution of an institution to begin business rescue proceedings is subject to the approval of the
responsible authority .
(b) An institution may file a resolution under section 129 of the Companies Act only after the responsible
authority has approved the resolution.
(c) Any resolution of an institution that is not approved by the responsible authority under paragraphs (a) or
(b), is void.
(4) If the board of an institution has reasonable grounds to believe that the company is financially distressed,
but the board has not adopted a resolution under section 129 of the Companies Act, the board must deliver a written
notice to the responsible authority, as an affected person, setting out the relevant reasons for not adopting a
resolution, as required by section 129(7) of the Companies Act.
(4) Despite the provisions of the Companies Act, the following acts are subject to the approval of the
responsible authority:
(a) The appointment of a business rescue practitioner who satisfies experience and knowledge requirements that
may be determined by the responsible authority; and
(b) the adoption of a business rescue plan.
(5) Despite the provisions of the Companies Act, if the responsible authority does not approve a resolution
referred to in subsection (3)(a) or (b), or the appointment or plan referred to in subsection (4)(a) or (b), the
responsible authority must apply to court—
(a) for the winding-up of the institution under this Act; or
(b) to place the institution under curatorship under this Act.
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(6) As from the date on which a business rescue practitioner is appointed, the business rescue practitioner
of an institution may not enter into any new contracts for the provision of financial products or financial services,
unless the practitioner has been granted prior approval to do so by the responsible authority .
(7) The power of a business rescue practitioner to apply to court in terms of section 136(2) of the
Companies Act to cancel any provisions of a contract in relation to critical functions performed by third parties that
provide services that are vial for the function of the institution is subject to the prior approval of the responsible
authority.
(8) (a) Notwithstanding section 137(5) of the Companies Act, the business rescue practitioner may, with the
approval of the responsible authority, remove a director from office if the director impedes the practitioner’s
performance or powers.
(b) The removal of a director from office in terms of paragraph (a) is reviewable by a court.
(9) Termination of business rescue proceedings contemplated in section 132(2) of the Companies Act is
subject to approval by the responsible authority .

Part 4
Winding-Up

Application of Companies Act to winding-up

166BN. (1) (a) Despite any other law under which an institution is incorporated, sections 79 to 81 of, and
item 9 of Schedule 5 to, the Companies Act applies, subject to this section, and with the necessary changes, in
relation to the winding-up of an institution, and to the exclusion of any similar provisions under the Co-operatives Act,
or any other law under which an institution is established or incorporated.
(b) In an application for the winding-up of an institution, the responsible authority is deemed to be a person
authorised under the Companies Act to make an application to the court for the winding-up of the institution.
(2) In the application of sections 79 to 81 of, and item 9 of Schedule 5 to, the Companies Act, as provided
by subsection (1)—
(a) a reference which relates to the inability of an institution to pay its debts must be construed as
relating also to its inability to comply with the financial soundness requirements of applicable
legislation;
(b) a reference to an institution in this section must, for the purposes of the application of sections 79,
80 and 81 of the Companies Act, be construed as a reference to a financially sound institution;
(c) in addition to any question whether it is just and equitable that an institution should be wound-up,
there must also be considered the question whether it is in the interest of the financial customers
that it should be wound-up;
(d) the references to the Commissioner, Commission, Master or Panel must be construed as a
reference also to the responsible authority ; and
(e) the requirement to give security does not apply where the responsible authority makes the
application to court.

Winding-up

166BO. (1) The responsible authority may make an application under the Companies Act for the winding-up
of an institution, if the authority reasonably believes that it is in the interests of the financial customers of that
institution to do so.
(2) (a) If an application to the court for, or in respect of, the winding-up of an institution is made by any
person other than a financial sector regulator—
(i) the application may not be heard, unless copies of the notice of motion and of all accompanying
affidavits and other documents filed in support of the application are lodged with the responsible
authority at least 14 days, or a shorter period that the court may allow on good cause shown,
before the application is set down for hearing; and
(ii) the responsible authority may, if it reasonably believes that the application is contrary to the
interests of the financial customers of the institution, join the application as a party and file
affidavits and other documents in opposition to the application.
(b) Any order granted by the court in circumstances where paragraph (a)(i) has not been complied with is
void.
(3) (a) Any resolution of an institution to begin winding-up proceedings is subject to the approval of the
responsible authority .
(b) An institution may file a resolution under section 80 of the Companies Act only after the responsible
authority has approved the resolution.
(c) Any resolution of an institution that is not approved by the responsible authority under paragraph (a) or
(b) is void.
(4) Despite the provisions of the Companies Act, the appointment of a trustee or a liquidator is subject to the
approval of the responsible authority.
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(5) Despite the provisions of the Companies Act, if the responsible authority does not approve a resolution
referred to in subsection (3)(a) or (b), or the appointment referred to in subsection (4), the responsible authority may
apply to court to place the institution under curatorship in terms of the section 166BK.”.

Amendment of section 167(3) of Act 9 of 2017

29. Section 167 of Act 9 of 2017 is amended by substituting for subsection (3):

“(3) An administrative penalty may include an amount to reimburse the responsible authority for
reasonable costs incurred by the responsible authority in connection with the contravention, except, in the
case of investigation costs, the costs were recovered under section 139A of this Act.”.

Amendment of section 171 of Act 9 of 2017

30. Section 171 of Act 9 of 2017 is amended by substituting for paragraph (a):

“(a) first, to—

(i) reimburse the responsible authority for its costs and expenses reasonably and properly
incurred in connection with the relevant contravention, making the order and enforcing it;
and
(ii) provide redress to prejudiced financial customers in accordance with section 171A; and”.

Insertion of section 171A in Act 9 of 2017

31. Act 9 of 2017 is amended by inserting following section 170:

“Redress to financial customers

171A. Where the responsible authority determined that a penalty must be applied to provide redress to
financial customers, the amount recovered by a responsible authority as an administrative penalty must—
(a) be deposited by the responsible authority directly into a specially designated trust account; and
(b) be distributed by the responsible authority to financial customers who the responsible authority has
determined suffered financial prejudice as a result of the action that lead to the administrative penalty
to the extend as determined by the responsible authority.”.

Substitution of section 173 of Act 9 of 2017

32. Section 173 of Act 9 of 2017 is amended by substituting for the section:

“Remission and suspension of administrative penalties

173. (1) The responsible authority that imposed an administrative penalty on a person may, on
application by the person, by order, remit all or some of the administrative penalty, and all or some of the
interest payable in terms of section 169.
(2) The responsible authority may suspend any part of an administrative penalty on any condition
the authority deems appropriate for a period not exceeding five years.”

Amendment of section 218 of Act 9 of 2017

33. Section 218 of Act 9 of 2017 is amended by substituting in the definition of “decision” for paragraph (b):

“(b) a decision by [an authorised financial services provider, as defined in section 1 of the Financial
Advisory and Intermediary Services Act, in
terms of section 14 of that Act] a financial institution licensed under the Conduct of Financial Institutions
Act, in terms of section 15(1) of that Act, in relation to a specific person;”.

Insertion of Part 1A in Chapter 17 of Act 9 of 2017

34. Act 9 of 2017 is amended by inserting in Chapter 17 following Part 1 and section 255:

“Part 1A
Equivalence

Equivalence recognition of foreign jurisdictions

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255A. (1) A financial sector regulator or the Reserve Bank may,

(a) on its own initiative or on application by an interested party; and
(b) where required under a financial sector law,
determine that the regulatory framework of a specified foreign country is equivalent to the regulatory framework
established in terms of this Act and that financial sector law, if the legislative and regulatory framework established in
that foreign country meets the objectives of this Act and the financial sector law.
(2) A determination in terms of subsection (1) must be published on the financial sector regulator’s or the
Reserve Bank’s website and in the Register.
(3) When assessing the equivalence of the regulatory framework of a foreign country, the financial sector
regulator or the Reserve Bank must take into account—
(a) the nature and intensity of the supervisory authority’s oversight processes, including direct comparison with
the regime applied by the financial sector regulator or the Reserve Bank;
(b) alignment of the foreign country’s regulatory framework with relevant principles developed by international
standard setting bodies applicable to financial institutions;
(c) observed outcomes of the foreign regulatory framework applicable to financial institutions relative to those in
South Africa; and
(d) the need to prevent regulatory arbitrage.

Withdrawal of recognition

255B. A financial sector regulator or the Reserve Bank may withdraw recognition where the criteria set out in
section 255A(3) are no longer met.

Principles of co-operation

255C. A financial sector regulator or the Reserve Bank may enter into a supervisory cooperation arrangement
with the relevant supervisory authority from the equivalent jurisdiction as contemplated in section 251(3) for the purpose
of performing its functions in terms of this Act or the specific financial sector law.”.

Amendment of section 266(1) of Act 9 of 2017

35. Section 266(1) of Act 9 of 2017 is amended by substituting:

“(1)(a) A person who contravenes section 111 (1), (2), (3), (4) or (5) commits an offence and is
liable on conviction to a fine not exceeding R15 000 000 or imprisonment for a period not exceeding 10
years, or to both a fine and [such] imprisonment.
(b) A person who contravenes section 111(4A) or (4B) commits an offence and is liable on
conviction to a fine not exceeding R1 000 000 or imprisonment for a period not exceeding 2 years, or to
both a fine and imprisonment.”.

Repeal of section 280 of Act 9 of 201719

36. Section 280 of Act 9 of 2017 is repealed.

Amendment of section 282 of Act 9 of 2017

37. Section 282 of Act 9 of 2017 is amended by inserting following subsection (3):

''(4) If this Act provides that a financial sector regulator or the reserve Bank may not take a
particular action without having first consulted the other financial sector regulator or the Reserve Bank, as
the case may be, the concurrence is not required if the other regulator or the Reserve Bank has agreed, in a
memorandum of understanding or otherwise, that the concurrence is unnecessary.”.

Amendment of section 292(2) of Act 9 of 2017

38. Section 292(2) of Act 9 of 2017 is amended—

(a) by substituting for paragraph (b):

“(b) [pension] retirement funds as defined in section 1(1) of the [Pensions] Retirement Funds Act;”;
and

19 This section is being moved to the licensing Chapter to which is relates, as section 118A.
 173

(b) by the deletion of paragraph (c).

Amendment of Schedule 1 of Act 9 of 2017

39. Schedule 1 of Act 9 of 2017 is amended—

(a) by substituting in the first row for the item “Pension Funds Act, 1956 (Act No. 24 of 1956)” for the item
“Retirement Funds Act, 1956 (Act No. 24 of 1956”;

(b) by deleting the following items from the Schedule:

''Friendly Societies Act, 1956 (Act No. 25 of 1956);”;

“Long-term Insurance Act, 1998 (Act No. 52 of 1998);”;
“Short-term Insurance Act, 1998 (Act No. 53 of 1998);”;
“Financial Institutions (Protection of Funds) Act, 2001 (Act No. 28 of 2001);”;
“Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002);”;
“Credit Rating Services Act, 2012 (Act No. 24 of 2012”;”; and

(c) by inserting below the reference to ''Insurance Act, 2017, Act No. 18 of 2017'':

''Conduct of Financial Institutions Act, 2021 (Act No. [--] of 2021)''.

Amendment of Schedule 2 of Act 9 of 2017

40. Schedule 2 of Act 9 of 2017 is amended—

(a) by substituting in the first row for the item “Pension Funds Act, 1956 (Act No. 24 of 1956)” for the item
“Retirement Funds Act, 1956 (Act No. 24 of 1956”;

(b) by deleting the rows relating to the following legislation:

''Friendly Societies Act, 1956 (Act No. 25 of 1956)”;

“Long-term Insurance Act, 1998 (Act No. 52 of 1998”;
“Short-term Insurance Act, 1998 (Act No. 53 of 1998;”
“Financial Institutions (Protection of Funds) Act, 2001 (Act No. 28 of 2001);”
“Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002);”
“Credit Rating Services Act, 2012 (Act No. 24 of 2012”;”;

(c) by inserting in Schedule 2 below the row referencing the Insurance Act, 2017 (Act No. 18 of 2017):

''Conduct of Financial institutions Act, 2021 (Act No. [--] of 2021) Financial Sector Conduct
Authority''; and

(d) by inserting below row (b) in the block relating to joint standards:

''(c) the Reserve Bank and the Reserve Bank and

Prudential Authority or Prudential Authority or
Financial Sector Financial Sector Conduct
Conduct Authority Authority, as the case may be”.

Amendment of Schedule 4 of Act 9 of 2017

41. Schedule 4 of Act 9 of 2017 is amended by substituting in the second row of the Schedule, in the column
headed “Short Title”, for the term “Pension Funds Act, 1956” of the term “Retirement Funds Act, 1956”.

Part 17
Amendment of Insurance Act, 2017 (Act No. 18 of 2017)

Amendment of section 52 of Act 18 of 2017

1. Section 52 of Act 18 of 2017 is amended by inserting following subsection (3):

''(4) The Prudential Authority must act with the concurrence of the South African Reserve Bank in
respect of an insurer that has been designated as a systemically important financial institution in accordance
with the Financial Sector Regulation Act.''.
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Substitution of section 53 of Act 18 of 2017

2. Section 53 of Act 18 of 2017 is amended by substituting for the section:

''Appointment of statutory manager

53. (1) Despite any other law, the Prudential Authority may, by agreement with an insurer or
controlling company and without the intervention of a court, appoint a statutory manager for that insurer or
controlling company.
(2) An appointment under subsection (1) takes effect immediately, but the Prudential Authority
must, as soon as practicable after the appointment, and in any event within 30 days after the appointment,
apply to the High Court for an order confirming the appointment.
(3) On hearing the application in terms of subsection (2), the court must confirm the
appointment, unless satisfied that the grounds for making the appointment no longer exist.
(4) The statutory manager of an insurer or controlling company—
(a) must be allowed full access to the accounting records, financial statements and other information
relating to the affairs of the insurer or controlling company;
(b) must participate in the management of the affairs of the insurer or controlling company with its
executive directors or managers;
(c) has the final decision, in the event of a disagreement between the statutory manager and the
executive directors or managers of the insurer or controlling company; and
(d) is entitled to receive remuneration from the insurer or controlling company that the Court may order.
(5) (a) The statutory manager of an insurer or controlling company and the insurer or
controlling company must manage the affairs of the institution with the greatest economy possible
compatible with efficiency and, as soon as practicable, report to the Prudential Authority and indicate what
steps should be taken to ensure that the insurer or controlling company addresses the concerns that
resulted in the appointment of the statutory manager.
(b) If the statutory manager considers that it is not practicable to take steps in terms of
paragraph (a), the statutory manager must report to the Prudential Authority and must indicate—
(i) whether steps should be taken to transfer the insurance business or a part of the business of the
insurer or controlling company to an appropriate financial institution, and if so, on what terms; or
(ii) whether the insurer or controlling company should be wound up or placed under curatorship.
(6) The statutory manager of an insurer or controlling company and the insurer or controlling
company must comply with directives issued by the Prudential Authority from time to time in relation to the
statutory manager's functions, and report to the Prudential Authority should the statutory manager be
hindered in giving effect to any directives.
(7) The statutory manager of an insurer or controlling company and the insurer or controlling
company may, after giving notice to the Prudential Authority, at any time apply to the court for directions.
(8) The Prudential Authority may at any time apply to the court to—
(a) terminate the statutory management; or
(b) remove a statutory manager from office and, subject to subsection (2), to confirm the appointment of a
replacement.
(9) The statutory manager of an insurer or controlling company is not liable for loss suffered by
the insurer or controlling company, unless it is established that the loss was caused by the statutory
manager's fraud, dishonesty or wilful failure to comply with the law.
(10) The provisions of this section must not to be construed as limiting any of the powers of the
Prudential Authority provided for elsewhere in this Act or the Financial Sector Regulation Act.
(11) If a statutory manager is appointed under this section, no business rescue or winding-up
proceedings may be commenced in respect of an insurer or controlling company until the appointment of
the statutory manager is terminated. ''.

Substitution of section 54 of Act 18 of 2017

3. Section 54 of Act 18 of 2017 is amended—

(a) by substituting for subsection (1):

''(1) The Prudential Authority may, on an ex parte basis, apply to a division of the High Court
having jurisdiction for the appointment of a curator to take control of, and to manage the whole or any part
of, the business of an insurer or controlling company.
(1A) Upon an application in terms of subsection (1) the court may—
(a) provisionally appoint a curator to take control of, and to manage the whole or any part of, the business
of the institution, on the conditions, and for the period, that the court deems fit; and
(b) simultaneously grant a rule nisi calling upon the insurer or controlling company and other interested
parties to show cause on a day mentioned in the rule why the appointment of the curator should not
be confirmed.
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(1B) On application by the Prudential Authority or the insurer or controlling company, the court
may anticipate the return day, if not less than 48 hours' notice of the application has been given to the other
party.
(1C) If, at the hearing pursuant to the rule nisi, the court is satisfied that it is desirable to do so, it
may confirm the appointment of the curator.
(1D) The court may, for the purposes of a provisional appointment in terms of subsection (2)(a)
or a final appointment in terms of subsection (1C), make an order with regard to—
(a) the suspension of legal or foreclosure proceedings against the insurer or controlling company for the
duration of the curatorship;
(b) the Prudential Authority of the curator to investigate the affairs of the insurer or controlling company or
any related, inter-related or associated entity;
(c) in addition to subsection (2), the powers and duties of the curator;
(d) the remuneration of the curator;
(e) the costs relating to any application made by the Authority;
(f) the costs incurred by the Prudential Authority in respect of any supervisory on-site inspection or
investigation conducted in terms of the Financial Sector Regulation Act;
(g) the method of service or publication of the order; or
(h) any other matter which the court deems necessary.
(1E) (a) Any person, on good cause shown, may make application to the court to set aside or
alter any decision made, or any action taken, by the curator or the Prudential Authority with regard to any
matter arising out of, or in connection with, the control and management of the business of an insurer or
controlling company which has been placed under curatorship.
(b) A person who makes application contemplated in paragraph (a) must give notice of
not less than 48 hours of the application to the Prudential Authority or the curator, as the case may be, and
the Prudential Authority or curator is entitled to be heard at the application.
(c) The court may, on good cause shown, cancel the appointment of the curator at any
time.
(1F) (a) Despite subsections (1) to (1E), the Prudential Authority may, by agreement with an
institution, and without the intervention of the court, appoint a curator for the purpose set out in subsection
(1).
(b) The terms of the appointment contemplated in paragraph (a) must be set out in a
letter of appointment issued by the Prudential Authority to the curator and—
(i) must include—
(aa) the powers and duties of the curator;
(bb) the remuneration of the curator; and
(ii) may include any other matter agreed upon between the Prudential Authority and the insurer or
controlling company.
(c) The rights of any creditor or financial customer of the institution are not affected by
the appointment of a curator in terms of paragraph (a).
(1G) An appointment in terms of subsection (1F) lapses—
(a) if the Authority, after consultation with the curator, withdraws the letter of appointment; or
(b) by order obtained at the instance of the insurer or controlling company in terms of subsection (1E)(c).
(1H) The curator acts under the control of the Authority, and in accordance with guidelines made
by the Authority, and the curator may apply to the Prudential Authority for instructions with regard to any
matter arising out of, or in connection with, the control and management of the business of the insurer or
controlling company.
(1I) The curator must furnish the Prudential Authority with the reports or information concerning
the affairs of the institution that the Prudential Authority may require.''; and

(b) by substituting in subsection (2) for the words preceding paragraph (a) of the following words:

''(2) In addition to any powers or functions that may be afforded by a court to a curator on appointment under
subsection (1), [but subject to section 5 of the Financial Institutions (Protection of Funds) Act,] a curator
on appointment—''.