Complying with Changes in Legislation

1. Complying with Changes in Legislation October 2009

2. Agenda

3. FICA

4. Money laundering Legislation Reporting obligation Defines: Money laundering offence

5. Definition

6. Financial Intelligence Centre Collect Process Analyse Law Enforcement Agencies

7. Reporting obligations Report to FIC

8. Duties of Accountable Institutions Above prescribed limit Also Reportable Institution Details of transfer After transfer Report on demand

9. Administrative duties for accountable institutions

10. Directives Cost borne by institution Only after consulting with Centre Accountable institutions, reportable institutions, other persons

11. Registration of Institutions Notify FIC of any changes within 90 days

12. Responsibility of supervisory body Administrative sanctions: Not to repeat conduct Reprimand Remedial action Restriction or suspension Penalty: Individual: R 10 mil Company : R 50 mil Process to be followed May appeal

13. Appointment of inspectors No warrant is necessary Issue certificate of appointment Must consult with Centre Institution liable for any costs involved

14. Compliance and enforcement

15. Consumer Protection Act

16. Background

17. Repeal and replacement of current laws

18. Scope of the Act

19. Excluded transactions

20. Meaning of transaction

21. Meaning of goods

22. Meaning of service Accommodation e.g. restaurant or hotel Entertainment e.g. sale of tickets Access to any electronic communications infrastructures e.g. cell phones, 3G Access to event, premises, activity or facility Right of occupancy in land or other immovable property Education, information, advice or consultation (excluding FAIS)

23. Right to equal access to consumer market Sales of alcohol to under-aged minors Discounted prices for children, persons over a certain age Separate use of facilities for different genders Access to goods or services Different quality or pricing

24. Right to privacy Consumer’s right to: Minister to: Accept, refuse or block any approach for the purposes of direct marketing Formal demands to discontinue marketing approach Pre-emptively blocking of direct marketing Establish an “Exclusion Register” Prescribe certain days, dates and times during which it is prohibited to contact consumers

25. Consumer’s right to choose Unless bundling results in economic benefit Right to cancel a fixed term agreement Limit rights to impose cancellation charges 20 Business days notice for any contract Fixed term contracts Repairs, maintenance or replacement services Provide consumer with an estimate Consumer to authorise Upfront disclosure for preparing an estimate Any costs above original estimate to be authorised by consumer No bundled goods or services

26. Consumer’s right to choose Cooling off period 5 business days

27. Right to disclosure and information Person with average literacy skills and minimal experience must understand: • Compulsory to display prices for goods • If two prices are displayed, the lowest has to be charged • Trade descriptions must not be misleading or tampered with • Disclose fact if: • reconditioned • grey market goods Disclosure requirements Wear identification Notice or document Content, significance and importance of notice or document Terms and conditions to make informed choices

28. Right to fair and responsible marketing • Consumers to be: • Provided with identity of agents • Informed about right to rescind the agreement during cooling off period • Prohibition against marketing that is misleading, fraudulent or deceptive • Following are prohibited • Bait marketing • Negative options • Referral selling • Offering of prices with intention of not providing them • Informing consumers that they have won a prize when no competition has been conducted • Making prize subject to payment of consideration

29. Right to honest and fair dealing Right to assume that the supplier has legal right to property The supplier is liable to third party if third party has legal right over property Does not apply to used goods or immovable property • Prohibited: • Unconscionable conduct, force, coercion, undue influence, pressure or harassment, unfair tactics • Making false, misleading or deceptive representations • Overselling and overbooking • Refund in full with interest • Claim contractual and consequential damages, including economic losses

30. Right to fair, just and reasonable terms Right to fair value, good quality and safety Goods to be in working order, free of defects, useable and durable for a reasonable period of time • Safeguard the safety of consumers • Establish regime of product liability • Rights of consumers to receive goods that are: • Of good quality • Free from defects • Reasonably suitable for the intended purpose Provisions that seek to limit suppliers liability must be brought to attention of the consumer

31. Right to fair, just and reasonable terms • To issue alerts of any activity that is subject to hazard • Provide notice or instructions of safe handling, how to inhibit any risk, remedy or mitigate the effects • Provide for safe disposal of goods • Accept the return of waste goods • Liable for harm caused as consequence of product defect or failure Obligation of suppliers: Implied warranty on quality: Six months on repair, replace or refund Further three months replace or refund requirements

32. Supplier’s accountability to consumers Pre-paid certificates, credits and vouchers Remain negotiable for 5 years Supplier obliged to honour them Minimum period is three years Treated as pre-paid income until redeemed

33. Companies Act

34. The Process so far

35. Categories of Companies

36. Company formation

37. Names of Companies

38. Financial Statements

39. Audit Requirement

40. Auditors

41. Minimum Directors

42. Directors }

43. Directors

44. Common law duties vs statutory duties New act has codified the common law duties Non-compliance with statutory duties is an offence. Both the company and the director will be liable to prosecution.

45. Reasonable man test Section 76 Director Alternate director Officer Member of committee Director's judgment "reasonable" if he:Has taken reasonably diligent steps to become informed about the matter at hand;Has no material personal financial interest in such subject matter; andIndicates judgment of a reasonable individual in a similar position.

46. Section 76 Duty to disclose

47. “Business Judgment Rule” Section 76(4) Use experts In good faith For proper purpose Acted on an informed basis Without personal interest Have rational belief that decision is in best interest of company Reasonable and responsible

48. Section 75 Interest in contracts Does not apply if: Decision affects all directors or only one director who is also shareholder

49. Other Actions: Liability Taking part in a meeting (formal or informal) and failed to vote against following In contravention of Act or MOI Liable for loss or damages suffered Conduct does not need to be fraudulent or carried out with gross negligence (§218)

50. Other liabilities Section 20(6) Unless ratified by shareholders Threat of class action – Exercised by a person acting as a member of a group, or class of affected people (section 157) Threat of derivative action Personal liability