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South African Post Office SOC Limited Amendment Bill, 2013 Department of Communications Presentation to the Select Committee on Labour and Public Enterprises 20 November 2013. Presentation Outline. Introduction/ Background Problem Statement Preamble Provisions of the Bill

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  1. South African Post Office SOC Limited Amendment Bill, 2013 Department of Communications Presentation to the Select Committee on Labour and Public Enterprises20 November 2013 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  2. Presentation Outline • Introduction/ Background • Problem Statement • Preamble • Provisions of the Bill • Departments/Stakeholders consulted • Process followed • Conclusion Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  3. Introduction/Background • Post Office Pension Fund was established on 1 October 1991 in terms of section 9 of the Post and Telecommunication-related Matters Act,1958(Act No 44 of 1958) (PTMA),and renamed Post Office Retirement Fund (PORF) in 2005 • PORF is a juristic person managed by a Board of Trustees as separate legal entity from the South African Post Office Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  4. Problem Statement • Ms Ngewu applied to the Constitutional Court for relief that would allow her to obtain immediate payment of her share of the pension interest benefit from her former spouse’s pension fund which was awarded to her following their divorce • The Post and Telecommunication-related Matters Act, 1958 currently does not make provision for the “clean break” principle upon divorce, this principle allows spouses to access their share of the pension benefit on divorce or dissolution of a customary marriage Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  5. Problem Statement • The Constitutional Court found the Post and Telecommunications-related Matters Act to be inconsistent with section 9(1) of the Constitution and invalid, as it does not provide for the “clean break” principle. Section 9(1) “Everyone is equal before the law and has the right to equal protection and benefit of the law.” • The Constitutional Court suspended the order for eight months from the 07 March 2013 the date of the order, and the Minister as the second respondent was expected to remedy the Constitutional defect within that time by 07 November 2013 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  6. Preamble • To amend the South African Post Office SOC Ltd Act, 2011 • To improve governance provisions between the Boards of the South African Post Office SOC Ltd and the South African Postbank Limited • To amend the Post and Telecommunication-related Matters Act, 1958 • To provide for the payment of pension benefits to a former spouse of a member on divorce or the dissolution of a customary marriage Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  7. Provisions of the Bill The Amendment Bill is divided into 6 clauses as follows: • Clause 1:The clause seeks to substitute the definition of “Post Office Act” for ‘‘Post and Telecommunication-related Matters Act’’ since the name of the former has changed to the latter • Clause 2: Clause 2 seeks to amend section 3 of the South African Post Office Act by substituting “Post Office Act” for “Post and Telecommunication-related Matters Act” • Clause 3: Seeks to amend section 8(2)(a) by removing requirement that the Managing Director of the Postbank be one of the members of the Post Office Board by virtue of his or her office Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  8. Provisions of the Bill • The clause further seeks to amend section 8(5) by removing the requirement that when the Board recommends persons for appointment to the Board of the Postbank, they must nominate non executive members of the Board of the Post Office • The amendment is required since the appointment criteria and the manner for members of the Boards of the South African Post Office and Postbank respectively are different • Clause 3 further seeks to amend section 8(6) by making it clear that any non-executive members of the Board are appointed to the Board of the Postbank such members are accountable to the Board of the Postbank in respect of their functions performed as Board members of the Postbank Board Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  9. Provisions of the Bill • This amendment is made in line with King III, Chapter 2, paragraph 142 that provides as follows: “The holding company must recognise the fiduciary duties of the subsidiary company’s directors and particularly their duty to act in the best interest of the subsidiary company at all times whether or not the director is nominated to the board of the subsidiary company by the holding company.” Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  10. Provisions of the Bill • Clause 4: Seeks to amend section 11(4)(c) to ensure that all members of the Board must be fit and proper persons to manage the affairs of the Post Office in its capacity of a controlling company of the Bank, as contemplated in section 44 of the Banks Act,1990(Act No 94 of 1990), which is “Granting or refusal of application for registration as controlling company” Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  11. Provisions of the Bill • Clause 5 and Schedule: Clause 5 of the Bill read with the Schedule provides for the amendment of the Post and Telecommunication-related Matters Act, 1958 (“the PTMA”) • The PORF is a juristic person that must act in accordance with pension-related provisions of the PTMA and is managed and controlled in accordance with pension statutes or rules promulgated under section 10 of the said Act • The rules of the PORF do not allow a former spouse of a member to claim a portion of a member’s pension interest, in terms of a divorce order or an order for the dissolution of a customary marriage, soon after the divorce order or the order for the dissolution of a customary marriage is granted Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  12. Provisions of the Bill • The former spouse can only receive a portion of the member’s interest after the exit of the member from the PORF • Until 7 November 2013, the rules of the PORF could not be amended due to the provision in sections 10B of the PTMA that provides that: • ‘‘10B.—(1) No pension or lump sum from a pension fund referred to in section 10, or right to such a benefit, or right in respect of contributions made by, or on behalf of, a member, may be ceded, pledged or hypothecated, or be attached or subjected to any form of execution under a judgment or order of a court of law . . .’’ Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  13. Provisions of the Bill • The Bill seeks to correct this prohibition in order to provide for the implementation of the ‘‘clean-break’’ principle • The ‘‘clean-break’’ principle allows for the non-member spouse to claim and receive a portion of the member’s interest that is assigned in terms of the divorce order or the order for the dissolution of a customary marriage, soon after the divorce order or the order for the dissolution of the customary marriage has been granted. The former spouse does not have to wait until the member exits the pension fund • A new section 10F is inserted into the PTMA to give effect to the ‘‘clean-break’’ principle and section 10B of the PTMA is amended to enable the PORF to amend its rules accordingly Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  14. Provisions of the Bill • Clause 6: This clause provides for the amendment of the law mentioned in schedule 1 of the Act • Clause 7: This clause contains the short title: the South African Post Office SOC Ltd Amendment Act, 2013 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  15. Departments/stakeholders consulted • Department of Justice and Constitutional Development • Department of Finance • South African Post Office • Post Office Retirement Fund • Telkom South Africa • Civil Society by gazetting the Bill for public comments Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  16. Process • The Bill was developed in consultation with the South Africa Post Office SOC Limited, Department of Finance (National Treasury), PORF and further approved by the following: the Economic Sectors & Employment Cluster on 17 April 2013, Cabinet Committee on 18 June 2013 and full Cabinet on 26 June 2013 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  17. Conclusion • The Bill allows for the amendment of the Post and Telecommunication-related Matters Act, 1958 with the inclusion of the “clean break” principle as a result of a recent court decision of Ngewu vs PORF where the Constitutional Court found that the exclusion of this principle from the PTMA is unconstitutional and invalid and therefore must be rectified Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  18. THE END I THANK YOU Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

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