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DOC Team

South African Postbank Limited Bill Dept of Communications 15 September 2010 Select Committee on Labour & Public Enterprise. DOC Team. Dr. Harold Wesso : Acting DG Norman Munzhelele : Acting DDG Willie Vukela : Director Alf Wiltz : Director Dimakatso Mojela : Deputy Director.

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  1. South African Postbank Limited BillDept of Communications15 September 2010Select Committee on Labour & Public Enterprise Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  2. DOC Team • Dr. Harold Wesso : Acting DG • Norman Munzhelele : Acting DDG • Willie Vukela : Director • Alf Wiltz : Director • Dimakatso Mojela : Deputy Director Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  3. NORMAN MUNZHELELE Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  4. Background • Postbank is a financial services division of the Post Offices around the world • It aims to give mostly isolated and rural communities access to vital financial and related services • SAPO has been offering financial services, since its incorporation, which included money order and postal order services • Postbank established in terms of the Post Office Act, 1958 (Act No. 44 of 1958) as a division of Post Office and under the control and management of SAPO Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  5. Background.. • Currently, regulated under the Postal Services Act 124 of 1998 and has special exemption from the application of the Banks Act, which imposes high entry barriers in terms of capital, liquidity and reserves requirements • This would have impeded the government intentions of providing financial services to the rural and unbanked population using the Post Office infrastructure Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  6. Background.. • Currently operates as a deposit taking and saving division of the South African Post Office and utilizes the shared Post Office infrastructure to provide its services Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  7. Introduction • The 1996 White Paper on Postal Policy provided a framework for the restructuring of the Postbank and the corporatisation of the Postbank as a subsidiary wholly owned by SAPO or Government, with an ultimate aim of becoming a fully-fledged bank • In implementing the policy, a memorandum of Understanding (MoU) was entered into between the Ministers of Communications and Finance on the restructuring and corporatisation process in 2005 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  8. Introduction • The policy and MoU spelt out the governing principles and the process to be followed in the restructuring and corporatisation of the Postbank Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  9. Introduction • Working and Steering committees comprising of representative from the Department of Communications (DoC), South African Post Office (SAPO), Postbank, National Treasury and Reserve Bank were established to work on finalising the process • The DoC tasked with the developing legislative framework that will enable the corporatisation process and creation of bank Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  10. Introduction • National Treasury, SAPO and Reserve Bank also working on other prudential requirements to ensure proper implementation of the process, which included conducting due diligence on the state of readiness and work on the gaps identified Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  11. Strategic focus of the Bill • To create a legislative framework that will facilitate the incorporation the Postbank division of the Post Office as a public company wholly owned by Post Office and for the company to be registered and operate as a bank • Provide for the establishment of financial institution for mass mobilization of savings and investment from a broad community, particularly to communities that have little or no access to commercial banking services and facilities Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  12. Strategic focus • To provide an improved and expanded role of the Postbank and to strengthen the Postbank to provide financial services to wide segments, particularly of the rural community Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  13. WILLIE VUKELA Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  14. Summary • The Bill is divided into 6 Chapters, namely • Chapter I-Interpretation & Objects of the Act • Chapter II-Incorporation and Transfer of Enterprise • Chapter III-Ownership & Powers of the Company • Chapter IV-Control & Management of the Company • Chapter V-Funds and Financial Account of the Company • Chapter VI- General & Miscellaneous Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  15. Chapter I Clause 1: Interpretation of the Bill Definitions • It provides for the definitions of words as they will be used in the legislation for better understanding and interpretation Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  16. Chapter I Clause 2: Objects of the Bill The object of this Act is to provide for the incorporation of the Postbank Division of the Post Office as a legal person with the aim of:- • Conducting the business of a bank that will encourage and attract savings amongst the people of the Republic • Rendering transactional services and lending facilities through, amongst others, existing infrastructure of the Post Office Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  17. Chapter I • Expanding the range of banking services and developing into a bank of first choice, in particular to the rural and lower income markets as well as communities that have little or no access to commercial banking services or facilities • Promoting universal and affordable access to banking services • Ensuring lending to rural and lower income markets • Ensuring that the rates and charges of the Company take into consideration the needs of the people in the lower income market Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  18. Chapter II • Clause 3: Incorporation • Provides for the incorporation of the public company and for such company to be a wholly owned subsidiary of SAPO • Empowers the Minister to sign the Memorandum and the Articles of Association and all other documents necessary for the formation and incorporation of the company Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  19. Chapter II • Clause 4: Registration as Bank • This provision compels the Company to register as a bank after it has satisfied the requirements of the Banks Act • The Company shall not expand the scope of its banking and investment activities which exist when this Act takes effect until it is registered as a bank in terms of the Banks Act, and any such additional business activity is approved by the Registrar of Banks Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  20. Chapter II • Clause 5: Determination of extent of business to be transferred • This clause empowers the Post Office to determine the extent of the business to be transferred to the Company and for such business to be audited by a public accountant and auditor appointed by the Minister • It further provides for the said auditor to attach a monetary value in determining the extent of the business of the former Postbank Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  21. Chapter II • Clause 6: Determination of transfer date of enterprise • Clause 6 empowers the Minister to determine a date for the transfer of the enterprise from the former Postbank to the Company by notice in the Gazette Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  22. Chapter II • Clause 7: Transfer of enterprise of former Postbank to Company, vesting and consequence thereof • It provides that on the transfer date— • (a) the management, control and operation of the former Postbank are transferred to the Company • (b) the business of the former Postbank vests in the Company • (c) subject to compliance with the Labour Relations Act, 1995 (Act No. 66 of 1995), personnel of the former Postbank is transferred to the Company Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  23. Chapter II • (d) anything done by or on behalf of the former Postbank must be regarded as having been done by the Company Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  24. Chapter II • Clause 8: Exemption from tax liability • Provides for the exemption of the transfer of the business of the former Postbank from tax liability Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  25. Chapter III • Clause 9: Powers and Duties of the Company • It provides for the powers that the Company shall have to enable it to realize its objectives as set out in section 2 • Importantly, the Company will have powers to invest, borrow and lend money in accordance with an investment policy made by the Minister, with the concurrence of the Minister of Finance • It further provides for an agreement between SAPO & Postbank on utilization of SAPO infrastructure Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  26. Chapter IV • Clause 10: Control and Management of the Company • This clause provides that the Company is controlled by a board of directors • Empowers the Minister, with the concurrence of the Minister of Finance and the Post Office to appointed or reappointed Board members Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  27. Chapter IV • Clause 11: Functions of Board • It provides for the functions of the Board as follows:- • (a) must give effect to the corporate plan of the Company • (b) is the accounting authority of the Company • (c) provides guidance to the managing director and personnel of the Company concerning the exercise of the functions of the Company • (d) must notify the Minister immediately of any matter that may prevent or materially affect the achievement of the objects or financial targets of the Company Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  28. Chapter IV • Clause 12: Composition of Board • Provides for the composition of the Board and the qualifications of its members • It provides for the composition of the Board as follows:- • seven non-executive members appointed from among the persons nominated in terms of section 14(1)(a) • two other non-executive members appointed from among the persons nominated by the Post Office in terms of section 14(1)(b) and • (c)the managing director, who is an executive member of the Board Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  29. Chapter IV... • Clause 13: Disclosure & disqualification from membership of Board • It provides the grounds of disqualification from membership of the Board & importantly that no person may be appointed as a board member if he/she has any direct or indirect interest in conflict with the business of the Company • It provides for financial interests disclosure & declaration that a member has no interests that are in conflict with the business of the company • It further differentiates between disclosure before and after appointment Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  30. Chapter IV... • Clause 14: Appointment of members of Board • Empowers the Minister to appoint members of the Board and further outlines the process to be followed • In summary, the Minister must, within 30 days after consensus has been reached with the Minister of Finance and the Post Office regarding the appointment of members as contemplated in section 10(2) (i) designate the non-executive members of the Board from suitable persons nominated by the Post Office and (ii) appoint the other non-executive members of the Board from suitable persons nominated by a nomination committee Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  31. Chapter IV... • Clause 15: Resignation, removal from office and vacating of office • Provides for how resignations and removal and vacating from office of Board member shall be dealt with Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  32. Chapter IV... • Clause 16: Disclosure and fiduciary duties of Board members • This clause provides for a member of the Board not be present, or take part in, the discussion of or the taking of a decision on any matter before the Board in which that member or his or her family member, business partner or associate has a direct or indirect interest Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  33. Chapter IV... • Further provides for a member of the Board or his or her family member, business partner or associate, or an organization or enterprise in which a member of the Board or his or her family member, business partner or associate has a direct or indirect interest, not to offer goods or services to the Company or conclude any business with the Company • It further provides for other fiduciary duties such as the regular attendance of Board meetings & the performance of functions with the utmost good faith, honesty and integrity, care and diligence Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  34. Chapter IV... • Clause 17: Procedures at meetings, and committees of Board • Provides for procedure at meetings and empowers the Board to appoint committees necessary to assist in the realization of the Company’s objectives and to delegate any of its powers to such committees Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  35. Chapter IV... • Clause 18: Appointment of managing director • Empowers the Board to appoint the managing director as the most senior person of the Company, subject to the Minister’s approval and outlines the appointment process Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  36. Chapter IV... • Clause 19: Conditions of appointment of managing director • Outlines the conditions for the appointment of managing director and the remunerative package as determined by the Board with the concurrence of the Minister and the Minister of Finance • The appointment of the managing director is subject to the conclusion of a performance contract entered into between the Board and the managing director • The managing director is accountable to the Board Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  37. Chapter IV... • Clause 20: Personnel of Company • Makes provision for the managing director with the concurrence of the Board to appoint personnel to perform work-related functions • It further provides that the Board must determine the structure or organogram of the Company and the conditions of service, remuneration and service benefits of personnel, in consultation with the Minister and the Minister of Finance Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  38. ALF WILTZ Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  39. Chapter V • Clause 21: Annual report • It provides for the Company to annually, not later than five months after the end of its financial year, submit to the Minister a report on all its activities during the previous year • It further provides for the annual report to be tabled in Parliament within 30 days after it was received by the Minister, if Parliament is then in session, or, if Parliament is not then in session, within 30 days after the commencement of its next ensuing session Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  40. Chapter V • Clause 22: Funds of Company • It provides for the funds of the Company consist of capital vested in the Company by virtue of section 7, funds derived from its operating activities, money appropriated by Parliament; and moneys lawfully received from any other source Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  41. Chapter V • Clause 23: Inspection of financial accounts and documents of Company • Empowers the Minister or any officer authorized by the Minister to inspect financial accounts and documents of the Company Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  42. Chapter V • Clause 24: Application of Public Finance Management Act • Provides for the application of the Public Finance Management Act Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  43. Chapter VI • Clause 25: Intervention by Minister • It provides for the circumstances under which the Minister, with the concurrence of the Minister of Finance, may intervene if the Company fails to perform its functions in terms of this Act • It furthermore empowers the Minister to dissolve the Board, on good cause shown, if the Minister loses confidence in the ability of the Board to perform its functions effectively and efficiently • It also provides for the appointment of an administrator by the Minister, to take over the functions of the Company Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  44. Chapter VI • Clause 26: Regulations and policy • It empowers the Minister to develop regulations, after consultation with the Minister of Finance • It also empowers the Minister to make policies on matters of national interest applicable to the Company • The Minister must act with the concurrence of the Minister of Finance, obtain Cabinet approval, table the policy in the National Assembly and publish the final version of the policy in the Gazette Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  45. Chapter VI • Clause 27: Non-application of provision of Companies Act • This clause provides that a provision of the Companies Act does not apply to the Company if • (a) because of any special or contrary arrangement made by this Act, such a provision is clearly inappropriate or inapplicable; or • (b) the Minister of Trade and Industry has issued a declaration under section Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  46. Chapter VI • Clause 28: Certain provisions of Companies Act may be declared inapplicable to Company • This clause empowers the Minister to request the Minister of Trade and Industry to declare any provision of the Companies Act to be inapplicable to the Company and describes the process involved which includes public participation Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  47. Chapter VI • Clause 29: Offences • This clause provides for offences such as the transgression of fiduciary duties and the disclosure requirements of members of the Board Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  48. Chapter VI • Clause 30: Transitional provisions • Provides for the transitional arrangement to allow the former Postbank to continue to function without interruption until the Postbank is registered as a bank Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  49. Chapter VI • Clause 31: Repeal of laws • Provides further for the repeal of laws mentioned in Schedule 1 and the extent set out in the third column of that schedule more specifically the repeal of certain sections from the Postal Services Act, 1998 Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

  50. Chapter VI • Clause 32: Short title and commencement • Provide for the short title and commencement of the Act Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development

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