The Banks Amendment Act
31 January 2014 | Legal Affairs | General | Yaniv Kleitman, Cliffe Dekker Hofmeyr
The Banks Amendment Act, No 22 of 2013 came into force on 10 December 2013, and amends the Banks Act, No 94 of 1990 in some substantial respects.
Its primary aim is to bring South African banking regulation in line with the latest recommendations of the Basel Committee of Banking Supervision (Basel III). The bulk of the Amendment Act deals with the new capital requirements and classes of share capital required to be in issue by banks, as per Basel III – a topic which in itself brings about a number of company law issues that warrant extensive analysis and advice.
Other corporate and commercial law issues that are worth noting in the Amendment Act are as follows:
• There is a general update of the Banks Act (in particular its cross-referencing to other statutes) to bring it in line with recent legislation such as the Companies Act, No 71 of 2008, Financial Markets Act, No 19 of 2012 and the Collective Investment Schemes Control Act, No 45 of 2002.
• The Amendment Act makes it clear that the business rescue provisions contained in Chapter 6 of the Companies Act shall not apply to banks. The Banks Act contains its own rescue provisions that pertain to banks.
• The power is given to the Registrar of Banks to invoke s77 of the Companies Act, which deals with the personal liability of directors and prescribed officers to their companies for breaches of the Companies Act and the company's memorandum of incorporation.
• There is an expansion of banks' audit committees' functions, to bring them in line with the Companies Act.
• There is now a statutory requirement for banks to have remuneration committees. This cements the recommendations in King III into statute.
The Banks Amendment Act is an important development in South Africa which aims at bringing our legislation further in line with global standards.
