Complying with Changes in Legislation October and November

Complying with Changes in Legislation October and November

Complying with Changes in Legislation October and November 2012 Agenda FICA FAIS National Credit Act Consumer Protection Act Protection of Personal Information Bill Companies Act and King III Second-Hand Goods Act Tax Administration Act FICA Money Laundering legislation FICA POCA Defines: Money Laundering offence Reporting obligation

Definition Concealing Disguising Nature Source Location Disposition Movement Proceeds of unlawful activities Financial Intelligence Centre Not a law enforcement agency or investigative FIC

body IRBA, Estate agents board, Law society Supervisory Bodies SARB Accountable Reporting Attorneys, Estate agents, Banks, Insurance broker Institutions Institutions General business Reporting obligations Any person who: And who knows or suspects that: Carries on a business

Business has received proceeds of unlawful activities Is in charge of a business Transaction may relate to money laundering Manages a business Party to a transaction Is employed by a business Duties of accountable institutions Accountable and Reportable Cash transactions Above R 25 000 Electronic

transfers Conveyance of cash Administrative duties for accountable institutions Register with FIC Compliance officer Identify clients Training Keep records for 5 years Internal rules Responsibility of supervisory body Administrative

sanctions: Report on compliance Not to repeat conduct Reprimand Report any action taken against accountable institution Issue or amend license, registration Fit and proper test Remedial action Restriction or

suspension Penalty: Individual: R 10 mil Company : R 50 mil Appointment of inspectors Issue certificate of appointment No warrant is necessary Head of supervisory body Appoint Inspector Must consult with Centre Enter and inspect premises Question persons

Open strong room/safe Institution liable for any costs involved Copy/seize document IRBA inspections Anti-Money laundering policy document Proof of registration with FIC (if applicable) Reporting procedures Section 29 Financial Intelligence Centre Act 31/2001 Protection of Democracy Against Terrorist and Related Activities Act (POCDATARA) Protection and Combating of Corrupt Activities Act (PRECCA) Monitoring procedures in respect of clients accountability in terms of sec 28 Procedures during an audit to detect possibility of money laundering Training schedules and programme in respect of staff Compliance and enforcement All offences

Sec 55, 61A, 62, 62A, 62B, 62D Imprisonment 15 years Imprisonment 5 years R 100 mil R 10 mil FAIS Definition of advice Advice is: Recommendation Guidance Proposal Client Group of clients Purchase or investment in any financial product

Advice is not: Factual advice Description of product Routine administrative query Objective information Display or distribution of promotional material Analysis without recommendation What is FSP? Duties Excluding a representative Any person Furnish advice Renders intermediary services Assistance

policies exempt until 21 August 2013 Display certified copy of license in prominent place at all business premises Include reference to license in all documentation Advise registrar of lapsing of license Permanent incapable of carrying on business Sequestrated Dies Liquidated Business is dormant Appoint compliance officer Representatives May only Act if: There is a contract with FSP

FSP accepts responsibility Maintain register of representatives Remove when representative no longer complies with requirements Debar any representative who does not comply with fit and proper requirements Inform registrar within 15 days of debarment (provide reasons) FSP must: Compliance officer Suitable qualifications and experience (according to new list Gazetted 15 August 2012) Approved by registrar Ensure compliance of FSP Submit reports to registrar Accounting and audit requirements Audited

Annual financial statements All FSPs Monthly accounting records Submitted within 4 months of year-end Trust account External auditor must be approved by Registrar Reasons for termination as auditor May only change year end with approval of Registrar 10 Different compliance reports

Different submission dates per category Exemption from audit requirement Exempt Category 1 FSP limited by product: Long-term insurance and friendly society benefits and who receives or holds client money Category 1: Does not receive premiums or hold clients assets or money Companies Act, 2008 Audit Review Exempt or CC Duty

Register exemption with registrar Inform Registrar in writing of any change within 15 days Duty to report irregularities Reporting duty Compliance officer and auditor Material irregularities Report by compliance officer Immediate reporting to employer/client Notification that matter will be reported Provide reasonable opportunity for written comments as to why irregularity is not material or steps that

will be taken to address Without undue delay to FSB Report by auditor Follow normal reporting process IRBA to notify the FSB Fit and proper requirements Honesty and integrity Two regulatory Competence Not been found guilty for fraud, dishonesty etc for 5 years Not denied membership of any body

License not suspended or withdrawn Different experience requirements for different categories: Table A Qualification requirements. List of recognised qualifications (New list Gazetted 15 August 2012) examinations Level1: FICA, FAIS, Code of

conduct (30 June 2012 or 30 September 2012) Level 2: Product specific information CPD requirements 15-60 hours over 3 year cycle Training facilitators to apply for accreditation Log CPD on the on-line CPD register Keep records for 5 years

Fit and proper requirements Operational ability Fixed business address Access to communication facilities e.g. telephone line, typing and duplication facilities Adequate storage and filing systems Bank account and separate trust bank account Money laundering control systems Financial soundness Not be an unrehabilitated insolvent or under liquidation Assets (excluding goodwill and other intangible assets) must exceed liabilities Category IIA and III 13/52 weeks of expenditure Liquid assets Category I 4/52 weeks of

expenditure Category II and IV 8/52 weeks of expenditure Professional Indemnity and Fidelity Insurance Category 11 or 11A and receive or hold client funds Category 1 PI of R 1 mil Guarantees of R 1 mil Category 1 or IV and receive or hold client funds FI of R 1 mil

Guarantees of R 1 mil PI or FI of R 5 mil Guarantees of R 5 mil Category 111 and receive or hold client funds PI and FI of R 5 mil Guarantees of R 5 mil Financial interest and conflict of interest Avoid or mitigate conflict of interest Disclose full nature of conflict in writing and measures taken to avoid or mitigate the conflict

Financial interest which a FSP may receive from or pay to a third party Restricting fees principally to commissions and fees authorised under the Long Term Insurance Act, the Short Term Insurance Act and the Medical Schemes Act. No financial interest to a representative for giving preference Prohibits offering a financial interest to a representative for giving preference to the quantity of business secured to the exclusion of quality, or for giving preference to a specific product supplier, or for giving preference to a specific product of a supplier Financial interest and conflict of interest Conflict of interest management policy Requires all FSPs to adopt, maintain and implement a conflict of interest management policy Anti-avoidance Prohibits any FSP or representative from attempting to collude with any associate in an attempt to avoid, limit or circumvent compliance with the Code. Reporting duty

Requires the compliance officer to report on the providers conflict of interest management policy, to the Registrar Reported on implementation, monitoring, compliance with and accessibility of the conflict of interest management policy Offences and penalties Offences Contravenes or fails to comply with a provision of section 7(1) or (3), 8(8), 8(10)(a), 13(1) or (2), 14(1), 17(4), 18, 19(2), 19(4) or 34(4) or (6); Deliberately makes a misleading, false or deceptive statement, or conceals any material fact; Gives an appointed auditor or compliance officer information which is false, misleading or conceals any material fact; or Is not a representative appointed or mandated by an authorised financial services provider, and who in any way declares, pretends, gives out, maintains or professes to be such a person Penalties Fine not exceeding R 10 mil Imprisonment not exceeding 10 years Both National Credit Act Consumer rights

Apply for credit Not to be discriminated against when applying for credit To be given reasons for credit being declined To be given documents in an official language that the consumer understands To be given documents in a clearly understandable language

To be given written documentation relating to the credit transaction The confidentiality of personal information To access and challenge information held by a credit bureau To receive periodic statements Registration requirements Credit providers No natural persons Credit bureaus

> 100 credit agreements (Excl incidental) Principle debt > R 500 000 Registration fees Renewal fees Duties of NCR Certificate of registration Enter in register Fit and proper No juristic person Counsellors Assign unique registration number Types of agreements

Intermediate Pawn transaction Up to R 15 000 Excluding mortgage Small Between R 15 001 and R 250 000 Excluding a pawn transaction and mortgage More than R 250 000 Mortgage Large Included transactions Loans and other credit from banks Mortgages Overdrafts

Credit cards Vehicle and personal finance Credit from retailers Furniture finance Clothing accounts Other Micro loans Pawn transactions Excluded transactions Where the consumer is a juristic person Assets or turnover Large agreements State or organ of State

Where credit provider is: Reserve bank Outside the Republic Provider of utility Other Insurance policies Lease of immovable property Stokvel Unlawful and Reckless Agreements Unlawful Credit provider Cannot sue Must refund: Monies paid Interest per quote

Minors Reckless credit No risk assessment Mentally unfit Under administration Negative option marketing Unregistered providers Assessment indicates consumer cant afford Consumer rights not understood Pre-agreement statements

Principle debt Terms and conditions Interest rate Prescribed forms for all agreements Pre agreement and quote Total amount payable Valid for 5 days Installments Fees, charges, interest Right to receive statements Once a month Every two months

Maximum = 3 months Installment Lease Secured Mortgage = 6 months Termination and early payments Termination Paying settlement amount Early payments May not be refused by credit provider No penalty fee for small/intermediate agreement Large agreement Penalty = 3 months interest First to interest, then charges, then outstanding balance

Surrender of goods, debt enforcement Surrender of goods Can return at any time Sell and credit account Proceeds less than debt 10 days to pay Debt enforcement Not allowed to retain: ID Debit or credit card ATM card Pin number Notify in writing Refer to debt councilor Consumer to reply within 10 days

Compliance and reporting Compliance report Annual financial statements 6 months after year end Assurance report Statistical return > R 15 mil Quarterly < R 15 mil 15th February Consumer Protection Act Scope of the Act

Every transaction occurring within the Republic Promotion or supply of goods and services Goods and services themselves after the transaction is completed Includes franchise transactions By profit business, or by non-profit entity, the State or entities contracted by the State and Public Private Partnerships Excluded transactions What is excluded? Goods or services promoted or supplied to the state Juristic person with asset value or turnover > threshold (R 2 mil) Credit agreements under NCA Services supplied under employment contract

Clause 60 and 61 deals with unsafe goods Apply to all goods introduced to the market, even when exempt Other exemptions Minister may grant industry-wide exemptions Meaning of goods Meaning of goods Legal interest in Tangible, intangible land Anything marketed e.g. music, for human photograph,

Any other consumption literature, software immovable property codes, licenses e.g. usufructs Gas Water Electricity Meaning of service Accommodation e.g. restaurant or hotel Provision of: Transportation Rights of a franchise Banking and financial service Work or under-taking

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) Consumers rights Free and unlimited access Suppliers may not: Limit access to goods and services Prioritise consumer groups Different quality or pricing Complain to Equality court or file complaint with commission

Excluded Sales of alcohol to under-aged minors Discounted prices for children, persons over a certain age Separate use of facilities for different genders Consumers rights Right to privacy No direct marketing at home for promotional purpose during Sunday, public holidays, Saturdays between 9:00 and 13:00 and all other days between 20:00 and 8:00 Accept, refuse or block any unwanted marketing Formal demands to discontinue marketing approach Pre-emptive blocking of direct marketing

Minister to: Establish an Exclusion Register Consumers rights Fixed term contracts Maximum of 24 months Right to cancel without penalty or charge Reasonable cancellation penalty Month to month automatic renewal 20 Business days cancellation notice Exclude juristic persons Quotes and estimates Provide estimate No charge for drawing up cost estimate Consumer to pre-authorise or

refuse additional repairs No charge for inspections to do cost estimates unless with prior agreement Consumers rights Cancel advance reservations or bookings May charge deposits Reasonable penalties Excluding death or hospitalisation Right to return goods Six months to return faulty or unsafe goods Without penalty Suppliers risk and expense Consumers rights Unsolicited goods or services

Retain goods without payment Return at suppliers risk and cost Entitled to retain after 20 business days Right to cancel agreement Result from direct marketing Cooling off period of 5 business days No need to provide reasons for cancellations No penalties Supplier to return payment received within 15 business days of receiving cancellation notice Over booking and

over selling Refund in full with interest Claim contractual and consequential damages, including economic losses Fair and responsible marketing Prohibited marketing practices Bait marketing Negative options: Client under no obligation to pay Referral selling Offering of prizes 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

Loyalty programmes, pre-paid certificates, credits and vouchers Loyalty programme: Notify consumer of times at which points may not be redeemed Exclusion period limited to 90 days in a year Pre-paid certificates Supplier obliged to honour them Minimum period is three years Disclosure and information Notice and document Plain and understandable language Person with average literacy skills and minimal experience must understand Goods and services

Compulsory to display price Specify duration of promotions, otherwise customers may purchase goods at specified prices If two prices are displayed, the lowest has to be charged Trade descriptions not misleading or tampered with Disclosure Reconditioned Grey market goods 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 Provisions that seek to limit suppliers liability must be brought to the attention of the consumer No voetstoots clause Strict liability Implied warranties Producer, importer, distributor and retailer Liable for harm caused Unsafe goods, product failure, defects, hazard,

inadequate instructions or warnings Irrespective if negligent or not Six months on repair, replace or refund Further three months replace or refund on repairs Registration of business names Prohibited Trading name must be the registered name of the entity or per ID Obligation May not be the same or similar to

another registered entity or trade mark If name is not registered Consumer Commission may require business to cease trading Consequence Safety Recall Guidelines Purpose Requirement Scope of Guidelines What a supplier is required to do when conducting a product safety recall

Supplier to adopt a system that will ensure the efficient and effective recall of unsafe consumer products from consumers and from within the supply chain The legal requirements The role and responsibilities of suppliers and government agencies Requirements for conducting a recall, including Notification Recall strategy Retrieval of the product Reporting on the

recall Penalties Consequences of non-compliance Fine or imprisonment of 12 months Disclosure of private information: 10 years Administrative fines of R 1 000 000 or 10% of turnover Civil damages Protection of Personal Information Bill Promulgated this year or in 2013 Enforcement and penalties Unsolicited electronic communication Information protection principles

What information is protected? Purpose of the Bill Overview Purpose of the Bill Everyone wants the right to be left alone and have control over their personal information Promote protection of personal information processed by public and private bodies Establish minimum requirements for the processing of personal information Provide for rights of persons regarding unsolicited electronic communications and automated decision making Processing of personal information

Processing Collection, receipt, recording, organisation, collating, storage, updating, modification, retrieval, alteration, use, dissemination and merging Personal information Race, gender, sex, pregnancy, marital status, national, ethnic or social origin, colour, sexual orientation, age, physical or mental health, well-being, disability, religion, conscience, belief, culture, language and birth of the person Education, medical, financial, criminal or employment history ID number, symbol, e-mail address, physical address, telephone number Blood type or biometric information Processing of personal information Personal information Personal opinions, views or preferences of the person Correspondence sent by the person that is implicitly or explicitly of a private or confidential nature, or further correspondence that would reveal the contents of the original correspondence The views or opinions of another individual about the person Special personal information Child who is subject to parental control Religious, philosophical beliefs, race or ethnic origin, trade union

membership, political opinions, health, sexual life, or criminal behaviour Warning: PI may only be processed after the Regulator has been notified Exclusions from the application of the Bill Personal or household activity De-identified information State- national security, defence and public safety State- prevention, investigation or proof of offences Journalistic purposes Cabinet, Executive Council of a province, Municipal Council and Municipality Judicial functions Exemption in terms of section 34 Information protection principles Processing limitation Consent and objection Informing data subject of purpose Retaining data for no longer than needed

Complete, accurate, not misleading Prevent loss or unauthorised use of PI Notification to Regulator and data subject Right to request free of charge a description about PI held and to whom such data was disclosed Right to request correction or deletion of PI that is inaccurate, irrelevant, excessive, out of date, incomplete, misleading Unsolicited electronic communication Prohibited unless: Consent from data subject Data subject is client Communication

Contain details of identity of the sender Address to which recipient may send request that communication cease Only goods and services of company may be advertised Selling of databases prohibited Unsubscribe address Directories Inform data subject of inclusion and use of directory Individuals may object and request withdrawal of information Enforcement and penalties Complaints procedure Any person may lodge a complaint with the Regulator Regulator may apply for warrant to enter and search premises Claim for damages irrespective whether there is intent or negligence involved Power of regulator Contravention of any of the principles in itself is not a criminal offence Regulator may issue enforcement notice Failure to comply with enforcement notice is criminal offence

Penalty: Fine and/or 12 months imprisonment (10 years when obstructing the Regulator) Companies Act and King III Categories of companies Companies Gain vs Public Benefit Profit Not statePFMA definition owned Non-profit Stateowned Private company Personal liability MOI

company Public company Stateowned company Non-profit company (Pty) Ltd. Inc. Name Ltd. SOC Ltd. NPC Private companies PIS

Audit Audit Audit Audit None Audit Review Audit None None Review Review

Independentl y compiled Internally compiled Independently compiled Internally compiled 350 100 0 Owner managed Not owner managed Financial reporting

Public listed/State owned IFRS/ PFMA All listing requirements (require all companies in group to be audited) Public not listed IFRS/IFRs for SMEs (meeting scoping requirements for SMEs) Audit Audit Secretary, auditor, audit committee Secretary, auditor, audit committee

Profit or non-profit In ordinary course of its primary activities hold assets in fiduciary capacity for unrelated persons > R 5 mil (aggregate) NPC incorporated by state, international entity, foreign state entity, or foreign company PIS is 350 or more or at least 100 and AFS internally compiled IFRS/ IFRs for SMEs (meeting scoping requirements for SMEs) Audit Reporting framework for private companies PIS 350 100

0 IFRS or IFRS for SMEs IFRS or IFRS for SMEs IFRS or IFRS for SMEs IFRS or IFRS for SMEs iFRS or IFRS for SMEs or SA GAAP IFRS or IFRS for SMEs or SA GAAP IFRS or IFRS for

SMEs or SA GAAP IFRS or IFRS for SMEs or SA GAAP IFRS or IFRS for SMEs or SA GAAP Independently compiled None Internally compiled Owner managed IFRS or IFRS for SMEs or SA GAAP

Independently compiled Acceptable Internally compiled Not owner managed Financial statements Financial statements (including annual financial statements) Satisfy financial reporting standards Present fairly state of affairs and business Explain transactions and financial position Show assets, liabilities, equity, income and expenses Set out the date when published and accounting period Bear on first page prominent notice

indicating whether audited, reviewed or not Name and professional designation of individual who prepared or supervised Continue May not be false or misleading in any material respect Incomplete in any material particular Guilty of offence if person is party to preparation, approval, dissemination or publication and knowing that it is materially false or misleading Financial statements Annual financial statements Within 6 months after year end Include: Audit report (If applicable) Directors report Approved by the board

Signed by one director Presented to first shareholders meeting Disclose directors remuneration of individual directors if statutory audit required Access to annual financial statements Shareholders: one copy without charge Judgement creditor: within 5 business days without charge Trade union: through CIPC for initiating business rescue process Financial year end Requirements First financial year Begins: Date of incorporation

Ending on date set out in MOI Change of year-end Only once during financial year Current year must not have ended Ends: Date set out in Notice of Incorporation (not more than 15 months) Form CoR25 Not more than 15 months after end of preceding financial year Annual returns and financial accountability supplements Also applicable to NPC and external company

Audited i.t.o Act or Reg 28 Latest approved audited financial statements Voluntary audit and review Audited or reviewed statements Not audited/reviewed File financial accountability supplement with annual return 30 Business days after anniversary date

Waived: March 2013 (except for public and SOC) Deregister : Returns outstanding for two successive years Legal effect of deregistration: Juristic personality is withdrawn and company or close corporation ceases to exists Company records For 7 years Reports presented at AGM Annual financial statements Accounting records Notice and minutes of shareholders/ directors/ committee meetings Resolutions adopted by shareholders Written communication to shareholders

Indefinitely Copy of MOI Any amendments to MOI Copy of rules Registration certificate Register of directors (7 years for past director) Securities register/secretary/auditor Shareholder: Inspect and copy except for accounting records and minutes of directors meetings Accounting records Complete Adequate precaution against

theft, loss, falsification, intentional and accidental damage or destruction Accurate One official language Facilitate the discovery of falsification Support preparation of F/S, audit and review requirements Capable of being retrieved to a readable and printable form

Warning: Commission may issue compliance notice in respect of any failure to comply with accounting record requirements Accounting records Non current assets Date acquired and cost Date re-valued, amount, basis and reason Date disposed, value, name of person Loans to/from shareholders, directors, prescribed officers and employees

including related persons Daily records of cash in and out Amount, interest rates, terms Daily records of goods purchased and sold on credit/ names of parties Revenue and expenses Stock take records Guarantee, surety ships, indemnity Vouchers/supporting documents Property held in

fiduciary capacity NPC: Revenue received from donations grants, members fees Auditors Public companies and SOCs Must not be: Director or prescribed officer Employee or consultant engaged more than 1 year in maintenance of financial records or preparation of statements Director/officer/employee of the company secretary Person who regularly performs duties of accountant/secretarial work Was not any of the above in the preceding 5 years from date of appointment A person related to any of the above Auditors Rotation after five years Annually appointed at AGM The same

individual Specify the name of individual member Two year break Acceptable to audit committee Other services if allowed by: IRBA Audit committee Appointment of directors Three Non-Profit Companies

Election Public Companies Three (or to satisfy requirement for audit and S&E Committee Personal Liability Companies One Private Companies One MOI may specify higher % Elected by shareholders

50% of directors and alternate directors Conducted as a series of votes (unless MOI provides otherwise) Majority of votes Vacancy: board may elect director on temporary basis (unless MOI provides otherwise) The Board (King III) Assess independence of non-executive directors after 9 years 1/3 of nonexecutive directors should retire by rotation at AGM Appointment

Shareholders responsible to appoint the board Nomination committee should play role in process Comprise balance executive and nonexecutive directors Majority independent nonexecutive directors Composition Appointed through formal process At least CEO and financial director (Compulsory for listed companies)

Must be competent Do background and reference checks Not been declared delinquent nor serving probation Does not receive remuneration contingent upon performance of the company Free from any business relationship Is not a professional advisor to the company Has not been employed for 3 preceding years Is not member of immediate family of person who was employed in executive capacity in past 3 years Does not have direct or indirect interest(< 5%) Not a representative of a shareholder who controls or has influence Independent non-executive director (King III) Codified regime of directors duties Fiduciary duty Degree of care, skill & diligence

Act bona fide in the interest of the company In good faith and for proper purpose Independent judgement in decision making Not to use corporate property information or opportunities for personal profit Prevent conflict of interest Person with general knowledge, skill and experience reasonably expected of a person when carrying out the functions of that director; and Having the general knowledge, skill and experience of that director Includes alternate director, prescribed officer and committee members These are unalterable provisions King III requirements

Compliance with laws and regulations Governance of IT Managing stakeholder relationships Governance of risk Financial assistance to buy securities of company or related company Board may authorise (subject to MOI) By special resolution (within 2 prior years) Loan, guarantee, provision of security To any person Approving specific recipient or in general for category of potential recipient Solvent and liquid after transaction For the subscription of any option

or securities Employee share scheme (excluded) Terms fair and reasonable to company and conditions and restrictions in MOI satisfied Financial assistance to directors or related entities Director Expenses paid on behalf of director By special resolution (within 2 prior years) Prescribed officer Credit card (unless on behalf of company) Solvent and liquid after transaction

Related or inter-related company or CC Intercompany loan/sales Terms fair and reasonable to company Treasury function (listed companies) Board decision has to be circulated in writing to all shareholders and trade unions Or Or Or

Person related to such company or director Or Or Or And And Distributions to shareholders Permitted if: Pursuant to an existing legal obligation or a court order Authorised by the Board by resolution Satisfies the solvency and liquidity test

Examples Dividends (paid within 120 days otherwise another board resolution) Definition Transfer of money or other property, other than its own shares to benefit of shareholders Consideration paid within same group of companies for acquisition of any shares within that group Incurrence of debt or other obligation for benefit of shareholders Forgiveness of waiver

of shareholders debt Solvency and liquidity test Considering reasonably foreseeable circumstances: Assets fairly valued equal or exceed liabilities fairly valued Able to pay debts as due for 12 months after consideration of test Able to pay debts as due for 12 months following distribution Financial information Accounting records satisfy S28 Financial statements satisfy S29 Fair valuation of assets and liabilities

Include reasonably foreseeable contingent assets and liabilities Liability of directors: These are unalterable provisions Fine or imprisonment not > 12 months, or both Loss, damages or costs Breach of fiduciary duty/delict Acted without authority Reckless trading Defraud creditor/employee or shareholder *Party to falsification of accounting records *Party to false or misleading financial statements or Loss, damages or costs continue Present at meeting and

failed to vote against: Issuing of unauthorised shares/securities/options Provision of financial assistance to any person or director inconsistent with sec 44 and MOI Approving distribution (does not satisfy solvency and liquidity test) Acquisition of its shares, or shares of holding company Liability Joint and several Action to recover loss may not commence more than 3 years after the act Court may provide relief if satisfied that director acted honestly and reasonably

Board committees The Board Subject to MOI May appoint committees and delegate any authority to such committee Members May appoint nondirectors Should not be disqualified or ineligible Prohibited Non-director member will not be allowed to vote Audit committee Compulsory

Public, SOC, or MOI Appointed at AGM At least three members who are all directors All non-executive All independent Third must have academic qualifications or experience in economics, law, corporate governance, finance accounting etc. May not be Involved in day to day management (previous year) Prescribed officer or full time employee (previous 3 years)

Material customer or supplier Not related to above If Duties prescribed in Companies Act and King III Social and ethics committee Compulsory State owned company Unless Must Subsidiary of another company 3 Directors (one not involved in dayto-day management for previous 3 years)

Exempted by the Tribunal (valid for 5 years) Elect members at each AGM Listed public company Other company with PIS > 500 in any 2 of previous 5 years Other committees (King 111) Nomination Comprise of board chairman Non-executive directors only Majority should be independent Remuneration

Chaired by an independent nonexecutive director Non executive directors only Majority should be independent External advisors and executive directors should attend meetings by invitation Should be free to take independent advice at the cost of the company Resolutions Resolutions Special: 75% but MOI may specify less (or more) Ordinary: >50% but MOI may specify more Margin of 10% No requirement to lodge Effective when passed Special resolutions Amend MOI Ratify consolidated version of MOI Ratify actions by company and

directors Approve issue of shares Financial assistance Re-acquisition of shares Compensation to directors Voluntary winding up of company Approve fundamental transactions Annual general meeting: N/A to private companies Frequency Minimum business Directors report 18 months after date of incorporation Auditors report Audit committee report Election of directors Once every calendar year but no more than 15 months after previous

AGM Appointment of auditor Appointment audit committee Round robin not allowed Other Registered office CIPC requirements MOI Office maintained by company not auditors Administrative business conducted N/A to CCs and coops E mail addresses and cell phone numbers of directors on CoR forms

Physical and postal address details in specific format Not compulsory to adopt new MOI after 31 April 2013 Only if in conflict with Act Consider: AGM Audit No automatic conversion by CIPC Free of charge Second-Hand Goods Act, 6 of 2009 Purpose To regulate the business of dealers in second-hand goods and pawnbrokers, in order to combat trade in stolen goods (Includes scrap metal dealer)

To promote ethical standards in the second-hand goods trade Schedules Copper Aluminium Zinc Chrome Lead White metal Nickel Tungsten Tin Ferrovanadium, Ferrosilicon, Ferrochrome Brass Bronze Cobalt Schedule 2 Controlled Metals Schedule 1 - Goods Jewellery Agricultural implements

Bicycles Household and office equipment Factory equipment Tyres Communication equipment Photographic or optical instruments Antique goods Motor vehicles or vehicles Sporting equipment Valuables and books Shopfitting equipment Exclude: Firearms or ammunition Registration Obligation Application Application to NC Business as a dealer must register Register all premises

Other than natural person, when natural person is responsible for business Notify dealer of intent to refuse and afford 30 days to dealer to object NC to issue certificate Registration Registration valid for 5 years Amendment of details within 30 days Renew every 5 years Apply not more than 180 days but at least 90 days Other May not transfer a certificate, only business Disqualification Previous 5 years imprisoned without options of fine for fraud, theft, corrupt activities, unrehabilitated insolvent, under 18 years Display of certificate Dealers Records by dealers ID of seller

Description of goods and serial number Price Number assigned to goods Name and signature of person who conducted transaction from dealer side Date and time of acquisition and disposal thereof and details of disposal Retention of copies = 5 years False information and stolen goods Suspects false name, document stolen goods, tampered goods Report to police official Transaction may not be continued with

Restrictions on dealers and pawnbrokers May not acquire from person < 18 years old May not store on premises for which no certificate obtained If seller is not owner or titleholder Must hold goods for 7 days May not accept firearms or ammunition Motor vehicles - records Register of every acquisition and disposal VIN, chassis, engine, odometer, colour, distinguishing mark Seller must give personal particulars and ID Dealer to keep copy of ID and proof of registration Dealer to keep copy for 5 years

Controlled metals Recycler Obligation to register In addition to registering under Section 2 NC Metals Application to be made Certificate will stipulate recycler Suspicion to be reported to police official May not acquire burnt

cable Communication equipment Register Disposals and acquisitions Make and model IMEI number Serial number ID copy to be kept by dealer Full name and address Kept for 5 years Records Particulars Person

Powers of police official ID by police official/ produce appointment certificate Routine inspections/ one annual inspection Entry, search, seizure and seal-off Offences and penalties 3 years Registration Certificate Transitional provisions 5 years Certain provisions of records by dealers Certain provisions of

motor vehicles 10 years Obligation to register Certain records by dealers False information and stolen goods Restrictions on dealers and pawnbrokers Certain motor vehicle sections Controlled metals Communication equipment Inspections Schedule 3 Offences and Penalties (commenced 16 January 2012) Tax Administration Act, 28 of 2011 Limitation of administrative powers Acts

Transfer Duty Estate Duty Income Tax VAT SDL UIF Securities Transfer Diamond Export Levy Mineral and petroleum Resources Royalty VDP Tax Ombud Address service failures Review complaints regarding

service, procedural or administrative matters Process: Contact branch/call centre Escalation to manager SSMO Tax Ombud Registration Registration requirements Single registration platform Registration period 21 business days Biometric information Inform SARS of changes within 21 business days Taxpayer reference number (compulsory use) Completeness of taxpayer registration

Access to third party information e.g. vehicle transaction records Physical inspections of business premises On-the-spot checks at markets and other trade locations Newspapers and internet Returns and records Submission of return Prescribed form and manner Date specified in Act, Commissioner or extension date Signed by taxpayer Non-receipt does not affect obligation to submit Statement concerning accounts SARS my require person who submits financial statements or accounts prepared by another to

submit certificate: Extent of examination of books Whether or not the entries disclose true nature False certificate or statement constitutes criminal offence Returns and records Duty to keep record Extended to taxpayers who are not required to submit a return 5 years from submission of return or 5 years from end of tax period Form of records kept or retained Original form Orderly fashion Safe place

Electronic form at physical address If not in official language SARS may require translation Open for inspection SARS can conduct unannounced inspection Determine compliance with Act Inspection, audit or investigation Information gathering Selection for inspection, verification or audit Random or risk assessment basis

Authorisation for SARS official to conduct audit Written authorisation Must produce authorisation letter Taxpayer may lawfully refuse to allow audit if authorisation cannot be produced Information gathering Inform taxpayer of the stage of audit Letter of findings To senior SARS official responsible for criminal proceedings Intervals of 90 days Within 21 days Only in case of in depth audit or

criminal investigation Referral for criminal investigation Material gathered during audit after referral is not admissible in criminal investigations Inspections SARS official may: Arrive at premises Unannounced Reason to belief trade is carried on

Inspection To determine: Identity of person occupying premises Registered for tax Maintaining proper records Enter dwellinghouse or domestic premises unless used for trade Without consent of occupant May not: Request for relevant material Requesting relevant information Tax payer and third

party Under oath or solemn declaration Purposes of revenue estimation Production of relevant material in person Written notice specifying time and place Interview by SARS official Clarify issues Not for purpose of criminal investigation Under oath or solemn declaration only with taxpayers consent Decline > 200km Field audit or

criminal investigation Prior notice of 10 business days Notice to state: Place date and time (normal business hours) Initial basis and scope Assistance during audit or criminal investigation Provide reasonable assistance Making available appropriate facilities May not: Costs incurred Obstruct a SARS official

May recover costs for use of photocopying facilities Refuse to give access or assistance Fees as prescribed in PAIA Answering questions Submitting relevant material Inquiry Notice to appear Notice in writing by presiding officer Appear before inquiry

At place and time in notice To be examined under oath or solemn declaration Confidentiality Private and confidential May use evidence given under oath in subsequent proceedings Incriminating evidence May not refuse to answer a question on grounds that it may incriminate person Incriminating evidence obtained not admissible unless:

False evidence or statement Failure to answer questions lawfully and satisfactorily Search and seizure Application for warrant SARS official may: SARS must apply to judge for warrant: Enter premises Search premises and any person present on premises Seize relevant material Exercised within 45 business days SARS official must produce warrant to person in charge of premises Inventory of relevant material Open or remove anything that contain relevant material

Seize any relevant material Seize and retain a computer or storage device Make extracts or copies of relevant material (May not remove originals) Require explanations from persons of relevant material May stop and board vessel, aircraft and vehicle Only search person of same gender Search and seizure Search of premises not identified in warrant Grounds to believe: Relevant material is not at premises identified in warrant Warrant cannot be obtained in time to prevent removal or

destruction Delay in obtaining warrant would defeat object Search without warrant Owner consent in writing Imminent removal or destruction of material Warrant will be issued if applied for Delay in obtaining warrant would defeat object Rights of taxpayer To examine and copy seized material Request SARS to return material Compensation for

physical damage Protection of material if legal professional privilege is asserted Confidentiality General prohibition SARS confidential information Taxpayer information including biometric information Oath of secrecy by SARS officials Disclosure PAIA Financial regulatory agencies Disclosure under Act e.g. POCA, FICA Criminal, public safety or environmental

matters e.g. SAPS By order of High Court To taxpayer of own record Publication of name of offender by Commissioner Name and residence area Particulars of offence Particulars of fine or sentence Assessments Types Original assessment Additional assessment Reduced assessment Jeopardy assessment

Jeopardy assessments In advance of due date Secure collection of tax in jeopardy Approved by Commissioner SARS to prove it is reasonable Estimates Failure to submit return Return incorrect or inadequate Agreed in writing with taxpayer Not subject to objection and appeal Subject to understatement penalty Burden of proof on

SARS Assessments Notice of assessment Name of taxpayer Reference number Date of assessment Amount of assessment Tax period Payment date Summary of process for lodging objection Period for issuance of

assessment Three years Original assessment by SARS Five years Self assessment Payment of tax if no return required N/A if due to fraud, misrepresentation, non disclosure Tax liability and payment Tax liability and payment Recovery of tax Interest General interest rules SARS may charge/pay interest From effective date Prescribed rate

Refunds on provisional tax and employees tax: 4% below Calculated on daily basis Compounded monthly Waiver of interest Circumstances beyond taxpayers control Limited to: Natural or human made disaster Civil disturbance or disruption in services Serious illness or accident Refunds Refunds of excess

payments Authorisation by SARS SARS may set-off against outstanding debts except instalment payment agreements and suspended disputed tax Must be paid if security is given Interest Not refundable if less than R100 but carried forward on account Only after verification, inspection or audit Limitation if outstanding IT and VAT returns

Time period Assessment by SARS: 3 years Self assessment: 5 years Penalty system Administrative non-compliance penalty Penalty system Mandatory Fixed amount Non-Compliance Percentage based Non-payment Understatement penalty Offences listed

in chapter 17 Criminal offences Offences listed in tax Acts Understatement penalty Tax practitioners Registration of tax practitioners Recognised controlling body SARS Refusal for registration Recognised controlling body Previous 5 years: Removed from

related profession or professional body; or Convicted of theft fraud or uttering a forged document, dishonesty, perjury or corruption with a sentence of two years imprisonment without option of a fine IRBA SA Legal Practice Council Other body with 1000 members Thank You Fasset Call Centre 086 101 0001 www.fasset.org.za

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