- NO. 71 OF 1996: STOCK
EXCHANGES CONTROL AMENDMENT ACT, 1996.
-
- PRESIDENT'S OFFICE No.
1871.
-
20 November 1996
-
- NO. 71 OF 1996: STOCK
EXCHANGES CONTROL AMENDMENT ACT, 1996.
-
- It is hereby notified that
the President has assented to the following Act which is hereby
published for general information:-
-
- GENERAL EXPLANATORY NOTE:
-
- Words in bold type
indicate omissions from existing enactments. Words in italics
indicate insertions in existing enactments.
-
ACT
-
- To amend the Stock
Exchanges Control Act, 1985, so as to insert, amend or delete
certain definitions; to further regulate the
juristic personality of
a stock exchange; to make further provision for the separation of
funds of members and other persons;
to further regulate the board
for the hearing of appeals; to make further provision for the sale
of securities otherwise than
by means of a bear sale; to provide for
the establishment and maintenance of more than one guarantee fund;
to further regulate
the alienation of securities; to further
regulate advertising and canvassing relating to securities; to make
further provision
for the appointment of an auditor and for
accounting records and audit; to make further provision for
inspections; to further
regulate certain provisions relating to
penalties; to further regulate limitation of liability; and to
effect certain technical
amendments to the text; to amend the Stock
Exchanges Control Amendment Act, 1995, so as to further regulate
restrictions on managing investments; and to provide for matters
connected therewith.
-
(Afrikaans
text signed by the President.) (Assented to 6 November 1996)
-
BE IT ENACTED by the
Parliament of the Republic of South Africa, as
-
follows:-
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- Amendment of section 1 of
Act 1 of 1985, as amended by section 14 of Act 50 of 1986, section
24 of Act 51 of 1988, section 25 of Act 54 of 1989, section
-
38 of Act 55 of 1989,
section 29 of Act 97 of 1990, section 13 of Act 64 of
-
1990, section 10 of Act 54 of
1991, section 56 of Act 104 of 1993 and section
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1 of Act 54 of 1995
-
- 1. Section 1 of the Stock
Exchanges Control Act, 1985 (hereinafter referred to as the
principal Act), is hereby amended-
-
- (a) by the substitution
in subsection (1) for the definition of "listed securities"
of the following definition:
-
- " 'listed
securities' means securities included in the list of securities
kept by the committee of a licensed stock exchange
in terms of
section 16(a);"; and
-
- (b) by the substitution
in subsection (1) for paragraph (iii) of the definition of
"securities" of the following paragraph:
-
"(iii) bankers'
acceptances, negotiable certificates of deposit issued by a
banking institution bank registered under
the Banks
-
Act, 1965 (Act No. 23
of 1965) 1990 (Act No. 94 of
-
1990), or by a mutual
building society mutual bank
-
registered under the Mutual
Building Societies Act, 1965 (Act
-
No. 24 of 1965), or by a
building society registered in terms of
-
the Building Societies
Act, 1986 (Act No. 82 of 1986) Mutual
-
Banks Act, 1993 (Act
No. 124 of 1993), or any other similar short-term instruments
designated by the Registrar by notice
in the Gazette, or options
on or fights to such acceptances, certificates or instruments;".
-
- Amendment of section 11 of
Act 1 of 1985, as amended by section 16 of Act
-
50 of 1986 and section 10 of
Act 54 of 1995
-
- 2. Section 11 of the
principal Act is hereby amended by the substitution for subsection
(1) of the following subsection:
-
- acquiring,
-
- "(1) A stock
exchange shall as from the date on which it is licensed for the
first time be a juristic person capable of
suing or being sued in
the name in which it is licensed, and of
-
- owning, hiring, letting
and alienating property, and, subject to the provisions of this
Act, of doing such things as may be
necessary for or incidental to
the exercise of its powers or the performance of its functions in
terms of its rules.".
- Amendment of section 11A
of Act 1 of 1985, as inserted by section 11 of Act
-
54 of 1995
-
- 3. Section 11A of the
principal Act is hereby amended by the substitution in subsection
(2) for the words following upon paragraph
(d) of the following
words:
-
- "resolve to
distribute such surplus assets to members, past members and or
persons who were stock-brokers prior to the
commencement of
-
the Stock Exchanges
Control Amendment Act, 1995 (Act No. 54 of 1995),
whether upon a restructuring
of such stock exchange or otherwise.". -
- Amendment of section 14
of Act 1 of 1985, as substituted by section 14 of
-
Act 54 of 1995
-
- 4. Section 14 of the
principal Act is hereby amended by the substitution in subsection
(1) for the words preceding the proviso
of the following words:
-
- "Every member who
has one or more clients shall-
-
(a) open
and maintain a separate trust account at a bank; or
-
- (b) utilise a separate
trust account at a bank, opened and maintained by the stock
exchange to which the member belongs,
and shall on the date of
receipt of any payment from or on behalf of a
-
person client deposit
in such account either the
-
account in question the
cheque, draft or instrument by means of which such payment is
made or alternatively deposit for
same day value in such account
funds equal to the amount of such payment".
-
- Amendment of section 17
of Act 1 of 1985, as amended by section 13 of Act
-
54 of 1991 and section 17 of
Act 54 of 1995
-
- 5. Section 17 of the
principal Act is hereby amended by the substitution for subsection
(2) of the following subsection:
- "(2) No removal,
suspension or omission referred to in subsection (1) shall be
effected by the committee on a ground in respect
of which the issuer
of the securities has not had an opportunity of making
representations to the committee in support of the
continued
inclusion of the securities of or prices in the relevant list.".
-
- Amendment of section 21 of
Act 1 of 1985, as amended by section 21 of Act
-
54 of 1995
-
- 6. Section 21 of the
principal Act is hereby amended by the addition of the following
subsection:
-
- "(7) The decision of
a majority of the members of the board shall be the decision of the
board, but the chairperson alone
shall decide any question of law,
and whether any matter constitutes a question of law or a question
of fact.".
-
- Amendment of section 25 of
Act 1 of 1985, as amended by section 17 of Act
-
54 of 1991 and section 26 of
Act 54 of 1995
-
- 7. Section 25 of the
principal Act is hereby amended by the substitution in subsection
(1) for the words preceding paragraph (a)
of the following words:
-
"If
any person, other than a member, sells securities to a member and
fails to deliver such securities to the member concerned
within a
period of seven business days or any other prescribed period or a
period as
provided for in the rules, the
member shall on the next succeeding business day after the expiry of
such period, or as soon thereafter
as the committee may allow in a
particular case-". -
- Substitution of section 30
of Act 1 of 1985, as amended by section 31 of
-
Act 54 of 1995
-
- 8. The following section
is hereby substituted for section 30 of the principal Act:
-
- "Establishment and
maintenance of guarantee fund or funds
-
- 30. (1) The committee
shall establish and maintain, to the satisfaction of the Registrar,
a fund one or more funds out of which
any
-
liability of a member, arising
out of the business of buying and selling listed securities, shall
be paid, up to an amount, for
different categories of claims,
specified in the rules referred to in subsection (3), if such member
fails to discharge any such
liability.
-
- (2) Every member shall
contribute to the fund or funds on such basis as may be determined
in the rules referred to in subsection
(3).
-
- (3) The committee shall
make rules to control the administration of the fund or funds, and
such rules shall be approved by the
Registrar after
-
he or she has in his or her
discretion added to or amended them, if necessary.
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- Substitution of section 37
of Act 1 of 1985, as substituted by section 34 of Act 54 of 1995
-
- 9. The following section
is hereby substituted for section 37 of the principal Act:
-
- "Restriction on
alienation of securities
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- 37. Subject to the
provisions of sections 22(2), (3) and (4) and 23(2), no member shall
alienate securities, whether listed or
unlisted, which have
-
been deposited with him or her
in terms of section 23, as security in respect of a loan unless the
person who deposited the securities
has before or after the deposit,
authorised him or her thereto in writing.".
-
- Amendment of section 39 of
Act 1 of 1985, as substituted by section 36 of
-
Act 54 of 1995
-
- 10. Section 39 of the
principal Act is hereby amended by the substitution for subsection
(1) of the following subsection:
-
- member,
-
- "(1) No person other
than a member or an officer or employee of a
-
- who is so permitted in
terms of the rules, or a stock exchange or an employee of a stock
exchange, shall in any matter or by
any means, either for himself,
herself or for any other person, directly or indirectly advertise
or canvass for any business
relating to the buying and selling of
listed securities.".
- Amendment of section 42
of Act 1 of 1985, as substituted by section 38 of
-
Act 54 of 1995
-
- 11. Section 42 of the
principal Act is hereby amended by the substitution for subsection
(1) of the following subsection:
-
- "(1) Every member
and stock exchange shall appoint an auditor registered as an
accountant and auditor under the Public
Accountants' and
Auditors' Act, 1991 (Act No. 80 of 1991), who engages in public
practice as contemplated in that Act and
who has no direct or
indirect financial interest in the business carried on by such
the member concerned or stock exchange
in
-
question.".
-
- Amendment of section 43
of Act 1 of 1985, as substituted by section 39 of
-
Act 54 of 1995
-
- 12. Section 43 of the
principal Act is hereby amended-
-
- (a) by the substitution
in subsection (1) for the words preceding paragraph
-
(a) of the following
words:
-
- "Every member and
stock exchange shall-"; and
-
- (b) by the substitution
for paragraph (c) of subsection (1) of the following paragraph:
- after
-
- "(c) cause such
records to be audited, not later than three months
-
- the financial year end of
such member or stock exchange, or such
-
later date as the
Registrar may allow, by an auditor whose appointment
-
has been approved by the
Registrar in terms of section 42. ".
- Amendment of section 45
of Act 1 of 1985, as amended by section 41 of Act
-
54 of 1995
-
- 13. Section 45 of the
principal Act is hereby amended-
-
- (a) by the deletion in
subsection (1) of the word "and" at the end of
subparagraph (iii) of paragraph (a), the addition
of the word
"and" at the end of paragraph (b) and the addition to
the said subsection of the following paragraph:
-
- "(c) any other
person who the Registrar has reason to believe is contravening or
has contravened any provision of this
Act."; and
- (b) by the substitution
for paragraphs (b) and (c) of subsection (2) of the following
paragraphs, respectively:
-
- "(b) the proviso to
section 8(1) thereof shall be construed as if the following further
proviso paragraph had been added
at the
-
end thereof:
-
- '(c) (e) the registrar
shall communicate to the committee or the official responsible for
surveillance of the business carried
on by a stock exchange any
relevant information pertaining to the affairs of a member or past
member of that stock exchange
obtained by the registrar in the
course of an inspection under this Act, or from a report by an
inspector on such an inspection.'.
-
- (c) the any stock
exchange, member, or an officer or employee of
-
a member or other person
referred to in paragraphs (a) and (b) subsection (1) shall be
deemed to be a financial institution,
and the registrar shall be
the Registrar of such stock exchange, member or person to be the
registrar defined in section 1
of the Inspection of Financial
Institutions Act, 1984.".
-
- Amendment of section 48 of
Act 1 of 1985, as substituted by section 45 of
-
Act 54 of 1995
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- 14. Section 48 of the
principal Act is hereby amended by the addition of the following
subsection, the existing section becoming
subsection (1):
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- fine
-
- the
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- "(2) (a) If any
person intentionally or negligently fails to submit to the
Registrar or to furnish the Registrar with any
record, return,
statement, report or other document or information in accordance
with a requirement of this Act within the
period determined by or
under this Act, the Registrar may impose upon him or her by way of
a notice in writing a fine not exceeding
the prescribed amount for
every day during which such failure continues: Provided that the
Registrar may not impose any such
-
- before the person to be
fined has been afforded an opportunity of making representations in
writing to the Registrar setting
out the reason for the failure to
submit or to furnish such record, return, statement, report or
other documentation or information.
-
- (b) A fine imposed under
paragraph (a) shall be paid to the Registrar within such period as
may be specified in the notice,
and if the person concerned fails
to pay the fine within the specified period the Registrar may by
way of civil action in a
competent court recover from such person
-
- amount of the fine or any
portion thereof which the Registrar may in the circumstances
consider justified.".
- Substitution of section
52A of Act 1 of 1985, as inserted by section 49 of
-
Act 54 of 1995
-
- 15. The following section
is hereby substituted for section 52A of the principal Act:
-
- "Limitation of
liability
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52A. (1)
No executive officer, employee or representative of a stock
exchange or clearing house, or any member of a committee
or
subcommittee of the committee, shall be liable for any loss
sustained by or damage -
caused
-
to any person as a result of
anything done or omitted by the executive officer, employee,
representative or member in the bona
fide or negligent, but not
grossly negligent, exercise of any power or the carrying out
-
of any duty or performance of
any function under or in terms of this Act or
- the rules.
-
- (2) For the purposes of
this section, 'bona fide' shall include negligent' but not 'grossly
negligent', 'wilful' or 'dishonest'.
-
- Substitution of section 54
of Act 1 of 1985
-
- 16. The following section
is hereby substituted in the Afrikaans text for section 54 of the
principal Act:
-
- "Kort titel
-
- 54. Hierdie Wet heet die
Wet op Beheer van Effektebeurse
-
Aandelebeurse, 1985.".
-
- Substitution of certain
words in Act 1 of 1985
-
- 17. The principal Act is
hereby amended by the substitution in the Afrikaans text for the
words "effekte", "effektebeurs",
"effektebeurse", "effektebeursaangeleenthede",
"effektebeurslisensie", "effektebeurslisensies",
"effektemakelaar" and "effektemakelaars",
wherever they occur, of the words "aandele",
"aandelebeurs",
"aandelebeurse",
"aandelebeursaangeleenthede", "aandelebeurslisensie",
"aandele- beurslisensies",
"aandelemakelaar" and
"aandelemakelaars", respectively.
-
- Substitution of section 4
of Act 54 of 1995
-
- 18. The following section
is hereby substituted for section 4 of the Stock
-
Exchanges Control
Amendment Act, 1995:
-
- "Substitution of
section 4 of Act 1 of 1985, as amended by section 9 of
-
Act 7 of 1993 and section 57
of Act 104 of 1993
-
- 4. The following section
is hereby substituted for section 4 of the principal Act:
-
- 'Restrictions on managing
investments
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- 4. (1) No person shall, as
a regular feature of his or her business, manage undertake the
management of investments on behalf
of another
-
person, and for such
management receive any remuneration in whatever form, other than
fees charged by a member for the buying
and selling of securities,
unless he or she-
-
- (a) is a member authorised
in terms of the rules to manage investments
-
on behalf of another person,
is a person who has been approved by the Registrar or is a person
who falls within a category
of persons approved by the Registrar;
-
- (b) has a written
mandate to do so from the other person; and
-
- (c) complies with such
conditions as the Registrar may from time to time determine by
notice in the Gazette.
-
- (2) The provisions of
section 14 shall apply mutatis mutandis to any person approved in
terms of subsection (1).
-
- (3) Every application for
approval referred to in subsection (1) shall be
-
made in the prescribed manner
and shall be accompanied by the prescribed application fee.
-
- (4) The Registrar may
grant an applicant the approval referred to in
-
subsection (1) if-
-
- (a) the applicant is of
good character and integrity, or in the case of a corporate body,
is managed and controlled by persons
who are of good character and
integrity;
-
- (b) the applicant
complies, or in the case of a corporate body is managed by persons
or employs persons who comply, with the
standards of training and
experience and other qualifications required by the Registrar by
notice in the Gazette;
-
- (c) the applicant
complies with the capital adequacy standards prudential
requirements determined by the Registrar by notice
in the Gazette;
-
- (d) the applicant has
made adequate arrangements for the safe custody of securities; and
-
- (e) the applicant
undertakes to pay the prescribed annual levy prescribed under
section 15A of the Financial Services Board
Act, 1990 (Act No. 97
of 1990).
-
- (5) The Registrar may
withdraw approval granted in terms of subsection (4) if the approved
person fails to comply with the requirements
contemplated in
subsections (1) and (4).
-
- (6) (a) For the purposes
of subsection (1) it shall be deemed that the managing management of
investments is not a regular feature
of the business of any person
if such investments form part of the assets-
-
- (i) in any deceased or
insolvent estate, and he or she is the executor, administrator or
trustee concerned or is a person
administering or winding up such
estate on behalf of that executor, administrator or trustee; or
-
- (ii) of any person under
curatorship, and he or she is the
-
curator concerned or is
administering such estate on behalf of that curator; or
-
- (iii) of a company in
liquidation or under judicial management, and he or she is the
liquidator or judicial manager concerned
or a person liquidating
or managing such company on behalf of that liquidator or judicial
manager; or
-
- (iv) of a trust inter
vivos, and he or she is the trustee concerned or administering
such trust on behalf of that trustee;
or
-
- (v) of a minor, and he
or she is the guardian concerned or a person administering such
investments on behalf of that guardian.
-
- (b) If in any instance
contemplated in paragraph (a) it is a regular feature of the
business of a person acting on behalf of such
executor,
administrator, trustee, curator, liquidator, judicial manager or
guardian
-
to
-
manage investments, such
person shall obtain approval from the Registrar in
-
terms of subsection (1).
-
- (7) For the purposes of
this section-
-
- (a) 'investments' means
securities, whether listed or unlisted, or any other instruments
declared to be such by the Registrar
by notice in the Gazette, or
funds intended for the purpose of buying such securities or
instruments;
-
(b) 'management of
investments'-
-
(i) in
the case of a member, means the buying and selling of listed
-
or unlisted securities
on behalf of another person in terms of an
-
unlimited mandate to
act on behalf of such other person; or
- person
-
- (ii) in the case of a
person who is not a member, means the buying and selling of listed
or unlisted securities on behalf of
another
-
- in terms of any mandate
whether limited or unlimited, to act on behalf of such other
person; and
- (c) 'an unlimited
mandate' means a mandate to act on behalf of another person without
it being necessary to obtain further authority
or consent from such
other person to effect any transaction in securities under such
mandate.'
-
- Short title
-
- 19. This Act shall be
called the Stock Exchanges Control Amendment Act,
-
1996.
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