South African Postbank Bill [B14-2009]: Department response to submissions; Committee Report on Department of Communications budget

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Communications

11 April 2010
Chairperson: Mr I Vadi (ANC)
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Meeting Summary

The Committee had completed its public hearings on the South African Postbank Bill on 23 March 2010. The Department of Communications summarised for Members its responses to stakeholders’ submissions. The Congress of South African Trade Unions had objected to incorporation and eventual privatisation of the Postbank.  The Bill, however, sought only to incorporate the Postbank. It would remain in public ownership. The development mandate therefore remained, and there would be no impact on job security. The Congress had proposed a number of additional objects of the Bill such as providing universal and affordable access to banking. The Department had agreed. The Congress had submitted that Schedule 1 be removed to leave employment conditions to collective bargaining. The Department’s response was that Schedule 1 was necessary to protect the rights of employees and to ensure a transfer without prejudice to them. The South African Post Office had contended that the repeal of certain sections of the Postal Services Act would prevent the continued operation of the Postbank prior to being granted a banking licence.  The Department’s response was that Clause 28 of the Bill covered the transitional period until a licence was issued under the Banks Act. Most of the Independent Communications Authority of South Africa’s submissions had been addressed by the current version of the Bill. The National Treasury had fully supported the Bill and proposed no amendments to any specific provisions. The Eastern Cape Youth Development Board had identified long queues, insufficient staff, inadequate security, early closing, and distance to post offices, as challenges for the Postbank. The Department believed that service delivery would generally improve as a result of the incorporation, and by the application of financial sector requirements to the Postbank. Members had argued that the Bill gave too many powers to the Minister in the appointment of the Postbank board. The Department’s response was that in the absence of any constitutional requirement for independence the role envisaged for the Minister was accepted practice in respect of State Owned Enterprises. Members had objected that publication in two national newspapers did not reach communities at large. The Department proposed that community radio and other relevant community fora be used in order to reach communities.

The Committee began its informal deliberations. A Democratic Alliance Member thought that too much power was given to the Minister. A Member of the Congress of the People said that it was essential to protect deposits, and at the same time ensure that Government did not have to bail out the Postbank.  This end must be reflected in the legislation, which must be unambiguous. An African Congress Member said that commercial banks would feel threatened by some of the objects of the Bill. He feared that the Registrar of Banks might object to them and decline a banking licence, thus frustrating the aims of the legislation. There was discussion on a new approach to drafting legislation, and debate as to how specific provisions in the Companies Act, from which the Bill sought to protect the Postbank, should be indicated in the Bill. Congress of the People and Democratic Alliance Members preferred to list the specific provisions, as in the older style of drafting legislation, to avoid any ambiguity. An African National Congress Member said that Members needed to know more to take an informed decision. However, a State Law Advisor said that listing specific provisions would entail confusion and complications if, in a new Companies Act, the contents of the relevant section numbers changed. The Chairperson understood that the State Law Advisor was referring to an enabling mechanism. He noted the potential dangers thereof. An African Congress Member said that Members needed a full understanding of this mechanism. The Department suggested that the Bill should accommodate both the 1973 Companies Act and the new 2008 Act by including an interim clause to cover both instances and to avoid having to make amendments in future. The Committee would meet again on 20 April as it was essential to complete deliberations soon.

The Committee adopted its reports on the Budget Votes for the Government Communication and Information System and for the Department of Communications with amendments. The Congress of the People noted contradictions between the budget allocations of the Department of Communications and the need for savings. The Democratic Alliance noted problems in the Department and its entities. The Department undertook to provide written confirmation of answers to queries. The reports would be tabled and debated in the National Assembly on 14 April 2010.

The Chairperson sought guidance on how to handle the small number of nominations for the Independent Communication Authority of South Africa board, and information additional to existing applications, received after the closing deadline. The Committee appeared to agree that no new nominations should be accepted after midnight, but that minor additional information such as a signed acceptance letter could be accepted a little while afterwards; however, contrary to the advice of the Democratic Alliance, an exact cut-off time for the latter was not specified.

Meeting report

Department Response to public submissions: South African Postbank Bill [B14-2009]
The Chairperson asked the Committee Section if it was necessary to pass a motion of desirability.
 
Mr S Kholwane (ANC) proposed that the Department should review issues as raised in the public hearings.

Mr Van den Berg said that the Postbank Bill was good, since it opened up opportunities. However, it was crucial to keep in mind the nature of the National Credit Act (No 35 of 2005).

Chairperson noted Mr Van den Berg’s comment.

Ms Mohlala said that the Committee had completed its public hearings on 23 March 2010 on the South African Postbank Bill [B14-2009].

The Bill comprised six chapters: interpretation and objects; incorporation and transfer of the business; ownership and powers of the company; control and management of the company; funds and financial accounts of the company; and general and miscellaneous. Postbank aimed to give isolated communities access to vital financial services and thereby contribute to their economic and social development.

The following stakeholders had made presentations and submissions: the Independent Communication Authority of South Africa (ICASA), the Congress of South African Trade Unions (COSATU), the Eastern Cape Youth Development Board ECYDB), the South African Post Office (SAPO), and the National Treasury.

The Department had responded and commented on stakeholders’ submissions and issues.

Mr Alf Wiltz, Director, Department of Communications, said that COSATU had objected to the incorporation and eventual privatisation of the Postbank.

The Department’s response had been that there was no intention to privatise the Postbank. In other words, there was no intention to take the ownership of the Postbank away from the public sector and transfer it to private ownership. This Bill sought only to incorporate the Postbank.

Incorporation [‘corporatisation’] referred to the transformation of state assets or agencies into state-owned corporations in order to introduce corporate management techniques to their administration.

Clause 9(1)(b) as referred to by COSATU only enabled the Postbank to sell assets required in the ordinary course of business. COSATU had stated that Clause 3(5) of the South African Post Office Bill also enabled the Minister to sell 49% of a subsidiary of SAPO that enabled privatisation.

The Postbank would, however, have a dedicated enabling statute that provided in Clause 3 that SAPO would be the sole shareholder. Legislative amendment was therefore first required, before privatisation could occur.

The development mandate therefore remained, and there would be no impact on job security.

COSATU had further submitted that the Communication Workers Union (CWU) had not been consulted on the Bill.

The Department’s response was that proof of consultations with the CWU had since been sent to COSATU. This proof was attached to the presentation document. The proof included a letter to the General Secretary of the CWU and an attendance register signed by members of the CWU in some of the workshops. A comprehensive list of all stakeholders consulted could be found on page 16 of the Bill in the Memorandum on the Objects.

COSATU had submitted that the Bill should have been subjected to collective bargaining.

The Department’s response was that COSATU had never indicated its requirement for the Bill to go through the National Economic Development and Labour Council (NEDLAC) but it had expressed a preference that the Bill be considered by NEDLAC.

COSATU had proposed a number of additional objects of the Bill.The Department’s response was that it agreed with the following objects proposed by COSATU –
- To promote universal and affordable access to banking services.
- To address historical disparities in access and distribution of services, especially in the rural areas.
- To expand the range of banking services accessible to poor people and communities.

COSATU had argued that less favourable employment conditions or different sets of employment considerations would be created.

The Department’s response was that no former Postbank employee, whether he or she became a Postbank employee or a SAPO employee seconded to the Postbank, would have less favourable conditions than before the date of transfer.

The SAPO Bill provided protection for former Postbank employees who elected to remain SAPO employees and to be seconded to the Postbank.

COSATU had submitted that Schedule 1 be removed to leave employment conditions to collective bargaining.

The Department’s response was that Schedule 1 was necessary to protect the rights of employees and to ensure a transfer without prejudice to employees. The further or ‘new’ determination of conditions of service as contemplated under Clause 20(2) remained subject to collective bargaining.

COSATU had further submitted that there should be public consultation on the Memorandum and Articles of Association.

The Department’s response was that ordinarily it was the shareholder who determined the Memorandum and Articles of Association.  The Bill went further by contemplating a role for the Minister in this regard to strengthen governance. The Memorandum and Articles of Association must be developed in lien with the framework in the Companies Act and in accordance with the Public Finance Management Act and the Postbank statutes. It would be very unusual to allow public consultation on a Memorandum and Articles of Association that effectively dealt with the operational matters of the Postbank.  It was to be noted that the Banks Act, Section 60, specified certain requirements regarding directors of banks.

Mr Willie Vukela, Director: Department of Communications, said that SAPO had submitted that Clause 12(3)(b) should be amended to refer only to non-executive members; that they ‘must’ as opposed to ‘may’ be appointed; and that the Minister must have the power to extend the term beyond five years.

The Department’s response was that the term ‘members’ must be used for consistency with the remainder of the Clause as well as Clauses 13-17 that all referred to ‘members’. The term ‘may be reappointed’ was preferred over ‘must be reappointed’ to allow discretion.  In the interest of openness and transparency, it was suggested that the Bill had rather fix the term of reappointment.

SAPO had contended that the repeal, under Clause 28 and Schedule 2 of the Bill, of certain Sections of the Postal Services Act 1998 (Act No. 124 of 1998), created a problem and would prevent the continued operation of the Postbank prior to being granted to banking licence.

The Department’s response was that Clause 28 of the Bill dealing with transitional provision covered the transitional period between the commencement of the Bill, when enacted, and the issuing of a license under the Banks Act.

Mr Vukela said that, as the Committee had noted, ICASA’s presentation had been based on the old version of the Bill. Most of ICASA’s submissions had been addressed by the current version of the Bill. It was, however, noted and indicated that some of their submissions were valid and should be reworked in line with the current version of the Bill.

ICASA had proposed the repeal of Sections 47-50 of the Postal Services Act.

The Department’s response was that these provisions were money transfer services that remained within the SAPO domain.

ICASA had proposed that the members of the board would be appointed for such period, not exceeding five years or such lesser period as the Minister might determine.

The Department’s response was that Clause 12(3)(a) already provided for ICASA’s proposal.

The National Treasury had emphasised that the Bill had resulted from the inter-departmental committee of the Department, the National Treasury, the Reserve Bank, and the SAPO/Postbank. The National Treasury had emphasised the need to incorporate the Postbank and to regulate and supervise it under the regulations for the financial sector.

The Department had noted that the National Treasury fully supported the Bill and proposed no amendments to any specific provisions of the Bill.

Ms Lerato Molete said that the ECYDB’s presentation was mostly based on the role that the Postbank should play in the development of communities, especially the rural communities, and not on the Bill’s content.

The Department’s response was that the additional objects proposed by COSATU would address the developmental requirements.

ECYDB had identified the following as challenges for the Postbank:
- Long queues
- Insufficient staff
- Inadequate security
- Early closing
- Distance to the post offices

The Department’s response was that long queues should be resolved by providing dedicated counters to serve Postbank clients. In terms of the service delivery standards, people were not supposed to have to walk more than a radius of five kilometres. The Department believed that service delivery would generally improve as a result of the incorporation, together with the appointment of a dedicated board. Service delivery would be further improved by the application of financial sector requirements to the Postbank.

ECYDB had recommended the building of automated telling machines (ATMs), the introduction of pin code cards, mobile banks, road shows, the improvement of security, establishment of networks with other commercial banks, and provision of minimum rates and charges.

The Department’s response was that the ECYDB proposals were mostly operational in nature and could not be captured in the Bill.

It was, however, important to note that the Department supported ECYDB’s submissions and would work closely with the Postbank to ensure it implemented the recommendations. The Department agreed that the Postbank’s rates and charges must take the targeted customer base’s needs into account. This included the rural and lower income market as well as communities with little or no access to commercial banking services or facilities.

The Department had responded to Members’ submissions on objects as contemplated in the White Paper. The Bill had not incorporated White Paper issues raised to transform the country’s postal services.

The Department’s response was that the aim was still to move to a fully-fledged savings bank through a phased approach as contemplated in Paragraph 9.10 of the White Paper.

Currently a subsidiary or autonomous company as envisaged in phases I and II would be created. The Bill also stated that one of the objects was to provide services to communities with little or no access and become a bank of first choice. As contemplated, lending facilities, for example, would become available once the Postbank was registered as a bank.

Although the Bill had revised policy thinking where necessary, the general purport of the White Paper remained. The additional objects proposed by COSATU, together with rates and charges that took the rural and lower  income market into consideration, brought the Bill into line with the White Paper’s objectives.

Members had argued that the Bill gave too many powers to the Minister in the appointment of the Postbank board.

The Department’s response was that the role envisaged for the Minister in the appointment of board members included public processes through invitations in the media and the role of a representative nomination committee.

In the absence of any constitutional requirement for independence as in the case of the South African Broadcasting Corporation (SABC) and ICASA, the role envisaged for the Minister was accepted practice in respect of State Owned Enterprises (SOEs).

Members had objected that publications in two national newpapers did not reach communities at large.

The Department’s response was that it agreed that communities and local people should also have access to such notices. It noted the principles of consultation in the Promotion of Administrative Justice Act 2000 (Act No. 3 of 2000) (PAJA) regulations. Costs should be taken into consideration, but it welcomed any improvement to the current wording in the PAJA regulations. The Department proposed that community radio and other relevant community fora be added in order to reach communities at large.

The Department would be glad to provide any further clarity or assistance to the Committee, and thanked it for its support.

South African Postbank Bill: informal deliberations
The Chairperson thanked the Department for its most useful overview and summary.

Mr Van den Berg said that it appeared that the Committee was always being sidelined. Much power was given to the Minister. This was not necessarily a bad thing, but he had reservations about the Minister’s powers in the case of this Bill, ‘like King George in this whole thing’. The Minister was important but ‘should not run the show all the way’.

The Chairperson said that this was a general political comment, but preferred for Members to proceed clause by clause and note matters for further attention.

Ms Kilian asked if a feasibility study had been conducted on the costs of separating the functions of the Post Office from the Post Bank. She also asked what the new, incorporated Postbank would be able to do that the present Postbank Division of the Post Office could not do now. Was it simply the credit aspect of it? At present, people could deposit and save, which was one of the primary objects of the legislation. What would happen if the depositors’ funds were ring-fenced? More clarity was needed on the financial impact on the Post Office. Who would be the guarantor of funds? She asked what the motive for moving out as a subsidiary of the Post Office was.

The Chairperson said that this question should have been asked at the beginning, but he would allow the Department to respond.

The Department (Acting DDG for Policy Development) responded that the Postbank should report independently on its finances. The Post Office should also report separately.

The Chairperson asked why the Post Office was absent.

Mr Vukela responded that a feasibility study had been carried out. As the shareholding company, the Post Office had commissioned it, and a report was ready. The Bill had taken account of the feasibility study’s recommendations. There would be benefits from incorporation, since currently Postbank was not ‘regulated’. Secondly, it was simply an institution for receiving deposits. Incorporation would mean that Postbank would have to meet all the minimum requirements of the banking sectors regulations.

The Chairperson informally encouraged Members to use the Postbank Division of the South African Post Office, which was accessible in the Old Assembly building. He asked if the title of the Bill should not be ‘South African Postbank Ltd Bill’. He also asked if ‘Postbank’ was one word or two words. He asked Members if they wanted to remark on any aspect of the Bill’s long title. He then asked if Members had any comments on definitions (Clause 1). He then asked for comments on the Object of the Act (Clause 2).

Mr Kholwane said that it might be necessary to return later to COSATU’s submissions on this subject.

Mr Van den Berg said that he had discussed this informally with Mr Wiltz. He asked if there were any amendments needed to accommodate the specific needs of the Postbank. He asked if, as the Companies Act stood, it was necessary to make provisions to accommodate the Postbank in the Companies Act.

The Chairperson said that the Committee would deliberate informally on Clauses 3 and 4 shortly. The Committee was now addressing Clause 2.  He asked the Department to redraft Clause 2 to reflect the vision of the White Paper and the ideas of COSATU in time for the next meeting. 

Mr Wiltz mentioned the views of ECYDB as a potential fourth object.

Mr Kholwane was cautious about including an object that might not be recognised by the Companies Act. More time was needed for consideration.

The Chairperson referred to Clauses 3 to 8, and the two-step process of setting up a company and then applying to operate as a Bank.

Mr Kholwane asked if one was establishing a company or a bank.

Mr Vukela explained the three processes required by the Banks Act, and the highly regularised and regulated nature of the banking sector. Since it was a Government Bank, the initial stage was ‘deemed’. One was establishing a company. Then this company would go and apply for a licence to become a bank. In between, it would be a company. This was the response to Mr Kholwane.

Ms Kilian asked if there was a fee payable in respect of incorporation as a company. She asked about the wording of Clause 4: was ‘notwithstanding’ the correct word to introduce Clause 4(1). She said that it looked as if it were a by-pass of the Banks Act; perhaps ‘notwithstanding’ should be replaced by ‘in terms of Section’. It must be ‘deemed’ to be existing. She did not want to prescribe the legal terminology, but suggested that the existing wording was perhaps a little confusing.

Mr Vukela replied that Ms Kilian’s observation was correct. The good thing was that this wording was requested by the South African Reserve Bank and the National Treasury. In the Department’s initial wording, it referred to ‘deeming’ the process. This was not ‘deeming’.  Cabinet had recommended that National Treasury consult again the South African Reserve Bank. The Treasury and Reserve Bank insisted on this provision. The Minister had supported the Bill. A screening process was required to avoid assuming all the risks. The wording was correct.

Mr Kholwane said that Members needed more time to understand Clause 5 of Schedule 1. It was necessary to comply with Section 15 of the Banks Act before becoming a company.

The Chairperson asked for clarity.

Mr Vukela said ‘Let me try to speak in English’; he explained the requirements of the Banking Act if one wished to open a company, not necessarily a bank, but a company, it was first necessary to seek authorisation from the Registrar of Banks. The second stage was to obtain authorisation to operate as a bank. That process was outlined in Section 15 of the Banks Act.  He pointed out to Mr Kholwane that what had happened here was that Government could not seek authorisation to establish a company because the company already existed. The Department agreed with the National Treasury. ‘They said “deem only that position”’. Thereafter this company would have to face the scrutiny of the banking sector. Thus when the Bill would pass into law, Postbank must, after enactment, apply for a license to operate as a bank and meet all the minimum requirements set out in the Banks Act. If that application failed, did this mean that Postbank would close down? There was a transitional provision, while engaging the Treasury, to protect the depositors’ funds and continue to operate as a company. So there was no more ‘deeming provision’. But the Department still wished ‘to deem’.  The banking environment was highly regularised and highly regulated. A bank must meet all minimum requirements.

Mr Kholwane accepted Mr Vukela’s explanation.

Mr Van den Berg asked about the objects of the proposed Act (Clause 2).  He said that new rules would apply when the existing Post Office savings bank became officially a bank as explained by Mr Vakula. To link up with COSATU’s concerns, if it became a bank, well-qualified personnel would be required to operate in a banking sector. He asked if there were any provisions to attract staff to the Postbank and to pay them decent salaries. There would be much competition in future. Other banks would try to poach Postbank staff. 

The Chairperson said that Members were ‘putting the cart before the horse’.  The Committee’s task was to create the legal framework to enable the Postbank to become a bank.  Once it became a bank, this did not mean that it would immediately start to operate as a bank. If one examined the Bill, it referred to a date determined by the Minister (Clause 6).  The Minister had first to take account of all kinds of operational questions, and the board had to be established.  A manager had to be appointed. Staff had to be transferred. These were all operational matters. He agreed that it would be foolish to establish what in effect would be a Government bank with the lowest level of skills. However, he did not think that this was the intention. The Postbank, in its existing form as the Post Office Savings Bank, had been in operation since 1878. The aim of the legislation was to upgrade it into a fully-fledged bank after 150 years experience.  However, Members could not put those operational questions to the Department since it would not be running the Bank once established. The bank manager, when appointed, would run the bank.

Mr L Mkhize (ANC) said that the new bank would cater for the poorest of the poor. Many some of the objects of ‘this Act’ would pose a certain threat to a commercial bank. He feared that the Registrar of Banks would agree that Postbank’s aims were sound, but object to them in terms of the regulations governing banks. He might decline the license unless the Postbank changed its objectives. If this happened, then one would not achieve the aims of the legislation.

The Department replied that the National Treasury was trying to mitigate that possibility in respect of ‘the second tier of banking’.   The worst opposition to the Bill had been expected from the banks themselves.

Mr Wiltz said that it had always been the intention that the Bank would not be established immediately. The White Paper envisaged that the developmental role imposed on the Postbank would require it to achieve its status as a fully-fledged savings Bank within five to seven years. It was always contemplated that one should at least start somewhere and over the years develop into a bank that fulfilled all the requirements of the Banks Act and thus be granted a license.

Ms L Mazibuko (DA) said that Chapter 2 (Clauses 3 to 8) and Chapter 6 (Clauses 25-30) of the Bill were inter-linked. She referred to a question in a previous meeting from Mr J de Lange (ANC) as to whether Postbank was a company or a bank. She understood that there was a process to be followed before it could be registered as a bank. She asked about Clauses 26 and 27. She asked why was it necessary to provide that the Minister might request the Minister of Trade and Industry to declare any provision of the Companies Act to be inapplicable to the Postbank Company (Clause 27(1)(a). She also asked for clarification on Clause 27(3)(b).

Mr Wiltz linked Ms Mazibuko’s question to an earlier question as to why the specific provisions of the Companies Act should not be listed in the Bill, and to the question as to why there should not be reference to the new Act envisioned in the Companies Bill. It was not possible to refer to the new Act envisioned in the Companies Bill because it had not been enacted and had therefore not commenced. To all intents and purposes it could be up to ten years before the President enacted the new (Companies) Act. At the same time, one could not simply refer to the provisions of the existing Companies Act because of the prospect that the new Act would commence in the foreseeable future, which would necessitate amending the Postbank legislation again. Therefore in the Bill reference was made to the Companies Act and a process provided, rather than specific sections. If nothing happened, all the provisions of the Companies Act would apply to the Postbank as a company. However, if the Department or the Postbank subsequently realised that some provision was inapplicable, then a process existed by which one could ask the Minister of Trade and Industry to exempt the Postbank from compliance with that particular Section. In the worst case scenario the Committee could mandate the Department now to establish which Sections of the Companies Act should not apply from the beginning.

Ms Mazibuko asked if the Department wished to be indemnified from certain provisions of the Companies Act once the Postbank became established as a company, but not in the current legislation. She asked the Department to confirm that, if there were no Companies Bill forthcoming, there would be no need for Clauses 26 and 27. 

Mr Wiltz said that for all intents and purposes the Department did not yet envisage the new Act envisaged in the Companies Bill. The Department was dealing simply with the existing Companies Act 1973, and believed that all its provisions should apply to the Postbank. However, the Department had provided for a mechanism in case exemptions were required. 

A State Law Advisor said that if there were no Companies Bill, the Department would be able to list Sections in the Companies Act 1973 according to the older style of drafting legislation. However, the State Law Advisors had sought to avoid a situation in which a new Act would have sections that did not correspond in content to the Sections with the same numbers in the existing Act. The purpose of Clauses 26 and 27 was to provide a way for the Department to make changes or apply for exemptions whether it was a new Act or the existing Act. It was a continuous process that allowed the Department continuously apply for exemption, without having to keep returning to ask for amendments. This was ‘the new trial way’ of drafting legislation which could be applied even after the Companies Act had been repealed.

Ms Kilian said that she was happy that this matter was actually mentioned. She referred to a document of 14 October 2010. She referred to concerns on special provisions that should not apply to the Postbank.  These included risk analysis and assessment. She found it strange that one was creating a neutral section to anticipate what might come. Once it came, if the Companies Act were to be amended, which would of course require a parliamentary process, she was worried at this stage that the particular Sections were not specified. She understood from the State Law Advisor that such provision might be included in the new Companies Act. Members needed to know what provisions might be a problem insofar as they had an impact on the Postbank. Members were dealing with legislation that must protect the interests of the people who had deposited their money. Secondly, Members must ensure that they created a viable institution that would not be just protected ‘in cotton wool’ but that could actually survive as a bank. ‘So we need to create that balance’. It was essential to protect deposits, and at the same time ensure that Government did not have to bail out the Postbank.  It was quite difficult to survive in the banking sector without all the necessary protective measures of the state.
 
Mr Wiltz said that a new Companies Act, that of 2008, already existed; it was on the law books but it had not commenced yet.  The Companies Act 1973 still applied. He did not have a problem ‘with the old way of doing it’. The old way had been to list the sections that were inapplicable. The Department had followed that process and cut and pasted from the Post Office Act 1958. That Act had a Section to the effect that these provisions did not apply to the Post Office, which, in turn, included the Postbank. The Department’s initial drafting simply cut and paste that into this Bill. Thereafter the Department expected the State Law Advisor and the Post Office to check the drafting to ensure that those provisions were still relevant and applicable. Then sometime in the drafting process, there was a change to the new style of drafting, ‘which was this open-ended clause’. The State Law Advisor had given the example of the Ports Act 2005, where this exact same wording appeared. This had become the trend or practice, since amending the law was a long and costly process. This was making it slightly easier through an executive process, though public consultation and the rights of everyone were catered for in that clause. Having said that, if this Committee insisted, it was still possible to go back and try to determine exactly which sections of the Companies Act should be inapplicable. Sadly he had not seen any mention by the Post Office of that. He believed that the Post Office and the existing Postbank should alert the Department to the specific clauses, but the Department could play a role with the State Law Advisors. However, the Department was not an expert on companies, but it could do its best to determine which ‘clauses’ should be inapplicable, then refer to the Committee.

Ms Mazibuko agreed with this proposal, for the reason that the Committee had yet to hear what was to be excluded regarding these two ‘sections’. She could not envisage the Committee’s signing off legislation that Members did not really understand. She proposed that the Department present exactly which Sections of the Companies Act the Department wanted the Postbank to be exempted from; and what the Department envisioned exactly with these two ‘clauses’.  Alternatively, she proposed that the Department go further and ‘incorporate it into the draft legislation’. In other words, follow the old style of drafting whereby one cut and pasted, and included in the draft legislation exactly which Sections of the Companies Act from which one wanted to exempt the Postbank.  It was not possible to sign-off on a loophole on which the Committee lacked clarity.

The State Law Advisor replied that there was no problem with that proposal. However, she warned of the complications and confusion that would ensue if the Bill were to be drafted to the effect, for example, that Section 3 of the Companies Act would not apply to the Postbank, and thereafter a new Companies Act came into force in which Section 3 referred to an entirely different subject. For this reason, the State Law Advisors objected to inclusion in the Bill of a clause listing legislation. If, for example, one found something new in the Companies Act that one wanted to add to that list, then it would be necessary to amend legislation, and this would be a costly process. This is what the State Law Advisors were trying to avoid.

The Chairperson asked if Members were aware of the specific exemptions that the Post Office required in terms of the Companies Act. From what he understood, this was basically a facilitation mechanism. He understood concerns about an open-ended facilitation mechanism, because it might be open to abuse. Two ministers might meet and come to some sort of an agreement regarding exemptions. He acknowledged the danger there. However, he asked if there were any specific concerns on the part of the Post Office, in so far as the Post Office could not apply in terms of the current Companies Act. He asked for discussion on something specific. If there was nothing specific, then Members must weigh up the options as to whether they wanted to create a facilitating mechanism or not.  The State Law Advisor might wish to give the Committee other examples to show that this facilitating mechanism was a standard provision.

Mr Kholwane said that what he was going to propose was perhaps close to what ‘they’ were talking about. The facilitating mechanism was not a standard for the Committee, because Members did not know what it was. It was dangerous for Members to assume that they understood the exemptions without these being presented to Members.  Those who had initiated that new style of drafting understood the circumstances in which they had initiated it; Members did not know. Members needed enough information in order to take an informed decision. The implication of the facilitating mechanism was that the legislature would ‘outsource’ legislative amendments to Cabinet. This was the essence of what Members were grappling with at this point. 

The Chairperson asked for copies of the new Companies Bill, and the Banks Act.

A Legal Advisor was concerned that the Committee was focusing on Clauses 26(b) and 27. Clause 26(a) stood alone, because it was followed by the conjunction ‘or’. She asked for more focus on Clause 26(a).  

The Chairperson sought a more practical sense of the implications.

Mr Wlitz said that Clause 26(a) applied when something was obvious and did not require to be stated.  It did not require a process to say that a particular clause in the Companies Act was inapplicable. However, while revising this Clause, perhaps provision should be made for the new Companies Bill, in a real form of transitional provision. In its present form this Bill talked about the existing Companies Act and was silent about the new Act proposed in the Companies Bill; perhaps one should accommodate in the Bill both the existing Act and the new Act proposed in the Companies Bill. He suggested inclusion of an interim clause to cover both instances, and to avoid having to return to make amendments.  

The Chairperson asked the Department to put both options to the Committee in draft form. He said that Members were running out of time. He suggested that when the Committee next met, it should receive feedback on the issues that Members had raised, and then begin informal deliberations on Chapter 3, page 5, of the Bill. It might be necessary to schedule an extra meeting, although the Chairperson of Committees was reluctant to allow additional meetings, and appeared not to understand the workload. The Chairperson himself thought that extra time would assist the Committee to achieve its aim of good legislation. 

Committee Report on Budget Vote for Government Communications and Information System
The Committee adopted its report on the Budget Vote for Government Communications and Information Services with amendments. The report would be tabled and debated in the National Assembly on 14 April 2010.

Committee Report on Budget Vote for the Department of Communications
Ms J Kilian (COPE) noted some contradictions between the budget allocations and the need to achieve savings. She wanted to engage the Department.

The Chairperson replied that it was too late to reopen the process of considering the reports. However, Members were welcome to raise their concerns in the debate in the National Assembly.

Ms Mamodupi Mohlala, Director-General, Department of Communications, answered queries on the Department’s allocation and undertook to provide written confirmation.

Mr N van den Berg (DA) said that the Democratic Alliance supported adoption of the Report ‘because business must go on’, but noted problems in the Department and its entities.

The Committee adopted its report on the Budget Vote for the Department of Communications with amendments. The report would be tabled and debated in the National Assembly on 14 April 2010.

Other business: ICASA nominations
The Chairperson said that the Committee Secretary needed some guidance on how to handle the small number of nominations received after the closing deadline.

The Chairperson’s view was that there should be some leniency towards nominations received shortly after the deadline, but that those received thereafter should be disregarded.

Ms Mazibuko said that the Chairperson’s view seemed logical, but asked at what point receipt of nominations should be refused.  A date and hour should be specified.

Ms Alma Nel, the Committee Secretary, said that her file of late submissions included new nominations and nominations with incomplete documentation, and gave details.

The Chairperson proposed that any additional information received by midnight on the closing day should be accepted, but that anything received after midnight, whether additional information or new nominations, should be disregarded. 

Mr Mkhize agreed that no new nominations should be accepted after midnight, but suggested that minor additional information such as a signed acceptance letter, could be accepted afterwards; however, he did not indicate an exact cut-off time for the latter.

The Committee indicated assent.

The Chairperson thanked the Committee for its advice and adjourned the meeting.

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