Securities Services Bill: deliberations

Meeting report

FINANCE PORTFOLIO COMMITTEE
5 October 2004
SECURITIES SERVICES BILL: DELIBERATIONS

Chairperson: Dr Rob Davies (ANC)

Document handed out:
Securities Services Bill [B19-04]
Banking Council of South Africa submission
Standard Bank submission
ABSA Bank submission
Life Offices' Association of South Africa submission

SUMMARY
The Committee considered submissions on the Securities Services Bill. The Committee adopted the Bill with amendments. It recommended that the Minister of Finance consult with the Minister of Trade and Industry over the feasibility of including the names of persons disqualified in terms of clause 96 of this Bill in the national register of disqualified directors and officers provided for in the Companies Amendment Bill.

MINUTES
The Chairperson said he had called for people to make submissions on the Securities Services Bill. A number of written submissions were received but no request for oral submissions. He read a letter from the Bond Exchange of South Africa in support of the Bill. He presented the Bill clause by clause, and invited people to make comments on any clause.

Clause 5: Registrar and Deputy Registrar of Securities Services
Standard Bank supported "the principle that competition between regulated persons should not be impeded or distorted" as laid down in clause 5(3)(b)(v). It justifies Standard Bank's opposition to STRATE Limited establishing a central securities register in circumstances where STRATE is the Regulator. The Bank was concerned that STRATE is a monopoly with no alternative supplier and yet it proposes to provide services directly to Standard Bank's clients and thereby "disintermediate" it from such clients.

Ms M Vermaas (STRATE Head of Legal Services) said that STRATE was investigating the possibility of establishing an alternative settlement model.

Mr R Barrow (Financial Services Board: Deputy Executive Officer) commented that submission was designed to protect the Bank's current status. They attempted to justify this by saying that STRATE is currently a monopoly and that if a Central Securities Register were to be introduced their element of the business would disappear. This is not necessarily true and legislation should not be used to entrench a particular business interest. There is no reason why STRATE should remain a monopoly. The Financial Services Board (FSB) would consider licensing anyone who makes an application for registration as a Central Securities Depository (CSD).

Ms R Taljaard (DA) said that in principle there might be the willingness to register another CSD. However, the start-up costs and infrastructure necessary for the new CSD to compete with STRATE would make it impossible. She asked if there was any assurance that the start-up costs and infrastructure problems would not be insurmountable and therefore the business of Standard Bank and other institutions would not be forfeited.

Mr Barrow agreed that the start-up costs were very severe. However, he could not understand why the Central Securities Depository Participants (CSDP) should be protected in the law. There was possibility that a depository from somewhere else in the world might seek to establish business in South Africa.

Ms B Hogan (ANC) asked if it was correct to say that by setting up a Central Securities Register the Bank would be disintermediated from clients.

Ms Vermaas replied that she was not sure what the impact would be. The intention was not to disintermediate clients from their intermediaries.

Ms Hogan asked if the setting up of a Central Securities Register would not contradict the provisions of clause 5(3)(b)(v) and therefore Standard Bank's concern was irrelevant. Ms Vermaas affirmed this.

Mr Barrow added that effect was still unknown. The alternative model might give people direct access to the CSD and thereby cut out the role of the CSDP. It might disintermediate Standard Bank. The FSB would, if possible, encourage this in the interest of investors and promoting efficiencies in the market.

Ms Taljaard was uneasy about creating an enabling provision without certainty on the impact and the details of the new system that would follow.

Ms Hogan disagreed with a suggestion that the clause should be flagged for further discussion. She said that the main point was that there was still some degree of uncertainty about the impact of the new model. In the future, cognisance should be taken of this provision to ensure that whatever is established is not in conflict with the clause. The clause was not amended.

Clause 6: Financial Markets Advisory Board
Standard Bank submission noted that it would like representation on the Financial Markets Advisory Board

The Chairperson wondered if the Bank wanted an amendment providing that one of the members of the Board should be Standard Bank.

Clause 13: Removal of listing and suspension of trading
The Banking Council of South Africa submitted that, after discussion with the JSE Securities Exchange, it would support an amendment to clause 13(6)(b) to read as follows -

" If the refusal to list securities or the removal of securities referred to in paragraph (a) was due to any fraud or other crime committed by the company, material misstatement of its financial position, non disclosure of any fact required to be disclosed under the listings requirements, failure to comply with any corporate governance or accounting standards determined by the Registrar to be generally accepted by the public or for any other reason in which there is a public interest, no other exchange in the Republic may, for a period of six months from the date referred to in paragraph (a), grant an application for the inclusion of the securities concerned in the list kept by it, or allow trading in such securities, unless the refusal or removal has been withdrawn by the first exchange or set aside on appeal by the board of appeal in terms of section 111."

Mr Barrow said that the FSB had interacted with the Banking Council and the Johannesburg Stock Exchange on the issue. He proposed that the clause should be amended as follows-

"13(6)
(a) If an exchange refuses an application for the inclusion of securities in the list under section 12(6)(b), or under subsection (1) removes securities from the list, the exchange concerned must immediately notify every other exchange in the Republic of the reasons for and date of the refusal, or removal.

(b) If the refusal to list securities was due to any fraud or other crime committed by the issuer, or any material misstatement of its financial position or non disclosure of any material fact, or if the removal of securities was due to a failure to comply with the listing requirements of the exchange, no other exchange in the Republic may, for a period of six months from the date referred to in paragraph (a), grant an application for the inclusion of the securities concerned in the list kept by it, or allow trading in such securities, unless the refusal or removal is withdrawn by the first exchange or set aside on appeal by the board of appeal in terms of section 111.

(c) If an exchange withdraws a refusal, or removal before the expiry of the six months, it must notify the issuer and every other exchange in the Republic.

The Committee agreed to this amendment.

Clause 20: Restriction on buying and selling unlisted securities
The Life Offices' Association (LOA) submitted that in the interest of legal certainty and to avoid abuse, a time limit should be provided in the clause. It should be clear that only counter parties who acted in good faith would be entitled to cancel.

Mr Barrow commented that it would not matter whether a counter party acted in good faith in cases where one is dealing with an illegal transaction. The transaction should remain void due to the illegality.

Dr J Rabie (DA) asked what would be an appropriate time limit.

Mr Barrow replied that an illegal transaction is void ab initio and even prescription does not apply to such a transaction.

Ms Taljaard said that she did not condone illegal transactions. However, there should be some recourse if a party innocently became party to such a transaction subject to substantive misrepresentation by the other party.

Mr Barrow remained convinced that there was no need for a time limit. Ms R Joemat (ANC) agreed.

Ms Taljaard said that she was not advocating for a time limit but for some protection to a bona fide party to the transaction.

Mr Y Bhamjee (ANC) said that it might be very difficult to determine if the transaction was tainted with fraud or illegality.

There was consensus that a time limit should not be included in the provision.

Clause 21: Reporting of transactions in listed securities
Standard Bank submitted that the clause could be interpreted to mean that CSDPs would have to report all change beneficial ownership off-market trades to the registrar. They asked what format would be used in reporting such transactions and whether it would be sufficient that off-market trades are reported to the CSD, which in turn is appointed by the registrar as a self-regulatory organization. If that is not what was intended, whatever the format the reporting to the registrar (not CSD) takes, if CSDPs have to do separate off- market reporting to the registrar, it could have a huge impact on their daily operations.

Mr Barrow said that the clause was not intended to cover CSDPs. The format for reporting would be prescribed by a Board notice.

Ms Taljaard asked how much of the conceptual concern about the CSD was valid.

Mr Barrow replied that it was not valid at all.

Ms Vermaas added that it boiled down to the alternative settlement model. It is unknown how the model would look like.

The LOA submitted that disclosure, in terms of clause 21(3)(b), to the Registrar and the relevant Exchange was important for the surveillance function and for policing possible insider trading abuses. Disclosure of such transactions to the public however, would serve no legitimate purpose that could not otherwise be protected through disclosure to the Registrar.

Mr Barrow commented that once the security is listed, the market should know the depth of trade in that security. To the extent that there are off-market trades such information should be made public. The report would not divulge the names of institutions that traded on the security. The market should know the full volume of trade as this relates to the question of liquidity in a particular counter.

Ms Hogan asked if it was clear that the intention was to report on the volume of trade and not the particulars of parties trading in securities.

Mr Barrow replied in the negative. He added that there might be situations were there would be a need to report specific transactions. For instance, a transaction through which a foreign bank seeking to take a majority position in a local bank might have to be reported to the public.

Clause 27: Segregation of funds of authorised users and other persons
ABSA asked if the intention in clause 27(1)(a) was that banks would also provide a trust account service for the purposes of the clause. With regard to subclause (3) they asked what effect would curatorship, deregistration or winding-up of a bank in terms of the Banks Act have on trust accounts if banks are allowed to maintain such accounts on behalf of authorised users.

Mr Barrow was of the view that the clause introduced no changes to the current situation.

Mr S Davies (JSE: Assistant General Manager-Surveillance) replied that members of the JSE were required to establish trust accounts with a bank into which they deposit surplus clients funds. In terms of the JSE the surplus funds are swept on a daily basis out the trust account established by a member firm into a central trust account operated by a company established by the JSE.

With regard to clause 27(3), Mr Barrow said that there were no changes to the existing position.

No amendment was effected to the clause.

Clause 32: Licensing of central securities depository
Standard Bank asked if the proposed amendments of the terms of licence for the CSD would follow the procedure as set out clause 30(3) so that the interested parties may be made aware of these proposed amendments.

Ms Taljaard was uneasy about legislating considerable discretion for the registrar and considerable scope for a Self-Regulatory Organisation (SRO) in absence of certainty regarding details of the new CSD.

The Chairperson felt that the procedure set out in clause 30(3) should be followed.

Mr N Muller (FSB: Head-Capital Markets) said that there was no need to follow the procedure set out in clause 30(3) when amending minor conditions.

Ms Taljaard said that such amendments should be published so as to comply with the Promotion of Administrative Justice Act.

Ms Joemat asked who would determine if a condition is minor.

Ms Vermaas said that if one applies a licence for a CSD one would have to follow the same process of applies for a licence from the FSB.

Ms J Fubbs (ANC) said that transparency should not be reduced to opacity by any amendment. The amendments should follow the procedure set out in clause 30(3) to ensure that there is transparency in all stages of the process.

The Committee agreed that an amendment to terms of a licence should follow the procedure follow laid down in clause 30(3).

The Committee amended clause 32 by inserting a new subclause (4). The new subclause would reproduce the language of clause 30(3) save that the words "for an amendment" would be added after the word "application". This clause would also be added to clause 10 and clause 66. However, paragraph (b) would read " the nature of the amendment to the licence".

Clause 33: Functions of central securities depository
Standard Bank asked if the effect of clause 33(h) would be that the CSD would take over some of the roles or responsibilities from a transfer secretary.

Ms Vermaas replied that STRATE cooperates with transfer secretaries without taking away any roles or responsibilities from them. She saw no problem with the provision.

Standard Bank also asked if clause 33(j) meant that CSDPs would be entitled to not supply information (such as ad-hoc BND and monthly downloads) to the CSD and could instead supply it directly to the transfer secretaries or to the underlying companies. This is an important question, since CSDP's could in theory use it as leverage against STRATE in the ongoing CSR debate.

Mr Muller replied that the word "may" does not mean that the CSDP would not supply any information to the CSD. The CSD would be entitled to any information.

Mr Bhamjee asked if the word "may" implied refusal. Mr Muller said it did not.

Ms Fubbs felt that the intention of the clause should be made clear.

Mr O Kellner (State Law Adviser) suggested that clause 33(j) should read "is entitled…" instead of "may…".
The Committee agreed.

Clause 34: Acceptance of participant
Standard Bank submitted that the entry criteria as stipulated in the CSD rules be properly defined.

Mr Muller said that the entry criteria would be embodied in the rules of the CSD. The rules would be approved by the FSB in consultation with all market participants.

Clause 35: Functions of participant
Standard Bank submitted that clause 35 (a) implied that CSDPs do not have to deposit all shares in STRATE electronically. The Committee agreed to change the word "may" to "must".

The Bank also asked if clause 35(f) refer to the fees CSDPs charge for their services or the depository fees they pass on to clients and whether the clause refers to every client that CSDPs transact with.

Mr Muller replied that participants must at all times disclose fees and charges to clients. The fees must be published for public information.

Ms Fubbs asked if the clause applied to service or depository fees.

Mr Barrow replied that the clause applied to fees of the CSDP.

The Bank was also concerned that the word "information" as used in clause 35(h) was rather broad. It felt that the clause should be more specific.

Mr Muller said that the information contemplated in the clause is information relating to specific securities being held by the CSDP.

Clause 36: Approval of nominee
Standard Bank asked why a CSDP nominee company would have to be approved by the CSD and not the FSB anymore.

Mr Barrow replied that there was never a requirement that the FSB approve nominees in terms of securities legislation.

Clause 38: Functions of issuer of uncertificated securities
Standard Bank asked for clarification on the meaning of clause 38(e)

Ms Vermaas said that section 91A of the Companies Act refers to, amongst others, inspection of registers.

Mr Barrow added that the clause was necessary to deal with securities issued by a company.

Clause 39: Requirements with which depository rules must comply
Standard Bank asked if clause 39(2)(k) meant that CSDPs could be forced to disclose information (beneficial or otherwise) pertaining to foreign clients' underlying clients (Standard Bank does not have this kind of level of information for foreign clients underlying clients). In most instances, the foreign clients are prohibited by their country laws to disclose their underlying clients' details. Many foreign clients had stated that if that was the case, they would withdraw from the South African market.

Ms Taljaard said that she was sympathetic of the need to disclose the information. However, she was not sure if this was the best method of ensuring disclosure.

Mr J Dixon (Chief Director: Financial Sector Policy - Treasury) said that it was important to investigate if there was any foreign law prohibiting disclosure of such information. One should not provide for a situation wherein a person could hide behind 'laws' that do not exist.

Members agreed that there was a need to know what the best international practice on this was and whether there was actual reluctance to disclose the information.

Mr Barrow said that more and more regulatory systems were moving towards require proper disclosure of beneficial ownership.

ABSA asked if clause 39(2)(l) was intended to afford the Central Securities Depository the ability to maintain records of beneficial owners and by so doing dispense with the role of the Central Securities Depository Participants?

Ms Vermaas replied that the clause was similar to section 12(1)(o) of the Custody and Administration of Securities Act.

Standard Bank also asked if the directives issued in terms of clause 39(2)(o) do not have to be in the general interests of the investor or market? It also asked if a directive that does not meet the criteria could be challenged.

Mr Muller replied that directives issued by an exchange or a CSD normally deal with internal procedural matters. Directives are not approved by the FSB or regulator. The directives should further the objects of the legislation and not be contrary to public interest.

Ms Taljaard asked there was any internal mechanism to resolve disputes on directives.

Ms Vermaas replied that there had never been such disputes primarily because the processes of formulating them were always inclusive.

Mr Barrow added that the FSB would act as an intermediator.

No amendments were made to the clause.

Clause 40: Registration of securities
ABSA asked for an explanation as to which additional securities are to be registered directly in the nominee name of the central securities depository without the use of a central securities participant.

Ms Vermaas replied that clause 40(1) stemmed from previous legislation. She suggested that the clause should be deleted.

Mr Barrow objected to the deletion of the clause. He felt that there might be a new type of security to which this clause could apply.

Ms Taljaard felt that the new instruments should be legislated for only when they come into effect.

The Chairperson felt that legislation should be ahead of any new schemes. Mr Barrow added that legislation takes long to pass.

Following Ms Taljaard's suggestion, it was agreed that the clause should include bonds. The Committee also agreed to amend clause 40(1) to read " the registrar may direct that…".

Clause 43: Pledge or cession of securities to secure debt
Standard Bank submitted that the clause should be amplified to clarify that entry of the pledge or cession could also be done at broker level (i.e. in a client's account with a broker) in the sense that this is a "securities account held on behalf of a participant". The reason for this is that most pledges are executed by private individuals or entities and in most cases these private individuals and entities will hold their shares with a broker who in turn will have an account or nominee account with the participant. The clause should also clarify that the "entry" in the securities account need only be a noting that the securities are pledged (this can then be done with a pledge indicator) and that the participant or the relevant broker must then also have a record indicating the name of the pledge/ cession and the date of the pledge/ cession. The reason for this is a practical one in that some of the participant's/ broker's systems do not cater for all of the required information to be an entry in the securities account.

Ms Vermaas commented that the suggestion by the Bank was not possible. A nominee register is not registered by the law as the subregister is.

Ms Taljaard said that most individuals act through a broker. Although it was not desirable to elevate the status of the nominee register, the practicality of doing so was compelling.

Ms Vermaas offered to investigate and discuss this with Standard Bank. She felt that there was no need to include a provision to this effect in the Bill. Ms Hogan supported her.

Mr Davies said that members of the JSE were required to note a pledge on behalf or in favour of their clients in the nominee register. He could not understand the Bank's practical concern.

The Chairperson said that the route to go was regulations and not legislation.

Following a proposal by Ms Vermaas, the Committee amended clause 43(1) by inserting the words "or the securities account held on behalf of a participant" after the words "central securities account".

Standard Bank submitted that Chapter IV should mention how transfer secretaries would be regulated and who would their regulator be and what rules would they have to adhere to. They felt that they should be regulated in the same vein as the CSDPs.

Mr Barrow said that transfer secretaries were not regulated other than in terms of any regulation imposed by the Companies Act. He saw no case for regulating transfer secretaries in the same vein as the CSDPs.

Standard Bank submitted that where a licence for a SRO is refused, cancelled, suspended or where SROs amalgamate or transfer to other SROs, there would be operational impacts on all CSDPs. Transition periods must be taken into account as this may include system changes to the CSDPs systems.

Mr Barrow felt that the submission raised operational issues. Such issues needed to be dealt with on a sporadic basis. People should be given an opportunity to get their systems in place.

Clause 49: Expiry and renewal of licence of self-regulatory organisation
Without necessarily appealing for a long transition period, Ms Taljaard felt that clause 49(1) did not provide a sufficient transitional period.

Mr Kellner said that the Department and the Presidency could arrange the date of commencement of the Act to address Ms Taljaard's concern.

Mr Barrow felt that an additional transition period might defeat the purpose of the legislation. The FSB would have to make sure that STRATE is a position to apply for a renewal of a licence.

Mr Muller added that transitional arrangements were covered in terms of clause 116.

Clause 50: Refusal of renewal of licence
Standard Bank submitted that the Bill must provide that procedures would be put into place to manage a situation wherein a renewal of a licence had been refused.

Ms Taljaard asked if the concern was valid that the transition might result in various systems changes that the CSDPs would have to make in order to communicate and process transactions with the similar SRO.

Mr Muller replied that the FSB would consider the impact on CSDP and stakeholders before canceling the licence of a SRO. He felt that it was not necessary to amend the Bill to cater for the concern.

The Committee amended clause 51(1) by deleting the words "on conditions determined by the registrar". The words "and may impose such conditions" were added after "such steps" in clause 51(3).

Clause 53: Demutualisation of self-regulatory organisation
ABSA asked if this clause was contemplated in previous legislation and what effect it would have on the existing shareholders of the self-regulatory organisation.

Mr Barrow replied that it was not contemplated in previous legislation. The legislation should not stipulate the right and duties of members upon demutualisation.

Clause 57: Limitation on control of and certain shareholding or other interest in certain self-regulatory organisations
The LOA submitted that clause 57 limited control of and shareholding in self-regulatory organisations that are companies or close corporations. The threshold for control is set very low at 15% of the nominal value of the issued shares or 15 % of the voting rights. In terms of clause 57(3) a person who acquires or holds shares which results in that person exercising control, must obtain the Registrar's approval. Prior approval is not required. Clause 57(4), on the other hand, requires prior approval for any acquisition or control of shares that exceeds the 15"/o threshold. It is difficult to distinguish between the two sub-clauses other than to conclude that sub-clause 4 is applicable and new consent has to be obtained prior to every increase in the holding notwithstanding the fact that approval has already been obtained under clause 57(3). Clause 57(5)(c) seems to support this interpretation. This might lead to absurd results.

Mr Barrow felt that clause 57(3) required prior approval.

The Committee agreed to amend clause 57(3) by inserting the word "prior" after "without the" in the first line of the clause.

Ms Taljaard felt that there was some merit to the complaint that the 15% threshold was too low.

Mr Barrow said that the threshold had been debated quite extensively. The requirement is quite low (5%) in the United Kingdom and Australia.

Clause 61: Manner in which exchange rules and depository rules may be made, amended or suspended and penalties for contraventions of such rules
The LOA submitted that it was unclear whether clause 61(8) required the Registrar to first publish amendment to rules for comment as is required by sub-clause (4) in connection with other amendments. The specific nature of this provision suggested that all that was required was consultation with the SRO without the need to grant an opportunity for objections. They asked that the clause should be reconsidered.

Mr Barrow felt that there was no need to first publish the amendments for comment. The registrar should be able to change rules within a short period as necessitated. However, there should be consultation with the SRO and consent of the Minister would also be required.

Ms Taljaard understood the need to act with speed under certain circumstances. However, cogniscence should be taken of the Promotion of Administrative Justice Act.

The Committee amended the clause 61(8)(a) to read " if there is an urgent imperative under exceptional circumstances to achieve the objects of this Act referred to in section 2".

LOA submitted that Registrar should allow for public comment and objections before finalising the Code of Conduct in terms of Chapter VII.

Mr Muller commented that it was not standard practice to publish subordinate legislation for public comment. For instance, when regulations are made they only have to be approved by the Minister without publication for public comment.

Ms Taljaard said that it would be desirable in the future to have delegated legislation published for public comment. She felt that the request for consultation during the compilation of the code of conduct was reasonable.

Ms Hogan said that the request was not for publication but for an opportunity to make comments and raise objections.

Mr Muller said that the FSB had always invited stakeholders before drafting regulations or Board notices. Various stakeholders were consulted in the finalisation of the draft code of conduct.

The Chairperson asked the State Law Adviser if there was any harm in inserting a provision in the Bill that would require the code to be drafted through a consultative process.

Mr Kellner replied that including a provision to that effect would cause no harm.

The Committee amended clause 70(1) by inserting the words "through an appropriate consultative process" just after the word "must".

Clause 71: Principles of code of conduct
Ms Taljaard was concerned with the use of the word "expedient" in clause 71(2)(f). She felt that the clause would fall foul of the Constitutional Court judgement in the case of the Department of Home Affairs in respect of previous immigration regulations.

Ms Hogan asked if clause 71(2)(f) was too broad.

Mr Kellner replied that the ambit of the clause was limited to matters that would further the achievement of the objects of the Act.

Ms Fubbs did not see the need for clause 71(2)(f). She felt that anything that would fall under the subclause was covered by other provisions of the clause.

The Chairperson felt that the clause was necessary to cover things such as aggressive yet legal canvassing. The Committee agree to make an amendment despite concerns that it was too open ended.

Clause 73 Insider trading
LOA submitted some of the defences available to insiders under the existing Act would, in terms of this Bill, be no longer available. Such exclusion of defences that would otherwise have been available was even more striking in respect of civil liability where the available defences would be restricted to those listed in clause 73(1)(b)

Mr Barrow said that it was true that certain statutory defences had been removed. Common law defences would still be available.

Cause 75 Prohibited trading practices
Standard Bank asked if it could, as a CSDP, be held liable for acting on behalf of a client who might be found guilty of engaging in prohibited trading practices even though the Bank had acted in good faith. It also asked if it was expected to check the price of all trades executed prior to committing them for settlement.

Mr D Govender (FSB) Senior Forensic Investigator for Insider Trading) replied that clause 75 did not introduce strict liability as evidenced by the use of the word "knowingly".

Mr G Van Deventer (Financial Services Board: Executive Director) added that in terms of clause 98(3) members of the Enforcement Committee who were involved in the investigation of a matter or had an interest in that matter would not be allowed to participate in deciding that particular matter. This would ensure the independence of the Committee.

Clause 98: Composition of enforcement committee
Ms Taljaard was concerned with the "independence" of the Enforcement Committee given that the committee would be housed within the FSB.

Mr Barrow felt that the clause would not be unconstitutional.

The LOA noted that the Companies Amendment Bill (2004) provided for additional disqualification grounds in respect of directors and people removed from offices of trusts on grounds that they were no longer fit and proper to hold office. That Bill required that a register of disqualified directors and officers should be kept. Clause 96 of the Securities Services Bill likewise provided for the removal of members of the controlling body of Self-Regulating Organisations. The LOA submitted that provision should be made that such removals should be reported to and incorporated in the national register of disqualified directors and officers. The same should apply to clause 96 of the Bill, which empowers the court to declare persons who are guilty of contraventions of the Bill or an offence involving dishonesty, to be disqualified from carrying on business or being employed in a capacity of trust.

Mr Barrow said that the Companies Amendment Bill was still under consideration by Parliament. He agreed that the LOA raised an important question but felt that that should be discussed at a later stage. He was uneasy about inserting a provision on the Bill without knowing what conclusion would be reached during discussions on the Companies Amendment Bill.

The Chairperson found it undesirable to impose duties on the Companies Register without discussing the matter with them. He advised the FSB to engage with the Registrar of Companies on the matter.

Following Ms Taljaard's recommendation, the Committee agreed to make a report requesting the Ministers of Finance and Trade and Industry discuss the matter.

The Chairperson read the motion of desirability and the Committee's report on the Bill. The Committee agreed on the Bill with amendments.

The meeting was adjourned.