Industrial Development Bill: negotiating mandates; Merchandise Marks Amendment Bill: finalisation

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The aim of this report is to summarise the main events at the meeting and identify the key role players.  This report is not a verbatim transcript of proceedings. 

economic and foreign affairs select Committee
24 October 2001
INDUSTRIAL DEVELOPMENT BILL:NEGOTIATING MANDATES; MERCHANDISE MARKS AMENDMENT BILL: FINALISATION

Chairperson: Mr V. Moosa (ANC)

Documents handed out:
Industrial Development Amendment Bill [B32B-2001]
Negotiating Mandates on Industrial Development Amendment Bill [B32B 2001] (Provincial Legislatures)
Merchandise Marks Amendment Bill [B33-2001]
Portfolio Committee Amendment to the Merchandise Marks Amendment Bill (Department of Trade and Industry)
Briefing Notes: Merchandise Marks Act, 1941 (Department of Trade and Industry)

SUMMARY
The Select Committee heard and discussed the negotiating mandates from the nine provinces on the Industrial Development Amendment Bill.  Legal representatives from the Department of Trade and Industry and The Industrial Development Corporation responded to Committee members questions and concerns.  Only one of the mandates was accepted by the Committee.  The Committee agreed to return the Bill to the provincial legislatures for final approval.  The DTI representative, Mr M. Netshitenzhe, presented the final draft of the Merchandise Marks Amendment Bill.  The Committee approved the Merchandise Marks Amendment Bill.

MINUTES
Negotiating Mandates on the Industrial Development Bill
The Chairperson opened saying that there were two items on the Committee's agenda: (1) the provincial negotiating mandates on the Industrial Development Amendment Bill, and (2) final comments and discussion on the Merchandise Marks Amendment Bill.  He said that the Committee would begin with the negotiating mandates and turned to the representative from the Eastern Cape.

Eastern Cape
Mr B. Dlulane (ANC) stated that the Eastern Cape generally supported the Bill.  The questions that it raised were (1) what mechanisms were in place to monitor loans, (2) what currency would be used for transactions, and (3) if transactions were to be carried out in the South African Rand, would this would lead to South Africa becoming the “Big Brother� of Africa.

The Chairperson stated that the Committee would address issues as they arose and paused to introduce the individuals who would field questions on behalf of DTI and the Industrial Development Cooperation (IDC).  The legal advisor present from the Department was Mr J. Strydom.  The legal representative present from IDC was Mr L. Jiya. 

The Chairperson responded that mechanisms were in place to handle loans and asked the Eastern Cape to recall the Credit Guarantee Insurance Scheme (CGIS).  He said that the allowed currencies would be both the US Dollar and the South African Rand. 

Eastern Cape then granted mandate to support the Bill.

Free State
Mr T. Setona (ANC) said that the Free State did not support the Bill, nor did it suggest amendments.  Mr Setona rationalised that his province felt as though the amendment process was too lengthy and complicated. 

The Chairperson informed Mr Setona that the Committee required more detailed comments from the provincial legislature.  He reminded him that the Bill had been sent to all provincial legislatures some time ago after it had gone through the National Assembly.  Two weeks had been allotted for deliberations.  Gauteng, for example, had used that time-period to hold public hearings.  He informed the Free State that thereafter the Committee would require negotiating mandates, and Mr Setona would have to communicate this to his legislature.  

Gauteng
Dr Conroy (NNP) of Gauteng stated that the legislature wanted clarification on the broader mandate of DTI.  Gauteng was curious as to how DTI envisioned further support to develop projects that were already underway.

Mr Jiya responded that DTI would like to figure out how to better support those projects as well as lend support to projects it had neglected in the past. 

Gauteng stated that it supported the Bill.

KwaZulu-Natal
KwaZulu-Natal reported that it supported the Bill with lengthy amendments.  The provincial representative proceeded to list the legislature's amendments.  In Clause 3, page 4, lines 3 and 4, the amendment was to paragraph (b) of section 5, in line 3, to delete the word “to� which appeared before the words “the labour supply;� and in an amendment of paragraph (b) of section 5, line 4, the word “to� which appeared before the words “the rates of wages� was deleted.  In Clause 3, page 4, line 7, an amendment to paragraph (c) of section 5, line 7, substituted the words “paragraph (b) of section 3� with the words “section 3(b).�  In Clause 6, page 4, line 27, an amendment defined the term “non-executive director.�  In Clause 11, page 5, line 10, an amendment deleted the word “then� which appeared before the word “sitting� at the beginning and end of the line.  In addition, in order to clarify issues, KwaZulu-Natal requested a rationale from the Department for the amendments proposed in (1) Clause 2(b), page 3, line 20, amending section 4(f) of the Principle Act; (2) Clause 9, page 4, line 44, amending section 16 of the Principle Act; and (3) Clause 10, page 5, line 2, amending section 18(h) of the Principle Act.

The Chairperson asked the Committee to begin with the final three questions.  He looked to DTI for comments but then paused to remind members that Clause 2(b) had been dealt with extensively at their last meeting.  He added that Clause 9 had been dealt with exhaustively as well, and there was no getting around the amendment. 

Mr Strydom asked the Chairperson for more time to read through the proposals from the KwaZulu-Natal legislature.  The Chairperson granted him the time it would take to hear from the remaining provinces.

Mpumalanga
The representative from Mpumalanga stated that it supported the Bill without amendments.

Northern Cape
The representative from the Northern Cape was absent, and the Chairperson read aloud the province's support of the Bill.

North West Province
The representative from North West Province stated that his legislature supported the Bill; however, it had raised the concern that the Bill neglected the rural population.

The Chairperson informed the representative that his document began by stating this concern on page one, but the second page lapsed into discussion of stray animals on public property.  He told the member that he would give him time to take care of the confusion and provide the proper documentation.

The Chairperson asked Mr Strydom whether he was ready to discuss the issues raised by KwaZulu-Natal. 

Mr Strydom started with page 4, line 3, where he said he was confused by what seemed to be a grammatical correction.

Mr Jiya stipulated that the grammar did not need to be corrected.

The Chairperson suggested that KwaZulu-Natal's objection was that the section was not readable.  He asked whether the section could be reformatted to arrange points numerically.  He stated that the problem was that the Principle Act had been written in 1941.  Both language and layout needed to be modernized. 

Mr Strydom stated that, if they did that, it would also be necessary to restructure Section 5, and that would be a fairly material amendment. 

The Chairperson said that the Committee and the Department should think about it, but, regardless, it did not make sense to delete the “to� as KwaZulu-Natal had suggested. 

Mr Durr (ACDP) commented that the language in the Act was simply not good law and not good English.

The Chairperson agreed with Mr Durr and asked Mr Strydom to move on to the next concern.

Mr Strydom stated that the Department was being asked for some unknown reason to substitute the words “paragraph (b) of section 3� with the words “section 3(b).�

The Chairperson suggested that the proposal was not major and asked whether there were any objections.  There were none.

Mr Strydom stated that everyone present knew that the Bill was originally written in 1941 and had undergone amendment no less than a dozen times.  He acknowledged that he would not disagree if someone said that the Principle Act was in need of an overhaul. 

Regarding the use of the term “non-executive director,� Mr Strydom continued, it was in the context of the Act.  KwaZulu-Natal was asking for definition of executive versus non-executive.

The Chairperson interjected that KwaZulu-Natal's point was interesting, and that, if the language was examined carefully, it did pose an interpretive problem. 

Mr Jiya explained that there were no executive directors within the structure of IDC.  Rather, they were the equivalent of “vice presidents.�

The Chairperson stated that this needed to be changed.  He asked if there was no one with the title “executive�?

Dr Conroy suggested that they simply delete “non-executive.�

The Chairperson agreed with Dr Conroy. 

Mr Durr disagreed suggesting that the Bill said exactly what it meant.

Dr Conroy suggested that the meaning was that the Chair should be non-executive, meaning that he was not an executive. 

Mr Setona said that the Committee needed to make sure of the IDC's meaning before going further.

Mr Durr said that these terms were defined in the company's act and were, or should have been, understood by anyone in the business community.

The representative from KwaZulu-Natal said that he just wanted to know the difference between a director and a non-director.

The Chairperson asked the IDC for an explanation.

Mr Jiya explained that there were two executive directors in the IDC structure: the Chief Executive Officer (CEO), the President, and the Chief Financial Officer (CFO).  There were twelve non-executive directors.  Mr Strydom continued stating that the most important thing, and the sole meaning of the legislation, was that the chairperson was excluded from being a director. 

The Chairperson asked Mr Jiya, IDC had a President and a CEO?

Mr Jiya clarified that they were one in the same. 

The Chairperson then asked who the managing director was.

Mr Durr commented that “Americanisms� (i.e. the use of the term “CEO�) were creeping into South African language.

The Chairperson insisted that the language needed to be consistent.

Mr Durr pointed out that businesses went through phases with language according to what trends dictated; however, whether or not a company called its managing director an “MD,� a CEO, or a President did not change the title of the executive in the law. 

Mr Jiya conceded that, as a statutory body, the IDC needed to be consistent with the law.

The Chairperson asked the Committee to drop the issue and take it up the following week.

Mr Strydom moved on to the next proposal.  He said that he did not have strong feelings about deleting the word “then� from Clause 11, page 5, line 10.  However, if the Committee were to support the amendment, it should also support the omission of the word “then� where it appeared in an identical capacity in line 9. 

The Committee agreed.

Mr Strydom then stated that KwaZulu-Natal was asking for an explanation of Clause 9, page 4, line 44.

Mr Durr explained that the legislation was proposing that, because the IDC portfolio was owned by the State, it would be possible for the government to receive dividends from the portfolio.  This practice would be in line with the government's dividend-sharing arrangement with Eskom. 

Mr Strydom said that there was one last question to address for KwaZulu-Natal and that was why the amendment was banning the use of the government seal.  He answered that the government seal referred to was the one that was used when the Principle Act was written, and it was now obsolete.

The Chairperson asked the North West Province representative whether it had sorted out its document mix-up.

The representative responded that he had and proceeded with the province's concerns.  First, the province asked whether the Bill could capitalise “provincial legislatures� and “municipal councils� because it capitalised Members of Parliament.

The Chairperson asked the Committee whether it had any objection.

Mr Durr objected, explaining that, since there was only one Parliament in South Africa, it and its members were capitalised according to grammatical rule.  The same grammar rule did not apply to provincial legislatures or municipal councils. 

The representative from the North West Province then asked whether a time-period could be assigned to the dividend program.

Mr Fenyane (ANC) said that the dividend agreement was not unique to the IDC Act.  He clarified that the time frame could not be “fixed.�

Thirdly, the North West Province representative stated that the name of the Bill should read exactly as it read in the original Act.

Mr Strydom explained that language disagreement was standard drafting process and the title of the Act would automatically change once the amendment was voted into effect. 

The Chairperson asked the Committee to agree on the final document that would be immediately returned to the provinces for final mandate. 

Mr Durr asked the Chairperson whether this was realistic.

The Chairperson responded that the document would be ready by the afternoon for members to take back to their legislatures.

Finalisation of the Merchandise Marks Amendment Bill
The Chairperson introduced Mr M. Netshitenzhe from the DTI to go over the Merchandise Marks Amendment Bill.  He reminded the Committee that the Bill had passed through the National Assembly and the amendments were strictly of a technical nature.

Mr Netshitenzhe briefly listed grammatical changes to the document. 

The Chairperson stated that the National Assembly had only made one amendment, to page 3, line 25.

Mr Strydom informed the Committee that there was fault with the National Assembly amendment.  The technicality was with the word “deemed.�  He said that the National Assembly amendment actually made the clause more confusing and asked the Committee whether it would agree to remove the second clause entirely from the document on the grounds that it would strengthen the language of the act. 

The Chairperson agreed with Mr Strydom's suggestion.  The Committee approved the Bill and the meeting was adjourned.

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