Definitions

1. (1) In this Act, unless the context indicates otherwise—

"accounting authority" means an authority referred to in section 58;

"annual Division of Revenue Act" means the Act of Parliament which must be enacted annually in terms of section 214(1) of the Constitution;

"approved budget" means an annual or adjustments budget –

(b) adopted by a provincial executive following an intervention in terms of section 139 of the Constitution;

"Auditor-General" means the person appointed as Auditor-General in terms of section 193 of the Constitution, and includes a person exercising a power or performing a duty of the Auditor-General in terms of a delegation by the Auditor-General;

"budget-related policy" means any policy of a municipality affecting or affected by the annual budget of a municipality, including –

(a) the tariffs policy which a municipality must adopt in terms of sections 74 of the Municipal Systems Act, read with section 105B of this Act;

"business plan", in relation to a municipal entity, means a plan adopted by the municipal entity in terms of section 63;

"category", in relation to municipalities, means a category A, B or C municipality referred to in section 155(1) of the Constitution;

"chief financial officer" means a person designated in terms of section 43(2)(a);

"controlling municipality" –

(b) in relation to a municipal entity under joint ownership control, means each of the municipalities which has joint ownership control of the municipal entity;

"councillor" means a member of a municipal council;

"court" means a court having jurisdiction;]

"creditor", in relation to a municipality, means any person to whom money is owing by the municipality;

"debt" means—

(a) a monetary liability or obligation created by a financing agreement, note, debenture, bond or overdraft, or by the issuance of municipal debt instruments; or

(b) a contingent liability such as that created by guaranteeing a monetary liability or obligation of another;

"delegation", in relation to a duty, includes an instruction or request to perform the duty;

"district municipality" means a municipality that has municipal executive and legislative authority in an area that includes more than one municipality, and which is described in section 155(1) of the Constitution as a category C municipality;

"Emergency Authority" means the Municipal Financial Emergency Authority established by section 88;

"Executive Officer", in relation to the Emergency Authority, means the person appointed as the Executive Officer of that Authority;

"financial emergency" means a financial emergency within the meaning of Chapter 11;

"financial recovery specialist", in relation to a municipality in a financial emergency, means a person appointed in terms of section 98 as the financial recovery specialist for that municipality;

"financial statements" means statements consisting of at least—

(a) a statement of financial position;

(b) a statement of financial performance;

(c) a cash-flow statement;

(d) any other statements that may be prescribed; and

(e) any notes to these statements;

"financial year" means a year ending on 30 June;

"financing agreement" includes any loan agreement, lease, instalment purchase contract or hire purchase arrangement under which a municipality undertakes to pay the capital cost of property, plant or equipment over a period of time;

"governing board or body", in relation to a municipal entity, means a board of directors or equivalent governing body appointed in terms of the legislation under which the municipal entity was established;

"irregular expenditure" means expenditure, other than unauthorised expenditure, incurred in contravention of, or that is not in accordance with, a requirement of this Act or [any other applicable legislation] the annual Division of Revenue Act;

"investment", in relation to funds of a municipality, means –

"joint ownership control", in relation to a municipal entity, means ownership control over the municipal entity which is exercised by a municipality together with another municipality;

"lender", in relation to a municipality, means a person who provides debt finance to a municipality;

"local municipality" means a municipality that shares municipal executive and legislative authority in its area with a district municipality within whose area it falls, and which is described in section 155(1) of the Constitution as a category B municipality;

"long-term debt" means debt that is repayable over a period exceeding one year;

"mayor", in relation to –

(a) a municipality with an executive committee, means the councillor elected as the mayor of the municipality in terms of section 48 of the Municipal Structures Act; or

"MEC for finance" means the member of the Executive Council of a province responsible for finance in that province;

"MEC for local government" means the member of the Executive Council of a province responsible for local government in that province;

["metropolitan municipality" means a municipality that has exclusive executive and legislative authority in its area, and which is described in section 155(1) of the Constitution as a category A municipality;]

["minimum essential municipal service" means a service, which, if not provided, would pose a threat to public health or safety;]

"Minister" means the Minister of Finance;

"municipal council" or "council" means [a municipal council contemplated in section 157 of the Constitution] the council of a municipality referred to in section 18 of the Structures Act;

"municipal debt instrument" means any note, bond, debenture or other evidence of indebtedness issued by a municipality, including dematerialised or electronic evidence of indebtedness intended to be used in trade;

"municipal entity" means—

(a) a company, co-operative, trust, fund or any other corporate [entity] body established in terms of any applicable national or provincial legislation and which operates under the ownership control of one or more municipalities;

[(b) any subsidiary of a company that is a municipal entity in terms of paragraph (a);] or

(c) a service utility established in terms of section 82(1)(c) of the Municipal Systems Act;

"municipality", when referred to as—

(a) a corporate body, means a municipality as described in section 2 of the Municipal Systems Act; and

(b) a geographic area, means a municipal area determined in terms of the Local Government: Municipal Demarcation Act, 1998 (Act No. 27 of 1998);

"municipal manager" means a person appointed in terms of section 82 (1) (a) or (b) of the Municipal Structures Act;

through an internal mechanism or by engaging an external mechanism, but excludes –

Municipal Structures Act" "means the Local Government: Municipal Structures Act, 1998 (Act No. 117 of 1998);

"Municipal Systems Act" means the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000);

"National Treasury" means the National Treasury established by section 5 of the Public Finance Management Act;

"organised local government" means an organisation recognised in terms of section 2(1) of the Organised Local Government Act (Act No. 52 of 1997), to represent local government nationally or provincially;

"overspending"—

(a) in relation to the budget of a municipality, means causing the operational or capital expenditure incurred by the municipality during a financial year to exceed the total amount appropriated in that year’s budget for its operational or capital expenditure, as the case may be;

(b) in relation to a vote, means causing expenditure under the vote to exceed the amount appropriated for that vote, subject to section 39; or

(c) in relation to expenditure under section 19, means causing expenditure under that section to exceed the percentage allowed in that section;

"ownership control", in relation to a company, co-operative, trust, fund or any other corporate entity established in terms of any applicable national or provincial legislation, means the ability to exercise any of the following powers to govern the financial and operating policies of the entity in order to obtain benefits from its activities:

(a) to appoint or remove at least the majority of the board of directors or equivalent governing body of that entity;

(b) to appoint or remove that entity’s chief executive officer;

(c) to cast at least the majority of the votes at meetings of the board of directors or equivalent governing body of that entity; or

(d) to control at least the majority of the voting rights at a general meeting, in the case of a company, co-operative or other body having members;

"political office-bearer", in relation to a municipality, means –

"political structure [or functionary]", in relation to a municipality, means—

(a) the council of the municipality; or

(b) any committee or other collective structure of a [municipal council or other political structure] municipality elected, designated or appointed in terms of a specific provision of the Municipal Structures Act; or

"prescribe" means prescribe by regulation [instruction or guideline] in terms of section 106;

"provincial department" means a department listed in Schedule 2 of the Public Service Act, 1994, which falls within a provincial administration listed in Schedule 1 of that Act;

"provincial treasury" means a treasury established in terms of section 17 of the Public Finance Management Act;

"Public Finance Management Act" means the Public Finance Management Act, 1999 (Act No. 1 of 1999);

"recovery plan" means a plan prepared and approved in terms of section 99;

"security" means a lien, pledge, mortgage, cession or other form of collateral intended to secure the interest of a creditor;

"short-term debt" means a debt that is repayable over a period not exceeding one year;

"sole ownership control", in relation to a municipal entity, means ownership control over the municipal entity which is exercised by a single municipality alone;

"standards of generally recognised accounting practice" means an accounting practice complying with standards applicable to municipalities or municipal entities and issued in terms of the Public Finance Management Act;

"this Act" includes regulations made [and instructions issued] in terms of section 106 or 115;

"unauthorised expenditure", in relation to a municipality, means an expenditure for which no provision is made in the budget of the municipality, and includes—

(a) overspending the budget;

(b) overspending a vote; or

(c) expenditure unrelated to the department or functional area covered by the vote;

"vote" means—

(a) one of the main segments into which a budget of a municipality is divided for the appropriation of money for the different departments or functional areas of the municipality; and

(b) which specifies the total amount that is appropriated for the purposes of the department or functional area concerned.

(2) In this Act, a word or expression derived from a word or expression defined in subsection (1) has a corresponding meaning unless the context indicates that another meaning is intended

Object of Act

2. The object of this Act is to secure transparency, accountability and sound management of the revenue, expenditure, assets and liabilities of the local government institutions to which this Act applies.

Local government institutions to which Act applies

3. (1) This Act applies to—

(a) municipalities; and

(b) municipal entities.

(2) In the event of any inconsistency between this Act and any other legislation in effect when this Act takes effect concerning financial management of municipalities or municipal entities, this Act prevails.

4. Draft national legislation directly or indirectly amending this Act, or providing for the enactment of subordinate legislation that may conflict with this Act, may be introduced in Parliament—

(a) by the Minister only after the Minister has consulted the Financial and Fiscal Commission; or

(b) only after the Minister and the Financial and Fiscal Commission [has] have been consulted in writing on the contents of the draft legislation, and [has] have responded in writing.

CHAPTER 2

SUPERVISION OVER LOCAL GOVERNMENT FINANCE MANAGEMENT

General functions of National Treasury

5. (1) The National Treasury must—

(b) promote the object of this Act as set out in section 2 in terms of –

(c) enforce compliance with the measures established in terms of section 216(1) of the Constitution, including those established in terms of this Act.

(2) To the extent necessary to perform its functions in terms of this Act, the National Treasury may—

(a) monitor the budgets of municipalities to establish whether they—

(i) are consistent with the national government’s fiscal [policy framework] and macro-economic policy; and

(ii) comply with [sections 16 and 20] Chapter 4;

(b) promote good budget management by municipalities, and for this purpose monitor expenditure and revenue of municipalities [to establish whether expenditure and revenue remain within budget];

(e) monitor and assess compliance by municipalities and municipal entities with—

(i) this Act; and

(ii) any applicable standards of generally recognised accounting practice and uniform expenditure and revenue classification systems;

(g) [review] investigate any system of financial management and internal control in any municipality and recommend improvements;

(h) take appropriate steps [including the stopping of funds to a municipality or municipal entity in terms of section 216(2) of the Constitution, if the] if a municipality or municipal entity commits a [serious or persistent material] breach of this Act, including the stopping of funds to a municipality in terms of section 216(2) of the Constitution if the municipality, or a municipal entity under the sole or joint ownership control of the municipality, commits a serious or persistent material breach of any measures referred to in that section; and

(i) take any other appropriate steps necessary to perform its functions effectively.

(3) The functions assigned to the National Treasury in terms of this Act are additional to those assigned to the Treasury in terms of the Public Finance Management Act in relation to municipalities.

Delegations by National Treasury

6. (1) The Minister may delegate any of the powers or duties assigned to the National Treasury in terms of this Act to—

(a) the Director-General of the National Treasury; or

(d) [the head of a provincial department] the MEC responsible for a provincial department, as the Minister and the [MEC responsible for that department] Premier of the province may agree.

(1A) The Minister may not delegate the National Treasury’s power in terms of section 5(2)(h)to stop funds to a municipality.

(2) A delegation in terms of subsection (1)—

(a) must be in writing;

(b) is subject to any limitations or conditions that the Minister may impose;

(c) may, subject to such limitations or conditions, authorise the Director-General of the National Treasury [the Director-General of the relevant national department the provincial treasury or the head of] or the MEC responsible for the relevant provincial department to sub-delegate a delegated power or duty [to (i)] an official, or the holder of a specific post, in the public service];

(iii) the accounting authority of a municipal entity;] and

(d) does not divest the National Treasury of the responsibility concerning the exercise of the delegated power or the performance of the delegated duty.

(3) The Minister may confirm, vary or revoke any decision taken in consequence of a delegation or sub-delegation in terms of this section, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.

CHAPTER 3

MUNICIPAL REVENUE

Opening of bank accounts

7. (1) Every municipality must open and maintain [bank accounts] at least one bank account in the name of the municipality[, into which all money received by the municipality must be paid [promptly].

(3) A municipality may not open a bank account –

(a) abroad; [or]

(b) with an institution not registered as a bank in terms of the Banks Act, 1990 (Act No. 94 of 1990); or

(3) Money may be withdrawn from a municipal bank account only in terms of section 11 (1), read with sections 11A, 23C (3) and 23F.

[Bank accounts designated for intergovernmental allocations

8. (1) One of the bank accounts opened by a municipality to be known as the accredited bank account must be designated for the receipt of all allocations made to the municipality—

8. (1) A municipality must have a primary bank account. If a municipality –

(a) the municipality’s share of the local government equitable share;

(b) all allocations to the municipality –

(i) in terms of the annual Division of Revenue Act; and

(ii) by the provincial government from provincial revenue, including from provincial public entities;

(c) all transfers, grants and agency payments to the municipality by another municipality or an organ of state in another sphere; and

(d) any other moneys as may be prescribed.

another of its bank accounts as its primary bank account, it may do so only after informing the National Treasury in writing at least 30 days before effecting the change.

transfer money referred to in subsection (2) to a municipality except through the municipality’s primary bank account.

9. (1) The accounting officer of a municipality must submit to the Auditor-General, in writing –

(2) The Auditor-General must keep a list of all bank accounts of each municipality, and make such list available to the National Treasury on request.

10. (1) The [municipal manager] accounting officer of a municipality —

(b) is accountable to the municipal council for the municipality’s bank accounts; and

(c) must enforce compliance with sections 7, 8 and 11.

(2) [A municipal manager] The accounting officer may delegate the duties contemplated in subsection (1)(b) to the municipality’s chief financial officer only.

11. (1) Only the [municipal manager] accounting officer or the chief financial officer of a municipality, or any other senior official of the municipality acting on the written authority of the [municipal manager] accounting officer, may withdraw money or authorise the withdrawal of money from any of the municipality’s bank accounts, and may do so only—

(a) for expenditure appropriated in [terms of a] an approved budget [approved by the municipal council] except in cases where sections 11A, 23C (3) and 23F apply;

(b) to pay over to [other entities or agencies money collected by the municipality

on behalf of such entity or agency] a person or organ of state money received by the municipality on behalf of that person or organ of state, including –

(ii) any insurance or other payments received by the municipality for that person or organ of state;

(c) to refund money incorrectly paid into [the bank accounts] a bank account;

(d) to refund guarantees, sureties and security deposits;

(e) within a prescribed framework, for cash management and investment purposes in accordance with section 12 [and within any framework that may be prescribed in terms of that section]; or

(f) within a prescribed framework, for [such other purposes including emergency purposes as may be prescribed] –

(1A) The accounting officer may not authorise a senior official to withdraw money or to authorise the withdrawal of money from the municipality’s primary bank account if the municipality has a primary bank account which is separate from its other bank accounts. Any other authorisation in terms of subsection (1) to a senior official to withdraw money or to authorise the withdrawal of money from a bank account must be in accordance with a framework as may be prescribed.

(2) Money may be withdrawn from a bank account in terms of subsection (1)(b), (c), (d), (e) or (f) without appropriation in [terms of a] an approved budget [approved by the municipal council].

(3) The [municipal manager] accounting officer must—

(a) within 30 days after the end of each quarter, table in the municipal council [on at least a quarterly basis] a consolidated report of all withdrawals made in terms of subsection (1)(b), (c), (d), (e) or (f) during that quarter; and

(b) make the report available for public inspection in the prescribed manner.

(2) Money received by the municipality for the purpose of a relief, charitable or trust fund set up by or in the name of the municipality, may be paid into a separate bank account opened for this purpose by the municipality.

(3) Money in such an account may be withdrawn from the account without appropriation in an approved budget, but only –

Part 2: Cash, investment and asset management

Cash management and investments

12. (1) The National Treasury [must] may prescribe a framework within which municipalities—

(a) must conduct their cash management and investments; and

(b [may] must invest [or lend] money not immediately required.

(2) A municipality must establish appropriate and effective cash management and investment [arrangements] policy, and these must be in accordance with any framework that may be prescribed in terms of subsection (1).

(3) A bank [that has opened an account for a municipality must promptly] where a municipality at the end of a financial year holds a bank account, or held a bank account at any time during a financial year, must—

(a) within 30 days after the end of that financial year notify the [National Treasury] Auditor-General, in writing, of [such account when the account is opened] such bank account, including the type and number of the account; and

(b) disclose information regarding the account when so requested by the National Treasury [the relevant provincial treasury] or the Auditor-General.

(4) [An institution with which a municipality has invested money] A bank, insurance company or other financial institution which at the end of a financial year holds, or at any time during a financial year held, an investment for a municipality must—

(a) within 30 days after the end of that financial year, notify the [National Treasury] Auditor-General, in writing, [that it holds money as an investment for the municipality] of that investment; and

(b) promptly disclose information regarding the investment when so requested by the National Treasury [the relevant provincial treasury] or the Auditor-General.

Disposal of capital assets

13. (1) A municipality may not transfer ownership [with or without consideration,] as a result of a sale or other transaction or otherwise permanently dispose of a capital asset needed to provide [a] the minimum [essential] level of basic municipal services.

(2) A municipality may transfer ownership or otherwise dispose of an asset other than one contemplated in subsection (1), but only after the council, in a meeting open to the public—

(a) on reasonable grounds decided that the asset is not needed to provide [a] the minimum [essential] level of basic municipal services; and

(b) considered the fair market value of the asset and the economic and community value to be received in exchange for the asset.

(3) A decision by a municipal council that a specific capital asset is not needed to provide [a] the minimum [essential] level of basic municipal services, may not be reversed by the municipality after that asset has been sold, transferred or otherwise disposed of.

(4) A municipal council may delegate to the accounting officer of the municipality its power to make the determinations referred to in subsection (2) (a) and (b) in respect of movable assets below a value determined by the council.

(6) This section does not apply to the transfer of a capital asset to another municipality or to a municipal entity or national or provincial organ of state.

Acquisition and disposal of minority interests in companies and other entities

14. A municipality [a municipal entity or a subsidiary of a municipal entity] may—

(a) acquire or hold a minority interest in any company or other corporate entity, but only if the other interests are held by—

(i) another municipality or municipalities;

(ii) a municipal entity or entities; or

(iii) a municipal entity over which that municipality or that other municipality or any of those other municipalities exercise sole or joint ownership control; or

(b) dispose of any interest which it holds in terms of paragraph (a) in a company or other corporate entity, but only to—

(i) another municipality;

15. A municipality may, subject to the other provisions of this Chapter, incur expenditure only –

(2) In order to comply with subsection (1) the mayor of a municipality must table the annual budget at a council meeting at least 120 days before the start of the financial year to which the budget relates

17. (1) An annual budget must be a schedule in the prescribed format –

(d) setting out –

(a) draft resolutions –

(b) measurable performance objectives for each vote;

(d) any proposed amendments to the municipality’s integrated development plan following the annual review of the integrated development plan in terms of section 34 of the Municipal Systems Act;

(e) any proposed amendments to the budget-related policies of the municipality;

(f) particulars of the municipality’s investments;

(g) particulars of all allocations by the municipality to other municipalities, municipal entities and other organs of state;

(h) the cost to the municipality of the salaries, allowances and benefits of –

(i) political office-bearers and councillors of the municipality; and

(ii) the municipal manager, the chief financial officer and all managers of the municipality referred to in section 56 of the Municipal Systems Act; and

(i) any other supporting documentation as may be prescribed.

18. (1) The budget may only be funded from –

(2) Revenue projections in the budget must be realistic, taking into account –

19. (1) A municipality may spend money on a capital project only if –

(2) Before approving a capital project involving construction, the council of a municipality must consider –

(3) A municipal council may approve a capital project in terms of subsection (1) (a) –

20. The National Treasury –

(b) may prescribe –

(iv) uniform norms and standards aimed at ensuring that municipal budgets do not undermine national economic policy objectives, including measures limiting –

(v) uniform norms and standards aimed at promoting transparency and expenditure control.

21. (1) The mayor of a municipality must—

(a) co-ordinate the processes for preparing the annual budget and for reviewing the municipality’s integrated development plan and budget-related policies to ensure that the budget, the integrated development plan and the budget-related policies are mutually consistent and credible;

(b) at least ten months before the start of the financial year to which the budget relates, table in the municipal council a time schedule outlining the key deadlines for –

(2) When preparing the budget, the mayor must —

(a) take into account the municipality’s integrated development plan;

(b) take all reasonable steps to ensure that the municipality revises the integrated development plan in terms of the Municipal Systems Act, taking into account realistic revenue and expenditure projections for future years;

(c) consult –

(i) the relevant district municipality, in the case of a local municipality;

(ii) the relevant local municipalities, in the case of a district municipality;

(iii) any municipal entities under the sole or joint ownership control of the municipality; and

(iv) the National Treasury and any other interested provincial and national organs of state as may be prescribed; and

(d) provide on request any information relating to the budget to the National Treasury, a prescribed national or provincial organ of state, or another municipality affected by the budget.

22. Immediately after an annual budget is tabled in a municipal council, the accounting officer of the municipality must –

(a) make the annual budget and the documents referred to in section 17 (3) available to the public on the municipality’s website and by way of printed copies at the municipality’s head and branch offices and libraries;

(c) submit the annual budget to the National Treasury in both printed and electronic formats, and in either format to any prescribed national or provincial departments, agencies and regulators, and to other municipalities affected by the budget.

23. (1) When the annual budget has been tabled, the municipal council must consider the views of –

(a) the local community obtained through appropriate mechanisms, processes and procedures in terms of Chapter 4 of the Municipal Systems Act; and

(b) the National Treasury, other provincial and national departments, agencies and regulators and municipalities which made submissions on the budget.

(2) After considering all budget submissions, the council must give the mayor an opportunity –

(3) The mayor must table the revised budget at least 30 days before the start of the

(4) The National Treasury may issue guidelines on the manner in which municipal councils should process their annual budgets, including guidelines on the formation of a committee of the council to consider the budget and to hold public hearings.

(2) An annual budget –

(c) must be approved together with the adoption of resolutions –

(i) levying any property rates for the financial year to which the budget relates;

(ii) levying any other taxes for the financial year;

(iii) setting any tariffs for municipal services for the financial year;

(iv) approving measurable performance objectives for each vote;

(v) approving any changes to the integrated development plan; and

(vi) approving any changes to budget-related policies.

23C. (1) If a municipal council has not approved an annual budget by the start of the financial year, the provincial executive may intervene in the municipality and take steps in terms of section 139 of the Constitution, which may include –

(a) the approval by the provincial executive of a budget for the municipality; and

(b) dissolution of the council in terms of section 34 (3) (b) of the Municipal Structures Act.

(2) When approving a budget for a municipality in terms of subsection (1) (a), the provincial executive is not bound by any provision relating to the budget process applicable to a municipality in terms of this Act or other legislation. Such a budget may after the intervention has ended be replaced by a budget approved by the council, provided the provisions of this Chapter relating to annual budgets are substantially complied with.

(3) Until a budget for the municipality is approved in terms of section 23A or subsection (1) (a) of this section, funds for the requirements of the municipality may, with the approval of the MEC for local government in the province, be withdrawn from the municipality’s bank accounts in accordance with subsection (4).

(4) Funds withdrawn from a municipality’s bank accounts in terms of

subsection (3) –

(a) may be used only to defray current expenditure in connection with votes for which funds were appropriated in the last approved annual budget or adjustments budget; and

(b) may not –

(i) during any month, exceed eight per cent of the total amount appropriated in the last approved annual budget for current expenditure, which percentage must be scaled down proportionately if revenue flows are not at least at the same level as the previous financial year; and

(ii) exceed the amount actually available.

(5) The funds provided for in subsection (3) are not additional to funds appropriated

for the relevant financial year, and any funds withdrawn in terms of subsection (4) must be regarded as forming part of the funds appropriated in a subsequently approved annual budget for that financial year.

(2) If the impending non-compliance pertains to a time provision other than section 16 (1), the MEC for local government may, on application by the mayor and on good cause shown, extend any time limit or deadline contained in that provision, provided that no such extension may compromise compliance with section 16 (1). An MEC for local government

must –

(3) The mayor of a municipality must upon becoming aware of any non-compliance by the municipality of a provision of this Chapter, inform the MEC for local government and the National Treasury, in writing, of –

(b) any remedial measures the municipality intends to put in place to avoid a recurrence.

(5) The provincial executive may intervene in terms of section 139 of the Constitution if a municipality cannot or does not comply with a provision of this Chapter, including a provision relating to process.

(2) An adjustments budget —

(a) must promptly adjust the revenue and expenditure estimates downwards if there is material under-collection of revenue during the year;

(b) may appropriate additional revenues that have become available, over and above those anticipated in the annual budget, but only to revise or accelerate spending programmes already budgeted for;

(c) may authorise unforeseeable and unavoidable, or emergency, expenditure recommended by the mayor of the municipality, within a prescribed framework;

(d) may authorise the utilisation of projected savings in one vote towards spending under another vote;

(e) may authorise spending of funds that were unspent at the end of the previous financial year, where the under-spending could not reasonably have been foreseen at the time the annual budget was approved by the council;

(f) may correct any errors in the annual budget; and

(g) may provide for any other expenditure within a prescribed framework.

(3) An adjustments budget must be in a prescribed form.

(4) Only the mayor may table an adjustments budget in the municipal council, but an adjustments budget in terms of subsection (2) (b) to (g) may only be tabled in accordance with any prescribed limitations as to timing or frequency.

(5) When an adjustments budget is tabled, it must be accompanied by –

(c) any other supporting documentation that may be prescribed.

(6) Before an adjustments budget is tabled or approved, the municipality must –

(2) Any such expenditure –

(3) If such adjustments budget is not passed within 60 days after the expenditure was incurred the expenditure is unauthorised and section 23G applies.

23G. (1) Without limiting liability in terms of the common law or other legislation—

(d) any person who deliberately or negligently made or authorised a fruitless and wasteful expenditure is liable for that expenditure.

(2) A municipality must recover unauthorised, irregular or fruitless and wasteful expenditure from the person liable for that expenditure unless the expenditure—

(a) in the case of unauthorised expenditure, is—

(b) in the case of irregular or fruitless and wasteful expenditure, is certified by the council as irrecoverable and written off by the council.

(4) The accounting officer must promptly inform the speaker of the council, the MEC for local government in the province and the Auditor-General, in writing, of—

(b) the steps that have been taken—

of alleged –

cases referred to in subsection (6) are reported to the South African Police Service if –

(8) Any action taken against an accounting officer because of that accounting officer’s compliance with subsection (4) or (6), is an unfair labour practice for the purposes of the Labour Relations Act, 1995 (Act No. 66 of 1995).

23H. (1) The national and provincial governments must by agreement assist municipalities in building their capacity for efficient, effective and transparent financial management.

(2) Despite subsection (1), a municipality and its political structures, office-bearers and officials remain responsible for complying with this Act, and any lack or inadequacy of performance by the national and provincial governments to fulfil their obligations in terms of subsection (1) does not constitute a ground for justifying non-compliance with this Act by a municipality or its political structures, office-bearers or officials.

23I. National and provincial departments and public entities must –

(c) provide timely information and assistance to municipalities to enable municipalities –

23J. (1) In order to enable municipalities to include allocations from revenue raised nationally, and from provincial revenue, in their budgets and to plan effectively for the spending of such allocations, the accounting officer of a national or provincial department and the accounting authority of a national or provincial public entity responsible for the transfer of any such allocation to a municipality must –

(b) by no later than 20 January following the date referred to in paragraph (a), notify the municipality of –

(2) In order to enable the relevant treasury to prepare its annual budget and

(b) by no later than 20 January following the date referred to in paragraph (a), notify the relevant treasury of –

23K. Municipalities must –

(2) In order to enable municipalities to include grants from other municipalities in

23L. (1) The National Treasury may stop –

(b) the transfer of funds due to a municipality as an allocation referred to in section 214 (1) (c) of the Constitution or as an agency payment, but only if the municipality or the municipal entity for which the funds are destined –

(2) Before the National Treasury stops the transfer of funds to a municipality in terms of subsection (1) (a) or (b), it must –

(3) If the stopping of funds in terms of subsection (1) (a) or (b) may affect the

provision of basic municipal services in the municipality, the provincial executive –

23M. (1) A decision by the National Treasury to stop the transfer to a municipality of funds referred to in section 23L (1) (a) –

(2) Parliament may renew a decision to stop the transfer of funds for no more than 120 days at a time, following the process established in terms of subsection (2).

(3) Before Parliament approves or renews a decision to stop the transfer of funds to a municipality –

(2) A power conferred by national or provincial legislation on a national or provincial

organ of state to determine the upper limit of a municipal tariff, rate or tax or of revenue from any other source, may despite such legislation be exercised by such national or provincial organ of state –

(a) only with the approval of the Minister; and

(b) only after the Financial and Fiscal Commission and organised local government have been consulted.

(3) A decision referred to in subsection (1) or (2) which is made known –

(2) If the Minister is not a party to the dispute, the parties –

(3) If the Minister accedes to a request in terms of subsection (2), the Minister may

(4) This section only applies if at least one of the organs of state referred to in subsection (1) is a municipality or municipal entity.

CHAPTER 5

DEBT

Short-term debt

24. (1) A municipality may incur short-term debt only in accordance with and subject to the provisions of this [Chapter] Act.

(2) A municipality may incur short-term debt only when necessary to bridge—

(a) shortfalls within a financial year during which the debt is incurred, in [anticipation] expectation of specific and realistic anticipated income to be received within that financial year; or

(b) capital needs within a financial year, to be repaid from specific funds to be received from enforceable grants or long-term debt commitments.

(3) A municipality—

(a) must pay off short-term debt within the financial year; and

(b) may not renew or refinance its short-term debt, nor that of a municipal entity under its sole or joint ownership control.

(4) (a) No lender may wilfully extend credit to a municipality for the purpose of renewing or refinancing short-term debt that must be paid off in terms of subsection (3)(a).

(b) If a lender wilfully extends credit to a municipality in contravention of paragraph (a), the municipality is not bound to repay the loan or interest on the loan.

(5) Subsection (4)(b) does not apply if the lender—

(a) relied in good faith on written representations of the municipality as to the purpose of the borrowing; and

(b) did not know and had no reason to believe that the borrowing was for the purpose of renewing or refinancing [its] short-term debt.

Long-term debt

25. (1) A municipality may incur long-term debt only in accordance with and subject to the provisions of this [Chapter] Act.

(2) A municipality may incur long-term debt only for the purpose of—

(a) capital expenditure on property, plant or equipment to be used for the purpose of achieving the objects of local government as set out in section 152 of the Constitution; or

(b) re-financing existing long-term debt, if such re-financing is in accordance with a prescribed framework.

(3) Capital expenditure contemplated in subsection (2)(a) may include—

(a) financing costs, including—

(i) capitalised interest for a reasonable initial period;

(ii) security arrangements [such as a reserve fund] in accordance with section 27;

(iii) discounts and fees in connection with the financing;

(iv) fees for legal, financial advisory, trustee and other services directly connected to the financing; and

(v) costs for printing, publication and competition directly connected to the financing;

(b) costs of professional services directly related to the capital expenditure; and

(c) such other costs as may be prescribed.

(4) [A municipality in respect of which a financial emergency has been declared may incur long-term debt to support financial restructuring in accordance with the approved] A municipality may borrow money for the purpose of re-financing existing long-term debt, provided –

Conditions on which short and long-term debt may be incurred

26. (1) A municipality may incur debt only if –

(2) (a) A municipality may incur short-term debt only if the accounting officer of the municipality has made a prior written finding that the debt either –

(3) A municipality may incur long-term debt only if the accounting officer of the municipality –

(a) at least 21 days prior to the meeting of the council at which approval for the debt is to be considered, has published a notice in a newspaper of general circulation in the municipality –

(c) has submitted an information statement to the council at least 14 days prior to the meeting of the council setting out –

Security

27. (1) A municipality may, by resolution of its council, authorise security to be provided for –

(a) any of its debt obligations;

(c) contractual obligations of the municipality undertaken in connection with capital expenditure by other persons on property, plant or equipment to be used by the municipality or such other person for the purpose of achieving the objects of local government in terms of section 152 of the Constitution.

(2) Without detracting from the generality of subsection (1), a municipality [when incurring debt,] may provide security to investors by—

(a) [undertake] undertaking to effect payment directly from money or sources that may become available and authorise direct access to such sources to ensure payment of the debt or performance of those obligations;

(b) [undertake] undertaking to deposit funds with the lender or a third party as security [for the debt];

(c) [agree] agreeing to specific payment mechanisms or procedures to ensure exclusive or dedicated payment to lenders, including revenue intercepts, payments into dedicated accounts or other payment mechanisms or procedures;

(d) [cede] ceding as security any category of revenue or rights to future revenue; [specified in the financing agreement or information statement contemplated in section 26(d)]

(e) [undertake] undertaking to have disputes resolved through mediation, arbitration or other dispute-resolution mechanisms;

(f) [undertake] undertaking to retain revenues or specific charges, fees, tariffs or funds at a particular level or at a level sufficient to meet its obligations [arising from that debt];

(g) [undertake] undertaking to make provision in its budgets for the payment of those obligations, including capital and interest;

(h) [agree] agreeing to restrictions on [other] debt that the municipality may incur in future until the secured debt is settled or the contractual obligations are met; and

(i) [agree] agreeing to such other arrangements as the municipality may consider necessary and prudent.

(3) A council resolution authorising the provision of security in terms of subsection (1)—

(a) must determine whether the asset or right with respect to which the security is provided, is necessary for providing [a minimum essential municipal service] the minimum level of basic municipal services; and

(b) if so, must indicate the manner in which the availability of the asset or right for the provision of that [service] minimum level of basic municipal services will be protected.

(4) If the resolution has determined that the asset or right is necessary for providing [a minimum essential municipal service, the lender] the minimum level of basic municipal services, neither the party to whom the municipal security is provided, nor any successor or assignee of such party, may [not], in the event of a default by the municipality, deal with the asset or right in a manner that would preclude or impede the continuation of that minimum [essential] level of basic municipal services.

(5) A determination in terms of subsection (3) that an asset or right is not necessary for providing [a minimum essential municipal service] the minimum level of basic municipal services is binding on the municipality until the secured debt has been paid in full or the secured obligations have been performed in full, as the case may be.

Disclosure

28. Any person involved in the borrowing of money by a municipality must, when interacting with a prospective lender or when preparing documentation for consideration by a prospective investor—

(a) disclose all information in that person’s possession or within that person’s knowledge that may be material to the decision of that prospective lender or investor; and

(b) take reasonable care to ensure the accuracy of any information disclosed.

Municipal guarantees

29. (1) A municipality may guarantee any debt of a municipal entity under its sole or joint ownership control only if—

(a) the debt is reflected in the business plan of the entity approved [by the relevant municipal council or councils] in accordance with section ….; and

(c) the guarantee is authorised by the relevant municipal council [or councils] in the same manner and subject to the same conditions [provided for in] applicable in terms of this Chapter to borrowing.

(2) A municipality must disclose in its annual report particulars of all guarantees

National and provincial guarantees

30. Neither the national nor a provincial government may guarantee debt of a municipality or of a municipal entity.

CHAPTER 6

[COUNCILLORS FOR FINANCIAL MATTERS] RESPONSIBILITIES OF MAYORS

[Councillors responsible for financial matters

[Duties of councillors for financial matters] General responsibilities of mayors

32. (1) The [councillor for financial matters must] mayor of a municipality—

(a) must exercise general political [control] guidance over the financial affairs of the municipality; [but may not interfere in the financial management responsibilities assigned in terms of this Act to the municipal manager or the chief financial officer]

(b) [oversee expenditure and revenue collection with a view to preventing overspending of the municipality’s budget or a vote;] must take all reasonable steps to ensure that the municipality perform its statutory functions within the limits of the approved budget;

(c) must within 30 days of the end of each quarter report to the council on the implementation of the budget and the financial state of affairs of the municipality;

(d) may not interfere in the responsibilities assigned in terms of this Act to the accounting officer or the chief financial officer; and

(e) must exercise the other powers and perform the other duties assigned by the council or [in terms of] this Act to the [councillor for financial matters] mayor.

32A. (1) The mayor of a municipality must –

(c) take all reasonable steps to ensure –

(iii) that the annual performance agreements as required in terms of section 57 (1) (b) of the Municipal Systems Act for the municipal manager and all managers directly responsible to the municipal manager are –

(2) The mayor must report any delay in the signing of the annual performance

32B. On receipt of a monthly budget report submitted by the accounting officer of the municipality in terms of section 42C, the mayor must –

(c) issue any appropriate instructions to the accounting officer to ensure –

(e) promptly respond to and initiate any remedial or corrective steps proposed by the accounting officer, which may include –

32C. If a municipality has not approved an annual budget by the first day of the financial year to which that budget relates or if the municipality faces a financial problem which the municipality cannot resolve on its own, the mayor of the municipality –

over the municipal entity in a way –

Delegations by [councillors for financial matters] mayors

33. (1) [The councillor for financial matters may delegate any of the powers or duties assigned to that councillor in terms of this Act to any other councillor of the municipality.] The powers and duties assigned in terms of this Act to the mayor of a

municipality, may –

(2) A delegation in terms of subsection (1)—

(a) must be in writing;

(b) is subject to any limitations or conditions that the [councillor for financial matters] mayor may impose; and

(c) does not divest the [councillor for financial matters] mayor of the responsibility concerning the exercise of the delegated power or the performance of the delegated duty.

(3) The mayor may confirm, vary or revoke any decision taken in consequence of a delegation in terms of this section, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.

CHAPTER 7

[DUTIES] RESPONSIBILITIES OF MUNICIPAL OFFICIALS

Part 1: [Municipal managers] Accounting officers

34. [(1)] The municipal manager of a municipality is the accounting officer of the municipality for the purposes of this Act, and, [is responsible for assuring compliance] as accounting officer, must take all reasonable steps to ensure that the municipality, including the political structures and office-bearers, and officials in the service, of the municipality, and any municipal entity under the sole or joint ownership control of the municipality, comply with this Act.

[(2) If the municipal manager is absent or otherwise unable to perform the functions of office, or during a vacancy, the acting municipal manager is the accounting officer for the purposes of this Act and, while acting as such, is responsible for assuring compliance with this Act].

35. (1) [As] The accounting officer of a municipality [the municipal manager] must—

(a) act with fidelity, honesty, integrity and in the best interests of the municipality in managing its financial affairs;

(b) disclose to the municipal council and the mayor all material facts which are available to the [municipal manager] accounting officer or reasonably discoverable, and which in any way might influence the decisions or actions of the council or the mayor; and

(c) seek, within the sphere of influence of that [municipal manager] accounting officer, to prevent any prejudice to the financial interests of the municipality.

(2) [A municipal manager] An accounting officer may not—

(a) act in a way that is inconsistent with the duties assigned to [a municipal manager] an accounting officer in terms of this Act; or

(b) use the position and privileges of, or confidential information obtained as, [municipal manager] accounting officer for personal gain or to improperly benefit another person.

36. (1) The accounting officer of a municipality—

(c) must ensure that the municipality has and maintains—

(e) must take effective and appropriate disciplinary steps against any official in the service of the municipality who—

(2) The accounting officer of a municipality must take all reasonable steps to ensure that the municipality has and implements –

(d) a credit control and debt collection policy referred to in section 96 (b) of the Municipal Systems Act, read with section 105C of this Act.

(3) The accounting officer must maintain and regularly update the municipality’s official website and promptly place on the website –

(4) The accounting officer is responsible for all funds set up by the municipality, including any relief, charitable or trust fund set up by the municipality in terms of section 11A, and must account for the money in such funds.

37. (1) The accounting officer of a municipality is responsible for the management of—

(2) The accounting officer must for the purposes of subsection (1) –

(b) cause the municipality’s assets and liabilities to be valued in accordance with standards of generally recognised accounting practice; and

(2) The accounting officer must for the purposes of subsection (1) –

(e) ensure that all money received is promptly deposited in accordance with this Act into the municipality’s primary and other bank accounts;

(f) establish and maintain a management, accounting and information system which –

(i) ensure that all revenue received by the municipality, including revenue received by any collecting agent on its behalf, is reconciled at least on a weekly basis.

(4) The accounting officer must ensure –

(2) The accounting officer must for the purpose of subsection (1) –

(b) ensure that the municipality has and maintains a management, accounting and information system which –

(i) recognises expenditure when it is incurred;

(ii) accounts for creditors of the municipality; and

(iii) accounts for payments made by the municipality;

(d) when making payments ensure that payments are made –

40. The accounting officer of a municipality must –

(a) in a format and at intervals as may be prescribed, report to the council on all expenditure incurred by the municipality on staff benefits, and in a manner that discloses such expenditure per type of expenditure, namely –

41. (1) Before transferring to an organisation or body outside any sphere of government funds of the municipality otherwise than in compliance with a commercial or other business transaction, the accounting officer must be satisfied that the organisation or body –

(a) has the capacity and has agreed –

(3) Subsection (1) (a) does not apply to an organisation or body serving the poor or used by government as an agency to serve the poor, provided that –

(b) the accounting officer –

42. The accounting officer of a municipality must –

42A. (1) The accounting officer of a municipality is responsible for implementing the municipality’s budget, including taking effective and appropriate steps to ensure that –

(b) revenue and expenditure are properly monitored.

(2) When necessary the accounting officer must prepare an adjustments budget and

(3) The accounting officer must no later than 14 days after the tabling of a budget in

the municipal council submit to the mayor –

42B. (1) The accounting officer of a municipality must report in writing to the municipal council –

(a) any impending—

(2) If the consolidated balance in a municipality’s bank accounts shows a net overdrawn position for a period exceeding a prescribed period or if, in the case of a municipality having only one bank account, the municipality’s bank account is overdrawn for a period exceeding such prescribed period, the accounting officer of the municipality must notify the National Treasury, in writing, of –

report in the prescribed format on the state of the municipality’s budget reflecting –

(g) when necessary, an explanation of –

(2) The amounts reflected in the report must in each case be compared with the

42E. The accounting officer must inform the MEC for local government in the province and the National Treasury, in writing, of –

(b) any non-compliance by a political structure or office-bearer of the municipality with any such policy.

42G. Any action taken by a political structure or office-bearer of a municipality against the accounting officer of the municipality solely because of that accounting officer’s compliance with a provision of this Act, is an unfair labour practice for the purposes of the Labour Relations Act, 1995 (Act No. 66 of 1995).

42H. (1) The top management of a municipality’s administration consists of –

(2) The top management must assist the accounting officer in managing and co-ordinating the financial administration of the municipality.

42I. A manager referred to in section 56 of the Municipal Systems Act or other official of a municipality—

42J. (1) The accounting officer of a municipality –

(b) may, in accordance with that system, delegate any of the powers or duties assigned to an accounting officer in terms of this Act –

(2) A delegation in terms of subsection (1)—

CHAPTER 8

MUNICIPAL BUDGET AND TREASURY OFFICES

Establishment of office

43. (1) Every municipality must have a budget and treasury office.

(2) A budget and treasury office consists of—

(a) a chief financial officer designated by the [municipal manager] accounting officer of the municipality;

(b) staff allocated by the [municipal manager] accounting officer to the chief financial officer; and

(c) any other persons contracted by the municipality for the work of the office.

44. (1) The chief financial officer of a municipality—

(a) is administratively in charge of the budget and treasury office;

(d) must perform such budgeting, accounting, analysis, financial reporting, cash management, debt management, financial management, review and other functions as may be delegated to the chief financial officer by the [municipal manager] accounting officer.

(2) The chief financial officer of a municipality is accountable to the [municipal manager] accounting officer for the performance of the functions referred to in subsection (1).

45. (1) The chief financial officer of a municipality may sub-delegate any of the functions referred to in section 44(1)(b)—

(a) to an official in the budget and treasury office;

(b) to the holder of a specific post in that office; or

(c) with the concurrence of the [municipal manager] accounting officer, to—

(i) any other official of the municipality; or

(ii) any person contracted by the municipality for the work of the office.

(2) If the chief financial officer sub-delegates any functions in terms of subsection (1) to a person who is not an official of the municipality, the chief financial officer must be satisfied that effective systems and procedures are in place to ensure control and accountability.

(3) A sub-delegation in terms of subsection (1)—

(a) must be in writing;

(b) is subject to such limitations or conditions as the chief financial officer may impose; and

(c) does not divest that chief financial officer of the responsibility concerning the delegated function.

(4) The chief financial officer may confirm, vary or revoke any decision taken in consequence of a sub-delegation in terms of subsection (1), but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.

(2) A municipality must for the purposes of subsection (1) –

(3) Consistent failure by a staff member to meet the prescribed competency levels is a

(4) The National Treasury or a provincial treasury may assist municipalities in the training of budget and treasury office staff referred to in subsection(1).

CHAPTER 12

GENERAL TREASURY MATTERS

(2) The policy referred to in subsection (1) –

(b) must be consistent with –

(d) must determine criteria for –

(f) must –

(i) ensure that tender committee meetings are open to the public;

(g) must provide for the invalidation of recommendations or decisions that were made, taken or in any way influenced by –

105B. A municipality’s tariff policy referred to in section 74 of the Municipal Systems Act and a municipality’s rates policy as may be required in terms of any applicable national legislation –

(b) must be consistent with –

105C. A municipality’s credit control and debt collection policy referred to in section 96 (b) of the Municipal Systems Act must –

Audit committees

107. (1) A municipality and a municipal entity must have an audit committee which must be established and must function in accordance with regulations made in terms of section 106.

(2) An audit committee must—

(a) consist of at least three persons of whom the majority may not be in the employ of the municipality or municipal [public] entity, as the case may be; and

(b) meet as often as is required to perform its functions, but at least twice a year.

[(2)] (3) A single audit committee may be [appointed] established for—

(a) a district municipality and the local municipalities within that district municipality; and

(b) a municipality and municipal entities under its sole ownership control.

107A. (1) A municipality may remunerate its political office-bearers and members of its political structures, but only –

(2) Any remuneration paid or given in cash or in kind to a person as a political office-bearer or as a member of a political structure of a municipality otherwise than in accordance with subsection (1), including any bonus, loan, advance or other benefit, is an irregular expenditure, and the municipality must, and has the right to, recover that remuneration from the political office-bearer or member.

(3) The MEC for local government must report to the provincial legislature –

107B. (1) Each municipality must –

(a) establish its own website; and

(b) place on that website information regarding the business and affairs of the municipality as may be required or prescribed in terms of this Act.

Treasury regulations [instructions] and guidelines

106. (1) The National Treasury may make regulations [or issue instructions] or guidelines applicable to municipalities and municipal entities, regarding—

(a) any matter that may be prescribed for municipalities or municipal entities in terms of this Act;

(b) financial management and internal control;

(c) a framework for regulating the exercise of municipal fiscal and tariff fixing

powers;

(d) a framework for a municipal procurement [and provisioning] and asset disposal system which is fair, equitable, transparent, competitive and cost- effective;

(e) a framework for public private partnership agreements;

(f) the establishment by a municipality of, and control over –

(i) municipal entities; and

(ii) business units contemplated in section 76 (a) (ii) of the Municipal Systems Act;

(g) [the transfer of assets from a municipality to a municipal entity under its sole or joint ownership control or from such entity to a municipality] the safe-guarding of the financial affairs of municipalities or municipal entities when assets, liabilities or staff are transferred from or to a municipality or a municipal entity for the purpose of providing municipal services;

(h) the alienation, letting or disposal of assets by a municipality;

(j) internal audit components and their functioning;

(l) the information to be disclosed when a municipality or municipal entity issues or incurs debt and the manner in which such information must be disclosed, including by way of a prospectus or other document;

(o) the circumstances under which further or specific disclosures are required after money has been borrowed by a municipality or [public] municipal entity;

(q) the circumstances under which documentation or information pertaining to municipal debt must be lodged or registered;

(r) the establishment of a registry for the registration of documentation and information pertaining to municipal borrowing;

(v) the settlement of claims against a municipality following an order of court in terms of section 103;

[(w) the administration of this Act;] and

(x) any other matter that may facilitate the [application] enforcement and administration of this Act.

(3) A regulation [instruction] or guideline in terms of this section may—

(a) differentiate between different—

(i) kinds of municipalities, which may, for the purposes of this section, be defined either in relation to categories, [or] types or budgetary size of municipalities or in any other manner;

(ii) categories of municipal entities;

(iii) categories of [municipal managers] accounting officers;

(iv) categories of accounting authorities; or

(v) categories of officials; or

(b) be limited in its application to a particular—

(i) kind of municipality, which may, for the purposes of this section, be defined either in relation to a category, [or] type or budgetary size of municipality or in any other manner;

(ii) category of municipal entities;

(iii) category of [municipal managers] accounting officers;

(iv) category of accounting authorities; or

(v) category of officials.

108. (1) [Draft] Before regulations in terms of section [104] 106 are promulgated, the National Treasury must –

(b) [be published for public comment] publish the draft regulations in the Government Gazette [before their enactment] for public comment.

(2) Regulations made in terms of section 106 must be submitted to Parliament at least

Departures from treasury regulations [instruction] or conditions

109. (1) The National Treasury may on good grounds approve a departure from a treasury regulation [or instruction] or from any condition imposed in terms of this Act.

(2) Non-compliance with a regulation made in terms of section 106, or with a condition imposed by the National Treasury in terms of this Act, may on good grounds shown be condoned by the Treasury.

CHAPTER 14

MISCELLANEOUS

Limitation of liability

116. No organ of state or person exercising a power or performing a function in terms of this Act, is liable in respect of anything done in good faith in terms of this Act.

Exemptions

117. (1) For a transitional period not to exceed five years, where practicalities prevent the strict application of this Act, the Minister, by notice in the Gazette, may exempt any municipality or municipal entity from any specific provision of this Act for a period and on conditions determined in the notice.

(2) An exemption in terms of subsection (1) may—

(a) apply to—

(i) municipalities generally; or

(ii) municipal entities generally; or

(b) be limited in its application to a particular—

(i) municipality;

(ii) kind of municipality, which may, for the purposes of this section, be defined either in relation to a category, [or] type or budgetary size of municipality or in any other manner;

(iii) municipal entity; or

(iv) category of municipal entities.

118. (1) Anything done in terms of a provision repealed by section 119(1), which can be done in terms of a provision of this Act, must be regarded as having been done in terms of this Act.

(2) All municipalities must within three months of the date on which this section takes effect, submit to the National Treasury a list of all municipal entities and other corporate [entities] bodies in which the municipality has an interest, specifying—

(a) the name and address of the municipal entity or other corporate body;

(b) the purpose, extent and other particulars of the interest;

(c) whether the municipal entity is under the sole or joint ownership control of the municipality; and

(d) such other information as may be required by the National Treasury.

(3) If a municipality or a municipal entity [or a subsidiary of a municipal entity] holds an interest in any company or other [entity] corporate body in contravention of section 14, it must dispose of such interest within two years from the date on which that section took effect.

(4) Section 24 (4) only applies—

(a) from a date determined by the Minister by notice in the Gazette; and

(b) to the extent prescribed during the period of two years commencing from the date determined in terms of paragraph (a).

Repeal and amendment of legislation

119. (1) The legislation referred to in the second column of the Schedule is hereby amended or repealed to the extent indicated in the third column of the Schedule.

(2) Despite the repeal of section 10G of the Local Government Transition Act, 1993 (Act No. 209 of 1993), by subsection (1) of this section, the provisions contained in subsections (6), (6A) and (7) of section 10G remain in force until the legislation envisaged in section 229 (2) (b) of the Constitution is enacted.

120. (1) This Act is called the Local Government: Municipal Finance Management Act, 2002, and, subject to section 118(4), takes effect on 1 July [2002] 2003, except [the] those provisions determined by the Minister by notice in the Gazette which will take effect on a date determined in the notice.

(2) Different dates may in terms of subsection (1) be determined for different provisions of the Act.

(3) The Minister may, by notice in the Gazette, after consultation with organised local government, phase in the application of the provisions of this Act, and determine different dates on which different provisions of this Act will become applicable –

(a) to municipalities of different [categories, types or kinds] kinds, which may, for the purposes of this section, be defined either in relation to categories, types, budgetary sizes or in any other manner; and

(b) to municipal entities of different categories.

SCHEDULE

REPEAL AND AMENDMENT OF LEGISLATION