CLAUSE 1

1. On page 2, in line 29, to omit paragraph (h) and to substitute:

(h) the substitution for the definition of "ownership control" of the following definition:

"’ownership control’, in relation to a private company, means the ability to exercise any of the following powers to govern the financial and operating policies of the private company in order to obtain benefits from its activities:

(a) To appoint or remove at least the majority of the board of directors;

(b) to appoint or remove the private company’s chief executive officer; or

(c) to control at least the majority of the voting rights at a general meeting of the private company;".

CLAUSE 2

1. That the Clause be rejected.

NEW CLAUSE

1. That the following be a new Clause to follow Clause 1:

Substitution of section 9 of Act 32 of 2000

2. The following section is hereby substituted for section 9 of the principal Act:

"Assignment of function or power to municipalities by Act of Parliament or provincial Act

9. (1) A Cabinet member or Deputy Minister seeking to initiate the assignment of a function or power by way of an Act of Parliament to municipalities must, at least 210 days before the draft legislation providing for the assignment is introduced in Parliament–

(a) request the Financial and Fiscal Commission to assess the financial and fiscal implications of the legislation, after informing the Financial and Fiscal Commission of the possible impact of such assignment on –

(i) the future division of revenue between the spheres of government in terms of section 214 of the Constitution;

(ii) the fiscal power, fiscal capacity and efficiency of municipalities or any category of municipality; and

(iii) the transfer, if any, of employees, assets and liabilities; and

(b) consult the Minister, the Minister of Finance and organised local government representing local government nationally with regard to –

(i) the assessment by the Financial and Fiscal Commission contemplated in paragraph (a);

(ii) the policy goals to be achieved by the assignment and the reasons for utilising assignment as the preferred option;

(iii) the financial implications of the assignment projected over at least three years;

(iv) any possible financial liabilities or risks after the three year period referred to in subparagraph (iii);

(v) the manner in which additional expenditure by municipalities as a result of the assignment will be funded;

(vi) the implications of the assignment for the capacity of municipalities;

(vii) the assistance and support that will be provided to municipalities in respect of the assignment; and

(viii) any other matter that may be prescribed.

(2) An MEC seeking to initiate the assignment of a function or power by way of a provincial Act to municipalities in the province must, at least 210 days before the draft legislation providing for the assignment is introduced in the relevant provincial legislature –

(a) request the Financial and Fiscal Commission to assess the financial implications of the legislation, after informing the Financial and Fiscal Commission of the possible impact of such assignment on –

(i) the future division of revenue between the spheres of government in terms of section 214 of the Constitution; and

(ii) the fiscal power, fiscal capacity and efficiency of municipalities; and

(iii) the transfer, if any, of employees, assets and liabilities; and

(b) consult the MEC responsible for finance, the MEC for local government and organised local government representing local government in the province with regard to –

(i) the assessment by the Financial and Fiscal Commission contemplated in paragraph (a);

(ii) the policy goals to be achieved by the assignment and the reasons for utilising assignment as the preferred option;

(iii) the financial implications of the assignment projected over at least three years;

(iv) any possible financial liabilities or risks after the three year period referred to in subparagraph (iii);

(v) the manner in which additional expenditure by municipalities as a result of the assignment will be funded;

(vi) the implications of the assignment for the capacity of municipalities;

(vii) the assistance and support that will be provided to municipalities in respect of the assignment; and

(viii) any other matter that may be prescribed.

(3) When draft legislation referred to in subsection (1) or (2) is introduced in Parliament or a provincial legislature, the legislation must be accompanied by—

(a) a memorandum –

(i) giving at least a three year projection of the financial implications of that function or power for those municipalities;

(ii) disclosing any possible financial liabilities or risks after the three year period; and

(iii) indicating how any additional expenditure by those municipalities will be funded; and

(b) the assessment of the Financial and Fiscal Commission referred to in subsection (1)(a) or (2)(a), as the case may be.".

CLAUSE 3

1. On page 4, in line 47, to omit "additional".

2. On page 4, in line 49, to omit "an additional" and to substitute "a".

CLAUSE 4

1. On page 5, in line 6, to omit "an additional" and to substitute "a".

CLAUSE 5

1. That the Clause be rejected.

CLAUSE 6

1. That the Clause be rejected.

NEW CLAUSE

1. That the following be a new Clause to follow Clause 4:

Insertion of sections 21A and 21B in Act 32 of 2000

5. The following sections are hereby inserted in the principal Act, after section 21:

"Documents to be made public

21A. (1) All documents that must be made public by a municipality in terms of this Act and the Municipal Finance Management Act must be conveyed to the local community –

(a) by displaying the document on the municipality’s official website referred to in section 21B;

(b) by displaying the document at the municipality’s head and satellite offices and libraries; and

(c) by notifying the local community in accordance with section 21 of the place, including the website address, where detailed particulars concerning the document can be obtained.

(2) If appropriate, any notification in terms of subsection (1) (c) must invite the local community to submit written comments or representations to the municipality in respect of the relevant document.

Official website

21B. (1) Each municipality must –

(a) establish its own website if the municipality deems it affordable; and

(b) place on that website information required to be made public in terms of this Act and the Municipal Finance Management Act.

(2) If it is not deemed affordable for a municipality to establish its own website, it must provide the information referred to in subsection (1) (b) for display on a website sponsored by the National Treasury.

(3) The municipal manager must maintain and regularly update the municipality’s official website, or provide the relevant information as required by subsection (2).".

CLAUSE 7

1. On page 6, in line 7, to omit the words "service provider" and to substitute:

external service provider

2. On page 6, in line 13, to omit the words "that were".

CLAUSE 9

1. On page 6, from line 31, to omit paragraph (b) and to substitute:

by the insertion after subsection (4) of the following subsections:

"(4A) The provisions of the Municipal Finance Management Act conferring responsibilities on an accounting officer must be regarded as forming part of the performance agreement of a municipal manager.

(4B) Bonuses based on performance may be awarded to a municipal manager or a manager directly accountable to the municipal manager only after an evaluation of performance.".

CLAUSE 12

1. On page 7, from line 15, to omit paragraph (iv) and to substitute:

(iv) the likely impact on development, job creation and employment patterns in the municipality; and

2. On page 7, from line 18, to omit paragraph (c) and to substitute:

(c) conduct or commission and take into account a feasibility study which must include –

(i) a clear identification of the municipal service for which the municipality intends to consider an external mechanism;

(ii) an assessment as to the extent to which the provision of the municipal service through an external mechanism will –

(aa) provide value for money;

(bb) address the needs of the poor;

(cc) be affordable for the municipality and residents; and

(dd) transfer appropriate technical, operational and financial risk;

(iii) the projected impact on the municipality’s staff, assets and liabilities;

(iv) the projected impact on the municipality’s integrated development plan;

(v) the projected impact on the municipality’s future budgets, for each year for which an external mechanism might be used, including impacts on revenue, expenditure, borrowing and debt;

(vi) the projected impact on the municipality and its residents and customers, including impacts on tariffs, grants, dividends, subsidies and service delivery; and

(vii) any other matter that may be prescribed, which may include –

(aa) an indication of the number of years for which the provision of the municipal service through an external mechanism might be considered;

(bb) the projected outputs the provision of the municipal service through an external mechanism might be expected to produce;

(cc) the strategic and operational costs and benefits of an external mechanism in terms of the municipality’s strategic objectives;

(dd) an assessment of the municipality’s capacity to effectively monitor the provision of the municipal service through an external mechanism and to enforce the service delivery agreement."; and

CLAUSE 13

1. On page 8, in line 5, to omit "provide a service" and to substitute:

provide a municipal service

2. On page 8, from line 25 to line 60, to omit subsections (3) to (5) and to substitute:

(3) (a) Where a municipality decides to enter into a service delivery agreement with another municipality as contemplated by section 76(b)(ii), that other municipality must conduct or commission and take into account a feasibility study before the service delivery agreement is entered into.

(b) The feasibility study referred to in paragraph (a), must include –

(i) an assessment on the impact on the budget of that other municipality, and on its assets, liabilities and staff expenditure, for each of the financial years that it intends to serve as an external service provider;

(ii) an assessment on whether it will be necessary to increase the number of staff to enable that other municipality to be an external service provider, and whether it will be necessary to transfer or second any staff from the appointing municipality to that other municipality;

(iii) an assessment on the ability of that other municipality to absorb any commitments, liabilities or employees involved, if and when the appointment as external service provider ends; and

(iv) any other relevant information as may be prescribed.".

CLAUSE 18

1. On page 10, after line 4, to insert the following new paragraph:

(j) the minimum content and management of service delivery agreements;

CLAUSE 19

1. On page 10, from line 31, to omit paragraph (a) and to substitute:

(a) a private company–

(i) established by one or more municipalities in terms of Part 2;

in which one or more municipalities have acquired or hold an interest in terms of Part 2; or

(iii) in which one or more municipalities have ownership control in terms of Part 2;

2. On page 10, from line 51, to omit paragraph (b) and to substitute:

(b) In the application of item 14 of Schedule 1 to directors of a municipal entity, that item must be regarded as providing as follows:

‘Breaches of Code

14. (1) The board of directors of a municipal entity may –

(a) investigate and make a finding on any alleged breach of a provision of this Code by a director; or

(b) establish a special committee –

(i) to investigate and make a finding on any alleged breach of a provision of this Code by a director; or

(ii) to make appropriate recommendations to the board of directors.

(2) If the board of directors or special committee finds that a director has breached a provision of this Code, the board of directors may -

(a) issue a formal warning to the director;

(b) reprimand the director;

(c) fine the director; or

(d) recommend to the parent municipality that the director be removed or recalled in terms of section 93G.’.

3. On page 11, from line 32, to omit subsection (2) and to substitute:

(2) A municipality may only acquire or hold an interest in a private company in terms of subsection (1) if –

(a) the other interests are held by—

(i) another municipality; or

(ii) a national or provincial organ of state; or

(b) the municipality alone or together with another municipality have ownership control in such company.

4. On page 11, from line 44, to omit paragraph(a) and to substitute:

(a) is a municipal entity –

(i) if it is wholly owned by a municipality;

(ii) if only municipalities have interests in the company;

(iii) if one or more municipalities and one or more national or provincial organs of state have interests in the company and such organs of state do not have ownership control in the company within the meaning of the Public Finance Management Act, 1999 (Act No. 1 of 1999); or

(iv) if one or more municipalities have ownership control in the company; or

5. On page 12, in line 45, to omit "object" and to substitute:

municipal service or function

6. On page 12, in line 47, to omit "attainment of such object" and to substitute:

performance of such municipal service or function

7. On page 12, from line 48, to omit paragraph (c) and to substitute:

(c) provide for–

(i) a board of directors to manage the service utility;

(iii) the number of directors to be appointed;

(iii) the appointment of directors, the filling of vacancies and the replacement and recall of directors by the parent municipality;

(iv) the terms and conditions of appointment of directors;

(v) the appointment of a chairperson;

(vi) the operating procedures of the board of directors;

(vii) the delegation of powers and duties to the board of directors consistent with section 92;

(viii) any other matter necessary for the proper functioning of the board of directors;

(ix) the –

(aa) acquisition of infrastructure, goods, services, supplies or equipment by the service utility; or

(bb) the transfer of infrastructure, goods, services, supplies or equipment to the service utility;

the –

(aa) appointment of staff by the service utility; or

(bb) the transfer or secondment of staff to the service utility in accordance with applicable labour legislation;

(xi) the terms and conditions on which any acquisition, transfer, appointment or secondment is made;

(xii) the governance of the service utility; and

(xiii) any other matter necessary for the proper functioning of the service utility; and

8. On page 13, from line 17, to omit paragraph (d) and to substitute:

(d) determine budgetary, funding and payment scheduling arrangements for implementation of the by-law.

9. On page 13, in line 27, to omit "object" and to substitute:

municipal service or function

10. On page 13, from line 35, to omit paragraph (b) and to substitute:

(b) if the municipality can demonstrate that that function could be performed more efficiently by a separate structure in order to achieve the strategic objectives of the municipality; and

CLAUSE 22

1. On page 14, in line 36, to omit "scheduling" and to substitute:

payment scheduling

2. On page 15, in line 29, to omit "and".

3. On page 15, after line 29, to insert the following new paragraphs:

(j) compulsory written reports regarding the activities and performance of the multi-jurisdictional service utility to a parent municipality;

(k) information that may be requested from the multi-jurisdictional service utility by a parent municipality;

(l) the amendment of the agreement; and

CLAUSE 23

1. On page 15, in line 39, to omit "participating" and to substitute "parent".

CLAUSE 25

1. On page 15, in line 53, to omit "participating", and to substitute:

[participating] parent

2. On page 16, in line 4, to omit "participating", and to substitute:

[participating] parent

3. On page 16, in line 12, to omit "participating", and to substitute:

[participating] parent

CLAUSE 26

1. On page 16, in line 25, to omit "participating", and to substitute:

[participating] parent

2. On page 16, in line 27, to omit "participating", and to substitute:

[participating] parent

CLAUSE 27

1. On page 17, from line 12, to omit subparagraph (ii) and to substitute:

(ii) if the municipality does not impose a financial recovery plan in terms of the Municipal Finance Management Act and the municipal entity continues to experience serious or persistent financial problems.

2. On page 17, from line 19, to omit paragraph (a) and to substitute:

(a) must enter into a mutual agreement determining and regulating –

(i) their mutual relationships in relation to the municipal entity;

(ii) the exercise of any shareholder, contractual or other rights and powers they may have in respect of the municipal entity;

(iii) the exercise of their powers and functions in terms of this Act and the Municipal Finance Management Act with respect to the municipal entity;

(iv) the establishment of annual performance objectives and indicators for the municipal entity;

(v) the monitoring and annual review of the performance of the municipal entity against the established performance objectives and indicators;

(vi) the payment of any monies by the municipalities to the entity or by the municipal entity to the municipalities;

(vii) procedures for the resolution of disputes between those municipalities;

(viii) procedures governing conditions for and consequences of withdrawal from the municipal entity by a municipality;

(ix) procedures for terminating the appointment and utilisation of the municipal entity as a mechanism for the performance of a municipal function;

(x) the disestablishment of the municipal entity, the division, transfer or liquidation of its assets and the determination of the responsibility for its liabilities; and

(xi) any other matter that may be prescribed; and

3. On page 17, from line 46, to omit subparagraph (ii) and to substitute:

(ii) if the municipality does not impose a financial recovery plan in terms of the Municipal Finance Management Act and the municipal entity continues to experience serious or persistent financial problems.

4. On page 17, from line 51, to omit section 93D and to substitute:

93D. (1) The council of a parent municipality must designate a councilor or official to be the representative of the municipality –

(a) to receive communications from the municipal entity; and

(b) if the municipal entity is a private company, to attend shareholder meetings and to exercise the municipality’s rights and responsibilities as a shareholder.

(2) If the council of a parent municipality does not designate a person as the representative of the municipality in terms of subsection (1), the speaker of that municipality is the representative of the municipality.

(3) A municipal representative –

(a) must act in accordance with the instructions of the council ; and

(b) may be reimbursed for expenses in connection with his or her duties as a municipal representative, but may not receive any additional compensation or salary for such duties.

(4) A municipal representative must represent the parent municipality faithfully at shareholder meetings, without consideration of personal interest or gain, and must keep the council informed of –

(a) how voting rights were exercised; and

(b) all relevant actions taken on behalf of the municipality.

(5) A municipal representative may convey to the parent municipality the essence of what transpired at a meeting of the board of directors of the municipal entity.

5. On page 18, in line 18, to omit paragraph (b) and to substitute:

(b) must consist of at least a third non-executive directors; and

6. On page 18, in line 19, to omit "may" and to substitute "must".

7 On page 18, from line 28, to omit section 93F and to substitute:

93F. (1) A person is not eligible to be a director of a municipal entity if he or she –

(a) holds office as a councillor of any municipality;

(b) is a member of the National Assembly or a provincial legislature;

(c) is a permanent delegate to the National Council of Provinces;

(d) is an official of the parent municipality of that municipal entity;

(e) was convicted of any offence and sentenced to imprisonment without the option of a fine, and a period of five years since completion of the sentence has not lapsed;

(f) has been declared by a court to be of unsound mind; or

(g) is an unrehabilitated insolvent.

(2) If a director of a municipal entity during that person’s term of office becomes disqualified on a ground mentioned in subsection (1), such person ceases to be a director from the date of becoming disqualified.

8. On page 18, in line 49, to omit "effectively;" and to substitute:

effectively; or

9. On page 18, in line 55, to omit "conduct; or" and to substitute:

conduct.

10 On page 19, from line 25, to omit section 93I and to substitute:

93I. (1) Meetings of the board of directors of a municipal entity must be open to the municipal representatives referred to in section 93D and the accounting officer of a parent municipality if the accounting officer is not also a municipal representative.

(2) Municipal representatives and accounting officers only have non-participating observer status in a meeting of the board of directors of a municipal entity.

11. On page 19, in line 31, to omit "board directors" and to substitute:

board of directors

12. On page 19, in line 38, to omit "No municipal entity may" and to substitute:

A municipal entity may not

NEW CLAUSE

1. That the following be a new Clause to follow Clause 27:

Amendment of section 120 of Act 32 of 2000

28. Section 120 of the principal Act is hereby amended by the substitution in subsection (1) for paragraph (a) of the following paragraph:

"(a) the matters listed in sections 22, 37, 49, 72, [94] 86A and 104;

CLAUSE 29

1. On page 20, from line 7, to omit subitem (1) and to substitute:

(1) A breach of this Code is a ground for dismissal or other disciplinary steps against a staff member who has been found guilty of such a breach.

2. On page 20, in line 9, to omit "disciplinary steps include", and to substitute:

disciplinary steps may include

3. On page 20, in line 10, to omit paragraph (a) and to substitute:

(a) suspension without pay for no longer than three months;

NEW CLAUSE

1. That the following be a new Clause to follow Clause 29:

Amendment of Table of Contents of Act 32 of 2000

30. The Table of Contents of the principal Act is hereby amended –

(a) by the substitution for the references to section 9 and 10 of the following references:

"9. Assignment of function or power to municipalities by Act of Parliament or provincial Act

10. Assignment of function or power to municipality in terms of legislation or by agreement";

(b) by the insertion after the reference to section 10 of the following reference:

(b) by the insertion after the reference to section 10 of the following reference:

"10A. Funding and capacity building";

(c) by the insertion after the reference to section 21 of the following references:

"21A. Documents to be made public

21B. Official website";

(d) by the substitution for the reference to section 46 of the following reference:

"46. Annual performance reports";

(e) by the substitution for the reference to Part 4 of Chapter 8 of the following reference:

"Part 4: Internal municipal service districts";

(f) by the insertion after the reference to section 86 of the following references:

"Part 4A: Regulations and guidelines regarding municipal services

86A. Regulations and guidelines regarding municipal services

CHAPTER 8A

MUNICIPAL ENTITIES

Part 1: General provisions

86B. Kinds of municipal entities

86C. Code of Conduct for directors and members of staff of municipal entity

Part 2: Private companies

86D. Establishment and acquisition of private companies

86E. Legal Status of private companies established by municipalities or in which municipalities hold interests

86F. Conditions precedent for establishing or acquiring interests in private companies

86G. Conditions precedent for co-owning of private companies

86H. Disposal of companies and equity interests in companies

Part 3: Service utilities

86I. Establishment

86J Legal status of service utilities

86K. Conditions precedent for establishing service utilities

86L. Disestablishment of service utilities

Part 4: Multi-jurisdictional service utilities";

(g) by the substitution for the references to section 87, 88, 89 and 90 of the following references:

"87. Establishment of multi-jurisdictional [municipal service districts] service utilities

88. Minister requesting [the] establishment of multi-jurisdictional [municipal service districts] service utilities

89. Contents of agreements establishing multi-jurisdictional [municipal service districts] service utilities

90. Legal status of [governing bodies] multi-jurisdictional service utilities";

(h) by the deletion of the reference to section 91;

(i) by the substitution for the references to section 92 and 93 of the following references:

"92. Control of [governing bodies of] multi-jurisdictional [municipal service districts] service utilities

93. Termination of multi-jurisdictional [municipal service districts] service utilities";

(j) by the insertion after the reference to section 93 of the following references:

"Part 5: Duties and responsibilities of parent municipalities

93A. Duties of parent municipality with respect to municipal entities

93B. Parent municipalities having sole control

93C. Parent municipalities having shared control

93D. Municipal representatives

Part 6: Governance of municipal entities

93E. Appointment of directors

93F. Disqualifications

93G. Removal or recall of directors

93H. Duties of directors

93I. Meetings of board of directors

93J. Appointment of chief executive officer

Part 7: General

93K. Establishment of and acquisition of interests in corporate bodies disallowed" and

(k) by the insertion after the reference to item 14 of Schedule 2 of the following reference:

"14A. Disciplinary steps".

CLAUSE 30

1. That the Clause be rejected.

NEW CLAUSE

1. That the following be a new Clause to follow Clause 30:

Transitional provisions

31. (1) If a municipality has established any corporate body under or in terms of applicable legislation before this Act took effect, such a corporate body continues to exist, despite the provisions of Chapter 8A of the principal Act, until such corporate body is disestablished or liquidated, as the case may be.

(2) A corporate body referred to in subsection (1) must be regarded as a municipal entity for the purposes of this Act, the principal Act and the Local Government: Municipal Finance Management Act, 2003.

(3) A municipality that has established a corporate body referred to in subsection (1), must within three months after this Act takes effect, publish a list of all such corporate bodies in the relevant provincial gazette and make that list public in terms of section 21A of the principal Act.

(4) If, before this Act took effect –

(a) a municipality or municipal entity has established a company referred to in section 21 of the Companies Act, 1973 (Act No. 61 of 1973), the municipality or the parent municipality of the municipal entity may, despite that Act, pass a by-law converting the company into a service utility under the sole control of the municipality or parent municipality; or

(b) two or more municipalities have established a company referred to in section 21 of the Companies Act, 1973 (Act No. 61 of 1973), those municipalities may, despite that, enter into an agreement converting the company into a multi-jurisdictional service utility under the shared control of those municipalities.

(5) A by-law referred to in subsection (4)(a) and an agreement referred to in subsection (4)(b) –

(a) must substantially comply with sections 86I (2) and 89, respectively, of the principal Act; and

(b) may provide for such transitional and other provisions as may be necessary to effectively convert the company into a service utility or multi-jurisdictional service utility, as the case may be.

_PAGE _

_PAGE _5_

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