DRAFT ONLY as of 11 May 2004

REPUBLIC OF SOUTH AFRICA
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PUBLIC INVESTMENT CORPORATION
BILL

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(To be introduced in the National Assembly as a section 75 Bill; explanatory memorandum of Bill published in Government Gazette No ___ of_______ 2004)
(The English text is the official text of the Bill)
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(Minister of Finance)

BILL
To provide for the establishment of a juristic person known as the Public Investment Corporation and the transfer of rights, obligations and assets of the commissioners to the corporation; the investment by the corporation of certain money received or held by, for or Oil behalf of the Government of the Republic and certain bodies, councils, funds and accounts; to regulate certain activities of the corporation relating to the management of investments; to repeal the Public Investment Commissioners Act and to terminate the term of office of all the commissioners; and to provide for matters connected therewith.

BE IT THEREFORE ENACTED by the Parliament of the Republic of South Africa

I Definitions

In this Act, unless the context indicates otherwise

"board" means the board of directors of the corporation established in terms of section 6;

"the commissioners" means the public investments commissioners contemplated in section 2 of the Public Investment Commissioners Act;

"Companies Act" means the Companies Act, 1973 (Act 61 of 1973);

"corporation" means the corporation established in section 2(1);

"department" means the National Treasury established in terms of section 5 of the Public Finance Management Act, 1999 (Act 1 of 1999);

"deposit" means an amount of money other than money forming part of the National Revenue Fund as contemplated in the Public Finance Management Act, 1999 (Act I of1999)-

(a) which is received or held by, for or on behalf of -

(i) the Government of the Republic, including the provinces; or

(ii) any body, council, fund or account established by or under law which may, or is required to, pay, in terms of the provision of that
law, such amount of money to the corporation for investment in terms of this Act; and

(b) which is not required for immediate use or as a reasonable working balance; and

(c) which is not invested or otherwise utilised, in terms of a provision of any law, otherwise than in terms of this Act; and

(d) which is not invested with the corporation referred to in section 2 of the Corporation for Public Deposits Act, 1984 (Act 46 of 1984),

and, except for the purposes of section 11(1), includes an amount of money received or held by, for or on behalf of a person or body referred to in that section;

"Financial Markets Control Act" means the Financial Markets Control Act, 1989 (Act 55 of 1989);

"financial year" means, in relation to the corporation, a year terminating on the last day of March;

"Minister" means the Minister of Finance;

"Public Investment Commissioners Act" means the Public Investment Commissioners Act, 1984 (Act 45 of 1984);

"the Registrar" means the Registrar of Financial Markets and Stock Exchanges as defined in section 1 of the Stock Exchanges Control Act and section 1 of the Financial Markets Control Act;

"State" means the National Government, whose powers will be exercised by the Minister of Finance

"Stock Exchanges Control Act" means the Stock Exchanges Control Act, 1985 (Act 1 of 1985).

Establishment of Corporation

(1) There is hereby established a juristic person, an institution outside the public service, to be known as the Public Investment Corporation Limited.

(2) The Registrar of Companies shall enter the name of the corporation in the register kept in terms of the Companies Act and shall issue to the corporation a certificate to that effect.

(3) Despite the provisions of the Companies Act, the Minister shall on behalf of the state sign the memorandum of association and the articles of association of the company.

(4) On signature of the memorandum of association and the articles of association as contemplated in sub-section (3), such memorandum and articles shall, as far as the signing thereof is concerned, be deemed to comply with the requirements of the Companies Act for the registration in terms of the said Act.

(5) On receipt of the memorandum and articles so signed, the registrar of companies shall register the said memorandum and articles as contemplated in section 63 of the Companies Act and endorse thereon a certificate that the corporation is incorporated.

(6) No fees shall be payable in terms of the Companies Act in respect of the checking of documents, the reservation of name, the registration of the said memorandum and articles and the issue of a certificate to commence business.

(7) The provisions of sections 32, 54(2), 66, 92, 190 and 344(d) of the Companies Act shall not apply to the corporation as long as the state is the sole or majority shareholder of the corporation.

3 Share Capital of Corporation

(1) The state shall be the sole holder of the shares in the corporation.

(2) The rights attached to the shares in the corporation, of which the state is the holder, shall be exercised by the Minister on behalf of the state.
(3) The Minister may decide at any time to dispose of all or any part of the shares held by the state in the corporation.
4 Objects of Corporation

The main object of the corporation is the management of investments as contemplated in section 5 of the Financial Markets Control Act and section 4 of the Stock Exchanges Control Act and activities related thereto.
5 Powers of Corporation

The corporation shall have all powers to enable it to realise its objects, including such powers as may be prescribed by regulation, unless expressly excluded or qualified by this Act.
6 Board of Directors

(1) The Minister shall, in consultation with Cabinet, determine and appoint the members of the board of directors of the corporation.

(2) The members of the board of directors must be appointed by the Minister on the grounds of their knowledge and experience, which when considered collectively, should enable them to attain the objects of the corporation.

7 Board Committees

(1) The board may establish such committees, consisting of directors, as it deems advisable.

(2) The board shall determine the functions of the committees and the procedure to be followed when the chairpersons of such committees are elected.

(3) Any person with expert knowledge of a function of a committee may be co-opted by such committee.

8 Management of Corporation

Subject to the provisions of this Act, the board shall control the business of the corporation and shall direct the operations of the corporation and exercise all such powers of the corporation as are not in terms of this Act required to be exercised by the shareholders of the corporation at a meeting of shareholders.

9 Registration as Investment Manager

(1) The Registrar shall, on a date to be determined by the Minister, register the corporation as an investment manager as contemplated in section 5 of the Financial Markets Control Act and section 4 of the Stock Exchanges Control Act.

(2) The corporation may not terminate its registration referred to in sub-section (1) without the consent of the Minister.

10 Investment of Deposits

(1) The corporation may invest every deposit or portions of a deposit, regard being had to the period, if any, after the expiration of which such a deposit or portions of such a deposit may again become necessary for use, on behalf of the depositor concerned in accordance with the investment policy of the corporation.

(2) The board must adopt an investment strategy with guidelines to regulate the investment of deposits and other money referred to in section 11.

11 Amounts of money other than deposits

(1) The Minister may, if he deems it desirable in the public interest, authorise generally or in respect of a particular case, any person or body receiving or holding within or outside the Republic, amounts of money other than deposits to pay those amounts of money or portions thereof to the corporation for investment as if those amounts of money were deposits.

(2) The corporation may receive for investment amounts of money other than deposits and those amounts referred to in sub-section (1).

12 Transfer of Rights, Obligations and Assets

(1) With effect from the date to be determined by the Minister, by notice in the Gazette, all of the assets, liabilities, rights and obligations of the commissioners shall be transferred to the corporation.

(2) The value of the assets and liabilities referred to in sub-section (1) shall be determined by the Minister after consultation with the commissioners.

(3) If any doubt arises as to whether anything for purposes of this Act pertains to or is connected with the commissioners, the department or anyone else, the decision of the Minister shall be conclusive.

(4) The corporation shall be substituted for the commissioners, as contracting party in respect of all contracts transferred to the corporation in terms of sub-section (1), without such substitution bringing about novation of such contract.

(5) The corporation shall, as consideration for the transfer of assets, liabilities, rights or obligations in terms of sub-section (1), issue to the state fully paid up shares in the corporation to a value determined by the Minister, after consultation with the corporation, and such value shall be deemed to be reasonable consideration for such transfer.

(6) No duty, charge, levy or any other tax shall be payable in respect of the transfer contemplated in sub-section (1) and the issue of shares to the state in terms of this Act.

(7) All persons, as at the date of the transfer contemplated in sub-section (1), who were in the employ of the department and who rendered their services exclusively for and on behalf of the commissioners, will be transferred to the corporation with effect from such date, without any interruption of their service, on terms and benefits not less favourable than those enjoyed by them immediately prior to their transfer.

(8) Despite the provisions of the Government Employees Pension Law, 1996 (Proclamation No 21 of 1996) or any other law, all persons referred to in subsection (7) shall remain members of the Government Employees Pension Fund referred to in section 2 of the Government Employees Pension Law, 1996.

(9) Any legal proceedings that were pending or could have been instituted by or against the commissioners prior to the establishment of the corporation, may, despite such establishment, be continued or instituted by or against the corporation, subject to any law governing prescription of debt.

13 Reporting and Accountability

As long as the state holds any shares in the corporation, the corporation shall be subject to the provisions of the Public Finance Management Act, 1999 (Act 1 of

1999).

14 Dividends

The declaration of dividends shall be authorised by the board and shall be approved by the Minister.

15 Interpretation of Laws

(1) Subject to the provisions of sub-section (2), any reference in any law to the commissioners shall be construed as a reference to the corporation.

(2) Any provision in any law requiring or authorising the investment of an amount of money not required for immediate use or as a reasonable working balance, with the commissioners, shall be construed -

(a) if such amount of money is a deposit, as a reference to a provision requiring or authorising the payment of such amount of money to the corporation for investment in terms of this Act;

(b) if such amount of money may or is required to be invested in such a manner that it is required to be repaid on demand, as a reference to a provision requiring authorising, as the case may be, the investment of such amount of money with the corporation referred to in section 3 of the Corporation for Public Deposits Act, 1984 (Act 46 of 1984).

(3) Despite the repeal of the Public Investment Commissioners Act in terms of section 21, anything done in terms of that Act which may be done under or in terms of this Act, continues to be valid and of full force and effect.

(4) Despite the provisions of sub-section (3), the commissioners cease to exist, and the terms of office of each of the commissioners terminate, with effect from the date referred to in section 12(1).

16 Transitional Provisions

The corporation shall not conduct any business and shall not acquire any assets, liabilities, rights or obligations prior to the date contemplated in sub-section 12(1).

17 Application of Companies Act

(1) The provisions of the Companies Act which are not in conflict with this Act, apply to the corporation, subject to sub-section (2).

(2) A provision of the Companies Act will not apply to the corporation in the following circumstances, namely, where -

(a) because of any special or contrary arrangement by this Act, such a provision is clearly inappropriate or incapable of being applied; or

(b) the Minister declared any particular provision not to be applicable to the corporation.

18 Winding Up of Corporation

The corporation shall not be wound up except in terms of an Act of Parliament.

19 Use of Name of Corporation

No person, association corporation or other statutory body or company shall carry on business or be registered under an Act of Parliament, with a name identical to that of the corporation, or so nearly resembling the name of the corporation as to deceive.

20 Regulations

(a) The Minister may, by notice in the Gazette, make regulations which are necessary for the achievements of the objects of this Act.

21 Repeal of Laws

The laws mentioned in the schedule are repealed or amended to the extent stated in the schedule and with effect from a date fixed by proclamation in the Gazette.

22 Short Title and Commencement

This Act is called the Public Investment Corporation Act, 2004, and shall come into operation on a date to be fixed by proclamation in the Gazette.

Schedule

LAWS REPEALED

MEMORANDUM ON THE OBJECTS OF THE PUBLIC INVESTMENT
CORPORATION BILL, 2004

1 BACKGROUND

1.1 The Public Investment Commissioners ("the commissioners") were appointed in terms of section 2 of the Public Investment Commissioners Act, 35 of 1984 ("the Act"). The commissioners are responsible for the investment of certain monies received or held by, for or on behalf of the Government and certain bodies, councils, funds and accounts. The Act does not provide for the creation of any juristic body and the activities of the commissioners are therefore curtailed.

1.2 The activities of the commissioners are similar to those of any other investment manager although they are not registered in terms of the Financial Markets Control Act, 1989 (Act No 55 of 1989) and the Stock Exchanges Control Act, 198~5 (Act No 1 of 1985)
.
2 OBJECTS

2.1
The object of the Bill is to establish a statutory corporation to be known as the Public Investment Corporation Limited.

2.2
The entire operation of the commissioners, comprising the assets, liabilities, rights and obligations, will be transferred to the corporation on a date to be determined by the Minister of Finance. The Minister of Finance shall also determine a date on which the Registrar of Financial Markets and Stock Exchanges shall register the corporation as an investment manager contemplated in the Financial Markets Control Act, 1989 and the Stock Exchanges Control Act, 1985.

2.3
The corporation will, after registration as an investment manager, manage deposits received from Government and other public institutions as well as money received from any other person. The board of directors of the
corporation shall determine all policies and investment guidelines of the corporation.

3 FINANCIAL IMPLICATIONS FOR STATE

There are no financial implications for the state. The state stands to gain from ~ collections as well as dividend payments from the establishment of the corporation.

4 DEPARTMENTS 1 ORGANISATIONS CONSULTED

4.1 The commissioners.
4.2 The National Treasury

5 PARLIAMENTARY PROCEDURE

The State Law Advisors and the National Treasury are of the opinion that this Bill

must be dealt with in accordance with the procedure established by Section 75 of the

Constitution. It contains no provision to which the procedure set out in Section 74 or

Section 76 of the Constitution applies.