Amend 5(2) to read "This Act applies to be a financial services co- operative that registers with the Supervisor of co-operative banks in terms of legislation applicable to co-operative banks: Provided that legislation governing an fsc that is registered as a co-operative bank will prevail over this Act". In addition, kill the proviso because it gives the impression that the constitution of an fsc that registers to become a co-operative bank must only comply with Chapters

1 and 2 of the Co- operative Bill, when it is the case that such a constitution must comply with the entire Co-operatives Bill.

2. No amendment required, however, Sections 55. 59. 60. and 61 (i.e., no exemption from fsc having an auditor while registered as a co-operative bank, and no division of a fsc into another person while registered as a co- operative bank) must not apply to an fsc that registers as a co-operative bank. However, for purposes of clarity, it would not hurt to state such a fact under Schedule 1: Part 3: Financial services co-operatives.

3. Amend section 62: "Conversion of co-operative to any other kind or

Section 62 will not apply to a fsc that is a co-operative bank that converts under the Co-operative Bank Act into a savings and loans co-operative bank - throughout the conversion, such a co-operative still remains an fsc However, an exception needs to be created for a fsc that is a savings and loans co-operative bank that converts itself into a bank, mutual bank, or dedicated bank, thereby becoming a company. For purposes of clarity, it would not hurt to state such a fact under Schedule 1: Part 3: Financial services co-operatives.

4. Chapter 12.-Section 80 "Co-operative Advisory Board"

Consider having this advisory board jointly informing the Minister overseeing co-operatives and Minister overseeing co-operative banks fsc issues, especially fscs that would register to become co-operative banks.

5. Section 91: "Transitional Provisions" - amend subsections 2,3,4,5,6 include fscs that currently take deposits under an exemption to the Ban Act and that are required to register as co-operative banks (i.e., village banks and credit unions) to be time bound in relation to submitting a revised constitution to the Registrar of Co-operatives (i.e., not three years).

Note: for purposes of deposit taking exemption notices under the Banks Act, effective dates would have to provide such fscs with sufficient time to submit (section 2) and revise their constitutions (if necessary, sections 3(b) and 4). Recommendation: village banks and credit unions will submit their revised constitutions to the Registrar of Co-operatives within a time period less than the three years referred to in the Co-operatives Bill.

Under subsection 5, time bind an fsc that fails to revise its constitution with respect to such failure compelling the fsc to becoming another person or winding-up.

Why the time-binding? Deposits with such fscs (i.e., not co-operative banks) are currently illegal and at risk because not covered by deposit insurance.

6. Schedule 1: Part 3: "Financial Services Co-operatives"

• Subsection 2(a): Requirements for Constitution

This section may create confusion because if an fsc can "deposit" meney received from members, then by implication, did it receive a "deposit". Deposit is not defined in new Co-op Act. "Deposit" is a banking word - better to keep fscs that would not register to become a co-operative bank from using banking terms

This whole section creates difficulties for the Co-operative Bank Bill-

• The powers granted an fsc under this section are not in line with the powers of an fsc as a co-operative bank. For instance, an fsc that is a co-operative bank cannot "provide" insurance cover, medica insurance, or funeral insurance to its members.
• Paragraph (h) - an fsc must not provide banking services to its members, unless registered as a co-operative bank
• For purposes of clarity, section 2(a) could have an exemption specifying that, "This section does not apply to an fsc registers with the Supervisor of co-operative banks in terms of legislation applicable to co-operative banks."

• Subsection 3: Banks Act:

This section should only stipulate that an fsc that registers with the Supervisor of co-operative banks in terms of legislation applicable to co- operative banks will no longer have to belong to a secondary co-operative that will act as a self-regulatory body, in compliance with any requirement for exemption form any provision of the Banks Act, Long and Short term Insurance Acts, or Medical Schemes Act

• Creation of new subsection: Co-operative Banks.

This section should specify:

• That fscs that are village banks and credit unions currently taking deposits under an exemption to the banks act are required to register with the with the Supervisor of co-operative banks in terms of legislation applicable to co-operative banks.
• That fscs other than those referred to in comment (1) above, whether they take deposits under an exemption to the Banks Act or not (i.e., stokvels), may, if they wish to become co-operative banks, register with the Supervisor of co-operative banks in terms of legislation applicable to co-operative banks.
• What type of co-operatives are state what type or types of co- operatives would be eligible to be "central financial service co- operatives" that register as Representative bodies with the Co- operative Development Agency as envisaged by the amended Co- operative Bank Bill. This section only mentions that secondary co- operatives are eligible to act as SROs. The amended Co-operative Banks Bill states that only central financial service co-operatives may apply to become Representative Bodies.

• Subsection 7: Establishment of SRO for fscs

1) Fscs, whether they take deposits under an exemption to the Banks Act or not (i.e., stokvels), may have to belong to a secondary co-operative that will act as a self-regulatory body, in compliance with any requirement for exemption form any provision of the Banks Act, Long and Short term Insurance Acts, or Medical Schemes Act.

2) However, fscs that are registered co-operative banks under the Co-operative Banks Act will not require an SRO or an exemption to the Banks Act, Long and Short term Insurance Acts, or Medical Schemes Act. This section should exclude wording that refers to fscs that are registered co-operative banks.

• Subsection 8: Regulations

Replace wording -

Registrar of Banks with "Minister of Finance"

1) For purposes of this section, the definition of financial services will only apply to Fcs that are not registered as co-operative banks

2) Remove from definition of financial services provided by an fsc "banking service" as such services will only be offered by a registered co-operative bank