Co-operative Banks Act 40 of 2007


Government Gazette
REPUBLIC OF SOUTH AFRICA

Vol. 512 Cape Town 22 February 2008 No. 30802
THE PRESIDENCY No. 217 22 February 2008
It is hereby notified that the President has assented to the following Act, which is hereby published for general information:–
No. 40 of 2007: Co-operative Banks Act, 2007.

ACT To promote and advance the social and economic welfare of all South Africans by enhancing access to banking services under sustainable conditions; to promote the development of sustainable and responsible co-operative banks; to establish an appropriate regulatory framework and regulatory institutions for co-operative banks that protect members of co-operative banks; to provide for the registration of deposit-taking financial services co-operatives as co-operative banks; to provide for the regulation and supervision of co-operative banks; and to provide for the establishment of co-operative banks supervisors and a development agency for co-operative banks; and to provide for matters connected therewith.
BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:— ARRANGEMENT OF SECTIONS
Sections
CHAPTER I
DEFINITIONS, PURPOSE AND APPLICATION OF ACT
1. Definitions 2. Purpose of Act 3. Application of Act 4. Application of Co-operatives Act 5. Types of co-operative banks
CHAPTER II
REGISTRATION, CONSTITUTION, FUNCTIONS, MANAGEMENT AND AUDITOR OF CO-OPERATIVE BANK
Parti
Application to register, name, and fit and proper requirement
6. Application for registration as co-operative bank 7. Requirements for registration 8. Registration of co-operative bank 9. Fit and proper person 10. Name of co-operative bank 11. Suspension of registration or de-registration 12. Repayment of deposits on de-registration or lapsing of registration
Act No. 40, 2007 CO-OPERATIVE BANKS ACT, 2007
Part 2
Constitution and functions of co-operative bank
13. Constitution of co-operative bank and amendment to constitution 14. Banking services provided by co-operative bank
15. General functions of co-operative bank
Part 3
Management of co-operative bank
16. Duties of directors and officers of co-operative bank
17. Details of directors and officers of co-operative bank
Part 4
Auditor of co-operative bank
18. Functions of auditor in relation to supervisor
19. Submission of documents to supervisor
CHAPTER III
PRUDENTIAL REQUIREMENTS AND LARGE EXPOSURES
20. Prudential requirements of co-operative bank 21. Inability to meet or maintain prudential requirements 22. Reporting on prudential requirements
23. Large exposures of co-operative bank
CHAPTER IV
DEPOSIT INSURANCE FUND
24. Deposit insurance obligations of co-operative bank 25. Establishment of Co-operative Banks Deposit Insurance Fund 26. Control of Co-operative Banks Deposit Insurance Fund
CHAPTER V AMALGAMATION, DIVISION, CONVERSION, TRANSFER, JUDICIAL
MANAGEMENT AND WINDING-UP OF CO-OPERATIVE BANKS 27. Prohibited transactions 28. Conversion of primary savings co-operative bank 29. Amalgamation or division of or transfer by co-operative bank
30. Winding-up or judicial management of co-operative bank
CHAPTER VI
REPRESENTATIVE BODIES
31. Application for registration as representative body 32. Requirements for registration 33. Registration of representative body 34. Requirements for continued registration 35. Cancellation or suspension of registration
Act No. 40, 2007 CO-OPERATIVE BANKS ACT, 2007
CHAPTER VII
SUPPORT ORGANISATIONS
36. Application for accreditation as support organisation 37. Requirements for accreditation 38. Accreditation of support organisation 39. Requirements for continued accreditation
40. Cancellation or suspension of accreditation
CHAPTER VIII
ADMINISTRATION OF ACT
41. Supervisors of co-operative banks 42. Co-operation and co-ordination between supervisors 43. Deputy co-operative bank supervisors and designated employees 44. Delegation and assignment 45. General powers and functions of supervisor 46. Power to make rules 47. Inspections 48. Directives 49. Administrative penalties 50. Information and reports 51. Records and register of co-operative banks 52. Reporting 53. Relationship with other regulatory authorities
CHAPTER IX
CO-OPERATIVE BANKS DEVELOPMENT AGENCY
Parti
Establishment, legal status, functions and powers of Agency
54. Establishment and legal status 55. General functions 56. General powers
57. Power to make rules
Part 2
Governance of Agency
58. Appointment of board members of Agency 59. Term of office of members of Agency 60. Disqualification from membership and vacation of office 61. Chairperson and deputy chairperson 62. Meetings 63. Decisions 64. Duties of members 65. Managing director 66. Delegations
67. Establishment of committees
Part 3
Funding and financial management of Agency
68. Funding 69. Annual budget and strategic plan 70. Financial management, financial statements and annual report
Act No. 40, 2007 CO-OPERATIVE BANKS ACT, 2007
Part 4
National government oversight and executive authority
71. Executive authority 72. Ministerial representatives 73. Investigations
74. Information
CHAPTER X
APPEALS AND APPEAL BOARD
75. Appeal against decision of supervisor
76. Establishment and composition of appeal board
CHAPTER XI
OFFENCES AND PENALTIES 77. Unlawful use of word "co-operative bank" or conduct of banking business of
co-operative bank 78. Untrue information in connection with applications 79. Criminal liability of director, managing director, executive officer and other
persons 80. General offences 81. Penalties
CHAPTER XII
GENERAL PROVISIONS
82. Fair administrative action 83. Certification of documents 84. Access to records, register and other documentation 85. Indemnity 86. Regulations 87. Powers of Minister 88. Civil liability of director or managing director 89. Exemptions 90. Amendment of laws 91. Transitional provisions 92. Short title and commencement
SCHEDULE
Act No. 40, 2007 CO-OPERATIVE BANKS ACT, 2007
CHAPTER I
DEFINITIONS, PURPOSE AND APPLICATION OF ACT
Definitions
1. (1) In this Act, unless the context indicates otherwise, a word or expression to which a meaning has been assigned in the Co-operatives Act has the meaning assigned to it in that Act, and—
"Agency" means the Development Agency for Co-operative Banks established under section 54; "appeal board" means the appeal board established under section 76; "banking institution" means a bank registered under the Banks Act, a mutual bank registered under the Mutual Banks Act, 1993 (Act No. 124 of 1993), a co-operative bank registered under this Act and any other similar institution registered under subsequent banking legislation; "banking services" means the services that may be provided by a co-operative bank in accordance with section 14; "Banks Act" means the Banks Act, 1990 (Act No. 94 of 1990); "business plan" means, in respect of a specified time period, a document of a co-operative bank that sets out— (a) its common economic and social objectives and aspirations together with a
description of the short and long term strategies for achieving those needs; and (b) its market strategy, the scope and nature of the business (including the types of
products offered), the expected volume of deposits and the details of lending and investment objectives;
"managing director" means a person under the direct authority of the board of directors of the co-operative bank responsible for the day-to-day operations of the co-operative bank; "co-operative" means a co-operative as defined in the Co-operatives Act; "co-operative bank" means a co-operative registered as a co-operative bank in terms of this Act whose members— (a) are of similar occupation or profession or who are employed by a common
employer or who are employed within the same business district; or (b) have common membership in an association or organisation, including a
business, religious, social, co-operative, labour or educational group; or (c) reside within the same defined community or geographical area; "Co-operatives Act" means the Co-operatives Act, 2005 (Act No. 14 of 2005); "deposit" has the meaning assigned to it in section 1(1) of the Banks Act; "executive officer" means any employee of a co-operative bank that reports directly to the managing director; "financial statements" means the annual financial statements referred to in sections 47 and 48 of the Co-operatives Act; "fit and proper person" means a person contemplated in section 9; "Fund" means the Co-operative Banks Deposit Insurance Fund established under section 26; "Minister" means the Minister of Finance; "National Treasury" means the National Treasury established by section 5 of the Public Finance Management Act, 1999 (Act No. 1 of 1999); "person" includes any partnership or group of natural persons; "prescribe", in relation to— (a) the Minister, means prescribe by regulation in the Gazette; (b) a supervisor, means prescribe by rule in the Gazette; (c) the Agency, means prescribe by rule in the Gazette; and "primary savings co-operative bank" means a co-operative registered as a primary co-operative under the Co-operatives Act and as a primary savings co-operative bank under this Act that may provide the banking services and perform the functions referred to in sections 14 and 15; "primary savings and loans co-operative bank" means a co-operative registered as a primary co-operative under the Co-operatives Act and as a primary savings and loans co-operative bank under this Act that may provide the banking services and perform the functions referred to in sections 14 and 15 of this Act;
Act No. 40, 2007 CO-OPERATIVE BANKS ACT, 2007
"proposed co-operative bank" means a deposit-taking financial services co-operative that applies for registration as a co-operative bank under section 6; "Public Finance Management Act" means the Public Finance Management Act, 1999 (Act No. 1 of 1999); "registrar" means the Registrar of Co-operatives defined in section 1 of the Co-operatives Act; "regulatory authority" means an entity established in terms of national legislation responsible for regulating activities or an industry, or sector of an industry; "representative body" means a secondary co-operative, irrespective of whether it is also a secondary co-operative bank, or other association of co-operative banks registered under section 33 that represents more than one co-operative bank in interactions with organs of state, the private sector and stakeholders; "Reserve Bank" means the South African Reserve Bank referred to in the South African Reserve Bank Act, 1989 (Act No. 90 of 1989); "rule", in relation to— (a) the supervisor, means a rule prescribed by the supervisor under section 46;
and (b) the Agency, means a rule prescribed by the supervisor under section 57; "secondary co-operative bank" means a co-operative registered as a secondary co-operative under the Co-operatives Act and as a secondary co-operative bank under this Act that may provide the banking services and perform the functions referred to in sections 14 and 15 of this Act; "supervisor" means the relevant supervisor of co-operative banks appointed in terms of section 41; "support organisation" means a representative body accredited under section 38 that support more than one co-operative bank as contemplated in section 37; "tertiary co-operative bank" means a co-operative registered as a secondary or tertiary co-operative under the Co-operatives Act and as a tertiary co-operative bank under this Act that may provide the banking services and perform the functions referred to in sections 14 and 15 of this Act; "this Act" includes any regulation or rule made under this Act.
Purpose of Act
2. The purpose of this Act is to— (a) promote and advance the social and economic welfare of all South Africans by
enhancing access to banking services under sustainable conditions; (b) promote the development of sustainable and responsible co-operative banks;
and (c) establish an appropriate regulatory framework and regulatory institutions for
co-operative banks that protect members of co-operative banks, by providing for—
(i) the registration of deposit-taking financial services co-operatives as co- operative banks;
Act No. 40, 2007 CO-OPERATIVE BANKS ACT, 2007
(ii) the establishment of supervisors to ensure appropriate and effective regulation and supervision of co-operative banks, and to protect members and the public interest; and
(iii) the establishment of a Development Agency for Co-operative Banks to develop and enhance the sustainability of co-operative banks.
Application of Act
3. (1) This Act applies to all co-operative banks registered under this Act and to any co-operative registered under the Co-operatives Act that takes deposits and—
(a) has 200 or more members; and (b) holds deposits of members to the value of one million Rand or more.
(2) A co-operative referred to in subsection (1) must, subject to section 91, within two months of meeting the criteria referred to in subsection (\)(a) or (b) apply for registration as a co-operative bank in terms of this Act.
Application of Co-operatives Act
4. (1) The Co-operatives Act applies to co-operative banks unless the application of a provision thereof has specifically been excluded or amended in this Act.
(2) In the event of an inconsistency between any provision of this Act and any provision of the Co-operatives Act, the provision of this Act prevails.
Types of co-operative banks
5. This Act provides for the registration of the following types of co-operative banks: (a) A primary savings co-operative bank; (b) a primary savings and loans co-operative bank; (c) a secondary co-operative bank; and (dj a tertiary co-operative bank.
CHAPTER II
REGISTRATION, CONSTITUTION, FUNCTIONS, MANAGEMENT AND AUDITOR OF CO-OPERATIVE BANK
Part 1
Application to register, name, and fit and proper requirement
Application for registration as co-operative bank
6. (1) A co-operative must apply, on the application form prescribed by the supervisor, to the supervisor for registration as one of the types of co-operative banks referred to in section 5.
(2) The following must be submitted together with the application form referred to in subsection (1):
(a) Two certified copies of the constitution of the proposed co-operative bank; (b) a certified copy of the registration certificate as a co-operative under the
Co-operatives Act of the proposed co-operative bank; (c) the full and abbreviated name of the proposed co-operative bank as well as
any literal translation thereof; (d) a lending policy, if applicable; (e) a savings policy; (f) a business plan; (g) certified copies of the registers referred to in section 21(1)(