Armaments Corporation of South Africa, Limited Act [No. 51 of 2003]


Government Gazette
REPUBLIC OF SOUTH AFRICA

Vol. 466 Cape Town 28 April 2004 No. 26296
THE PRESIDENCY No. 546 28 April 2004
It is hereby notified that the President has assented to the following Act, which is hereby published for general information:–
No. 51 of 2003: Armaments Corporation of South Africa, Limited Act, 2003.

3 No. 26296 GOVERNMENT GAZETTE. ?X APRIL 2004
Act No. 51,2003 ARMAMENTS CORPORATION OF SOUTH AFRICA, LIMITED ACT, 2003
(English rext signed by the President.) (Assented to 20 April 2004.)
ACT To provide for the continued existence of the Armaments Corporation of South Africa, Limited; to provide for the functions, accountability and finances of the Corporation; and to provide for matters connected therewith.
B fo~ low~; - E IT ENACTED by the Parliament of the Republic of South Africa, as ARRANGEMENT OF ACT
Sectior?
1. Definitions
CHAPTER 1
ARM.AMENTS CORPORATION OF SOUTH AFRICA, LIMITED AND ITS OBJECTIVES AND FUNCTIONS
2. Continued existence of Corporation 3. Objectives of Corporation 4. Functions of Corporation 5. Service l vel agreements
CHAPTER 2
BOARD OF DIRECTORS AND EMPLOYEES OF CORPORATION
6. 7. 8. 9. 10. 11. 12. 13. 14.
15. 16. 17.
Corporation managed by Board of Directors Non-executive members of Board Vacation of office by members of Board Meetings of Board and decisions Chief Executive Officer Chief Financial Officer Committees Employees of Corporation Conflict of interest
CHAPTER 3
FINANCIAL AND AUDIT MATTERS
Funds of Corporation Audit of financial statements System for evaluating acquisitions
5
10
15
20
25
1 N o . 26296 GOVERNMENT G.AZETTE. 28 .APRIL 20()+‘
) ict NO. 51,2003 ARMAMENTS CORPORATION OF SOUTH AFRICA. LIMITED ACT, 2003
CHAPTER 4
REGULATIONS AND DELEGATION
18. Regulations 19. Delegation
CHAPTER 5
MISCELLANEOUS PROVISIONS
20. Safeguarding of information, records, property and premises 2 1 . Subsidiaries 22. Intellectual property 23. Repeal of laws and savings 24. Short title and commencement
SCHEDULE
Definitions
1. ( 1 ) In this Act, unless the context indicates otherwise-
5
i o
“Armaments Development and Production Act” means the Ammamenth 15 Development and Production Act, 1968 (Act No. 57 of 1968): “Board” means the Board of Directors contemplated in section 6; ”Chief Executive Officer” means the Chief Executive Officer appointed i n terms of section 10; “Chief Financial Officer” means the Chief Financial Officer appointed i n 30 terms of section 11: “commercial matiriel” means any material, equipment. facilities or ser\,ices other than defence material; “Corporation” means the Armaments Corporation of South Africa. Limited contemplated in section 2( l ) , and its subsidiaries; -_ ’i “defence mate‘riel” means any material. equipment, facilities or services used principally for military purposes; “Department” means the Department of Defence; “dispose of defence matiriel” means the process by which excess. redundant. forfeited or surplus defence matkriel is transferred to the Corporation by the 30 Department for the purposes of upgrading. sale, donation or destruction: “employee” means an employee appointed in terms of section 13: “Minister” means the Minister of Defence; “organ of state” means an organ of state as defined in section 939 of the Constitution; 35 “Public Finance Management Act” means the Public Finance Management Act, 1999 (Act No. 1 of 1999); “Secretary for Defence” means the Secretary for Defence contemplated in section 7 of the Defence Act, 2002 (Act No. 42 of 2002); “this Act” includes any regulation made under section 18. 30
CHAPTER 1
ARMAMENTS CORPORATION OF SOUTH AFRICA, LIMITED AND ITS OBJECTIVES AND FUNCTIONS
Continued existence of Corporation
2. (1) The Armaments Corporation of South Africa, Limited established by section 2 15 of the Armaments Development and Production Act continues to exist under that name despite the repeal of that Act.
(2) (a) The State remains the sole shareholder of the Corporation. (b ) The Minister exercises ownership control over the Corporation on behalf of the
State. 50
6 No. 26296 GOVERNMEKT GAZETTE. 2s .APRII. 2004
Act No. 51,2003 ARMAMENTS CORPORATION OF SOCTH AFRICA LIMITED ACT, 2003
(3) The Corporation is a juristic person capable of suing and being sued in its own
(4) Subject to this Act, the Corporation may- name.
(a ) purchase or otherwise acquire, hold or alienate property. movable or
(b) perform such acts as are necessary for or incidental to the carrying out of its
(5) (a) No person may carry on business under a name in which the expression “Armaments Corporation of South Africa” or “Armscor” appears or which so closely resembles any of those nam s thatit may confuse people. 10
(b) A person who contravenes paragraph ( a ) is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding five years or to both a fine and such imprisonment.
immovable; and 5
ob.jectives and the performance of its functions.
Objectives of Corporation
3. (1) The objectives of the Corporation are to meet- 15 (a) the defence mattriel requirements of the Department effectivelJ,. efikientl!,
and economically; and (b) the defence technology, research, development. analysis. test and evaluation
requirements of the Department effectively. efficiently and economically. ( 2 ) The Corporation must adhere to accepted corporate governance principles, best 20
business practices and generally accepted accounting practices within a framework of established norms and standards that reflect fairness, equity, transparency. economy. efficiency, accountability and lawfulness.
Functions of Corporation
4. (1 ) For the purpose of this section- 25 (a) “defence industrial participation” means the process by Lvhich defence
acquisition is used to leverage defence industrial and economic benefits for the Republic;
(b) “defence operational research” means the use of scientific or specialised techniques, employing mathematical methods. simulation and qualitative or 30 logical reasoning in systematic and general approaches to defence problem solving and decision malung; and
( c ) “defence-related industries” means those organisations in the public and private sector, including the commercial companies and business units of such organisations, which are directly or indirectly active in the research. 35 development, manufacture and marketing of defence matiriel.
( 2 ) The Corporation must- acquire such defence mattriel on behalf of the Department as the Department may require; manage such technology projects as may be required by the Department: 40 establish a programme management system in support of the acquisition and technology projects contemplated in paragraphs ( a ) and (b): provide for a quality assurance capability in support of- (i) the acquisition and technology projects contemplated in paragraphs I n )
(ii) any other service contemplated in this section required by the Depart-
establish a system for tender and contract management in respect of defence matiriel and, if required in a service level agreement or if requested in writing by the Secretary for Defence, the procurement of commercial matiriel; 50 dispose of defence matCriel in consultation with the person who originally manufactured the mattriel; establish a compliance administration system for the Department as required by applicable international law, the National Conventional Arms Control Act.
and fb); and 45
ment;
8 No. 26296 GOVERNMENT GAZETTL:. 1X .APRIl. 2004
Act No. 51,2003 ARMAMENTS CORPORATION OF SOUTH AFRICA LMlTED ACT. 2003
2002 (Act No. 41 of 2002), and the Non-Proliferation of Weapons of Mass Destruction Act, 1993 (Act No. 87 of 1993);
(h) support and maintain such strategic and essential defence industrial capabili- ties, resources and technologies as may be identified by the Department:
(i) provide defence operational research; 7 ( j ) establish a defence industrial participation programme management system: ( k ) provide marketing support to defence-related industries in respect of defence
mattriel, in consultation with the Department and the defence-related industries in question;
( I ) manage facilities identified as strategic by the Department in a service level 10 agreement; and
(m) maintain such special capabilities and facilities as are regarded by the Corporation not to be commercially viable, but which may be required by the Department for security or strategic reasons.
(3) (a) The Corporation may, with the approval of the Minister- 15 (i) exploit such commercial opportunities as may arise out of the Corporation's
duty to acquire defence mattriel or to manage t chnology projects; (ii) procure commercial mattriel on behalf of any organ of state at the request of
the organ of state in question; and (iii) and subject to the National Conventional Arms Control Act, 2002 (Act No. 41 20
of 2002), the Regulation of Foreign Military Assistance Act, 1998 (Act No. 15 of 1998), and the Non-Proliferation of Weapons of Mass Destruction Act. 1993 (Act No. 87 of 1993), perform any function which the Corporation may perform for or on behalf of the Department in terms of this Act for or on behalf of any sovereign State. 25
(b) The Minister may impose such conditions in respect of the performance of a function contemplated in paragraph (a)(iii) as may be necessary in the national interest.
Service level agreements
5. (1) The Corporation must enter into a service level agreement with- (a) the Department in respect of any function contemplated in section 4 relating 30
(b} any other organ of state on whose behalf the Corporation procures commercial
(c) any foreign State in respect of any function contemplated in section
( 2 ) A service level agreement must be concluded between the Board and the accounting officer or accounting authority, as the case may be, of the Department. other organ of state or foreign State and must, amongst other things-
( a ) be based on the shareholder's compact contemplated in the Public Finance
(b) be focused on the functions of the Corporation; (c) specify measurable objectives and milestones; (d) specify a system to monitor the delivery of service; (e) provide for the maintenance of the Corporation's capabilities over the long
(f) provide for the terms and conditions applicable to the service to be rendered
(g) set out the rate at which the Corporation may charge for its services.
to the Department;
mattriel; and
4(3)(a)(iii). I j
Management Act; -10
term; 45
by the Corporation; and
CHAPTER 2
BOARD OF DIRECTORS AND EMPLOYEES OF CORPORATION 50
Corporation managed by Board of Directors
6. (1) The affairs of the Corporation are managed and controlled by a Board of Directors consisting of-
(a) nine non-executive members;
10 No. 26296 GOVERNMENT G.-\%ETTt. 7 % .APRII . 2I)OL
Act No. 51,2003 ARMAMENTS CORPORATION OF SOUTH AFRICA LIMITED ACT, 2003
(b) two executive members, namely a Chief Executive Officer and ;L Chief
(c ) the Secretary for Defence and the Chief of the South African National
(2) The Board is the accounting authority for the Corporation as contemplatscl i n
Financial Officer; and
Defence Force, who serve as ex oficio members.
section 49(2)(a) of the Public Finance Management Act.
Non-executive members of Board
7. (1 ) The non-executive members of the Board must be appointed by the Minister on the grounds of their knowledge and experience which, when considered collecti\-sly. should enable them to attain the objectives of the Corporation.
(2) The Minister must designate one of the non-executive members of the Board as chairperson of the Board and another one as deputy chairperson of the Board.
(3) No member of the National Assembly, the National Council of Prcninceh. ;L provincial legislature or a municipal council may be appointed a h a member of the Board.
(4) Subject to section 6(l)(c), no officer or employee as defined in section 1 o f the Public Service Act, 1994 (Proclamation No. 103 of 1994), or person appointed under ;I special contract contemplated in section 12A of that Act may be appointed as a member of the Board.
( 5 ) A non-executive member of the Board- ( a ) holds office for three years and may be re-appointed for one further term: and (b) may resign by giving one month's written notice to the Minister.
(6) A non-executive member of the Board must be paid out of the funds o f the Corporation such remuneration for his or her services as the Minister. after consultation with the Minister of Finance, may determine.
Vacation of office by members of Board
8. A member of the Board must vacate office if- (a) he or she becomes disqualified to serve on the Board by virtue of section 7 ( 3 )
(b) he or she resigns; or (c) his or her services are terminated by the Minister on good cause shonm.
or (4);
Meetings of Board and decisions
9. ( 1 ) The chairperson of the Board must determine the time when and place \\here meetings of the Board will take place.
(2) The chairperson of the Board presides at meetings of the Board at which he o r she is present.
(3) If the chairperson of the Board is absent or unable to perform his or her functions as chairperson, the deputy chairperson must act as chairperson, and \j,hile he or she so acts he or she has all the powers and must perform all the duties of the chairpermn.
(4) If both the chairperson and deputy chairperson are absent from a meeting of the Board. the non-executive members present must elect a non-executive member to act ;IS chairperson at that meeting, and while he or she so acts he or she has all the powers and must perform all the duties of the chairperson.
(5) The quorum for any meeting of the Board is the majority of the members in office at the time.
(6) The decision of the majority of members present at a duly constituted meeting is the decision of the Board and in the event of an equality of votes the person presiding at the meeting has a casting vote in addition to his or her deliberative vote.
(7) No decision of the Board or act performed under the authority of the Board is invalid merely by reason of a vacancy on the Board, or by reason of the fact that an)' person who was not entitled to sit as a member sat as a member when the decision was
.3 0
Act No. 51.2003 ARMAMENTS CORPORATION OF SOUTH AFRICA. LIIMITED ACT, 2003
taken or the act was authorised, if the decision was taken or act was authorised by thc required majority of members present at the time and entitled to sit as members.
Chief Executive Officer
10. ( 1 ) The Board must appoint a Chief Executive Officer for such period and on such conditions as the Board may determine, after consultation with t e Minister. 41
( 2 ) Subject to the directions of the Board, the Chief Executive Officer is responsible for-
(a) the day-to-day management of the affairs of the Corporation: and (b) administrative control over the employees.
Chief Financial Officer, I O
11. The Chief Executive Officer must, in consultation with the Board. appoint the Chief Financial Officer for such period and on such conditions as the Board may determine.
Committees
12. ( I ) The Board must establish an audit committee contemplated i n hection 77 of the 15 Public Finance Management Act.
( 2 ) The Board may establish such other committees to assist it in the performance of its functions as may be necessary.
(3) Any person appointed to a committee contemplated in this section who is not i n the full-time employment of the State, must be paid out of the funds of the Corporation 20 such remuneration and allowances as the Minister may determine, on the recommen- dation of the Board and after consultation with the Minister of Finance.
Employees of Corporation
13. (1) Subject to the written policies and procedures of the Corporation. the Chief Executive Officer may appoint such members of staff for the Corporation a s ;Ire 25 necessary to perform the work arising from or connected with the Corporation's functions.
( 2 ) The conditions of service of such employees. including their remuneration. allowances, subsidies and other service benefits, must be determined b!, the Board.
(3) Subject to applicable labour legislation, the Chief Executive Oficer may second .30 any staff member to an organ of State for such period of time and under such Conditions as the Board may determine.
Conflict of interest
14. (1 ) A member of the Board must- (a ) disclose to the Board any direct or indirect interest that such member. or his or 35
her spouse, partner or family member, may have in any matter relating to the acquisition or procurement activities of the Corporation: and
(b) withdraw from participation in the activity in question unless the Board decides that the interest is trivial or irrelevant.
(2) An employee of the Corporation or a member of a committee contemplated in I O section 12 must--
(a ) disclose to the Chief Executive Officer any direct or indirect interest that such employee or member, or his or her spouse, partner or family member. may have in any matter relating to the acquisition or procurement activities of the Corporation; and I S
(b) withdraw from participation in the activity in question unless the Chief Executive Officer decides that the interest is trivial or irrelevant.
(3) Any member of the Board, employee of the Corporation or member of a committee contemplated in section 12 who fails to make disclosure in accordance with subsection (l)(a) or (2)(a), as the case may be, or fails to withdraw in terms of 50
14 No. 2629b GOVERNMENT GAZETTE, 28 APRIL 2004
Act No. 51,2003 ARMAMENTS CORPORATION OF SOUTH AFRICA, LIMITED ACT. 2003
subsection (l)(b) or (2)(b), as the case may be, is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding 15 years or to both a fine and such imprisonment.
CHAPTER 3
FINANCIAL AND AUDIT MATTERS
Funds of Corporation
15. (1) The funds of the Corporation consist of-
consultation with the Minister of Finance; (a) the share capital of the Corporation as determined by the Minister in
(b) money appropriated by Parliament; (c) revenue, including interest derived from its investments; (d) money raised or borrowed by the Corporation; and ( e ) money obtained from such other source as may be consistent with the
(2) The Corporation may establish reserves for such purposes as it may deem fit if they are consistent with its objectives and functions, and may invest that portion of the money which it does not immediately require into a reserve fund in any manner which is to the advantage of the Corporation.
(3) Income or revenue derived from the Corporation's assets, interest on its moneys and services rendered by it must be included in the projected annual budget and corporate plan.
objectives and functions of the Corporation.
Audit of financial statements
16. (1) The annual financial statements of the Corporation must be audited annually in terms of section 58 of the Public Finance Management Act.
( 2 ) The Corporation must allow any internal auditor of the Department access to all documentation pertaining to a service level agreement between the Corporation and the Department.
System for evaluating acquisitions
17. (1) The Corporation must provide the Secretary for Defence with a system, as required by section 38( l)(a)(iii) of the Public Finance Management Act, to evaluate all defence mate'riel acquisitions, prior to a final decision being made on such an acquisition.
( 2 ) The system referred to in subsection (1) must be fair, equitable, transparent, competitive and cost effective and must comply with all relevant national legislation.
(3) The system must be supported by a tender and contract management system.
CHAPTER 4
REGULATIONS AND DELEGATION
Regulations
18. (1) The Minister may make regulations regarding- ( a ) the place where the head office of the Corporation must be situated; (b) conditions or restrictions subject to which the Board must manage and control
the affairs of the Corporation, including the circumstances in which the Board must rnanage and control such affairs subject to the approval of the Minister or the Minister acting in consultation with any other responsible Minister of State and the manner in which such affairs must be managed and controlled in particular circumstances or in relation to companies promoted by the Corporation;
(c) the procedure at meetings of the Board and the keeping of records and minutes;
5
10
15
20
25
30
35
40
45
I 6 No. 26296 GOVERNMENT GAZETTE. X .APKIL 1004
Act No. 51,2003 ARMAMENTS CORPORATION OF SOUTH AFRICA. LIMITED ACT, 2003
(d) a code of conduct to be adhered to by employees; ( e ) the procedure for dealing with complaints and grievances of employees and
the manner in which and time when or period wherein and person to whom documents in connection with requests and communications of such employees must be submitted; and
( f ) any other matter which it may be necessary or expedient to prescribe in order to achieve the objectives of the Corporation.
(2) Any regulation which is likely to result in state expenditure must be made with the concurrence of the Minister of Finance.
Delegation
19. (1) The Board may- (a ) in writing delegate any of its powers to any official of the Corporation or any
(b) assign any employee of the Corporation or any committee to perform any of committee established in terms of this Act; and
the Corporation’s duties. ( 2 ) A delegation or assignment in terms of subsection (1)-
(a) is subject to such limitations and conditions as the Board may impose: (b) may either be to a specific individual or to the holder of a specific post within
(c) does not divest the Board of the responsibility concerning the exercise of the
(3) The Board may confirm, vary or revoke any decision taken by an employee or committee as a result of a delegation or assignment in terms of subsection ( 1 subject to any rights that may have become vested as a consequence of the decision.
the Corporation; and
delegated power or the performance of the assigned duty.
CHAPTER 5
MISCELLANEOUS PROVISIONS
Safeguarding of information, records, property and premises
20. ( 1 ) The Corporation must take such measures as are necessary for the efficient
(a) information, records and property belonging to or under the control of the
(b) any premises upon which any activity of the Corporation is being performed. (2) If the Corporation takes any measures contemplated in subsection (1). it must
cause such notices to be published or such warnings to be erected as may in each particular case be necessary to warn the public of any danger or harm which may be caused by such measures.
protection or safeguarding of-
Corporation; or
Subsidiaries
21. (1) The Corporation may, subject to the Public Finance Management Act and with
( 2 ) The Corporation may only dispose of a subsidiary with the approval of the the approval of the Minister, form wholly owned subsidiaries.
Minister.
Intellectual property
22. (1 j Notwithstanding any other law, all intellectual property rights in any product, service, item, method or any other thing of any nature vested in the Department must be held in the custody of the Corporation on behalf of the Department.
( 2 ) The Corporation must manage and utilise intellectual property rights acquired for and on behalf of the Department as directed by the Secretary for Defence in a service level agreement.
5
10
15
20
25
30
35
40
45
I8 No. 26296 GOVERNMENT G,\ZETll.. 7 5 4t’Rll 3 l O J
Act No. 51,2003 ARMAMENTS CORPORATION OF SOUTH AFRICA. -
LIMITED ACT. 2001
Repeal of laws and savings
23. (1) Subject to this section, the laws referred to in column 2 of the Schedule x e hereby repealed to the extent set out in column 3 of that Schedule.
( 2 ) (a) The board of directors contemplated in section 5 of the Armment> Development and Production Act, which was in office immediately before the date of 5 commencement of this Act, must be regarded as having been appointed in term\ of section 7 of this Act for the remainder of its members’ original terms of office.
(b) The persons who were chairperson and deputy chairperson of the board of directors remain chairperson and deputy chairperson for the remainder of their term3 of office. 1 0
(3) Every person who was an employee of the Armaments Corporation of South Africa, Limited contemplated in section 2 of the Armaments Developn~nt and Production Act immediately before the date of commencement of this Act must be regarded as having been appointed in terms of section 13 of this Act. and the employment agreement existing between that person and the Armaments Corporation of 15 South Africa, Limited immediately before the date of commencement of t h k Act continues to have full force and effect without any change.
Short title and commencement
24. This Act is called the Armaments Corporation of South Africa. Limited Act. 2 0 0 3 . and comes into operation on a date to be fixed by the President by proclan~ation i n the 10 Gnzette.
Act No. 51.2003 ARMAMENTS CORPORATION OF SOUTH AFRICA LIMITED ACT. 2003
SCHEDULE
Repeal of laws
(Section 23)
No. and gear of law
Act, 1968 The hole Armaments Development and Production Act No. 57 of 1968 Extent of repeal Short title
Act No. 65 of 1972 Armaments Development and Production The M hole Amendment Act, 1972
Act No. 20 of 1977 Armaments Development and Production The whole Amendment Act, 1977 7
Act No. 5 of 1978 Armaments Development and Production The Amendment Act, 1978
Act No. 86 of 1980 Armaments Development and Production The whole Amendment Act. 1980
Act No. 56 of 1982 Armaments Development and Production The whole Amendment Act. 1982
Act No. 97 of 1986 1 Transfer of Powers and Duties of the State 1 Section 38 I I President Act, 1986
Act No. 46 of 1992 1 Armaments Development and Production 1 The Amendment Act, 1992
Act No. 31 o f 1993 Amendment Act, 1993
The Armaments Development and Production