Keep up to date on key Financial Services Regulatory developments in South Africa in March 2023.
Implementation of the beneficial ownership regime by the Companies and Intellectual Property Commission (CIPC) - 1 March 2023
The CIPC will be collecting beneficial ownership information once the regulations relating to beneficial ownership are promulgated. The regulations will ensure that ultimate beneficial owners of entities on their register are known and that the abuse of corporate vehicles to facilitate money-laundering and terrorism financing is reduced and mitigated.
Draft Companies Amendment Regulations 2023 – Establishment of a Beneficial Ownership Register
On 10 March 2023, the Minister of Trade, Industry and Competition, in consultation with the CIPC, published the draft Companies Amendment Regulations 2023 for public comment (Regulations). The Regulations were drafted pursuant to the General Laws Amendment Act, 2022 which commenced in December 2022.
Stakeholders and interested persons could submit comments on the proposed Regulations in writing within fourteen (14) days of their publication. The comment period closed at the end of March.
The Regulations provide for the establishment of a Beneficial Ownership Register (BOR) and will enable the CIPC to collate the beneficial ownership information of legal persons. The BOR will: 1) develop a database of natural persons who own or exercise control over legal persons; 2) enable law enforcement bodies to access relevant information when they are investigating who the beneficial owner of a legal person is; and 3) mitigate the risks of legal persons being utilised as vehicles for money laundering and terrorist financing.
Draft notice of Amendment of board notice 90 of 2014
On 6 March 2023, the Financial Sector Conduct Authority (FSCA), published a draft notice of amendment (draft Amendment Notice) to Board Notice 90 of 2014 (BN90 of 2014).
Details about the draft Amendment Notice can be found here.
Proposed Directive – Threshold amounts issued in terms of section 6(6) of the Banks Act 94 of 1990
On 13 March 2023, the Prudential Authority (PA), published a Proposed Directive – Threshold amounts (Proposed Directive) in terms of section 6(6) of the Banks Act 94 of 1990. The Proposed Directive replaces Directive 1 of 2016 dated 12 April 2016.
On 7 December 2017, the Basel Committee on Banking Supervision (BCBS) issued the revised standardised approach (STA) and internal ratings-based (IRB) approach for credit risk, available here. The PA subsequently issued Guidance 4 of 2022 setting out the implementation dates of the outstanding regulatory reforms in South Africa. In September 2022 the PA also issued proposed amendments to the Regulations relating to Banks (Regulations) to incorporate the requirements of the revised STA and IRB approach to credit risk issued by the BCBS.
The Proposed Directive specifies the appropriate threshold amounts to be used by banks, controlling companies and branches of foreign institutions (collectively referred to as Banks) when implementing the various requirements of the revised STA and IRB approach and the liquidity risk and interest rate risk for banking book (IRRBB) frameworks.
The Proposed Directive is available on the PA's website. Comments are open until 3 May 2023.
Commencement of the Financial Sector and Deposit Insurance Levies Act 11 of 2022 and the Financial Sector and Deposit Insurance Levies (Administration) and Deposit Insurance Premiums Act 12 of 2022
On 24 March 2023, the Finance Minister gazetted the commencement date of the new Financial Sector and Deposit Insurance Levies Act 11 of 2022 and the Financial Sector and Deposit Insurance Levies (Administration) and Deposit Insurance Premiums Act 12 of 2022 (collectively, the Acts). The Acts were published by the National Treasury on 9 December 2022. They replace the existing levies payable by financial institutions to the FSCA and PA.
The Acts will commence on 1 April 2023, with certain sections commencing on 1 April 2024.
The Financial Sector and Deposit Insurance Levies Act intends to:
- impose financial sector levies on supervised entities;
- impose a deposit insurance levy;
- provide exemption from these levies under certain circumstances;
- allocate amounts levied to financial sector bodies; and
- provide for related matters.
The Financial Sector and Deposit Insurance Levies (Administration) and Deposit Insurance Premiums Act intends to:
- provide for the collection and administration of levies imposed in terms of the Financial Sector and Deposit Insurance Levies Act;
- amend the Financial Sector Regulation Act to provide for the administration of levies;
- provide for the imposition, collection, and administration of deposit insurance premiums;
- amend the Pension Funds Act, the Banks Act, the Mutual Banks Act, and the Financial Advisory and Intermediary Services Act, to align them with the Financial Sector Regulation Act, in respect of the financing of financial sector bodies; and
- provide for related matters.
The schedules to the Financial Sector and Deposit Insurance Levies Act set out the levy calculations for various supervised entities.
Commencement of certain provisions of the Financial Sector Regulation Act 9 of 2017
On 24 March 2023, the Minister of Finance gazetted the commencement date of certain provisions of the Financial Sector Regulation Act 9 of 2017 (FSR Act) in terms of section 305 of the FSR Act. This harmonises with the commencement of the Financial Sector and Deposit Insurance Levies Act 11 of 2022 and the Financial Sector and Deposit Insurance Levies (Administration) and Deposit Insurance Premiums Act 12 of 2022.
Provisions of chapter 16 (sections 237 to 249) of the FSR Act dealing with fees, levies and finances come into effect on cascading dates.
1 April 2023 commencement:
- all sections except sections 239 and 240, which deal with budgetary requirements for financial sector bodies.
- levies and fees related to the Corporation for Deposit Insurance (CODI) will not commence on this date because the South African Reserve Bank will only have CODI fully functional in 2024 to maintain and administer the deposit insurance fund.
1 June 2023 commencement:
- sections 239, 240 and 248 (to the extent that they deal with budgeting for financial sector bodies).
1 April 2024 commencement:
- all sections except sections 239 and 240 in respect of deposit insurance levies and deposit insurance premiums for the CODI.
1 June 2024 commencement:
- sections 239, 240 and 248 (to the extent that they deal with budgeting for financial sector bodies) - in respect of the CODI.
Section 290 takes effect on 1 April 2023 to the extent of the amendments and repeals of various legislation.
Commencement of certain provisions of the Financial Sector Laws Amendment Act 23 of 2021
The Minister of Finance on 24 March 2023 gazetted the commencement date of certain provisions of the Financial Sector Laws Amendment Act of 2021 (Amendment Act).
Provisions of chapter 12A of the FSR Act on resolution of designated institutions as inserted by section 51 of the Amendment Act come into effect on two dates. Chapter 12A of the FSR Act is entitled Resolution of Designated Institutions.
On 24 March 2023 the following sections of the FSR Act came into effect:
- 166AH to 166AS;
- 166AU to 166BB; and 1
These provisions deal with the establishment of the Corporation for Deposit Insurance.
On 1 June 2023 the following sections of the FSR Act will come into effect:
- 166A to 166I;
- 166J to 166P;
- 166Q to 166Y; and
On 1 June 2023, the following sections of the Amendment Act will come into effect:
- section 1;
- sections 4 to 11;
- sections 13 to 50;
- section 52;
- sections 54 to 57; and
- sections 59 to 62.
The provisions deal with the consequential amendments to the Insolvency Act, South African Reserve Bank Act, Banks Act, Mutual Banks Act, Competition Act, Financial Institutions (Protection of Funds ) Act, Co-operative Banks Act, Companies Act, Financial Markets Act as a result of the inclusion of Chapter 12A into the FSR Act.
The FSCA publishes Final Strategy for Promoting Financial Sector Transformation
On 30 March 2023 the FSCA published its final strategy for promoting the transformation of the financial sector, in line with its Regulatory Strategy 2021-2025.
The strategy outlines how the FSCA will promote transformation within the current legislative framework pending the finalisation of the Conduct of Financial Institutions (COFI) Bill, and how it will give effect to future proposals relevant to transformation once the COFI Bill is enacted.
Key changes to the final strategy, in response to public comments, include the following:
- clarification of the legislative frameworks that guided the development of the strategy;
- reconsideration of the proposal to introduce a minimum B-BBEE Level 4 requirement;
- further details on the FSCA’s approach to ensure proportionality in its application of the strategy; and
- clarification on the impact of transformation requirements on new institutions entering the market and institutions that are already licensed.
The Transformation Strategy and Response Document are available on the FSCA's website.