Complying with Changes in Legislation

Complying with

Changes in Legislation

September and October 2010

Agenda

FICA

Money Laundering Legislation

Defines: Money laundering offence

Reporting obligation

Definition

Financial Intelligence Centre

CollectProcessAnalyse

Law Enforcement

Agencies

Reporting obligations

Report to FIC

Duties of accountable institutions

Above prescribed limit

Report on demand

Details of transfer

After transfer

AlsoReportable Institution

Administrative duties for accountable institutions

Directives

Only after consulting with

Centre

Cost borne by institution

Accountable institutions, reportable institutions, other persons

Registration of institutions

Notify FIC of any changes within 90 days

Responsibility of supervisory body

Administrative sanctions:

Not to repeat conduct

Reprimand

Remedial action

Restriction or suspension

Penalty:Individual: R 10 milCompany : R 50 mil

Process to be followed May appeal

Appointment of inspectors

Issue certificate of appointment

No warrant is necessary

Must consult with Centre

Institution liable for any costs involved

Compliance and enforcement

Draft Regulation

of

Tax Practitioners Bill

Application of Act

Applicable to

Not applicable to:

Registration

Register

Do not register

Approval of application

Board must approve if:

Will not approve if:

Board to enter name in register and to

issue certificate

Duties of tax practitioners

May not

Must

Disciplinary practices

Cannot question unless informed of following rights:

Has the right to be assisted or represented by another person; and

Is not obliged to make any statement and that any statement made may be used in evidence

against that tax practitioner.

FAIS

Purpose of Act

Definition of advice

Advice vs. intermediary services

What is FSP?

Excluding a representative

Duties

Display certified copy of license in prominent place

Include reference to license in all documentation

Advise registrar of lapsing of license

• Permanent incapable of carrying on business

• Sequestrated• Dies

• Liquidated• Business is dormant

Appoint compliance officer

Representatives

May only Act if:

FSP must:

Accounting and audit requirements

External auditor must be approved by Registrar

Irregularities reported

Reasons for termination as auditor

May only change year end with approval of Registrar

10 Different compliance reports

Different submission dates per category

Fit and proper requirements

Fit and proper requirements

Professional Indemnity and Fidelity Insurance

Financial interest and conflict of interest

Financial interest and conflict of interest

National Credit Act

Statutory bodies

Independent

Consumer rights

Registration requirements

Certificate of registration

Enter in register

Assign unique registration number

Duties of NCRNo natural persons

Fit and proper

No juristic person

Types of agreements

Included transactions

Excluded transactions

> R 1 000 000

Unlawful and Reckless Agreements

Cannot sue

Must refund:• Monies paid• Interest per quote

Credit provider

Pre-agreement statements

Prescribed forms for all agreements

Cost of Credit

For monthly and annual, transactions

May not exceed outstanding obligation

Cover reduce with decrease in

outstanding balance

Limited to cost of letter

As per court tariffs

Right to receive statements

Changes, termination, early payments

Surrender of goods, debt enforcement

Debt counseling

Compliance and Reporting

6 months after year end

> R 15 mil – Quarterly< R 15 mil – 15th February

Consumer Protection Act

Background

Scope of the Act

Excluded transactions

Meaning of goods

Meaning of service

Accommodation e.g. restaurant or hotel

Entertainment e.g. sale of tickets

Access to any electronic communications infrastructures e.g. cell phones, 3G

Access to event, premises, activity or facility

Right of occupancy in land or other immovable property

Education, information, advice or consultation (excluding FAIS)

Right to equal access to consumer market

Access to goods or services

Different quality or pricing

Sales of alcohol to under-aged minors

Discounted prices for children, persons over a certain age

Separate use of facilities for different genders

Right to privacy

Accept, refuse or block any approach for the purposes of direct marketing

Formal demands to discontinue marketing approach

Pre-emptively blocking of direct marketing

Minister to:Consumer’s right to:

Establish an “Exclusion Register”

Prescribe certain days, dates and times during which it is prohibited to contact consumers

Consumer’s right to choose

No bundled goods or services

Fixed term contracts

Right to cancel a fixed term agreement upon expiry without penalty or charge

Month to month automatic renewal

20 Business days cancellation notice

Repairs, maintenance

or replacement

services

Provide consumer with an estimate. Supplier not permitted to charge for drawing up cost estimate

Consumer to pre-authorise or refuse additional repairs

Suppliers not permitted to charge for inspections required in compiling cost estimates unless with prior agreement

Unless bundling results in economic benefit

Consumer’s right to choose

Cooling off period of

5 business days

No need to provide reasons for

cancellations

No penalties

Suppliers to return payments received within 15 business days of receiving

cancellation notice

Consumer’s right to choose

Right to disclosure and information

Notice or document

Content, significance and importance of notice or document

Terms and conditions to make informed choices

Person with average literacy skills and minimal experience must understand

Disclosure requirements

Compulsory to display prices for goods and services

Specify duration of promotions, otherwise customers may purchase goods at specified prices

If two prices are displayed, the lowest has to be charged

Trade descriptions must not be misleading or tampered with

Disclose fact if:• Reconditioned• Grey market goods

Right to fair and responsible marketing

Prohibition against marketing that is misleading, fraudulent or deceptive

Following are prohibited

Bait marketing

Negative options: Client under no obligation to pay

Referral selling

Offering of prizes with intention of not providing them

Informing consumers that they have won a prize when no competition has been conducted

Making prize subject to payment of consideration

Consumers to be:• Provided with identity of agents• Informed about right to rescind the agreement during cooling off period

Right to honest and fair dealing

Prohibited:

Unconscionable conduct, force, coercion, undue influence, pressure or harassment, unfair tactics

Making false, misleading or deceptive representations

Overselling and overbooking:

Refund in full with interest

Claim contractual and consequential damages, including economic losses

Right to assume that the supplier has legal right to goods

The supplier is liable to third party if third party has legal right over property

Does not apply to used goods or immovable property

Right to fair, just and reasonable terms

Provisions that seek to limit suppliers liability must be brought to the attention of the consumer

Right to fair value, good quality and safety

Safeguard the safety of consumers

Establish regime of product liability

Rights of consumers to receive goods that are:• Of good quality • Free from defects• Reasonably suitable for the intended purpose

Goods to be in working order, free of defects, useable and durable for a reasonable period of time

Right to fair, just and reasonable terms

Obligation of suppliers • To issue alerts of any activity that is subject to hazard

• Provide notice or instructions of safe handling, how to inhibit any risk, remedy or mitigate the effects

• Provide for safe disposal of goods

• Accept the return of waste goods

• Liable for harm caused as consequence of product defect or failure

• Joint and several liability: producer, importer, distributor, retailer

Implied warranty on quality:

Six months on repair, replace or refund

Further three months replace or refund on repairs

Supplier’s accountability to consumers

Supplier obliged to honour them

Minimum period is three years

Treated as pre-paid income until redeemed

Pre-paid certificates, credits and vouchers

Registration of business names

Protection of Personal Information Bill

Overview

Purpose of the Bill

Everyone wants the right to be left alone and have control over their

personal information

Processing of personal information

Processing of personal information

Warning: PI may only be processed after the Regulator has been notified

Exclusions from the application of the Bill

Information protection principles

Information protection principles

Unsolicited electronic communication

Enforcement and penalties

Penalty: Fine and/or 12 months imprisonment (10 years when obstructing the Regulator)

Companies Act

Categories of Companies

Registration of external companies

Names of Companies

Company formation

MOI + Rules

File notice of ratification/non-ratification within 5 business days

MOIRules

Amendment of MOI

Company records

Company records

Directors’ register

Access to company records

Excluded: Minutes and resolutions of directors meetings, committee’s and audit committee

Accounting records

Warning: Commission may issue compliance notice in respect of any failure to comply with accounting record requirements

Accounting records

Financial Statements

Warning: If any financial statements of a company is false or misleading, any person who is a party to the preparation, approval, dissemination or publication of that statement is guilty of an offence if

that person knew that the statements were materially false or misleading

Financial reporting

Financial reporting

Financial reporting

Independent accounting professional

Member of professional body that is a member of IFAC

No personal financial interest in company/ related or inter-related company

Not involved in day-to-day management

Not been in day-to-day management during previous 3 years

Not a prescribed officer

Is/ has not been an employee for last 3 years

Not a material supplier / customer or related to such person

Annual return and financial accountability supplements

Shareholders Meetings

Annual General Meeting

Minimum Directors

Shareholders to elect 50% of directors and

alternate directors

Director includes

Prescribed officer

Person who is member of a committee

Ineligibility and disqualification of directors

For single conviction or loss of office only

Director’s personal financial interest

Does not apply if:Decision affects all directors

oronly one

director who is also

shareholder

Liability

Taking part in a meeting (formal or

informal) and failed to vote against following

Common lawIn contravention of Act

or MOI

Breach of fiduciary duty

Liable for loss, damages or costs

suffered

Conduct does not need to be

fraudulent or carried out with

gross negligence

Exclusion of duties

Any provision

void that is in

Arising from act or omission that constitutes willful misconduct or breach of trust

Indemnification

Only if

Company may purchase insurance to protect a director against liability

Directors’ conduct

Duty to disclose

Relying on information

Financial Assistance

Solvency and liquidity test

Auditors

Audit Committee

Social and Ethics Committee

Valid for 5 years

Business rescue

King 3Effective from 1 March 2010

Structure of report

Provide reasons for not complying

Chapters

Chapter Topic

Chapter 1 Ethical leadership and corporate citizenship

Chapter 2 Board and directors

Chapter 3 Audit committees

Chapter 4 The governance of risk

Chapter 5 The governance of IT

Chapter 6 Compliance with laws, rules, codes and standards

Chapter 7 Internal audit

Chapter 8 Governing stakeholder relationships

Chapter 9 Integrated reporting and disclosure

Application of code

The Board

Independent non-executive director

Chairman

*May not be the

chairman

CEO

Secretary

Appointed and removed by board

Not a director of the company

Source of guidance

Agendas and minutes

Committees

External advisors and executive directors should attend meetings

by invitation

Should be free to take independent advice at the cost of

the company

Training and appraisals

Reviewed by nominations committee

Directors subjects to evaluation before re-appointed

Remuneration of directors

Detailed analyses in annual report of individual directors plus three highly paid employees

Audit committees

Board to elect chairman

Independent non-executiveChairman to attend AGM

Oversee audit

Review financial statements

Deal with complaints

Independence of internal and external auditors

Listed – Auditor approved by JSE

Fees, terms of engagement, other services by auditors

Reportable irregularities

Meet twice a year and annually with internal and external auditors

Governance of risk

Governance of IT

Responsibility of the Board

Permanent point on agenda

Receive independent assurance on the effectiveness of IT controls

Delegate responsibility for implementation to management

A CIO must be appointed

Monitor and evaluate IT investment and expenditure

Compliance with laws and regulations

Each individual director should be aware

Effective compliance framework and process

Standing item on agenda

Culture of compliance

Key performance indicators

Head of compliance must be experienced

Board to delegate responsibility to management

Internal audit

Technical and business skills

Written assessment of the effectiveness of internal

control

Managing stakeholder relationships

Formal process to identify important

stakeholder groupings

Shareholders should be encouraged to attend

AGM

Board to ensure that minority shareholders

are protected

Communications should be in clear

understandable language

Clause in contract

Integrated sustainability reporting

Reason for ceasing to be in office

Names and attendance at meetings

Age and length of serviceList of other directorships

Increase trust and confidence

Once a year

International Standards on Auditing

Structure of the New Standards

Introduction

Effective: Year end beginning on or after 15 December 2009

Complying with ISAs

Professional Scepticism

Professional Judgement

Now codified as a

requirement

Reasonable man test

Not to be used as justification for decisions that are not supported

by facts

Agreeing the Terms of Engagement

Is there an acceptable reporting framework?

Management understands and acknowledges responsibility:Preparation of financial statementsInternal controls

Agree to provide auditor with: Access to all informationAdditional informationUnrestricted access to persons

Communication with TCG

If these are the same people only communicate once

Significant qualitative aspects•Significant difficulties•Significant matters

Auditors independence (Listed entities)

• Statement of compliance with ethical requirements

• Total fees charged•Safeguarded applied to

eliminate threats•Adequacy of communication

process

Timely

In writing

Orally: When and whomIn writing: Retain a copy

Communicating Deficiencies in Internal Control

Assessing risk of material misstatement

Determine NET of further audit procedures

Materiality

Evaluation of misstatements

Accounting Estimates

MethodControls

Use of an expertAssumptions

Changes from prior period Effect of estimation uncertainty

Related Parties

Inspect the following• Bank and legal confirmations

• Minutes of meetings• Other records or documentation

Treat significant transactions with related parties outside normal course of business as a significant risk

Financial Reporting Framework for Non-

Public Entities

Scope

Presentation of financial statements

Principles, recognition and measurement

Principles, recognition and measurement

Principles, recognition and measurement

Principles, recognition and measurement

Principles, recognition and measurement

Principles, recognition and measurement

Environmental taxes

Environmental taxes

Thank You

Fasset Call Centre

086 101 0001

www.fasset.org.za