FINANCE DIRECTORATE
SHAREHOLDING MANAGEMENT DEPARTMENT
MUNICIPAL ENTITY
QUARTERLY NEWSLETTER
Analyst
2010/2011 Quarter 3: January 2011 – 31 March 2011, ISSUE NO. 16
As parent municipality to the municipal entities we aim to keep our municipal entity boards of directors
and staff abreast of all current news, legislation and policies directly affecting the municipal entities.
This will enable directors to be continuously informed as well as ensuring that we meet the legislative
requirement as parent municipality to ensure that both the municipality and the municipal entity
comply with the Municipal Systems Act, the Local Government: Municipal Finance Management Act and
any other applicable legislation.
Contents
The newsletter’s intend to convey information relating to the Local Government: Municipal Finance
Management Act, Local Government: Systems Act, Companies Act, Corporate Governance and any
information relevant to municipal entities.
THE LOCAL GOVERNMENT LEGISLATION:
THE MUNICIPAL FINANCE MANAGEMENT ACT:
Supply Chain Management Regulations: In the service of the State
(Regulation 44)
Regulation 44 of the Supply Chain Management Regulations deals with the prohibition of awards to
persons “in the service of the State”.
“In the service of the State” means –
 A member of any municipal council
 A member of any provincial legislation
 A member of the National Assembly
 A member of the board of directors of any municipal entity
 An official of any municipality or municipal entity
 An employee of the national or provincial department provincial or national or provincial public
entity.
Regulation 44 states that a municipality or a municipal entity may not make an award to a person:
 who is in the service of the State
 if that person is not a natural person, of which any director, manager, principal shareholder or
stakeholder is a person in the service of the state; or
 who is an advisor or consultant contracted with the municipality of municipal entity
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In other words, a municipality or municipal entity cannot procure goods or services from a company if
that company has a director, manager or principal shareholder who is “in the service of the state”.
There was previously an exemption from this requirement for municipal entities, but the exemption
expired on the 31 June 2010.
Local Government Budgets 2010/11 Financial Year
Second Quarter Local Government Section 71 Report
National Treasury has released local government’s budget statement for the second quarter of the
2010/11 financial year. The statement covers revenue and expenditure as well as spending of
conditional grants for the period 1 July to 31 December 2010. It is available at
http://www.treasury.gov.za/comm_media/press/2011/2011030301.pdf
IGRAP10 - Interpretation of the Standards of Generally Recognised
Accounting Practice - Assets Received from Customers
Your attention is drawn to the above interpretation of GRAP standards. It deals with the treatment of
assets received from third parties. The interpretation is based on the situation where assets are
received to connect users to a network to receive ongoing services such as electricity or water (i.e.
private property developments where the infrastructure resorts to the municipality). However, it is also
relevant to other assets received, which meets the criteria of an asset. It could therefore be applicable
to your entity, although most probably only in isolated cases
NEW LEGISLATION:
Companies Amendment Act
The Companies Amendment Act was passed by Parliament on 22 March 2011. The final approved
version can be accessed at:
http://www.pmg.org.za/files/bills/110316b40b-10.pdf
The implementation date of 1 April 2011 is the same as the principal Companies Act.
Consumer Protection Act, 2008
The Consumer Protection Act comes into effect on 31 March 2011. Smaller municipalities have been
granted an exemption, but municipal entities and large municipalities have to comply with the
provisions of the Act.
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GENERAL:
Price Waterhouse Coopers 14th Annual Global CEO Survey
The 14th Annual Global CEO Survey conducted by PWC concludes that innovation and emerging
markets will drive future growth.
The Survey is available at:
http://www.pwc.com/gx/en/ceo-survey/industry-insights.jhtml?WT.mc_id=syndication_0211_ceo-survey-animated-logo-gx_ceo-survey-industry-home
THANK YOU:
On behalf of the City, the Shareholding Management Department would like to thank all the staff and board
members of all the City’s municipal entities for their contribution and commitment during 2010. We look
forward to working with you in 2011.
Please contact Louise Muller (021 4003940) or Richard Wootton (021 4002701) if you have any queries
in respect of this newsletter.
Although every effort is made to check the accuracy and quality of the information supplied, The City
cannot be held responsible for any errors that may arise.
Copyright(c) City of Cape Town 2007. All rights reserved. No part of this newsletter may be reproduced or transmitted in any form
without written permission from the City of Cape Town, Finance Directorate, Shareholding Management Department.
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