FINANCE DIRECTORATE,
SHAREHOLDING MANAGEMENT DEPARTMENT
MUNICIPAL ENTITY
QUARTERLY NEWSLETTER
Analyst
2009/2010 Quarter 1: 1 July 2009 – 30 September 2009, ISSUE NO. 10
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:
Local Government Budgets 2008/2009: National Treasury Report
If you want to see how the City of Cape Town compares to other metro’s and municipalities, then
the quarterly National Treasury report is a useful document. This report is used by National
Treasury to gauge how municipalities are spending their budgets. The report can be accessed at:
http://www.treasury.gov.za/legislation/mfma/media_releases/section_71_4th_0809
/00%20%20Press%20Release%20-%204th%20Q%20as%20at%2025%20August%202009.pdf
PROPOSED LEGISLATION:
Publication Of Explanatory Summary of the Protection of Personal
Information Bill, Government Gazette 32495 dated 14 August 2009
The Minister of Justice and Constitutional Development intends introducing the Protection of
Personal Information Bill, 2009, in the National Assembly shortly. The explanatory summary
of the Bill was published in accordance with Rule 241(l)(c) of the Rules of the National
Assembly.
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The Protection of Personal Information Bill, 2009, is intended to promote the protection of
personal information processed by public and private bodies; to introduce information
protection principles so as to establish minimum requirements for the processing of personal
information; to provide for the establishment of an Information Protection Regulator; to
provide for the issuing of codes of conduct; to provide for the rights of persons regarding
unsolicited electronic communications and automated decision making; to regulate the flow
of personal information across the borders of the Republic; and to provide for matters
incidental thereto.
Copies of the Bill can be obtained from:
1. Government Printers: Cape Town and Pretoria
2. Parliament: Mr M V Pama
mvpama@parliament.gov.za
Telephone (021) 403 2078/9
GENERAL:
TRAINING AND SKILLS DEVELOPMENT LEVIES:
Transfer Of Administration and Powers and Functions Entrusted by
Legislation in terms of Section 97 of Constitution
The whole Skills Development Levies Act and one section of the NQF Act becomes the
responsibility of the Minister of Higher Education and Training from 1 November
2009 and no longer fall under the Minister of Labour.
TAX MATTERS
SARS have issued Draft Practice Note 47, which deals with wear and tear and depreciation
allowances. The Draft Practice Note is available on the SARS website at:
http://www.sars.gov.za/home.asp?pid=333
The closing date for comment is 9 October 2009.
Proposed write off periods are as follows:
Asset
Proposed write-off period (in years)
Adding machines
6
Air conditioners:
Window type
6
Mobile
5
Room unit
10
Air conditioning assets (excluding pipes, ducting and vents):
Air handling units
20
Cooling towers
15
2
Condensing sets
15
Chillers:
Absorption type
25
Centrifugal
20
Aircraft: Light passenger or
commercial helicopters
Arc welding equipment
Artefacts
4
6
25
Balers
6
Battery
5
Bicycles
4
Boilers
4
Bulldozers
3
Bumping flaking
4
Carports
5
Cash registers
5
Cell phone antennae
6
Cell phone masts
10
Cellular telephones
2
Cheque writing machines
6
Cinema equipment
5
Cold drink dispensers
6
Communication systems
5
Compressors
4
Computers
Main frame
5
Personal
3
Computer software (main frames)
Purchased
3
Self-developed
1
Computer software (personal computers)
2
Concrete mixers (portable)
4
Concrete transit mixers
3
Containers
10
Crop sprayers
6
Curtains
5
Debarking equipment
4
Delivery vehicles
4
Demountable partitions
6
Dental and doctors equipment
5
Dictaphones
3
Drilling equipment (water)
5
Drills
3
TAXATION LAWS AMENDMENT BILLS, 2009
Finance Minister, Pravin Gordhan has tabled the Bills which bring into effect all the taxation
proposals announced in the February Budget Speech 2009. The Minister’s introductory
speech can be viewed at:
http://www.treasury.gov.za/comm_media/speeches/2009/2009090102.pdf
COMPANIES ACT, 71 0f 2008
KPMG Advisory Services have produced a brochure summarizing the new Companies Act. If
you would like an electronic copy of the brochure please e-mail Richard Wootton at
Richard.Wootton@capetown.gov.za. The brochure is 3MB in size.
KING III GOVERNANCE CODE
The Institute of Directors has published the final “King Code for Governance for South Africa
2009”. The report was released on 1 September and comes into effect on 1 March 2010. If
you would like an electronic copy of the report please e-mail Richard Wootton at
Richard.Wootton@capetown.gov.za. The brochure is 1MB in size.
The following is an article by Sanchia Temkin from Business Day published on 2 September
2009:
“SOUTH African companies will have to display more transparency, accountability and integrity
in light of yesterday’s release of the third King report on corporate governance. The code applies
to all companies, public entities, private companies and all other forms of businesses.
The report proposes that directors be required to “apply the code or explain” the reasons for not
doing so.
Mervyn King, chairman of the King committee, says this is in keeping with international norms.
“This is a practice adopted by most trade departments internationally,” he says. He cites the
Netherlands as an example. However, the UK is in the process of reconsidering the “apply or
explain” model, King says. “Perhaps they missed a trick.”
But Mike Bourne, professional practice director, Africa region, at Ernst & Young, says: “The
‘apply or explain’ approach is one of the biggest challenges contained in King 3. Corporate SA
does not have an environment yet where stakeholders are vigilant or challenging.” If a company
does not apply the code, it will be interesting to see if stakeholders will take on the challenge, he
says.
King says a third report became necessary because of changes to SA’s company laws and new
developments in corporate governance.
Sir Adrian Cadbury, the doyen of UK corporate governance, lauds the King report, particularly
its chapters on sustainability reporting and risk management.
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“The governance for tomorrow is contained in the King 3 report,” says Cadbury.
There were 11 subcommittees for the report: boards and directors; audit and accounting; risk
management; internal audit; business rescue; sustainability reporting; stakeholder relationships;
information technology (IT) governance; fundamental and affected transactions; alternative
dispute resolution; and editing.
Lindie Engelbrecht, CE of the Institute of Directors and a member of the King committee, says
improvements were made to interpretations contained in the report, and also its use.
The report clarifies the number of meetings the board should have annually (preferably four a
year); the duty of the board relating to IT governance; the definition of independent directors; and
the consideration of non executive directors after a prolonged service period. In the case of the
composition of the board, the code recommends a balance of power, with a majority of non
executive directors. “It may therefore happen that a board could have less independent non
executive directors than was the case under King 2,” Engelbrecht says.
The code addresses the remuneration of directors, recommending that benefits paid be disclosed.
Further, the remuneration report should disclose salaries of the three most highly paid employees
who are not directors.
The report clarifies the shareholding of non executive directors, which should be limited to 5% of
the group’s total number of shares in issue; but less than 5% should not be material to the
individual’s wealth. Bourne says some directors are paid an enormous amount of money and do
not add value to the company.
“On the other hand, others are paid well and do add value.”
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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