Pretoria - Cabinet has approved the South African Reserve Bank (SARB) Amendment Bill - a move that is hoped will protect the independence of the bank.
Finance Minister Pravin Gordhan said on Monday it had come to the attention of government that a number of shareholders were involved in activities which could undermine the Bank's independence by conniving in attempts to influence the bank's decision making capabilities.
"Cabinet considers this to be unacceptable and has agreed that urgent legislative steps must be taken to protect the Bank's independence," Gordhan said.
The constitution, he said, mandated the SARB to perform its functions independently and government would continue to ensure that this independence was not compromised.
The Amendment Bill will among things, limit shareholders from circumventing the Act's current limitations of the maximum of 10 000 shares per stake per shareholder.
The amendments to the Act seek to curb circumvention of this limit by introducing the concept of "associate" and "close relative" and extend the restriction to such associates and close relatives.
The purpose is to ensure that no shareholder can create a "bloc" of voting interests; thereby exerting influence that was clearly intended to be limited by setting a maximum number of shares that could be owned and voted on by any individual or institution.
Gordhan said the Governor of the Reserve Bank, Gill Marcus, had conveyed their concerns to shareholders in March this year, stating that: "Profit making should never be a motive for holding shares in the Bank. The Bank is neither desired nor expected to maximize profits.
The fixed dividend paid and the limited voting rights available to private shareholders underline the fact that the bank - like its counterparts in other countries - is a public entity that acts in the public interest... self-interested profit motive of a very small minority of shareholders... does not appear to care about the national interests of the Republic of South Africa."
The amendments, which will be tabled in Parliament soon, will also broaden the base for nomination of directors on the board by enabling nominations to be made by the general public.
The number of government appointed directors will be increased from three to four, taking the size of the Board to 15.
The Act would also provide for the establishment of a panel for the election of directors and to define clear criteria regarding when people should be disqualified from serving.
The amendments also seek to extend the grounds for termination of directorship as a result of unexcused absenteeism, failure to disclose conflicts of interests, unlawful disclosure of confidential information and breach of duty.
Gordhan said they will also introduce flexibility when a second or subsequent term is considered for governor and deputy governors. This, he said, will enable reappointment for an agreed period of not more than five years per term.
According to Gordhan, the timeline for the speeding up of the approval of the bill was largely a result of the recent activities of this fringe group.
He said the amendments will be submitted to the Speaker of Parliament and will be gazetted for public comment during the course of the week. Public hearings are envisaged to be held from mid-May 2010, he said.
Interested persons and institutions are invited to submit written representations on the Bill to the Secretary to Parliament by no later than 17 May 2010. Further documents will be available electronically on the National Treasury website - www. treasury.gov.za
