| (1) |
[Section 19(1) deleted by section 8(a) of Act No. 53 of 1989] |
| (1A) |
[Section 19(1A) deleted by section 14(c) of Act No. 103 of 1979] |
| (2) |
[Section 19(2) deleted by section 8(a) of Act No. 53 of 1989] |
| (3) |
[Section 19(3) deleted by section 8(a) of Act No. 53 of 1989] |
| (4) |
Except as provided for in subsection no assets of a registered fund in excess of five per cent of their fair value, shall be invested in or lent to the business of an employer participating in the scheme or arrangement whereby the fund has been established. Where the employer is a company (in this subsection called the employer company), the business of every other company which— |
| (i) |
of the employer company; or |
| (ii) |
of any subsidiary of the employer company; or |
| (iii) |
of any successive subsidiary within the same hierarchy; or |
| (b) |
is the holding company— |
| (i) |
of the employer company; or |
| (ii) |
of the holding company of the employer company; or |
| (iii) |
of any successive holding company within the same hierarchy, |
shall be deemed, for the purposes of this subsection, to be part of the business of the employer company. In applying paragraphs (a) and (b), "subsidiary" and "holding company" respectively mean—
| (aa) |
a "subsidiary" as defined in section 1 of the Companies Act; |
| (bb) |
a "holding company" as defined in that section. |
[Section 19(4)(b)(iii)(aa) amended by section 33(a) of Act No. 45 of 2013]
| (4A) |
The registrar, on application by the Board, may allow a greater percentage of the fund's assets, but not exceeding 10 per cent of the fair value of the fund's assets, to be invested in or lent to that employer's business for the period and on any conditions determined by the registrar if, in that application, the Board has certified— |
| (a) |
that it has consulted with the members about the proposed investment in or loan to the employer's business; and |
| (b) |
that the members support the making of that investment or loan. |
| (4B) |
Notwithstanding the provisions of subsections (4) and (4A), no assets of a fund may be invested in or lent to such a participating employer's business unless it is in the best interest of the fund to do so. |
| (a) |
A registered fund may, if its rules so permit and subject to prudential standards, grant a loan to a member by way of investment of its funds or furnish a guarantee in favour of a person other than the fund in respect of a loan granted or to be granted by such other person to a member to enable the member— |
[Words preceding section 19(5)(a) substituted by section 290, item 6(a) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017) - effective 28 September 2018 (paragraph (c)(i) of Notice No. 1019, GG 41947, dated 28 September 2018]
| (i) |
to redeem a loan granted to the member against security of, either a pledge by the member concerned to the fund of the benefit contemplated in paragraph (c)(ii), or immovable property which either belongs to the member or his or her spouse or the member and his or her spouse and on which a residence has been or will be erected which is occupied or, as the case may be, will be occupied by the member or a dependant of the member; |
| (ii) |
to acquire immovable property on which a residence has been or will be erected, or to erect a residence on immovable property in respect of which, either the member or his or her spouse, or the member and his or her spouse, has or have obtained ownership or the right to ownership through a right of occupation, for occupation by the member or a dependant of the member; or |
| (iii) |
to make additions or alterations to or to maintain or repair a residence of which ownership or the right to ownership was obtained through a right of occupation by either the member or his or her spouse or the member and his or her spouse and which is occupied or will be occupied by the member or a dependant of the member, |
if the right of occupation of the immovable property or residence is secured by virtue of the operation of any custom or law, other than an agreement of lease or similar temporary measure, entitling such member, or his or her dependants, to the right of occupation of such immovable property or residence or any specified portion thereof.
| (b) |
A loan or guarantee by a fund, contemplated in paragraph (a), shall not be granted or furnished, respectively, after the commencement of the Pension Funds Amendment Act, 2001— |
| (aa) |
a first mortgage on the immovable property in respect of which the loan is granted; or |
| (bb) |
a pledge by the member concerned to the fund of the benefits to which the member is entitled in terms of the rules of the fund; or |
| (cc) |
both such mortgage and such pledge; |
| (ii) |
in respect of immovable property if the member concerned is liable to the fund in respect of a loan or guarantee granted or in respect of the member in respect of other immovable property; |
| (iii) |
unless, in the case of a loan granted by the fund, the rate of interest on the loan is equal to or exceeds the rate of interest which may from time to time be prescribed; |
| (iv) |
in the case of a loan granted to the member by some other person in respect of which a guarantee has been furnished by the fund, or in respect of a loan by the fund to the member, unless the capital sum in respect of any such loan together with interest is redeemable over a period not exceeding 30 years in equal weekly or monthly instalments: Provided that if such period in a particular case extends beyond the normal retirement date of the member concerned, the outstanding balance of the loan on that date must be able to be repaid out of no more than one third of the total value of the benefit due to the member at that date. |
| (c) |
A loan or guarantee contemplated in paragraph (a) shall not exceed, at the time it is granted or furnished, where it is secured in accordance with— |
| (i) |
paragraph (b)(i)(aa), 90 per cent of the fair value of the hypothecated immovable property concerned; |
| (ii) |
paragraph (b)(i)(bb), the lesser of the amount of— |
| (aa) |
the lowest benefit in terms of the rules which the member would receive on termination of his or her membership of the fund, nett of income tax as envisaged in section 37D(a); or |
| (bb) |
the fair value of the immovable property concerned, or |
| (iii) |
paragraph (b)(i)(cc), the lesser amount of— |
| (aa) |
the amount equal to the aggregate of 90 per cent of the fair value of the hypothecated immovable property concerned and the amount of the lowest benefit in terms of the rules which the member would receive on termination of his or her membership of the fund, nett of income tax as envisaged in section 37D(a); or |
| (bb) |
the fair value of the hypothecated immovable property concerned. |
| (d) |
The percentages referred to in subparagraphs (i) and (iii) of paragraph (c) may be increased to 100 per cent, subject to the furnishing to the fund by the employer of the member of an irrevocable guarantee in respect of so much of the loan or the amount of the guarantee as may exceed 90 per cent. |
| (e) |
For the purposes of this section "immovable property" includes a land tenure right as defined in section 1 of the Upgrading of Land Tenure Rights Act, 1991 (Act No. 112 of 1991). |
| (a) |
Where a transaction for the purchase of an immovable property is pending and a purchase price has already been agreed upon, or where such an immovable property was acquired by purchase not more than six months before the date on which the estimate is made, the fair value of the property shall not be fixed at an amount higher than the true purchase price of the property, as declared or to be declared by the parties concerned for transfer duty purposes; and |
| (b) |
where a transaction for the erection of, or additions or alterations to, or to maintain or repair a residence is contemplated, the estimate of the fair value of the immovable property shall not be fixed at an amount higher than the fair value contemplated in paragraph (a) plus an amount equal to the cost of such erection, additions, alterations, maintenance or repairs, as the case may be. |
| (5B) |
Notwithstanding anything to the contrary contained in the rules of a registered fund, such a shall not, directly or indirectly after the commencement of the Pension Funds Amendment Act, 2001— |
| (a) |
grant a loan to, or a guarantee in respect of, a member or make any of its funds available, whether by way of an investment or otherwise, to be utilised in any manner by the fund or someone else for a loan to a member or a guarantee on behalf of a member, other than— |
| (i) |
a loan contemplated in subsection (5) and which complies with the provisions of that subsection; and |
| (ii) |
a guarantee contemplated in subsection (5) and which complies with the provisions of that subsection; or |
| (b) |
grant a loan to, or invest in the shares of— |
| (i) |
a company controlled by an officer or a member of the fund or a director of a company which is an employer participating in the scheme or arrangement whereby the fund has been established; or |
| (ii) |
a subsidiary (as defined in the Companies Act), of such a first-mentioned company. |
[Section 19(5B)(b)(ii) amended by section 33(b) of Act No. 45 of 2013]
| (5C) |
A registered fund may, if its rules so permit, contribute to any other pension fund registered under this Act, or any fund of any kind whatsoever, which is conducted for the benefit of the employees of the said registered fund. |
| (a) |
A fund shall not without the prior approval of the registrar, directly or indirectly, acquire or hold shares or any other financial interest in another entity which results in the fund exercising control over that entity. |
| (b) |
The approval referred to in paragraph (a) may be given subject to such conditions as the registrar may prescribe. |
[Section 19(5D) inserted by section 33(c) of Act No. 45 of 2013]
| (a) |
The registrar may, under exceptional circumstances, and on such conditions and for such periods as he may determine, temporarily exempt any fund from compliance with any provision of subsection (5) or (5B)(a). |
| (b) |
[Section 19(6)(b) deleted by section 17(d) of Act No. 86 of 1984]
|
| (c) |
[Section 19(6)(c) deleted by section 11(a) of Act No. 64 of 1990] |
| (7) |
[Section 19(7) deleted by section 290, item 6(b) in Schedule 4, of Notice No. 853 of 2017 - effective 1 April 2018 (paragraph (h) of Notice 169 of 2018)] |
| (8) |
[Section 19(8) deleted by section 8(c) of Act No. 53 of 1989]
|
Protection of Businesses Act, 1978
