Eskom Conversion Act

1. In this Act, unless the context indicates otherwise- “Companies Act” means the Companies Act, 1973 (Act No. 61 of 1973); 5 “date of conversion” means the date determined in terms of section 3( I ) ; “Eskorn” means the juristic person referred to in section 2 of the Eskom Act and upon conversion means Eskom Holdings Limited; “Eskom Act” means the Eskom Act, 1987 (Act No. 40 of 1987); “Income Tax Act” means the Income Tax Act, 1962 (Act No. 58 “Minister” means the Minister of Public Enterprises; “security” means any bill of exchange, promissory note or instrument issued by Eskom as security for any loan negotiated by it; “Shareholder compact” means the performance agreement between Eskom and the government annexures thereto. as amended from time to be entered into of the Republic of South Africa, including of 1962); to time. Object of Act

2. The object of this Act is to convert Eskom into a public company having a share capital as contemplated in section 19( I)(a) of the Companies Act, with its entire share capital by the State. held I O 15 20 Conversion of Eskom 3. (1) Eskom is, with effect from a date determined by the Minister by notice in the Gccette. deemed to be a public company incorporated in terms of the Companies Act and is to be known as Eskom Holdings Limited from such date. (2) The provisions of sections 32, 44( l), 54(2), 59, 63(2), 64, 172 and 344(b) of the 25 Companies Act do not apply to Eskom. Effect of conversion 4. ( 1 ) Subject to the provisions of this Act, the provisions of the Companies Act apply to Eskom with effect from the date of conversion. ( 2 ) For as long as the State is the sole or majority shareholder in Eskom, sections 60, 30 66, 190 and 344(d) of the Companies Act do not apply to Eskom. (3) The conversion of Eskom does not- ( a ) affect the continued corporate existence of Eskom as from the date of its first establishment; ih) affect any of the rights, liabilities or obligations acquired or incurred by 35 Eskom, or on Eskom’s behalf, at any time before its conversion; and (L,) affect the terms and conditions of service of its employees. GOVERNMENT GAZETIE, 3 AUGUST 2001 CONVERSION ESKOM ACT, 2001 No. 22545 3 Act No. 13,2001 Powers and duties of Eskom

5. In addition to the powers and duties of Eskom contained in the memorandum and the articles of association and the Shareholder compact, Eskom- (a) may enter upon any land for the purpose of making plans and surveys thereof, but must give the owner at least seven days’ notice of such entry; (b) must pay compensation for any damage caused by its officers or employees in 5 the performance of their duties upon the land; (c) may, irrespective of whether or not the owner of the land agrees, transfer to its subsidiary companies any servitude or other similar right in terms of which Eskom may effect improvements on or over such land, by way of a deed of 10 cession attested by a notary; and (i) the relevant registrar of deeds must make such entries or endorsements in or on any relevant register, title deed or other document in the registrar’s office or submitted to the registrar as the registrar considers necessary to give effect to the provisions of this paragraph; 15 (ii) no fees or other levies are payable in respect of such entry or endorsement; and (iii) the provisions of section 13 of the Electricity Act, 1987 (Act No. 41 of 1987), do not apply to a transfer referred to in this paragraph. and Memorandum articles of association of Eskom 20 6. (1) The Registrar of Companies, appointed in terms of section 7 of the Companies articles of terms of section 63(1) of the Companies Act, but no fee is Act, must, on the date of conversion, register the memorandum and the association of Eskom in payable in respect of such registration. (2) The memorandum and the articles of association of Eskom must be as determined 25 by the Minister. (3) The Minister may publish such articles of association in the Gazette for public comment and must table them before Parliament. (4) The Minister must enter into a Shareholder compact with Eskom Holdings Limited. 30 ( 5 ) When entering into the Shareholder compact as well as in determining the articles of association, the Minister must take into account the following: (a) The developmental role of Eskom Holdings Limited; and (b) the promotion of universal access to, and the provision of, affordable electricity, taking into account the cost of electricity, financial sustainability 35 and the competitiveness of Eskom. Borrowings secured by Eskom’s revenue and assets 7. (1) All borrowings effected by Eskom and any interest or other costs due or to become due in respect thereof must, unless otherwise agreed between Eskom and the lender, be a first charge against all revenues and assets of Eskom and on all moneys 40 recovered or to be recovered by it. (2) (a) If any interest due in respect of any securities remains unpaid for three months after demand therefor in writing has been lodged with Eskom, the holder thereof may apply to a high court having and revenues jurisdiction for the appointment of a receiver of the assets referred to in subsection (1). 45 (b) The court may- (i) make such order and give such directions as in the circumstances it may deem necessary for the raising and payment of the moneys due; and (ii) in particular, order that any prices for electricity supplied or to be supplied be increased to meet the deficit, and for that purpose the receiver referred to in 50 paragraph (a) must exercise all such powers as Eskom might have exercised under the Eskom Act in respect of amending its prices for electricity, and the exercise of such powers does not require the sanction of any authority. (3) If such default in payment of interest in whole or in part continues for a further period of three months, the holder of the securities may apply to a high court having 55 jurisdiction for a declaration that the outstanding principal sum for the time being has become due, and the court may make such declaration, together with any consequential order or declaration. (4) In the event of default in payment of the principal sum of any security for one month after the date on which it is repayable, the provisions of subsections (2) and (3) 60 apply with the necessary changes.

1 No. 73545 .Act No. 13, ZOO1 GAZETTE, GOVERNMENT 3 AUGUST 200 I ESKOkl CONVERSION ACT. 2001 Taxation of receipts and accruals of Eskom and subsidiaries 8. (1) The provisions of section IO( I)(cAj of the Income Tax Act d o not apply in respect of the receipts and accruals of- ( a i Eskom: and f h ) any association, corporation or company contemplated in paragraph (a) of the definition of "company" in section I of the Income Tax Act, a majority of the shares of which are held by Eskom, if the operations of such association, corporation or company are ancillary or complementary to the objects o f Eskom contained i n its Memorandum and Articles of Association referred to in section 6. 12) ( a ) The Minister of Finance must, after consultation with the Minister and the XIinister of Minerals and Energy, determine the tax values of the capital assets owned by in subsection (l)(b) on 1 January 2000 for the Eskom and any company contemplated purpose of calculating any wear and tear or depreciation allowance as contemplated in the Income Tax Act. (6) The assets conternplated in paragraph (a) are, for the purposes of sections 1 1 ( e ) , 13C and I3 of the Income Tax Act. deemed to have been brought into use for the first time <lt a cost e q u d to the value determined in terms of paragraph (a). (3) For the purposes of the Income Tax Act- 5 1 0 15 ( c l ) Eskom; ('hi any subsidiary company of Eskom to which Eskom may transfer any asset, 20 liability, right or obligation or any business of Eskom; and (ci Eskom Holdings Limited, are. subject to such adjustments as may be necessary, deemed entity. to be one and the same (4) No tax, duty or levy is payable in respect of the transfer of any asset from Eskom to any subsidiary company contemplated in subsection (3)(bj. Regulations

9. The Minister may. by notice in the Gazette, make regulations which are necessary for the achievement of the objects of this Act. 30 Repeal of laws

10. The laws mentioned in the Schedule are repealed with effect from the date of conversion. Savings and transitional provisions 11. (1) Despite the repeal of the Eskom Act by section 10, anything done in terms of that Act which may be done under or in terms of this Act, continues to be valid and of force and effect. 35 (2) Any reference to Eskorn in the patents register, trade marks register, designs register, deeds register or any other register is with effect from the date of conversion deemed to be a reference to Eskom Holdings Limited. ( 3 ) The relevant Registrar must make such entries 40 or endorsements in or on any in the registrar's office or register referred to submitted to the registrar, as the registrar considers necessary. in subsection ( 2 ) , or other document (4) No fees or other levies are payable in respect of such entry or endorsement. ( 5 ) Any legal proceedings that were pending or could have been instituted against 45 Eskom prior to the conversion, may, despite such conversion, be continued or instituted against Eskom Holdings Limited, subject to any law governing prescription of debts. ( 6 ) Despite the provisions of subsection ( I ) the Electricity Council and the Management Board defined in section 1 of the Eskom Act cease to exist, and the terms of office of each of the members thereof terminate. with of conversion. effect from the date 50 (7) The termination of the terms of office of members of the Management Board does not atfect their rights in their capacity as employees of Eskom. Short title and commencement 12. ( I ) This Act is called the Eskom Conversion Act, 200 I , and comes into operation 55 on a date determined by the President by proclamation in the Gazetfe. ( 7 ) Section 8 is cleemzcl to have come into operation on I January 2000 GOVERNMENT GAZETTE, 3 AUGUST 2001 CONVERSION ESKOM ACT, 2001 Schedule No. 22545 5 Act No. 13,2001 No. and year of law No. 10 of 1985 Act No. 34 of 1985 Act No. 40 of 1987 Act No. 15 of 1991 No. 29 of 1991 Short title Transkei Corporations Act, Act 1985 Bophuthatswana Electricity Extent of repeal The whole The whole Eskom Act, 1987 Eskom Amendment Act, 1991 Bophuthatswana Electricity Act Amendment Act, 1991 The whole The whole The whole Act No. 69 of 1995 Eskom Amendment Act No. 126 of 1998 Act, 1995 The whole Eskom Amendment Act. 1998 The whole