Conversion of SASRIA Act

4 December 1998 No. 1581.

4 Desember I998 It is hereby notified Act which following information:- that the President has assented is hereby published to the for general Hierby word bekend gemaak dat die President keuring geheg het aan die onderstaande Wet wat hierby algemene inligting gepubliseer word:- sy goed- tt’r NO. 134 of 1998: Conversion of SASRIA Act, 1998. No. 134 van 1998: Wet op die Omskepping van SASRIA, 1998. 2 No. 19555 GOVERNMENT GAZETTE, 4 DECEMBER 1998 Act No. 134,1998 CONVERSION OF SASRIA ACT, 1998 (English text signed by the President.) to 24 November 1998.) (Assented ACT To provide Association of the South African Special Risks Insurance for the conversion into a public company, with a share capital, and for connected matters. PREAMBLE Recognising incorporated damage that the South African Special Risks Association (“SASRIA”) was in 1979 in terms of the Companies Act, 1973, to provide insurance against to property caused by political acts; Recognising that, in terms of the, Reinsurance SASRIA’s main business was extended and thereupon property caused by defined political acts and non-political public disorder), as well as loss suffered by moneylenders (“special risks”); covered of Damage and Losses Act, 1989, to acts (such as riots, strikes and loans in respect of mortgage loss of or damage Recognising that, due to the short-term insurance industry not being prepared underwrite reinsurer of last resort; the risk in question, the Government agreed, in the public interest, to to act as Recognising that the Government conferred monopoly status on SASRIA by allowing it to be the sole supplier of insurance cover for special risks in the Republic; Recognising that SASRIA was exempted from tax, until reserves, which it as a section 21 company the 1996 tax year and as a is result thereof has accumulated to distribute; and not allowed substantial Recognising that, as a result of restrictions to normalise the short-term in the Companies Act, 1973, the industry as regards insurance restructuring special risks could not commence, of SASRIA B E IT ENACTED follows:- by the Parliament of the Republic of South Africa, as ARRANGEMENT OF SECTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Il. Definitions Purpose of Act Conversion of SASRIA Effect of conversion Share capi ta1 Minister’s Reserves Termination Disposal of State’s shareholding Repeal of Act 56 of I989 Short title rights and duties of existing agreement with SASRIA 10 4 No. 19555 GOVERNMENT GAZE-I-l-E, 4 DECEMBER 1998 Act No. 134,1998 CONVERSlON OF SASRIA ACT, I998 Definitions

1. In this (i) Act, unless the context i ndicates otherwise- the agreement which (ii) (iii) (iv) (v) (vi) (vii) to in referred 5 10 “Agreement” means the Minister has, in terms of section 2 of the Reinsurance of Damage and Losses Act, I989 (Act No. 56 of 1989), entered into with SASRIA before this Act took effect; “Companies Act” means the Companies Act, 1973 (Act No. 61 of 1973); “Company” means section 3; “Minister” means “SASRIA” means incorporated “short-term (a) the Minister of Finance; the South African Special Risks Insurance Association, in terms of section 21 of the Companies Act; insurance the public company, SASRIA Limited, in section that participates l(1) of the Insurance Act, insurance every registered 1943 (Act No. 27 of 1943), business for special risks; and in the Republic by the Committee the person appointed terms of section 60(l)(g) of that Act as being authorised Committee’s behalf and on behalf of underwriters “special risks” means “loss in respect of a mortgage damage to property” as defined in section 1 of the Reinsurance of Damage and 20 Losses Act, 1989, including consequential that Act. at Lloyds; loan” and “loss of or loss referred to in section 2(a)(ii) of in of Lloyds to act on that industry” means- insurer as defined in short-term (b) 15 Purpose of Act

2. The purpose of this Act is- (Q) (b) to convert SASRIA into a public company, having a share capital, as described in section 19 of the Companies Act, with the shares to be held by the State; to provide entitling Company; and regarding to dispose of all or any of the State’s shareholding of the Company by in the flexibility the Minister the future restructuring (c) generally, to ensure the orderly restructuring of the State’s role in the short- industry as regards special risks and to reduce the State’s risk term insurance exposure. Conversion of SASRIA 25 30

3. From a date determined by the Minister by notice in the Gazette, SASRIA is converted described into a public company. known as SASRIA Limited, having a share capital, as 35 in section 19 of the Companies Act. Effect of conversion 4. (1) The provisions of section 29 of the Companies Act, excluding the payment of fees, apply requiring company, having a share capital, (2) No stamp duty is payable to the conversion of SASRIA those provisions into a public in accordance with section 3 of this Act. 40 in terms of the Stamp Duties Act, 1968 (Act No. 77 of in section 5(l)(a) of 1968). in respect of the issue of the ordinary share as contemplated this Act. (3) The conversion of SASRIA into a public company, having a share capital, does not affect any obligation in terms of the Income Tax Act, 1962 (Act No. 58 of 1962). 45 Share capital 5. ( 1) Upon the conversion of SASRIA into a public company, the Company has- (a) a share capital of RI, represented by one ordinary share with a nominal value of RI, held by the State; and 6 No. 19555 GOVERNMENT GAZETTE, 4 DECEMBER 1998 Act No. 134,1998 CONVERSION OF SASRIA ACT, 1998 (b) the State as its only member. (2) While the State is the sole or majority shareholder in the Company, sections 66, 190 and 344(d) of the Companies Act do not apply to the Company. Minister’s rights and duties 6. (1) The Minister exercises the rights and performs the duties of the State as member 5 of, and shareholder in, the Company. (2) While the State is the sole member of, and sole shareholder in, the Company, the Minister may, after consultation with the short-term insurance industry- (u) alter the memorandum subsection appoint (b) (c) do anything necessary (3); and articles of association of the Company, subject to 10 the board of directors of the Company; and to give effect to the conversion of SASRIA into a public company and to restructure (3) The Minister may not alter the Company. the Company’s main business for special risks other than to that of short-term short-term special risks. insurance Reserves of carrying on reinsurance for 15 7. (1) Within six months after the conversion of SASRIA into a public company, the Minister must determine- (a) (b) (u) (6) the percentage of the Company’s Company a short-term the percentage of those reserves which is not essential to do its main business as a short-term for special risks; and reinsurer current reserves which is essential for the 20 insurer for special risks or as (2) Before making a determination in terms of subsection consult with the board of directors of the Company; take into the result of an independent Minister for the purposes of that subsection_ for that purpose. (l), the Minister must- and 25 actuarial assessment obtained by the (3) While the State is the sole member of, and sole shareholder in, the Company, the Minister- (a) may declare a dividend terms of subsection (l)(b); and to be paid from any excess reserves determined in 30 (b) must use the proceeds of that dividend to reduce state debt. Termination of existing agreement with SASRIA 8. (1) If the Minister terminates the Agreement in terms of clause 6 of the Agreement- (a) (b) of the Republic the Government in terms of is released section 2 of the Reinsurance of Damage and Losses Act, 1989 (Act No. 56 of 1989), with effect from the date as stipulated and sections 3 and 4 of that Act, despite the termination of the Agreement, applicable as if the Agreement had not been terminated. from its liabilities in the Agreement; remain (2) Subsection (l)(b) does not affect the Government of the Republic’s reinsurance obligations referred to in clause 6.3 of the Agreement. (3) Subsection lapses when Losses Act, 1989, takes effect in terms of section 10 of this Act. the repeal of the Reinsurance (l)(b) of Damage and Disposal of State’s shareholding 35 40 45

9. The Minister must, after consultation with the short-term in any other way dispose of the State’s shareholding shareholding. insurance industry, sell or in the Company or part of its 8 No. 19555 GOVERNMENT GAZE-ITE, 3 DECEMBER 1998 Act No. 134, 1998 CONVERSION OF SASRIA ACT, 1998 Repeal of Act 56 of 1989

10. The Reinsurance of Damage and Losses Act, 1989 (Act No. 56 of 1989), and the Reinsurance of Material Damage and Losses Amendment Act, 1990 (Act No. 65 of 1990), are repealed with effect from a date determined by the Minister by notice in the Gazette. 5 Short title

11. This Act is called the Conversion of SASRIA Act, 1998.