Vol. 434 Cape Town 31 August 2001 No.
The Minister of Finance intends tabling the Municipal Finance Management Bill, 2001 in Parliament for consideration during the third parliamentary session of 2001. The Bill as approved by Cabinet ISpublished in accordance with Rule 241(c)of the Rules of the National Assembly.
The bill is tabled with Chapter 11 and certain clauses extracted frorn the main text. These are contained in Annexture A for information purposes. These clauses are subject to the passage of the constitutional amendment and will be included if the amendments have been passed by Parliament.
Interested persons and institutions are invited to submit written representation on the Bill to the Secretary to Parliament by no later than 1 October 2001.
Fax: (021) 462 2141 4 No.
Councillors responsible for financial matters -32.
Chapter 8 33.
Clauses 86 to 103 removed to Annexure A.
105. 106 I07 Treasury regulations, instructions and guidelines Audit committees Publishing of draft treasury regulations for public comment Departures from treasury regulations.
a corporate body.
Municipal Act, 27 "municipal manager" means a person appointed in terms of section 82 of the Municipal Structures Act; "Municipal Structures Act" means the Local Government: Municipal Structures Act, 1998 (Act No. I17 of 1998); "Nlunicipal Systems Act" means the Local Government: Municipal Systems Act, 45 3-000 (Act No. 33-of 2000); "National Treasury" means the National Treasury established by section 5 of the Public Finance Xlanagement Act: "organised local government" means an organisationrecognised in terms of section 2 (1) of theOrganisedLocalGovernmentAct(Act No.
(hi in relation to a vote, means when expenditure undera vote exceeds the amount appropriated for that vote. subject to section 38; or the allowed section; "ownership control", in relation to a company, co-operative, trUst. fund or any other corporate entity established in terms of uny applicable national or provincial legislation.
one of the main segments into which a budget of a municipality is divided for the appropriation of money for the different departments or functional areas which specifies the total amount that is appropriated for the purposes of the department or functional area concerned.
Theobject of thisAct is to securetransparency, accountabilityandsound manazement of the revenue, expenditure. assets and liabilities of the local government institutions to which this Act applies.
promote the object of this Act as set out in section 2; and lb perform the other functions assigned to the National Treasury in terms of this Act.
do anything further that is necessary to fulfil its responsibilities effectively.
and the relevant MEC in the province concerned may agree.
is subject to any limitations or conditions that the Minister may impose: and exercise of the delegated power 01-the performance of the delegated duty.
4 delegation in terms of subsection (1) (a) or (b) mayauthorisethe Director-General of the National Treasury. or the Director-General of the department concerned.
(5)The Minister may confirm.vary or revoke any decision taken in consequence of a delegation or sub-delegation in terms of this section, provided that no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
CHAPTER 3 25 7. I 1 Every municipality must open and maintain bank accounts in the name of the municipality, into whichall money received by the municipality must promptly be paid.
A municipality may not open a bank account abroad or with a banknot registered in terms of the Banks Act. 1990 (ActNo. 94 of 1990).
One of the bank accounts opened by a municipality. to be known as the primary bank account. must be designatedfor the receipt of all allocations to the municipalityin terms of theannualDivision of RevenueActandthosemadeto it by other municipalities.
Notification of opening of bank accounts relevant provincial treasury and the Auditor-General.
bj which of these accounts is its primary account.
(eJ for cash management and investment purposes in accordance with section 12 and within any framework that may be prescribed in terms of that section: or other(f)any for prescribed.
(2)Money may be withdrawn froma bank account in terms of subsection (1) (6J, IcJ, id), (e)or (f)without appropriation by the municipal council.
report of all withdrawals in terms of'subsection (1) (b),(c). (d),(e) or (f); and 25 (hi make the report available for public inspection ina prescribed manner.
notify the National Treasury, in writing.
notify the National Treasury, in writing, that it holds money as an investment for the municipality; and promptly disclose information regarding the investment whenso requested by the National Treasury, the relevant provincial treasury or the Auditor-General.
(2)A municipality may sell, transfer, or otherwise dispose of an asset other than an asset described in subsection (I) only after the council. in a meeting open to the public.
considered the fair market value of the asset and the economic and community v:liuebe to asset.
a municipal entit!
dispose of an!'
(i)another municipal it!
A municipal council must for each financial year, by \vay of an annual budget.
appropriate money for the requirements of the municipality.
annual Municipal budgets 25 16.
(3)When calculating. for the purpose of subsection (1) (bj.
hj realistic estimates of expenditure for that financial year.
projected finmcial hplications of that expenditure for future financial years.
interest 55 14 No.
(iii)borrowing for thepreviousfinancialyear:and municipal entities to the municipality.
my other information as may be prescribed, including any multi-year budget information. (-1) When an annual budget is tabled in the municipal council, the municipal manager must submit measurable objectives for each vote in the bud5et.
thedistrictmunicipality in whose area it falls. in the case of a local municipality; and the local municipalities in its area. in the case of a district municipality.
(-1) Any comments the National Treasuryor the relevant provincial treasury may wish to offer on thedraftbudgetmustbesubmitted to hemunicipalitywithin 40 days of receipt of the draft budget.
(5)The councillor for financial matters must as soon as the counci.
direct the municipal manager to prepare the final budget for the financial year.
table the budget in the council for appro~al.
(6)The councillor for financial matters must manage the budget process in such a way that the budget referred to in subsection (5)(b)is tabled in the council at least 30 days before the start of the financial year to which the budget relates.
(7)A municipality must approveits annual budget before the start of the financial year to u:hich it relates.
The annual budget of a municipality is approved by a decision taken by the council of the municipality with a supporting vote of a majority of the members of the council.
If a municipal council failsto approve an annual budget by the majority required in terms of subsection (1). the council must reconsider the budget and again vote on the budget or an amended version thereof within seven days of the meeting that failed to approve the budget.
The process provided for in subsection (2) must be repeated until a budget is approved.
If a municipal council has not approved an annual budget before the start of the financial year. the MEC for local government must direct the council to adopt the budget within 14 days.
If the municipal council has not approved an annual budget before the start of the financial year. funds ma.. with the approval of the MEC for local government; be withdrawn from themunicipal it.'^ bank accounts in accordance with this section for the requirements of the municipality. until the budgetis approved as provided forin this .4ct.
durinz any month. exceed 8 per cent of the total amount appropriated in the last approved annual budget for current expenditure.
(3)The funds provided forin subsection (1j are not additional to funds appropriated regarded as forming part of the funds appropriated ina subsequently approved annual budget for that financial)ear.
to provide for other matters that rnay be prescribed.
and (iii). rnay procide only for- ill) the appropriation of any net additional revenues that have become available.
(6)Section 18 (I) and (2)applies in respect of the approval of an adjustments budget, and in such npplication a reference in that section to an annual budget must be react LIS a reforence to an adjustments budget.
The municipal manager of a municipality must, ona monthly basis or as may be prescribed.
cover a prescribed reporting period; and be submitted within 10 days after the end of each reporting period.
(3)When a district municipality submitsits report, it must attach the reportsof local municipalities within its area that were submitted to it in terms of subsection (1) (c).
actualborTowings for that period, and for the financial year up to the end Of that period.
in the case of unauthorised expenditure.
authorised by the municipal council in an adjustments budget; or certified as irrecoverable and written of by the council; and in the case of irreglllar expenditure.is certitizd as irrecoverable and writtenOH by the council.
themunicipalmanagel-is liable for an unauthorised expenditure.
(3)If a political structure or functionar)* ofa municipality takes a decision which. if implemented. wouldor is likelyto result in an unauthorised or irregular expenditure. the municipal managel-is liable for any ensuing unauthorised or irregular expenditure unless the municipal manager has informed the relevant political structure or functionary. in writing. that the expenditure will or is likely to be unauthorised or irregular.
unauthorised expenditure. the Auditor-General musl inform the relevantMEC for local government as soon as this comes to the Auditor-General's attention.
(6)The writing off of any unauthorised or irregular expenditure as irrecoverable in terms of subsection (I) is no excuse in criminal proceedings against a person charged expenditure.
(7)The council of a municipality must ensure that irregular expenditure that occurred in the municipality and that ma): constitute a criminal offence are reported to the South African Police Service.
The National Treasury may regulate the application of this section by regulation in terms of section 104.
If an additional function or power is assigned to. or any other new obligation is imposed on, a municipality in term of national or provincial legislation. the functionary assigning he function or powel-. or imposing the obligation. must submitto the National Trcacur: and the h'iinister responsible for local government a memorandum giving at leastathreeyearprojection of thefinancialimplications of that function.
A municipality ma\. incur short term debt onlyin accordance with and subject to the pm\.isions of this Chapter.
18 No. 22645 GOVERNMENT GAZETTE, 31 AUGUST 2001 capitalneedswithin a financial year in anticipation of funds derivingfrom specific and enforceable grant or long term debt commitments.
A municipality may incur long-term debt only in accordance with and subject io the provisions of this Chapter.
capital cxpenditure on property, plant or equipment to be used for the purpose of achieving the objects of local government as set out in section 152 of the Constitution: or accordance with a prescribed framework.
costs of professional services directly related to the expenditure; and any other costs as may be prescribed.
where security is to be provided, the provisions ofsection 27 (4) have been complied with.
Security provided for any of its debt obligations.
incurring debt. ma\'-undertake to effect payment directly from moniesor sources that may become available and authorise direct access to suchsources to ensurepaymentof those obligations: undertake to deposit funds with the lender or a third party as security for the debt: agree to specific payment mechanisms or procedures to ensure exclusive or dedicatedpaymenttolenders, includingrevenueintercepts, paymentsinto dedicated accounts or other payment mechanisms or procedures; cede as securit, any categoryof revenue or rights to future revenue specified in the financing agreement or information statement contemplated in section undertake to have disputes resolved through mediation, arbitration 01-other dispute resolution mechanisms; and agree to such other arrangements as the municipality may consider necessary and Drudent.
must determine whether the assetor right with respect to which the securityis provided, is necessary for providing a minimum essential municipal service; and if so, must indicate the manner in which the availability of the assetor right for the provision of that service will be protected.
(5)A determination in termsof subsection (4)that an asset or right is not necessaryfor providing a minimum essential municipal service is binding on the municipality until the secured debt has been paid in full.
Any person involved in the borrowing of money by a municipality must.
discloseallinformation in thatperson'spossession or withinthatperson's knowledge that may be material to the decision of that prospective lender or a prospective investor: and take reasonable care to ensure the accuracy of any information disclosed.
the debt is disclosed in the municipality's consolidated financial statements, in the case of a municipality exercising sole ownership control over the entity: and the guarantee is authorised by the relevant municipal councilor councils in the mannersubjectthe provided Chapter.
in the case of a municipality with an executivecommitteereferred to in section 42 of theMunicipalStructuresAct.mustbe the mayor or, if the council has designated another councillor.
in the <;lse of's municipality that does not have cither a11executive conliilittee or an executive mayor, must be a councillor designated by the council.
Responsibilities of councillors for financial matters 15 32.
perform the other duties assigned by the council or in terms of this Act to the councillor for financial 25 matters.
The councillorfor financial matters may delegate in writing anyof the powers or duties entrusted to that councillor in terms of this Act to any other councillor of the municipality.
delegation(2) A in terms of subsection (1)- 30.
Themunicipalmanager of a nlunicipality is the accounting officer of the 40 municipality for the purposes of this Act, and is responsible for assuring compliance with this Act.
If the municipal manager is absent or otherwise unable to perform the functionsof office, or during a vacancy, the acting municipal manageris the accounting oflicer for the purposes of thisAct.and is responsible forassuringcompliancewith this Act.
is responsible for the effective. efficient.
spending is reduced as necessary when revenues are anticipatedto be less than projected in the budget.
(3)The councillor for financial matters must table in the council all statements and reports received from the municipal manager in terms of subsection(2) (a)and (bjat the first council meetingheldthe of the or report.
A municipality may not utilise a saking in the amount appropriated.
If a budget appropriates funds for specific purposes within a vote, the provisions of subsection (1) apply to those specific appropriations as if they were separate votes.
Llnd the relevant provincial treasury.
(I The municipal manager of a municipality may in writing delegate any of the powers or duties entrusted or delegated to the municipal managerin terms of this Act, to as by section 10 (2).
exercise of the delegated power or the performance of the delegated duty.
consequence of a delegation in terns of subsection (I). provided that no such variation or revocation of a decision may detract from any rights that may have accrued asa result 15 of the decision.
1 1 Every municipality must have a budget and treasury office.
staff allocated by the municipal manager to the chief financial officer: and any other persons contracted by the municipality for the work of the office.
must perform such budgeting, accounting. auditing. financial reporting. cash management, debt management, financial management and other functions as be may manager.by the 45 delegated municipal manager for the performance of the functions referred to in subsection (1).
24 No. 22645 GOVERNMENT GAZETTE, 31 AUGUST 2001 any person contracted by the municipality for the work of the office.
does not divest that chief tinancial officer of the responsibility concerning the delegated function.
The chkf financial oficer may confirm, vary or revokeanydecision tllkenin consequence of a sub-delegation in termsofsubsection (I). providedthatnosuch variation or revocation of a decision may detract from any rights that rnay have accrued as 3 result of the decision.
the provision of a municipal service in the municipalityor in an area of which the municipality forms part: or prescribed.
A municipal entity rnay be established only as providedfor in, and in accordance- with, the Municipal Systems Act.
A municipality may not assign regulatory powers and functions to a municipal entity.
For thepurposes of subsection (I) "establish"includestheacquisition of an ownership control interestin an existing company or other entity.
A list in terms of subsection (I) must be in the prescribed format and contain the prescribed particulars.
This Act, to the extent that it could be applied, applies to the governing body ofa multi-jurisdictional municipal service district established in terms of Part 4 of Chapter 8 ofthe, Municipal SystemsAct as if thatgoverningbody is amunicipalentity.
The municipalityor municipalities exercising ownership control over a municipal entity must exercise those ownership control pouersto ensure that the municipal entity complies with this Act 2nd the financial policies of the municipality or municipalities.
(2)A municipal entity may sell. transfer. or otherwise dispose of an asset other than an asset described in subsection (1) only after the councilof the municipality exercising sole orjojnt ownership control o\'er the municipal entity, in a meeting open to the public.
Oj considered the fair market valueof the asset and the economic and community value to be recei\.ed in exchange for the asset.
(3)A decision by a municipal council that a specific asset is not needed to providea minimum essential municipal service. may not be reversed by the municipality after that asset has been sold. transferred or otherwise dispose of.
This Part applies to all municipal entities which in terms of the legislation under which the entit!t has beenestablishedare required to have a governing board or body.
to effectively manage and guide the activities the entity.
(2)A person appointed or nominated for appointment by a municipal council as a member of a governing hoard or body must have 1-equisite skills and expertise in the services to be renderedas such a member.
is not an employee of the municipal entity concerned.
(4)T;lr number of councillcrs and the number of officials on a governing board or may body limit.
A person is appointed to the governing boal-d or body of a municipal entity in accordanceu, iththelegislation in tenns of whichtheentityhas been established. as modified by the provisions of this Act.
U'hene\.er it is necessary for a municipality to select a person for nomination or appointment as a member of a governing board or body.
through ad\,ertisements in the media circulating in the area of the municipal-ity.
the matter. taking into account the provisions of seclion 52.
The municipal council must make its selection from the list submitted in terms of subsection (2) (c).
affected and seek, withinthesphere of influence of thatgoverningboard or body, to prevent any prejudice to the financial interestsof the affected municipality or municipalities.
(2)A member of the governing board or body of a municipal entity may not use the position or privileges of, or confidential information obtained as, a member of the board or body, for personal gain or to improperly benefit another person.
(2)A councillor or official of a municipality may not receive compensation for serving on the governing board or body of a municipal entity under the soleor joint ownership control of that municipality.
Meetings of the governing boardor body of a municipal entity must be open to the public, includingthemedia, andsuchboard or bodymay not exclude thepublic. including the media, froma meeting, except when it is reasonable to do so having regard to the nature of the business being transacted.
does not ha1.e 3 chief executive officer.the governing board or body of the entity is the accounting authoriry for that entity.
in exceptional circumstances. approve or instruct that another official of the entity must he the accounting authority for that entity; or at any time withdraw an approval or instruction in terms of paragraph (a).
(I)A municipal entity must inform the Auditor-General promptly and in writing of anyapproval or instruction in terms of subsection (3) (a) andanywithdrawal of an approval or instruction in terms of subsection (3) (Oj.
(5)To the extent that the accounting authority of a municipal entity is in terms of this Act accountable to the municipality exercising sole or joint ownership control overthe entity. the accounting authority must discharge that responsibility through the municipal municipality.
must compile a budget annually and submit it to the entity's governing board or 'inody for approval.
(/I) must comply with any tax, levy. duty.
may be either to a specific individual or to the holder of a specific post in the entity; municipal does not divest the accounting authority of the responsibility concerning the exercise of the delegated poweror the performance of the delegated duty.
An accounting authority may confirm, vary or revoke any decision taken by an official in consequence ofa delegation in terms of subsection (l), provided that no such variation or revocation of a decision may detractfrom any rights that may have accrued45 as a result of the decision.
mustcomplywiththe provisionsofthis Act to the extent applicable to that official, including any delegations in terms of section 60; and is responsible for the management, including the safeguarding, of the assets and the management of the liabilities within that official's area of responsi-bility.
Whencomplyingwithsubsection (l), an official is bound by the system of financial management and internal control established by the accounting authorityof the municipal entity.
(/I) is consistent with the budget or budgets of the municipality or municipalities complies M.ith the other provisions of this Act.
Expenditul-e of a municipal entity must be in accordance with business plan appro\,ed by the council of the municipality exercising sole or joint ownership control over entity.
The accounting authority of a municipal entity must submit the business plan of the entity to the relevant municipality or municipalities for approval at least six months before the start of the financial year to which that budget relates.
any arrears owed by councillors to the municipality: and any other matters that may be prescribed.
30 No. 22645 GOVERNMENT GAZETTE, 31 AUGUST 2001 submit an auditreport on those statements to the municipal manager within three months of receipt of the statements.
copies of the annual report, the financial statements and the audit report; and particulars of any corrective action t&en in response to the findings of the audit report.
The financial statements and audit report must be made public when tabled in the municipal council.
any contingent liabilities for the municipality or municipalities exercis-ing ownership control over the entity; and matters that may be prescribed; dl if the municipal entity is a company, include the financial statements of any subsidiaries.
The accountin authority of a municipal entity must, within one month after the endof the financial year. submit the financial statements prepared in terms of section 68 (I) (b)to-auditors(a) the of the entit! for auditing?
report on those statements to the municipal entity.
Theaccountingauthority of a municipal entity must, within onemonthafter receivingthereport of theauditors on thosefinancialstatements, submit tothe municipality or municipalities exercising ownership control over that entity, and if the Auditor-General did not perform the, also to the Auditor-General?
the financial statements for that financial year; and the report of the auditors on those statements.
all municipal entities under the sole ownership control of the municipal-ity.
any arrears owed by councillors to the municipality; and any other matters that may be prescribed.
The municipal manager of a municipality must, within two months after the end of the financial year, submit the consolidated financial prepared in terms of section 7 I (1) (b)to the Auditor-General for auditing.
submitanauditreporton those statements to the municipality within three months of receipt of the statements.
The municipai manager.
table in the municipa!
copies of the annual report.
10 attend such meetings for the purpose of responding to questions concerning the financial statements and audit report; and submitcopies of theminutes of thesemeetingstotheAuditor-General, the relevant provincial treasury and the relevant provincial department.
(4)The consolidated financial statements and audit report must be madepublic when tabled in the municipal council.
The Auditor General must. without delay. submit copies of a municipality's financial statements or consolidated financial statements, and the audit report on those statements to the relevant provincial legislature.
A provincial legislature may deal with the documents referred to it in terms of subsection (I) in accordance with its constitutional powers.
If the municipal managerfails to submit financial statements to theAuditor-General in terms of section 66 (I) or 72(1).
mayissueaspecialreport on the delay to the relevant provincial legislature;: Ind must comment on u, hcther there are grounds for financial misconduct or criminal sanctions: and government. may withhold the transfer of funds from the National Revenue municipality.
The annual financial statements of all municipalities must annually be audited by the Auditor-General as required by section 188 of the Constitution.
Act. 1995 (Act 12 of 1995).
The Auditor-General must render an opinion on compliance with this Act.
National Revenue Fund to the municipality.
Auditors' Act; 1991 (Act No. 80 of 1991), as an accountant and auditor, and engayed in public practice as such.
may appoint any person referred to in subsection (I) (b)as its auditor: and municipality or municipalities exercising ownership control over it.
either on own initiative or at the request of the municipalit:.
Auditor-General 1995 (Act No. 12 of 1995).
An auditor appointedin terms of section 80 (2) (a)or (3) (b)must perform the functions of oflice as auditor in terms of legislation applicable to that person as auditor.
An auditor appointed in terms of section 80 (2) (a) or (3) (b)may consult the Auditor-General or anyperson in theOffice of the Auditor-Generalconcerning any_ matter relating to the auditing of the municipal entity concerned.
the performance information furnished in terms of subsection 68.
Investigations and special audits by Auditor-General interest or upon the receipt of a credible complaint.
(2)The Auditor-General may appoint a person to carry out an investigation or special audit in terms of section (1) on behalf of the Auditor-General.
The Auditor-General may claim the reasonablecost of performing the duties and exercising the powers in terms of this section from the municipal entity concerned. or, in the case of non-payment by themunicipal entity, from themunicipalityor municipalities exercising ownership control over the municipal entity.
Accountability of municipal entities legislatures on specific and general findings regarding the accountability of municipal entities.
A. Its form and content may change depending on the adoption and final wording of a proposed sections will be inserted upon the approvalof the constitutional amendments.
guidelines applicable to municipalities and municipal entities.
theadministration of this Act; and any other matter that may facilitate the application of this Act.
The National Treasury mayby regulation determine that a contravention of, or failure to comply with, a specific regulation in terms of subsection (I) is an offence and 20 thatapersonfoundguilty of such an offence is liable to an appropriate fine or to imprisonment not exceeding one year.
(v)category of officials.
Audit committees 40 105.
consist of at least three personsof whom at least the majority may not be in the employ of the municipalityor municipal public entity, as the case may be;and meet at least twice a year.
(2)A single audit committee may be appointed afordistrict municipality and the local 45 municipalities within that district municipality.
Draft regulations in terms of section 104 must be published for public comment in the national Government Gazette before their enactment.
The National Treasury mayon good grounds approve a departure from a treasury regulation or instruction or any condition imposed in terms of this Act.
fails to compl' with a requirement of section 22. 35, 36. 39, 65 or 71: or makes or permirs an unauthorised or irregular expenditure?
An official of a municipality to whom a pouzer or duty is assigned in terms of section 40 commits an act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty.
fails to comply a of section 58, or 68; or with 59 requirement makes or permits an irregular expenditure.
(3)An official of a municipal entity to whom a power or duty is assigned in terms of section 60 commitsan act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty.
(4)Financial misconduct is a ground for dismissalor suspension of, or other sanction against. a member or personreferredto in subsection (2) or (3)despiteanyother legislation.
Acharge of financial misconductagainst a municipalmanager or an official referred to in section 108 (2)or 109 (2)or an accounting authority or a member of an accounting authority or an official referred to in section 109 (3). must be investigated, heard and disposed of in terms of the statutory or other conditions of appointment or employment applicable to that municipal manager or authority, or member or official. and any regulations made by the Minister in terms cif section 1I 1.
sanctions imposed by the board must be reportedto the National Treasury.
A municipal manager of a municipality is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that municipalmanagerwilfully or in a grosslynegligentwayfails to complywith a provision of section 22, 35, 36 or 39.
An official of a municipality or municipal entity to whom a power or duty was delegated in terms of section 40 or 60, is guilty of an offence if that official wilfully or in a grossly negligent way fails to comply with a condition of the delegation.
A councillor of a municipality is guilty of an offence and liableon conviction to a fine, or to imprisonment foraperiodnotexceeding five years, if that.
dl makes a withdrawal in contravention of section 11.
No person is liable in respect of anything done in good faith under this Act.
The Minister, by notice in the nationalGovernment Gaxtte, may exempt any municipality or municipal entity fromany specific provision of this Act for a period and on conditions determined in the notice.
kind of municipality. which ma'.
category of municipal entities.
Anything donein terms of a provision repealed by section 116 (1). which can be done in terms of a provision of this Act, must be regarded as having been done in terms of this Act.
(2)All municipalities must within three monthsof the date on which this section takes effect.
other information as may be required by the National Treasury.
If a municipality or a municipal entity or a subsidiary of a municipal entity holds an interest in any companyor other entity in contravention of section 14, it must dispose of such interest within two yearsas from the date on which this Act took effect.
Government Transition Act. 1993 (Act 209 of 1993). and section17 (d)of the Promotion of Local Government Act are hereby repealed.
UBI interfere in theactions of the municipalmanagerrelating to the appointment.promotion.discipline.
6A. (1) A councillor must promptly and diligently pay all rates, tariffs, rent and other money due to the municipality.
The municipal manager must notify the speaker of the counciland the MEC for local government in writing if a councillor is in arrear with any of these payments for a period of longer than 30 days.
EA. (I) If amunicipalmanager, on reasonablesuspicion, is of the opinionthat a provision of this Code hasbeenbreached.
This Act is called the Local Government: Municipal Finance Planagement Act, 1001, and takes effect on 1 July 7002 except those provisions determined by the Minister by notice in the national Government Ca:etre, which will takz effect on a date determined in the notice. (2) Different dates mayinterms of subsection (1) be determined for diEerent provisions of the Act. (3) TheMinister may by notice in the national Government Gazette phase in the 15 application of the provisionsof this Act, and determine different dates on which different provisions of this Act will become applicable to municipalities of different categories, types or kinds.
Local government financial management is currently contained in section OG of the LocalGovernmentTransitionAct, Act 209 of 1993 (LGTA). Thissectionwhich regulated n~unicipal finances during the transitional phase will be replaced by this Bill. As such the Bill is a critical element in the final transformation of local government that is currently underway within the policy framework established by the White Paper on Local Government and the various pieces of legislation that emanated from the White Paper.
To put in place a municipal borrowing framework.
Chapter 1 provides definitions of key terms and concepts used in the Bill, outlines the scope of the legislation. and determines the conditions under which amendmentsto the legislation may be made.
Chapter 3 sets out conditions for municipal revenue and investments. It requires each municipality to establish bank accounts into which all monies received by municipalities must be paid. The rr, l. Inicipal manager is made accountable for these accounts and must ensure compliance with the relevant requirements in the legislation. Various procedures are outlined for the control, withdrawal and investment of funds. The National Treasury is granted powers to prescribe a framework for municipal cash management and the management of investments by municipalities.
liabilities, and reporting. Written employment contracts and performance standards are required for the municipal manager. Part 2 of the Chapter sets out conditions for the delegation of powers and duties by municipal managers to other officials and outlines the implications this has for such other officials.
Chapter 8 requires that municipalities establish Treasury and Budget Offices, under control of a chief financial officer, who, in turn, are enabled to delegate some specific responsibilities to officials who report to the chief financial officer.
Chapter 9 allows municipalities to retain or establish a variety of municipal entities in terms of other relevant legislation, but also makes it possible for statutory and regulatory limitations and requirements to be imposed on such entities. These conditions concern accounting, auditing.assettransfers, debtmanagement, governance, reporting and disclosure, decision-making, mandates and operational scope, planning and budgeting and investments. Every municipal entity is required to have an accounting authority who will be accountable for the execution of such conditions.
Note: Sections 56 to 103 in Chapter 11 has been removed from the main text and canbe located in Annexure A. The explanation below serves as information on the content. Changes may be affectedto this chapter and is subject to thepassage of the constitutional amendments.
Chapter 11 defines the approach and procedures to be followedin the event of financial emergencies within the local sphere. It provides for a Municipal Financial Emergency Authority (MFEA) to overseetheadministration of municipalities in financial emergency, with a view to normalising the financial affairs of such municipalities. The chapter further specifies procedures for the appointmentof an Executive Oficer for the hlFEX by the Minister of ProvincialandLocal Government, forthedeclaration.
managementandterminationof; i financialemergency. for a recoveryplan in a municipality as well as for extraordinary measures should the measures taken in terms of the recovery plan be insufficient. It giW specific powers to the courts in this regard and also outlines the powers and duties of the EO of hlFEA and of administrators of municipalities declared to be in a financial emergency. Specific provision is made for stepsrelated to financial emergencies in cases wheretheboundaries of theaffected municipaiitics have been re-demarcated in terms of the Municipal Demarcation Act.
Chapter 14 provides for miscellaneous aspects. It limits liability in respect of anything done in goodfaith in terms of thelegislation, allowstheMinistertoexempt municipalities and municipal entities from specific provisions of the legislation, and sets out transitional arrangements for the phasing in of the legislation.
Conclusion The legislative reforms and transformation framework as articulatedin the White Paper on Local Government is incomplete without a firm foundation for financial managementreforms. TheMunicipalFinanceManagement Bill provides sucha foundation for orderly and sound financial management principles and practices in the local sphere of government.
Appointment of administrator for municipality..
The process provided for in subsection (2) must be repeated until a budget is approved, subjectto any dissolutionof the council in terms or of the of section 100 139 Constitution on account of the council's failure to approve its budget.
..,jailing which steps in terms of section 139ofthe Constitution may be taken against the council.
(4)A municipaliQ in respect of which a financial emergency has been declared, may incur long term debt to support financial restructuring, if so provided in the approved recovery plan.
agree to restrictionson debt the municipality may incur in future until such debt is settled.
Note: This Chapter has been removed from the main text. Its form and conteni may change depending on the passage of the constitutional amendment.
(1)A Municipal Financial Emergency Authority is hereby established as an institution outside the public service but within the public administration as envisaged in section 195 of the Constitution.
(2)The Emergency AuthoriQ is a juristic person.
engage in anylawful activity, whether alone or together withanyother person; and do anything that is incidental to the exercise of any of its powers.
The Minister responsiblefor local government, acting with the concurrence of the Minister of Finance, must appoint a person as the Executive Oficer of the Emergency Authority.
for an agreed term not exceedingjve years, but which is renewable; and on termsandconditions set out in a written employment contract which must include terms and conditionssetting performance standards.
is responsible for the performance by the Authorityof itsfunctions and the exercise of its powers; and takes all decisionsof the Authority in the performanceof its functions and the exercise of its powers, except those decisionsof the Authority takenin consequence of a delegation or instruction in terms of section94.
vacancy in the ofice responsible for local government may designate another employeeof the Emergency Authority, or a person seconded to the Authority, to actas Executive Oficer.
the Executive Oficer of the Authority; and persons in the service of or seconded to the Authority.
Anemployee of an organ ofstate may be seconded to the Emergency Authority by agreement between the Authority and such organof state.
The Emergency Authority is regarded to bean employer for the purposes ofthe Government Employees' Pension Law, 1996 (Proclamation 21of 1996), in regard to employees who elects to become members of the Government Employees' Pension Fund.
any government grants made to it; and any other money legally acquired by it.
The Emergency Authority may accept donations but only with the approval of the Minister responsible for local government.
is subject to the limitations or conditions that the Executive Oficer may impose; and does not divest the Executive Oficer of the responsibility concerning the exercise of the delegated power or the performanceof the delegated duty.
consequence of adelegation interms of subsection (I), provided that no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
the municipality's actual current expenditure have exceeded actual current revenue for at least the three preceding financial years; or percentage of actual operating revenues in the most recent financial year for which financial statements have been prepared.
at least one of the conditions listed in subsection (2) exist; and impedes the municipality from meeting its obligations.
the Minister responsible for local government.
If the courtdeclares that a municipality isin ajnancialemergency, it may order that legal proceedings by any creditor and the execution of any process against the rnznicipality be stayed for a period not 90days to allow for the appointment exceeding of an administrator and the preparation of a recovery plan for the municipality.
The Emergency Authority must give eflect to a court order issued in terms of section 95 (5)and promptly appoint an administrator for the municipality.
(2)The Emergency Authority must determine the compensation of the administra-tor, and may require that the compensation and expenses ofthe administrator be paid by, or recovered from, the municipality.
(3)A person appointed as an administrator tnust have appropriate jnnncial and management experience and skills to address any problems underlying a jnancial emergency.
the municipality's creditors, following a procedure that may be prescribed.
identify whichof the administrator'spowers referred to in section96 may be used in implementing the plan; and provide for stakeholder input, if appropriate.
submitacopy of the recovery plan tothemunicipality, theEmergency Authority and the parties involved in the court proceedings in which the financial emergency was declared; and allow public access to the recovery plan in the prescribed manner.
Councillors, o@cials and staff of the municipality must co-operate with the administrator in investigatingthe jnancial emergency andindevelopingand implementing the recovery plan.
(6)The Emergency Authority mustapprove the planif it complies with subsection (3).
(8)Reports must be in theprescribed form.
(9)(a) The administrator may amend a recovery plan as the tleed may arise.
allow public access to the amendment in the prescribed maliner.
9s. (1)The administrator appointed for a municipality has access to any structure, functionary, oficial, premises, documents orrecords of the municipality.
To the extent permitted in the recovery plan and subject to subsection (3)and any other applicable legislation, the administrator may exercise on behalf of 'the municipality any of the municipality's executive or legislative power necessary to restore the municipality to a soundjnancial and fiscal position.
may provide for the suspension of the remuneration and other benefits of members of the council or oficials should they fail to co-operate in the implementation of the recovery plan.
When exercising the powers permitted in the recovery plan, the administrator must consider the least intrusive practical meansto effectively address the financial emergency, allowing the structures and functionariesthe municipality to act where of they can and are willing do so in a timely and responsible manner.
the applicant in the application to declare a financial emergency; or a creditor of a prescribed amount.
to the MEC.
to the Minister responsible for local government; and in the prescribed mannerto organised labour.
(2)=Inautomatic extension in terms of subsection (I) (a) may be terminated in accordance with section 99 at any time.
demonstrates to the satisfaction of thecourtthatfinancial, jscal, or management conditions are such that ajnancial emergency will also exist in the newly established municipality.
tosuspendtheobligations of themunicipality to its creditors until the declaration of thejnancial emergency is terminated; or to terminate the obligations of the municipality to its creditors, and to settle claims proportionally, takinginto account the preference of claims.
to the Minister for local government: and in the prescribed manner to organised labour.
the municipality cannot meet its obligations to its creditors; and all assets and rights not necessary to provideminimum essential municipal services have been liquidated for the benejit of meeting creditors' claims.
If the court grants an application referred to in subsection (I), it must give preference to the rightsof secured creditors as to assets or rights with which they are secured, provided that such security was given in good faith and at least six months priortoanyapplicationinterms of section93 for adeclaration of financial emergency.
all assets and rights not necessary to provide minimurn essential municipal services have been liquidated for the benefit of meeting creditors' claims; and all employees have been discharged except those that are aflordable in terms of reasonably projected revenues.
If the court grants an application referred toin subsection (l),it must-give preference to the rightsof secured creditors as to assets or rights with which they are secured, provided that such security was given in good faith and at leastsix months prior to any application in termsof section 93for a declaration of$nancial emergency; and treat unsecured claims as concurrent andorder that such claims be settled proportionally.
obstructs, orfails to co-operate with, an administrator in the fulflment of the administrator's duties under this Act?
"I 7A. Municipal Financial Emergency Authority".