Regulatory Alerts2018-03-31
Information Circular 3 of 2016: Filling of Vacancies on the Board of a Fund
The Financial Services Board of South Africa has prescribed a maximum 90-day period for pension funds to fill board vacancies under Section 7A(1A) of the Pension Funds Act. To ensure board decisions remain valid during this interim period, fund rules must explicitly authorize such actions while maintaining compliance with Section 7A(1) and maintaining a quorum. Funds are advised to amend their governing rules accordingly to prevent legal challenges to decisions made by partially constituted boards.
FINANCIAL SERVICES BOARD
Riverwalk Office Park Block B 41 Matroosberg Road Ashlea Gardens Extension 6 Pretoria South Africa 0081 PO BOX 35655 Menlo Park Pretoria South Africa 0102 Tel +27 12 428 8000 Fax +27 12 346 6941 E-mail info@fsb.co.za Toll free 0800 110443/0800 202087 Website: www.fsb.co.za
| ENQUIRIES: | Alta Marais | D. DIALLING NO.: | 012 428 8065 |
| OUR REF: | 12/12/25 | FAX: | |
| DATE: | 27 September 2016 | E-MAIL: | Alta.Marais@fsb.co.za |
INFORMATION CIRCULAR PF NO. 3 OF 2016
FILLING OF VACANCIES ON THE BOARD OF A FUND
1. Introduction
Section 7A(1A) of the Pension Funds Act, 1956 (“the Act”) determines that-
“The composition of the board shall at all times comply with the requirements of the rules of the fund and any vacancy on such board shall be filled within such period as prescribed.”
Notice No. 3 of 2016 prescribes the period within which a vacancy must be filled as a maximum of 90 days, calculated from the day the vacancy arises.
2. Rules of the fund
In order for a board of a fund to take a valid decision during the 90 day period when there is a vacancy on the board, the fund must continue to comply with section 7A(1) of the Act and the rules of the fund must specifically provide for such a decision to be valid.
For illustrative purposes, a fund may consider including the following in the rules of the fund:
“Even though a vacancy on the Board may arise, when a decision is taken during the period prescribed in section 7A(1A) of the Act, it will not make that decision invalid provided the fund still complies with the provisions of section 7A(1) of the Act.”
Board Members: AM Sithole (Chairperson) H Wilton (Deputy Chairperson) Z Bassa JV Mogadime Prof PJ Sutherland FE Groepe D Turpin HMH Ratshefola D Msomi I Momoniat O Makhubela (Alternate) Executive Officer: DP Tshidi
3. Decisions by a board not fully constituted
Provided there is compliance with section 7A(1) of the Act, the fund’s rules permit it and there is a quorum at meetings, the board may take valid decisions despite the vacancy on the board during the 90 day period.
Yours sincerely
[Signature] DUBE TSHIDI REGISTRAR OF PENSION FUNDS
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