Regulatory Alerts2018-04-01
Friendly Societies Circular 30: Increase of Benefit Limitations and Exemption Thresholds
The South African Financial Services Board issued Circular 30 to implement amendments to the Friendly Societies and Financial Institutions Acts effective 1 July 1993. The directive establishes a maximum benefit cap of R5,000 for endowment and contingency insurance and R144 annually for annuities, mandating that any society exceeding these thresholds register as a formal insurance company. It further advises that the Registrar may exempt qualifying societies with annual incomes not exceeding R100,000 from specific statutory provisions under the Friendly Societies Act.
FINANCIAL SERVICES BOARD
446 Rigel Avenue South Erasmusrand 0181 Private Bag X238 Pretoria 0001 Tel (012) 347-0660 Int + 27-12-347-0660 Fax (012) 347-0221
Enquiries: Our ref: 12/12/1 Date: August 1993
CIRCULAR NO. 30 - FRIENDLY SOCIETIES
(To all Friendly Societies)
INCREASE OF LIMITATION ON CERTAIN BENEFITS AND INCREASE OF EXEMPTION LIMIT
The Friendly Societies Amendment Act, No. 44 of 1988 and the Financial Institutions Second Amendment Act, No. 104 of 1993 came into operation on 1 July 1993.
The definition of "insurance business" in the Insurance Act, 1943 was amended to make provision for a maximum payment of R5 000,00 (inclusive of bonuses) in any form of endowment insurance on the life of a person or in the event of sickness or other infirmity, accident, death or other contingency which is, in the opinion of the Registrar of Insurance, insurance business as ordinarily understood. The maximum annuity remains at R144 per annum. In other words, if your society grants benefits above these levels, the society must apply for registration as an insurance company.
Your attention is also invited to section 3(2)(a) of Act 25 of 1956 which stipulates that if the aggregate value of the income likely to be received by a society will not in general exceed during any year an amount of R100 000,00, the Registrar may on certain conditions, specified by him, exempt a society from the operation of all or any provisions of the Act.
Yours faithfully
[Signature]
REGISTRAR OF FRIENDLY SOCIETIES
(Sien keersy vir Afrikaans)
Board Members The Honourable Mr Justice D A Melamet (Chairman) Dr A S Jacobs (Deputy Chairman) P J Badenhorst (Executive Officer) R A Norton I B Skosana D J Malan Dr C J de Swardt Prof W L Mouton P J J van der Walt L A F H van Wouw J M Connolly R C Andersen