| (1) | Subject to the provisions of subsections (3), (3A) and (4), the board of directors of a bank and controlling company shall appoint at least three of its members to form and serve on an audit committee. |
| (2) | The audit committee shall— |
| (a) | assist the board of directors— |
| (i) | in its evaluation of the adequacy and efficiency of the internal control systems, accounting practices, information systems and auditing processes applied within that bank or controlling company, as the case may be in the day-to-day management of its business; |
| (ii) | to facilitate and promote communication, regarding the matters referred to in subparagraph (i) or any other related matter, between the board of directors and the executive officers of, the auditor appointed under section 61 or 62 for, and the employee charged with the internal auditing of the transactions of, the bank or controlling company, as the case may be; and |
| (iii) | to introduce such measures as in the committee's opinion may serve to enhance the credibility and objectivity of financial statements and reports prepared with reference to the affairs of the bank or controlling company, as the case may be; |
[Section 64(2)(a)(iii) amended by section 33(a) of Act No. 22 of 2013]
| (aA) | in accordance with section 90 of the Companies Act, nominate a registered auditor who is independent of the bank or controlling company for appointment as an auditor of the bank or controlling company, as the case may be; |
[Section 64(2)(aA) inserted by section 33(a) of Act No. 22 of 2013]
| (aB) | determine the terms of engagement of, and the fees to be paid to, the auditor; |
[Section 64(2)(aB) inserted by section 33(a) of Act No. 22 of 2013]
| (aC) | ensure that the appointment of the auditor complies with the provisions of the Companies Act and any other legislation relating to the appointment of auditors; |
[Section 64(2)(aC) inserted by section 33(a) of Act No. 22 of 2013]
| (aD) | determine, subject to the provisions of the Companies Act, the nature and extent of any non-audit services that the auditor may provide to the bank or controlling company, as the case may be, or that the auditor shall not provide to the bank or controlling company, or a related company as defined in the Companies Act; |
[Section 64(2)(aD) inserted by section 33(a) of Act No. 22 of 2013]
| (aE) | pre-approve any proposed agreement with the auditor for the provision of non-audit services to the bank or controlling company, as the case may be; |
[Section 64(2)(aE) inserted by section 33(a) of Act No. 22 of 2013]
| (aF) | prepare a report, to be included in the annual financial statements for that financial year— |
| (i) | describing how the audit committee carried out its functions; |
| (ii) | stating whether the audit committee is satisfied that the auditor was independent of the bank or the controlling company, as the case may be; and |
| (iii) | commenting on the financial statements, the accounting practices and the internal financial control of the bank or the controlling company, as the case may be; |
[Section 64(2)(aF) inserted by section 33(a) of Act No. 22 of 2013]
| (aG) | receive and shall appropriately deal with any concerns or complaints, whether from within or outside the bank or controlling company, as the case may be, or on its own initiative, relating to— |
| (i) | the accounting practices and internal audit of the bank or controlling company; |
| (ii) | the content or auditing of the financial statements of the bank or controlling company; |
| (iii) | the internal financial controls of the bank or controlling company; or |
| (iv) | any other related matter; |
[Section 64(2)(aG) inserted by section 33(a) of Act No. 22 of 2013]
| (aH) | make submissions to the board of directors on any matter concerning the accounting policies of, financial control of, records of and reporting by the bank or controlling company; |
[Section 64(2)(aH) inserted by section 33(a) of Act No. 22 of 2013]
| (aI) | perform any other function determined by the board of directors, including the development and implementation of a policy and plan for a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes within the bank or controlling company; and |
[Section 64(2)(aI) inserted by section 33(a) of Act No. 22 of 2013]
| (b) | perform such further functions as may be prescribed. |
| (2A) | Nothing in this section precludes the appointment by a company at its annual general meeting of an auditor other than one nominated by the audit committee: Provided that if such an auditor is appointed, the appointment is valid only if the audit committee is satisfied that the proposed auditor is independent of the company. |
[Section 64(2A) inserted by section 33(b) of Act No. 22 of 2013]
| (2B) | In considering whether, for the purposes of subsections (2)(aA) and (2A), a registered auditor is independent of a company, the audit committee of that company must— |
| (a) | ascertain whether or not that auditor receives any direct or indirect remuneration or other benefit from the bank or controlling company, except— |
| (ii) | for rendering such other services to the bank or controlling company as are permitted in terms of subsection (6)(d); |
| (b) | consider whether or not the auditor's independence may have been prejudiced— |
| (aa) | previous appointment as auditor; or |
| (bb) | consultancy, advisory or other work undertaken by the auditor for the bank or controlling company; and |
| (ii) | by taking into account any other criteria relating to independence or conflict of interest that are prescribed by the Independent Regulatory Board for Auditors established by the Auditing Profession Act, 2005 (Act No. 26 of 2005), in respect of the bank or controlling company and, if the bank or controlling company is a member of a group of companies, any other company within that group. |
[Section 64(2B) inserted by section 33(b) of Act No. 22 of 2013]
| (2C) | Neither the appointment nor the duties of an audit committee reduce the powers and duties of the board or the directors of the company, except in respect of the appointment, fees and terms of engagement of the auditor. |
[Section 64(2C) inserted by section 33(b) of Act No. 22 of 2013]
| (2D) | A company shall pay all expenses reasonably incurred by its audit committee, including the fees of any consultant or specialist engaged by the audit committee to assist it in the performance of any of its functions. |
[Section 64(2D) inserted by section 33(b) of Act No. 22 of 2013]
| (a) | All of the members of the audit committee of a bank shall be persons who are not employees of the bank nor of any of its subsidiaries, its controlling company or any subsidiary of its controlling company: Provided that the chairperson of the board of directors of the bank or the controlling company shall not be appointed as a member of the audit committee. |
| (b) | All of the members of the audit committee of a controlling company shall be persons who are not employees of the controlling company nor of any of its subsidiaries, the bank in respect of which it is the controlling company or any subsidiary of that bank: Provided that the chairperson of the board of directors of the controlling company or the bank in respect of which it is the controlling company shall not be appointed as a member of the audit committee. |
| (3A) | Notwithstanding the provisions of the Companies Act, the board of a bank or controlling company, as the case may be, must appoint a person to fill any vacancy on the audit committee within 90 business days after the vacancy arises. |
[Section 64(3A) inserted by section 33(c) of Act No. 22 of 2013]
| (4) | The Authority may upon written application exempt the board of directors of a bank from the duty to appoint an audit committee in respect of a bank if the Authority is satisfied that the audit committee appointed in respect of the relevant controlling company, in addition to its responsibilities in respect of that controlling company, is able to also adequately assume the responsibilities of an audit committee in respect of that bank. |
[Section 64 substituted by section 17 of Act No. 20 of 2007]
