Mutual Banks Act, 1993 (Act No. 124 of 1993)Chapter VII : Conversion of Mutual Banks69. Effects of conversion |
| (1) | The juristic person that existed as a mutual bank before the conversion shall, notwithstanding the conversion, continue to exist as a juristic person, but in the form of a public company deemed to be registered as a bank in terms of the Banks Act, 1990, and as from such conversion— |
| (a) | the provisions of the Banks Act, 1990, shall apply to it; |
| (b) | the provisions of this Act shall cease to apply to it; |
| (c) | a reference in any document to the former mutual bank shall, unless inconsistent with the context or otherwise clearly inappropriate, be construed as a reference to the bank; |
| (d) | the persons who immediately before the conversion were directors of the former mutual bank shall vacate their offices as such directors and the persons referred to in section 63(2)(e)(v) shall become the directors of the bank; |
| (e) | the persons who immediately before the conversion were shareholders or members of the former mutual bank shall cease to be such shareholders or members; |
| (f) | all investments in the form of shares, excluding permanent interest-bearing shares, issued by the former mutual bank and which immediately before the conversion were not yet redeemed shall be deemed to be fixed deposits with the bank; and |
| (g) | all investments in the form of permanent interest-bearing shares issued by the former mutual bank shall be deemed to be debt instruments issued by the bank in terms of paragraphs (i) to (iv), inclusive, of the definition of "secondary share capital" in section 70(1) of the Banks Act, 1990. |
| (2) | The conditions and any tax benefit that were immediately before the date of conversion applicable to an investment in the form of shares referred to in subsection (1)(f) shall, notwithstanding the provisions of the said subsection but subject to the provisions of the Income Tax Act, 1962 (Act No. 58 of 1962), continue to apply to the investment for a period of 10 years or until it is redeemed whichever period expires first. |
| (3) | A conversion of a mutual bank into a bank shall not affect anything lawfully done by the mutual bank before its conversion. |
| (4) | Profits which accrued to a mutual bank prior to its conversion into a bank, and to the extent to which such profits are used for the declaration and payment of a dividend to a controlling company registered in respect of it in terms of section 66, shall for the purposes of paragraph 48 of Schedule 4 to the Companies Act, not be deemed to be pre-acquisition profits. |