Mutual Banks Act, 1993 (Act No. 124 of 1993) > Chapter VIII : Amalgamation, Winding-up and Dissolution > 71. Amalgamation and transfer of assets and liabilities

(1)

Two or more mutual banks may with the written approval of the Registrar amalgamate and become one mutual bank, and a mutual bank may with like approval transfer all or part of its assets and liabilities to another mutual bank or to a bank registered as such in terms of the Banks Act, 1990 (Act No. 94 of 1990).

(2)	The proposed terms and conditions of an amalgamation or transfer in terms of subsection (1) shall be submitted in advance to the Registrar, who shall, subject to paragraphs (a) and (b) of subsection (3), approve the proposal concerned as drafted or with such modifications as he may deem necessary.

(3)	No transaction involving the amalgamation of mutual banks or the transfer of assets and liabilities from one mutual bank to another mutual bank or to a bank shall be of any force or effect unless—

(a)	the Registrar is satisfied that such transaction will not be detrimental to the public interest or cause undue hardship to the members of any of the mutual banks concerned or of the mutual bank or bank concerned, as the case may be;

(b)

in the case of an amalgamation of two or more mutual banks or the transfer of assets and liabilities from one mutual bank to another mutual bank, the agreement specifically provides that there shall be no division of the profits or of any of the reserves of the mutual banks concerned among their members, but nothing in this paragraph shall be construed as preventing the making of reasonable provision out of the profits of a mutual bank for compensation to its officers (other than directors, alternate directors or members of local boards) for any resulting loss of office or for payment in recognition of past services rendered by such officers;

(c)	the provisions of the agreement for the contemplated amalgamation or transfer are confirmed by special resolution by each of the mutual banks concerned or by the mutual bank concerned and the bank concerned, as the case may be.

(4)	The notice convening a special general meeting for the confirmation of any such amalgamation or transfer shall contain or have attached to it the complete terms and conditions of the relevant agreement.

(5)

Notice of the passing of the special resolution concerning such amalgamation or transfer, together with a copy of such resolution and the full terms and conditions of the proposed amalgamation or transfer duly certified by two directors and the secretary of each of the parties concerned, shall be sent by each of the parties affected to the Registrar and shall be registered by him.

(6)	The amalgamation or transfer shall take place upon the terms and conditions set forth in such resolution.

(7)	Upon registration by the Registrar of the appropriate notices—

(a)	of any amalgamation, the individual mutual banks that were parties to the transaction shall be deemed to be dissolved and the Registrar shall cancel their registration and at the same time and in their stead register the new mutual bank in terms of this Act;

(b)	of any such transfer of all the assets and liabilities of a mutual bank, the mutual bank whose assets and liabilities are subject to transfer shall be deemed to be dissolved and its registration shall be cancelled by the Registrar.

(8)

The liquidator of a mutual bank that is being wound up voluntarily or by the court, or the judicial manager of a mutual bank, may transfer all the assets and liabilities of the mutual bank being wound up or under judicial management to another mutual bank or a bank: Provided that subsection (3)(c) and subsection (4) shall not apply to a mutual bank that is being wound up.

(9)

Upon the registration by the Registrar of the notice of the amalgamation of two or more mutual banks or of the transfer of the assets and liabilities of any mutual bank to another mutual bank or a bank, all the assets and liabilities of the mutual banks so amalgamated shall become assets and liabilities of the mutual bank registered in their stead, or, as the case may be, all, or, in the case of the transfer of only part of the assets and liabilities of a mutual bank, that part of, the assets and liabilities of the mutual bank transferring assets and liabilities shall become assets and liabilities of the mutual bank or the bank to which they are transferred.

(10)

The officer in charge of a deeds registry or other office in which is registered any mortgage bond or any immovable property which is transferred in accordance with subsection (9) shall, upon production to him by the mutual bank or bank concerned of such bond or of the title deed of such immovable property and certificate by the Registrar of the registration by him of the notice of amalgamation or transfer, as the case may be, make such endorsements upon such bond or title deed and such entries in his registers as are necessary by reason of such amalgamation or transfer.

(11)	The amalgamation of mutual banks or transfer of assets and liabilities of a mutual bank under the provisions of this section shall not affect the rights of any creditor of any of the mutual banks concerned or of the mutual bank or bank concerned.

(12)

In the case of a transfer of assets and liabilities of a mutual bank to a bank provision may, subject to subsection (14), be made in the relevant transfer agreement for compensation to members of the mutual bank, taking into account the unimpaired reserves of the mutual bank, by way of either a cash payment or a right to take up shares in the transferee institution or its controlling company, and provision may be so made for compensation to officers of the mutual bank mutatis mutandis in accordance with subsection (3)(b).

(13)

The basis on which and conditions subject to which compensation contemplated in subsection (12) to members shall take place, and also the amount of the unimpaired reserves of the mutual bank on the date of the latest return submitted to the Registrar in terms of section 53(1), and, in the case of cash payments, also the estimated total amount of such payments shall be furnished in the relevant agreement for the transfer.

(14)	A resolution to offer compensation referred to in subsection (12) to members, must be approved by both parties to the agreement for the transfer of assets and liabilities, by separate special resolution, and shall provide that—

(a)

only a member who on the day immediately prior to the date determined for the transfer of assets and liabilities held shares in the transferor mutual bank and which shares had been issued to such a member at least 12 months prior to that date, or which had been paid for out of the proceeds of shares redeemed by that mutual bank during the said 12 months, shall qualify for such compensation;

(b)	such a member shall nevertheless not be entitled to the compensation if he—

(i)	is not resident in the Republic; or

(ii)	is a body corporate that is not incorporated in the Republic; and

(c)	such a member who is the holder of subscription shares in the transferor mutual bank shall qualify for such compensation only to the extent to which such shares are paid up on the day referred to in paragraph (a).

(15)

Upon the transfer of assets and liabilities from a mutual bank to a bank, all investments in the form of shares, excluding permanent interest-bearing shares, issued by the mutual bank and which prior to the date of the transfer of its assets and liabilities have not yet been redeemed, shall be deemed to be fixed deposits with the transferee bank.

(16)

The conditions and any tax benefit which immediately prior to the date of transfer of assets and liabilities were applicable in respect of an investment in the form of shares referred to in subsection (15) shall, notwithstanding the provisions of that 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.