# EFF wants to expropriate Reserve Bank private shareholders

- Link: https://dearsouthafrica.co.za/2020/11/12/eff-wants-to-expropriate-reserve-bank-private-shareholders/
- Published: 2020-11-12T19:57:49+02:00
- Author: dearSA

![DearSA-reserve bank amendment bill](https://cdn.dearsouthafrica.co.za/wp-content/
uploads/2020/11/20190843/DearSA-reserve-bank-amendment-bill.jpg "DearSA-reserve 
bank amendment bill")

The EFF has introduced the South African Reserve Bank Amendment Bill which seeks
effectively to nationalise the SA Reserve Bank (SARB) by removing private ownership
of shares in SARB and vesting these with the state.

[click here to have your say on the draft bill ](https://dearsouthafrica.co.za/reserve-bank/)

The EFF bill has the explicit aim of expropriating the shares of 802 private shareholders,
who include finance minister Tito Mboweni (10,000 shares), DA shadow finance minister
Hill Lewis, the Anton Rupert Trust, Discovery, Absa, Nedcor, FirstRand Bank and 
Nedcor.

These shares would be expropriated without compensation and vested in the state 
on behalf of 57 million South Africans. “For true sovereignty and autonomy, the 
SA Reserve Bank must be transferred to the state,” says the EFF in a Parliamentary
presentation. “The next debate will be on its mandate.”

While it would cost billions of rands to nationalise the Reserve Bank, the EFF sees
a more expedient solution as the expropriation of private shareholders. The share
capital of the Reserve Bank is set at R20 million, and the dividend per share at
R1,000. Hence, the party says the financial loss to shareholders is limited.

Parliament’s Standing Committee on Finance and Select Committee was given a briefing
on the proposed bill on 25 August 2020, when the DA questioned its constitutionality,
particularly Section 25 which prohibits arbitrary deprivation of property. At the
presentation to Parliament, the EFF’s Floyd Shivambu said the majority of the Reserve
Bank’s existing shareholders were white and non-South African citizens, and that
the aim of the proposed amendments was to protect the Bank from the abuse suffered
by many state-owned companies.

Parliament’s legal services unit has also raised concerns over the constitutionality
of the proposed amendments. The law as it stands – underpinned by Constitutional
Court findings – require expropriation to be accompanied by compensation. Adv Noluthando
Mpikashe, the Parliamentary Legal Advisor, told the Standing Committee that the 
law is vague as to what is considered just and equitable compensation, and that 
the EFF bill may not pass constitutional muster.

The EFF bill seeks to give the minister of finance powers to regulate the appointment
of directors to the SARB, and to further regulate the tenure of these directors 
and how they are to be appointed.

The bill further proposes allowing the minister of finance to appoint the SARB auditors.

The EFF bill proposes amending several sections of the South African Reserve Bank
Act of 1989:

Section 4 of the SARB Act, particularly that section which allows shareholders to
elect directors. The EFF wants the minister of finance to perform this function.

Section 4A, which requires the SARB to submit annual financial statements to shareholders(
as well as the minister of finance and Parliament). The EFF wants this section amended
to exclude private shareholders.

Sections 5, 6 and 9, which deal with the appointment of directors, their tenure 
and conditions of appointment. The EFF wants the state to step into the shoes of
the private shareholders when it comes to directorial issues. Section 9 deals with
the validity of board decisions. The current SARB Act deems board decisions invalid
only when there are insufficient board members or when a disqualified person sits
on the board. The current Act requires shareholders to elect seven directors from
candidates confirmed by a panel, though the Act also allows any member of the public
to nominate directors for selection. It is uncertain whether the EFF wants this 
function to be performed by the state, or whether SA citizens should be allowed 
to continue nominating their preferred directors.

The EFF wants Section 10, which deals with the powers of the SARB, to be amended
to remove its power to “form shares” for issue to private owners, as these will 
henceforth be owned by the state.

Section 13 of the SARB outlines certain prohibited businesses, such as the purchase
of its own shares, or the purchase of shares in a bank (without the minister of 
finance’s approval). The bill seeks to remove these prohibitions, which would allow
the Reserve Bank to purchase it own shares, buy shares in a bank, would remove limitations
on the SARB’s ability to purchase government bonds from Treasury.

Section 21 of the Act sets the share capital of the Reserve Bank at two million 
ordinary shares of R1 each. The Bank is allowed to increase its capital with board
approval. The EFF proposal would make the state the owner of these shares.

Section 30 authorises the appointment of two firms of public accountants by shareholders
to act as auditors of the Bank. The bill proposes vesting this authority with the
state.

At a recent presentation, the EFF outlined the motivation behind the proposed amendments:“
The South African Reserve Bank as one of the apex of the financial system in the
country should be democratically owned by the people as a whole as a necessary and
important building block towards complete overhaul of the currently white-owned 
financial sectors.

“A state owned SARB must pursue decisive transformation of the financial sector 
in a manner that will change its current dominance of descendants of colonial settlers.”

What’s your opinion on the EFF’s South African Reserve Bank Amendment Bill? Is it
time to place ownership of the bank in state hands? Or would this open the door 
to the possibility of state meddling in the economic life of the country?

[click here to have your say on the draft bill ](https://dearsouthafrica.co.za/reserve-bank/)