summary

IN THE MEDIA

• Daily Maverick — The NPO Amendment Bill is a mess, awash with inconsistencies and clumsy provisions
• Inyathelo — NPO amendment bill

BRIEF SUMMARY

from NGO Law

1. Not allowing any organisation whose name is confusingly similar to that of any other organisation or person to register, unless they have verifiable legal rights to the name or consent to use it

The NPO register is currently full of organisations with identical or confusingly similar names as there is no checking name mechanism for voluntary associations and trusts and they can just choose their name subject to the common law prohibition on ‘passing off’ (using a similar name to an established brand to benefit by association or confusion).

This amendment seeks to avoid confusion and improve credibility by policing the use of similar names.

The practical problem with imposing this requirement during the registration process, is that there does not at this stage appear to be an advance check/reserve name process proposed (as there is at CIPC). This could lead to delays with organisations having to amend their founding documents and begin again. (It does seem that it is intended that registration of an NPC name with CIPC or letters of authority in the name of a trust will constitute ‘legal right to that name’.)

2. Requiring that minimum organisational structures in place before registration include the offices of chair, secretary, treasurer and their deputies.

A deputy chair is a good idea, but vice treasurers and vice secretaries are not as common and this requirement would effectively mean that the board of an organisation must have at least six persons on it (when three has up till now been the effective minimum).

3. Mandatory registration for ‘foreign non-profit organisations that intend to operate business/es within the Republic’

The language of the proposed section around this is confusingly drafted and the intention (especially in the absence of an explanatory memorandum) is unclear. What mischief is aimed at? What does ‘operate’ mean?

The Companies Act already has a provision requiring local registration with CIPC of any foreign non-profit that does more than have meetings, a bank account and property in South Africa: As soon as a foreign non-profit needs to employ locals or as soon as they for longer than six months ‘engage in nonprofit activities’ in South Africa, they have to register with CIPC. Perhaps the drafters of this Bill are not familiar with the provisions of Section 23 of the Companies Act? We will certainly raise this issue.

4. The rather curious requirement to disclose, on application, ‘whether a member or office-bearer has been previously found guilty of an offence relating to the embezzlement of money of any non-profit organisation and the status of the conviction’

First, the likelihood of those who knowingly admit such persons to their boards disclosing this on application seems extremely slim. If there is a way for the information to be checked and verified, then this checking should be taking place automatically, without the proposed requirement to disclose. And if there is no way to check and verify, then it is, we think, useless to require the disclosure.

5. The removal of the deadline for filing of annual reports ‘within nine months after the end of its financial year’

We understand that the intention behind this amendment was to allow for the annual reports which are filed to be differentiated based upon the size (turnover?) of the organisation, so that smaller organisations are not inappropriately burdened. However, the effect of the proposed deletion is that the deadlines for reports are deleted and the only reference to annual reports is now found in the regulations to the Act. Some tweaking is clearly required.

This is not an exhaustive list of the proposed changes, nor is it our final commentary on them, as we have still to digest, consult and collate responses.

STATEMENTS FROM OTHER ORGANISATIONS

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• To amend the Nonprofit Organisations Act, 1997, so as to amend and insert certain definitions;
• to provide for the office of the Registrar of nonprofit Organisations,
• to provide for the registration of nonprofit organisations and compulsory registration of foreign organisations,
• to provide for the Arbitration Tribunal for the disputes resolution; and
• to provide for matters connected therewith.