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SECURITISATION SCHEMES
As promulgated in
Government notice 153 (Government Gazette 13723) of 3, January, 1992
Under paragraph (cc) of the definition of 'the business of a deposit-taking institution' in section 1 of the Deposit-taking Institution Act 1990 (Act 94 of 1990), 1.Jen Henarik van Greuning, Registar of Deposit-taking Institution, hereby designate, with the approval of the Ministry of Finance, the activity set out in paragraph 2 of the Schedule and which is performed in accordance with the conditions set out in paragraphs 3 and 4 of the Schedule, as an activity which does not fall within the meaning of 'the business of a deposit-taking institution'.
J. N. van Greuning
Registrar of Deposit-taking Institution
SCHEDULE
1. In this Schedule 'the Act' means the Deposit-taking Institution Act 1990 (Act 94 of 1990), and any word or expression to which a meaning has been assigned in the Act shall bear such meaning and, unless the context otherwise indicates-
'associated company', in relation to deposit taking institution, means a subsidiary or fellow subsidiary of that deposit-taking institution and includes an associated company, as defined in paragraph 06 of Accounting Statement AC. 110 issued by South African Institute of Chartered Accountants, of that deposit-taking institution :
'securitisation scheme , means a scheme whereby a deposit-taking institution transfer to a special-purpose institution, by virtue of a sale, such of its assets as consist of claim sounding in money;
'special purpose institution' means a company incorporated or a trust created society for the purpose of the implementation of a securitisation scheme;
'underlying transaction' means the transaction in which an asset transferred by a deposit taking institution to a special-purpose institution in terms of a securitisation scheme;
2. The acceptance, by a special-purpose institution, of money from the general public against the issue of the special-purpose institution of written acknowledgements of debt for the purpose of obtaining fund to pay for the asset transferred to it by the deposit-taking institution in terms of the securitisation scheme, provided-
(a) all of the condition set out in paragraph 3 in in respect of the special-purpose institution and all of the condition set out n paragraph 4 in respect of the transfer of the assets are compiled with; and
(b) no liabilities other than liabilities directly or indirectly to the implementation of the securitisation scheme are incurred by the special-purpose institution.
3. The conditions in respect to the special-purpose institution are as follows:
(a) To commence a securitisation scheme, the deposit-taking institution and the special-purpose institution concerned shall conclude an agreement in terms of which the special-purpose institution shall acquire from the deposit-taking institution a portfolio of assets to serve as backing for the written acknowledgements of debt to be issued by the special-purpose institution as contemplated in subparagraph (b);
(b) the issuing of written acknowledgements of debt by the special-purpose institution for the purpose of funding itself as contemplated in paragraph 2, shall be affected in accordance with the applicable provisions (excluding any such provisions relating to the endorsement of commercial paper by a deposit-taking institution) of any notice under the Act whereby the acceptance of deposits from the general public by the way of commercial paper or debentures is designated as not falling within the meaning of 'the business of a deposit-taking institution';
(c) in the case of the payment made in terms of an underlying transaction, the amount so received in payment shall be utilised by the special-purpose institution for the redemption of acknowledgements of debt issued by it as contemplated in subparagraph (b) or for the acquisition of further assets as contemplated, and for the purpose set out, in paragraph 4(f).
(d) neither the deposit-taking institution nor any of its associated companies may-
(i) in case of a special-purpose institution which is a company acquire or hold any shares in such special-purpose institution; or
(ii) in case of a special-purpose institution which is either a company or a trust, directly or indirectly hold any beneficial interest in or be a beneficiary of or directly or indirectly exercise any control over or manage such special-purpose institution;
(e) no members of the board of directors and no trustee, as the case may be, of the special-purpose institution shall be a member of the board of directors and or be a trustee, as the case may be, of the deposit-taking institution or any of its associated companies;
(f) the name of the special-purpose institution shall not include the name of the deposit-taking institution or any of its associated companies, or imply any association with the deposit-taking institution or any of such companies;
(g) excess profit accumulated by the special-purpose institution shall be applied as follows:
(i) While the securitisation scheme is in progress, such profit shall be retained by the special-purpose institution and utilised as the contingency reserve for the protection of the investors in the acknowledgements of debt issued by the special-purpose institution;
(ii) in the event of the winding-up or dissolution of the special-purpose institution such profit may be paid over to the deposit-taking institution concerned, to shareholders in of beneficiaries of the special-purpose vehicle or to the holders of the acknowledgements of debt issued by the special-purpose institution, and the proposed distribution of such profits shall be set out in a prospectus of the securitisation scheme;
(h) neither the deposit-taking institution nor any of its associated companies shall-
(i) bear any recurring expenses in respect of the securitisation scheme;
(ii) provide temporary finance to the special-purpose institution to cover the cash shortfalls arising from delayed payment in respect of underlying transaction or the non-performance of the debts administered by the deposit-taking institution or associated company in its capacity of the servicing agent;
(iii) bear any loan arising from any risk of a type referred to in regulation 11(1)(g) of the Regulation to Deposit-taking Institution, published under Government Notice R2799 of 30 November 1990, to which the special-purpose institution is exposed; or
(iv) underwrite or guarantee in any manner the issue of the acknowledgements of debt by the special- purpose institution; and
(I) the board of directors or the trustee, as the case may be, of the special-purpose institution shall appoint an auditor who shall, in addition to his normal duties as an auditor, be required-
(i) to satisfy himself that, on the basis of the information presented to him by the special-purpose institution, the provisions of this Schedule with regard to the conducting of the securitisation scheme will be complied with; and
(ii) if he has so satisfied himself, to furnish a statement to that affect, which statement shall be included in the prospectus to issued by the special-purpose institution with regard to the securitisation scheme.
4. The conditions in respect of the transfer of the assets are as follows:
(a) The transfer must be such as to totally divest the transferring deposit-taking institution and all of its associated companies of all rights and obligations originating from the underlying transactions and all risks in connection with the assets transferred:
(b) no transfer may be effected which will result in a breach of any term of any of the underlying transactions;
(c) the special-purpose institution shall have no right of recourse against the deposit-taking institution or any of its associated companies in respect of any loss sustained in connection with any of the assets after the transfer thereof in terms of the securitisation scheme: Provided that the deposit-taking institution may, in its discretion, replace any asset transferred in terms of the securitisation scheme, excluding a non-performing asset, with an equivalent asset;
(d) the agreement between the deposit-taking institution and the special-purpose institution with regard to the securitisation scheme shall be such that, in the event of the terms of an underlying transaction being amended, the special-purpose institution and not the deposit-taking institution or any of its associated companies will be subject to the terms as so amended;
(e) if payments due in terms of an underlying transaction are made by the agency of the deposit-taking institution who had transferred the assets or any of its associated companies (that is, the deposit-taking institution or such associated companies acts as a servicing agent), the deposit-taking institution or such associated companies may not transferred any funds to the special-purpose institution in respect of such payments unless such payment have been actually received from the debtor under the underlying transaction ;
(f) after a securitisation scheme has been put into operation, the transfer by the deposit-taking institution to the special-purpose institution of further assets in terms of that scheme shall be permissible only for the purpose of maintaining the capital value of the portfolio of assets included in the scheme; and
(g) the portfolio of assets securitised under a securitisation scheme may consist of assets which are not of a homogenous nature: Provided that a predetermined ratio between the different classes of assets comprising such a portfolio shall be maintained throughout the existence of securitisation scheme in question.
5. If any of the condition set out in paragraphs 5 and 4 are not compiled in the execution of a securitisation scheme, the assets transferred ih terms of that scheme by the deposit-taking institution shall again be reflected as assets in the balance sheet of the deposit-taking institution for the purpose of determination of the prudential requirements with which the deposit-taking institution must comply in terms of the Act.