Banking Requirements of an Informal Body

Content

Page

Section 5 / Rules Pertaining to an Informal and a Governing Body / 87-97
Overview / 89
5.1 / Types of Informal Bodies / 90
5.2 / Banking requirements of an Informal Body / 93
5.3 / Banking requirements of a Governing Body of a Sectional Title / 95
5.4 / Summary / 97
97 / IB CP 7
Version: 03/2004
5. / Rules Pertaining to an Informal and a Governing Body

Overview

PROCESS / CONTENT / Resources
Learning Outcomes, Objectives and Assessment Criteria
/ · Introduce this Section of the workshop by means of the Learning Outcomes, Objectives and Assessment Criteria related to the Section

/ LG P 102

OH 61
OH 62
5.1 /

Types of Informal Bodies

PROCESS / CONTENT / Resources
Introduction / An Informal Body is an Informal Association of people who do not have profit as an objective. / LG P 103
/ · Ask the Learners if they can remember the type of Company that does not have profit as its objective
· Answer: Section 21 Company (Incorporated Company not for Gain) / LG P 103
Types of Informal Bodies / Below are examples of Informal Bodies that you may come across from time to time:
· Clubs and Associations
· Friendly Societies
· Buildings Funds (Schools and Churches)
· Syndicates
· The People’s Benefit Scheme
/ LG P 103

OH 63
Note to the Facilitator / · Ask the Learners to read through the information on pages 104-105
· On completion ask the Learners if they have any questions regarding the content
· List their questions on a flip chart
· Go through the content and ensure that you answer all their questions / LG P 104-105
PROCESS / CONTENT / Resources
Clubs and Associations / Clubs or Associations are groups of people with common interests who get together to follow these interests.
Examples include:
· Non-profitable clubs or associations
· Charitable clubs
· Sports clubs
The members of the Club or Association elect a Committee which normally consists of the following:
· A Chairperson
· A Treasurer
· A Secretary
· Committee Members / LG P 104
Friendly Societies / A Friendly Society is an association that provides relief or maintenance to its members by:
· Granting annuities
· Providing contributions for medical costs
· Insurance cover for births, funerals and fire
· Compensation for loss of employment
·
The members of a Friendly Society consists of:
· A Chairperson
· A Committee consisting of members
· Highlight the following learning point:
Friendly Societies must, except in certain cases, register with The Registrar of Friendly Societies. / LG P 104
Building Funds / Schools and Churches normally form Building Funds. An account is opened in the name of the School or Church Fund Committee.
Any money collected from or spent for the school/church, will be deposited/ withdrawn from this account.
The Committee consists of:
· A Chairperson
· A Treasurer
· A Secretary
· Members / LG P 105
PROCESS / CONTENT / Resources
Syndicates / A Syndicate is a group of people (more or less something like an informal partnership), who open one account. They share a common interest, but not necessarily to make a profit.
For example, when a group of people share a house and they open an account to deposit/withdraw money for the sole purpose of running the household. / LG P 105
/ · Ask the Learners if they can think of any other examples of Syndicates / LG P 105
The People’s Benefit Scheme (Stokvel) / The People’s Benefit Scheme is also called “Stokvels”. These are an informal group of people who club money together to save. The funds from this scheme are then lent to needy members.
The members of a “Stokvel” consists of:
· A Chairperson
· A Treasurer
· A Secretary
· Members / LG P 142
5.2 /

Banking requirements of an Informal Body

PROCESS / CONTENT / Resources
Introduction / As discussed, an Informal Body is an informal group of people. / LG P 106
Legal entity /
Normally, an Informal Body is not regarded as a legal entity, except, if the Informal Body has a constitution and it is clear from its constitution that the following is applicable:
1. The Informal Body must have continual succession.
2. It must exist separately from its members.
3. It must be the sole owner of all its assets.
4. There must be an indication that it has been the founder’s intention that the Informal Body should be empowered with corporate existence.
5. The Informal Body’s members must have no rights to its assets. / LG P 106

OH 64
/ · Refer the Learners to the activity on page 107
· Explain to the Learners that from the above content is is clear that an Informal Body can be regarded as a legal entity if the above points are clear from its constitution
· Ask the Learners to explain each of these points in their own words
· Randomly ask the Learners for feedback / LG P 107
PROCESS / CONTENT / Resources
Implications for FNB
/ Explain to the Learners that an Informal Body functions by means of its members. In some cases it functions through authorised persons and in accordance with the Constitution or Regulations of the Informal Body
In terms of the constitution, certain persons, for example the Committee, normally have the power to act on behalf of the Informal Body.
· Highlight the following learning point:
In order to bind an Informal Body, it is critical to obtain the constitution or regulations of the Informal Body to determine whether any such powers were granted to the persons/Committee.
Explain to the Learners that the Informal Body cannot act by itself or make decisions. It is vital that the Bank obtain a resolution (by the committee), in respect of advances asked for and for the provision of security under all circumstances. / LG P 108
Documentation required
/ Explain to the Learners that it is crucial that the Bank obtain the following documentation:
· A Certified copy of the Constitution, Regulations or Rules of the Informal Body.
These documents must be kept on file.
If no powers have been granted in the Constitution, Regulations or Rules, these would have to be amended to allow the Committee acting on behalf of the Informal Body to exercise powers or certain powers.
· Highlight the following learning point:
Remember: The Bank insists that a resolution be taken in accordance with its example resolution documents.
The Bank must always be in possession of a certified copy of the resolution. / LG P 108
5.3 /

Banking requirements of a Governing Body of a Sectional Title

PROCESS / CONTENT / Resources
Introduction / As soon as all the units of a Sectional Title have been transferred into the names of the owners, the developer’s interest as a member of the Body Corporate terminates.
All the owners together then form the Body Corporate. / LG P 109
Source of law / The establishment of a Sectional Title Scheme is subject to the provisions of the Sectional Title Act 95 of 1986. / LG P 109
Name of the Body Corporate/legal status / The name of the Body Corporate must always reflect the name of the building and the scheme number.

In itself, a Sectional Title has no contractual capacity and is not a legal entity.
The legal entity is the Body Corporate of the building, consisting of:
· The trustees nominated by the title owners of the units
· Land that has been divided into Sectional property in terms of the development scheme / LG P 109

OH 65
Documentation required / The following documentation must be obtained for the Bank’s records:
· Certified copies of the Rules (whether Rules of Management or Conduct, or both)
You must ensure that the powers are ascertained from these documents. / LG P 109
PROCESS / CONTENT / Resources
Documentation required, continued
/ · Highlight the following learning point:
In order to bind the Body Corporate, it is essential that the Trustees pass a formal resolution in respect of advances and the provision of security. Further, it is important that the Trustees have the power to bind the Body Corporate in respect of a loan and the providing of security. / LG P 109
/ · Refer the Learners to the Self Check on pages 110-111
· Ask the Learners to complete the questions without referring back to the content
· On completion, ask the Learners to exchange their books with a learning partner to mark their answers
· Summarise activity and ensure that the Learners complete all the answers to the questions correctly / LG P 110-111
5.4 /

Summary

PROCESS / CONTENT / Resources
Summarise
/ · Summarise this Section by asking the Learners for questions and/or concerns about this Section
· Refer the Learners to page 112 of Learner Guide and ask them to read through the learning points
· Ask them to note additional learning points from this Section on page 113
· Randomly ask the Learners to share a learning point with the rest of the group / LG P 112-113
END OF WORKSHOP
97 / IB CP 7
Version: 03/2004