PRESENTATION TO THE SELECT COMMITTEE ON LABOUR AND PUBLIC ENTERPRISES ON THE ESKOM CONVERSION BILL DATE: 12 JUNE 2001

BACKGROUND Eskom Amendment Act 126 of 1998 Made Eskom a tax paying entity, Mandated the Minister to incorporate Eskom as a Company.

PURPOSE To give effect to the Eskom Amendment Act, To level the playing field between Eskom and its counterparts in telecommunication and transport, To position Eskom for global competition, Enable Eskom to observe principles on Corporate Governance.

SALIENT FEATURES OF THE BILL Seeks to incorporate Eskom into a public Company, Process – “deeming route”. SALIENT FEATURES OF THE BILL Section 2. Entire share Capital to be held by the State BILL

Certain provisions of the Companies Act not applicable . Conversion of Eskom not affecting its continued corporate existence, Not affect any of the rights, liabilities or obligations acquired or to be incurred by Eskom. Section 3. Section 4

Section 5. Powers and duties of Eskom, Entry into land for purposes of plans and surveys, Pay compensation for any damage caused, Subsidiary companies of any servitudes for purposes of improvement.

Section 6 Registration of Memo’s and Articles by the Registrar of Companies, Articles of Association to be determined by the Minister, Minister may publish such articles in the Gazette for Comments, Eskom’s developmental role.

Section 7. Borrowings secured by Eskom’s revenue and assets, Borrowings to be a first charge against all revenues and assets of Eskom, Interest unpaid for 3 months – holder may apply to a high court, Court may make any such order as it deems fit.

Section 8. Taxation of receipts and accruals of Eskom and Subsidiaries, Eskom and any Company of which Eskom is a shareholder and whose objects are ancillary or complementary to Eskom, not exempted from provisions of Sec 10 (i) (CA), Eskom and its subsidiary company to which assets, liability right or obligation may be transferred regarded as one and the same entity for purposes of the Income Tax Act.

Section 9 Section 10 Minister empowered to make regulations. Repeal of laws in the schedule.

Section 11 Savings and transitional provisions. Anything that could be done in terms of the Eskom Act of 1987 continues to be done in terms of the Eskom Conversion Bill Any legal proceedings comments on or before incorporation continues to be of valid force and effect