Given the latest changes to the National Credit Act, No 34 of 2005 (hereinafter referred to as the “Act”) by the National Credit Amendment Act 19 of 2014, legal entities must determine whether they are regarded as credit providers in terms of the Act and the next practical step is to then register as a credit provider. This article will provide the guidelines to assist credit providers with the registration process to ensure compliance with the Act.
In summary the most notable amendments was effected on 11 May 2016 and 11 November 2016 and contain the following:
On 11 May 2016, a new threshold of R 0 (nil) was published and from 11 November 2016, 6 months after the publication of the new R 0 (nil) threshold, all credit providers (irrespective of the number of credit agreements) should register as credit providers with the NCR. This means that any person who extends credit that does not form part of an incidental credit agreement is required to register as a credit provider with the National Credit regulator.
Certain exclusions apply to the requirement to register as a credit provider. Requirements to register as a credit provider is excluded where the consumers are juristic persons (together with all its related juristic persons) with an asset value or annual turnover of at least R1 000 000.00 (one million Rand) or where the juristic person concludes a large credit agreement with the credit provider, with a principal debt of at least R250 000.00 (two hundred and fifty thousand Rand).
Based on the abovementioned information the natural or juristic person can establish whether they are required to register as a credit provider in terms of the Act. If you are required to register you can follow the following steps to assist with your application with the National Credit Regulator for registration of a company as a credit provider in terms of Section 40 and 41 of the Act:
All documentation must be delivered to: 127 - 15th Road, Randjespark, Midrand for the attention of the National Credit Regulator. In the alternative the documentation may be posted to PO Box 209,Halfway House, 1685.
The process can take between 9 (nine) and 12 (twelve) weeks to be completed, pending the provision of accurate information being provided by the natural or juristic person in their application.
Chapter 3, Section 40(3), (4) and (5) of the Act regulates the sanctions that apply to an entity that is required to register as a national credit provider but have not done so. These sections of the Act state:
If a person fails to register in circumstances where credit is provided as provided by the Act both the capital and the interest may be at risk and the entire agreement can be found to be void to the extent provided for in section 89. We strongly suggest that you take the time to consider whether you are regarded as a credit provider to avoid situations where the whole amount you expended may become unrecoverable.
Barnard Inc is an attorneys firm in Centurion, Pretoria.
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