S.L. 363.12 Art. 5be added the forwarded to days of its as specified in by the 30th and 30th submit such the advice of retain any approved abides by a notice in to the Council shall in writing next quarterly be drawn up, improve its and which Council was the ten per be bound to which members, the and the and should n

P1.05 shall be amended as follows:

(a) Immediately after d.06 there shall following new paragraphs: "d.07 A copy of this report shall be the Director within fifteen presentation to the Council the preceeding paragraph (i.e., July, 30th October, 30th January April of each year). Should the Council fail to report, the Minister shall, on the Director, provisionally portion of the allocation of funds to the Council, until the Council such obligation. Provided that the Minister shall only retain such funds following a period of time prescribed in a written notice where the Council is given the opportunity to rectify its failure. Provided further that the amount so retained shall not exceed 1% of the funds allocated to the Council during the financial year.".

(b) Immediately after g.05, there shall be added the following: "h. The Council shall forward to the Director a copy of the approved minutes of its meetings as well as the minutes of the Finance Committee. Should the Council fail to submit such minutes within three working days after their approval, the Minister may, on the advice of the Director, provisionally retain any portion of the allocation of funds approved to the Council, until the Council abides by such obligation. Provided that the amount so retained shall not exceed 1% of the funds allocated to the Council during the fmancial year. i. The Financial Situation Indicator of a Council, as defined by regulation 4 of the Financial Regulations, is calculated by taking the total amount of current assets (cash in bank and debtors) and deducting from it the total amount of current liabilities (payments/creditors falling due in the short and long term), with the exception of long-term financial commitments approved in writing by the Minister in terms of the Act. In situations where the Council has an approved loan arrangement, the long term outstanding loan will not be taken into consideration, when calculating the Financial Situation Indicator. However, both the Council and the Director shall ensure that that the loan repayments are in line with the original agreement when the loan was approved and issued. i.01 Should a Local Council have a Financial Situation Indicator with a favourable balance which is less than ten per cent of the allocation which Government would have approved to the Local Council for that same Local Council financial year:

(i) The Director shall issue writing about this situation Local Council. The thereby be bound to reply so as to state how the financial report will how the Council would financial situation expenditure cuts the about to effect to achieve cent mark;

(ii) The Council shall appoint a Finance Committee would include as Mayor, another Councillor Executive Secretary, person from the Council Executive Secretary accountant, a qualified shall be appointed by Before any decision any expenditure, the request the advice in Finance Committee evaluate the proposed having regard to situation of the Council;

(iii) Should the Council, quarterly financial report Director’s letter, fail provision for the benchmark, the Minister advice of the Director, release of such amount allocation approved Council which would difference between balance and the benchmark. The amount withheld for so long quarterly report made withholding of such amount, per cent benchmark is such occurrence, the authorise the release of to the Council: Provided that when a Council consistently registers a positive result, the Minister shall remove the application of the requirement of a favourable balance of ten per cent as long as the Council continues to register a positive financial position. The Minister may at any time reactivate the ten per cent requirement in such cases where the financial result or forecasts of the Council would require such measure. i.02 Should a Council have a Financial Situation Indicator with a negative balance of less than five per cent of the funds, which the Government would have allocated to the Local Council for that same Local Council financial year:

(i) The Director shall formally call upon the Mayor and the Executive Secretary within fifteen days from the discovery of the negative balance;

(ii) The Director shall request the Mayor and the Executive Secretary to prepare proposals regarding the removal of the negative balance so that the ten per cent benchmark of favourable balance may be achieved not later than twelve months after such time: Provided that, should the negative balance in the Financial Situation Indicator be registered at a time during the last year of the term of the Local Council, the ten per cent benchmark of favourable balance shall be achieved within two months from the date of a notice sent by the Director to the Local Council, and by virtue of such notice, the provisions of item (v) shall immediately apply;

(iii) The proposals of the Mayor and of the Executive Secretary shall cover the method and the source of financing of the negative balance, which budget votes are to be used, and which projects would be minimised or terminated;

(iv) Should the Director proposals of the Mayor Executive Secretary, proposals shall in supersede the allocations the Council budget decision previously Council;

(v) If the Director does not proposals made by the the Executive Secretary, Minister, on the advice Director, shall have withhold from the allocation Council an amount of to the difference negative balance and the mark of favourable balance start paying by such amounts as would be Council to third parties;

(vi) Should the Council, within of twelve months, fail ten per cent benchmark, shall apply the paragraph i.03 of this whatever the favourable balance of the Council Provided that wherever in this is indicated that a rate of the case of a positive balance for the period between 1 April, 31 March, 2005, there shall five per cent. i.03 Should a Local Council have Situation Indicator with a negative in excess of the five per allocation made by Government same Local Council financial

(i) Within one month from the resulting negative Director shall, after with the Council and and auditors, prepare restructuring plan for months or years, depending magnitude of the negative which period, however, exceed three years. Should the Director incur any expenses in the preparation of that plan or in the required consultation thereof, such expenses shall be defrayed from the allocation which Government would have made to that Council;

(ii) The plan shall indicate the amount to be used of the allocation to the Local Council for the financing of the financial restructuring plan and, in general terms, which Council votes shall be used for this purpose;

(iii) Prior to the implementation of the restructuring plan the Director shall inform the Minister about the plan, and the Minister shall, before confirming the plan, request and hear the views of the Local Councils Association;

(iv) During the restructuring period, the Council’s accounts shall be controlled by the Director who shall have the right to refuse to finance any undertaking of the Council which adversely affects the restructuring plan;

(v) The Council may not enter into any financial undertaking without the approval of the Director.

(vi) Any document relating to a call for public tenders, and any documentation of the Council, including any correspondence which the Council may send, shall include a statement declaring that the Council may not enter into any financial commitment unless it has an agreement to do so in writing with the Director;

(vii) Such funds as are allocated by the Government shall be held by the Director in the name of the Local Council and shall be spent according to approved procedures;

(viii) Within the context of the restructuring plan, the Director shall have the right to pay such amounts as may be due by the Council to third parties.". Appendix p1. XI Depreciation Rates

The depreciation rates that will be applicable are as follows:

Land Buildings Office Furniture and Fittings Construction Works Urban Improvements (Street Furniture) Special Projects Office Equipment Motor Vehicles Plant and Machinery Computer Equipment Trees Plants Litter Bins Playground Furniture Traffic signs Road Signs Street Mirrors Street Lights

Appendix