Non-Bank Financial Regulatory Authority - Supervision And Regulation Of Non-Bank Financial Institutions (S 49)

Link to law: http://www.elaws.gov.bw/desplaylrpage1.php?id=1348

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[Ch4608s49]49. Prudentially regulated non-bank financial

institutions

(1)

The non-bank financial institutions referred to in subsection (2) are declared

to be prudentially regulated non-bank financial institutions, and accordingly

the provisions of section 50 and prudential rules made thereunder shall have

effect in relation to such prudentially regulated financial institutions.

(2)

The following are prudentially regulated non-bank financial institutions-

(a) an asset manager;

(b) a person operating a central securities

depository;

(c) a collective investment undertaking that is

an investment company with variable capital;

(d) a person operating a collective investment

undertaking other than one described in paragraph (c);

(e) a custodian;

(f) an insurer;

(g) a pension or provident fund;

(h) a securities dealer;

(i) the operator of a securities exchange;

(j) a trustee of a collective investment

undertaking or a pension or provident fund;

(k) pension fund administrator;

(l) finance and leasing company;

(m) insurance agent;

(n) insurance broker;

(o) international insurance firm;

(p) investment adviser;

(q) management company for a collective

investment undertaking;

(r) micro lender.

(3)

Without prejudice to the preceding provisions of this section, regulations may

declare other non-bank financial institutions to be prudentially regulated

non-bank financial institutions, and the provisions of section 50 and

prudential rules made thereunder shall have effect in relation to such

institutions.

Prudential Rules (s 50)

[Ch4608s50]50. Prudential rules

(1)

The Regulatory Authority may make and publish rules imposing requirements with

respect to-

(a) the conduct of the affairs of prudentially

regulated non-bank financial institutions, or of the affairs of financial

groups, with a view to ensuring that the prudentially regulated financial

institutions or the groups (as the case requires) maintain a sound financial

position and do not cause or promote instability in the financial system; or

(b) the conduct of the affairs of prudentially

regulated non-bank financial institutions with integrity, prudence and

professional skill.

(2)

Without limiting what a prudential rule may deal with, a prudential rule may

impose requirements with respect to any of the following-

(a) fit and proper person requirements for

controllers and managers of prudentially regulated non-bank financial

institutions;

(b) the governance of non-bank prudentially

regulated financial institutions;

(c) capital and liquidity requirements;

(d) valuation requirements and methods;

(e) standards of business conduct;

(f) requirements for controllers of non-bank

financial institutions;

(g) the use by non-bank financial institutions

of financial instruments (including derivatives) and off balance sheet

transactions;

(h) insurance and, in the case of insurers,

re-insurance arrangements;

(i) outsourcing;

(j) how prudentially regulated non-bank

financial institutions manage risks associated with their businesses.

(3)

The Regulatory Authority shall not make a prudential rule unless-

(a) either-

(i) a draft of the rule has been published in

a way that the Regulatory Authority considers will bring it to the attention of

prudentially regulated non-bank financial institutions to which it will apply;

(ii) those institutions have had at least 90

days after that publication to make representations about the matter to the

Regulatory Authority; and

(iii) the Regulatory Authority had regard to

those representations in deciding whether to make the rule; or

(b) the Regulatory Authority considers on

reasonable grounds that it is necessary to make the rule urgently.

(4) A

prudential rule made in terms of paragraph (b) of subsection (3) ceases

to have effect at the end of 90 days after it is made, but this subsection does

not prevent the Regulatory Authority from acting in terms of that paragraph

again.

(5)

Subsections (3) and (4) apply in respect of modifications of prudential rules.

Information, reports, etc. (ss 51-52)

[Ch4608s51]51. Information to be given to Regulatory

Authority

The

Regulatory Authority may at any time give a written direction to a licensed

non-bank financial institution requiring it to give information to the

Regulatory Authority relevant to the performance of the Regulatory Authority's

functions under a financial services law.

[Ch4608s52]52. Reporting

(1)

The Minister may make regulations that impose requirements on any of the

following-

(a) a non-bank financial institution;

(b) an affiliate of a non-bank financial

institution;

(c) a person who is or has at any time been a

director or manager of a non-bank financial institution;

(d) a person who is or has at any time been an

auditor of a non-bank financial institution;

(e) in the case of a pension or provident fund

or an insurer, an actuary or auditor for the fund or the insurer;

(f) a controller of a non-bank financial

institution;

to make reports to the Regulatory Authority, and to give information or

documents to the Regulatory Authority, in connection with the Regulatory

Authority's performing its functions under a financial services law.

(2)

Without limiting subsection (1), the regulations may do any of the following-

(a) require the lodgement of periodic and other

returns;

(b) require changes in management and control

of non-bank financial institutions to be reported to the Regulatory Authority;

(c) require financial difficulties or suspected

financial difficulties in non-bank financial institutions to be reported to the

Regulatory Authority;

(d) require contraventions or suspected

contraventions of financial service laws in relation to non-bank financial

institutions to be reported to the Regulatory Authority.

(3) A

person who refuses or fails to comply with regulations made for the purposes of

this section shall be liable to a civil penalty not exceeding P50,000 to be

imposed by the Regulatory Authority.

(4) A

person who reports to the Regulatory Authority-

(a) financial difficulties or suspected

financial difficulties in a non-bank financial institution;

(b) a breach or suspected breach of a financial

services law in relation to a non-bank financial institution;

(c) the involvement or suspected involvement of

a non-bank financial institution in financial crime,

whether or not the report is required by law, shall not be liable for

damages or other sanction in relation to a loss caused by the report unless it

is established that the report was made in bad faith.

(5) A

person who subjects another person (in this subsection called a

"reporter") to any prejudice in his or her employment, or penalises a

reporter in any way, on the ground that the reporter made a report of a kind

mentioned in subsection (4), even if the report was not required by law,

commits an offence and on conviction is liable to a fine not exceeding P10,000.

Directions (s 53)

[Ch4608s53]53. Powers to give directions

(1)

If it appears to the Regulatory Authority that-

(a) a non-bank financial institution has

contravened a financial services law;

(b) a non-bank financial institution is likely

to contravene a financial services law;

(c) a non-bank financial institution is

conducting its affairs in an improper or in a financially unsound way;

(d) a non-bank financial institution is causing

or promoting instability in the financial system, or is likely to do so;

(e) a non-bank financial institution is

involved in financial crime; or

(f) the direction is necessary to protect the

interests of clients of a non-bank financial institution,

the Regulatory Authority may give the non-bank financial institution a

written direction as to the way in which the affairs of the institution are to

be conducted.

(2)

Without limiting subsection (1), a direction may require a non-bank financial

institution to do any of the following-

(a) to comply with the whole or a specified

part of a financial services law;

(b) to cause a person (such as an auditor)

chosen by the Regulatory Authority to audit the records of the institution, at

the expense of the institution, and give the report to the Regulatory

Authority;

(c) to ensure that a specified director or

employee of the institution does not take part in the management or conduct of

the business of the institution except as permitted by the Regulatory

Authority;

(d) to appoint a specified person or persons to

a specified office (including the office of director) of the institution for a

period specified in the direction;

(e) to remove an auditor or actuary of the

institution from office;

(f) not to borrow a specified amount, or any

amount;

(g) not to pay a dividend;

(h) not to pay or transfer an amount to a

person, or create an obligation (contingent or otherwise) to do so;

(i) not to undertake a financial obligation

(contingent or otherwise) on behalf of another person;

(j) to take any other action the Regulatory Authority

considers necessary or desirable to deal with the case in the interests of the

institution, the clients of the financial institution or the financial system.

(3) A

direction may include a direction to remove a director or officer of the

non-bank financial institution from office but only if the Regulatory Authority

is satisfied that-

(a) either-

(i) the institution has contravened a

financial services law or been involved in financial crime; and

(ii) the director or officer was knowingly

concerned in the contravention of the financial crime; or

(b) the director or officer has contravened a

financial services law or has been knowingly concerned in financial crime

(whether or not related to the institution).

(4) A

direction in terms of subsection (2) not to pay or transfer an amount does not

apply to the payment or transfer of money under an order of a court or a

process of execution.

(5) A

direction may specify the time by which, or period during which, it is to be

complied with.

(6) A

non-bank financial institution that has been given a direction in terms of this

section has power to comply with it despite anything in its memorandum or

articles of association or regulations, and despite any contract or arrangement

to which it is a party.

(7) A

direction in terms of this section is not a ground on which a person may

terminate, repudiate or cancel a contract with the non-bank financial

institution, accelerate a debt under such a contract or close out a transaction

with the institution, despite any provision to the contrary in any document.

(8)

The High Court may, on application by a party to a contract mentioned in

subsection (7) (other than the non-bank financial institution), make an order

relating to the effect of the direction on the contract.

(9)

Without limiting what the order may do, the order may require the non-bank

financial institution-

(a) to perform its obligations under the

contract; or

(b) to compensate the applicant, as specified

in the order; but may not require a person to take action that would contravene

the direction.

(10)

The Regulatory Authority may revoke a direction at any time, by written notice

to the non-bank financial institution concerned.

Inspections and investigations (ss 54-57)

[Ch4608s54]54. Appointment of inspectors and investigators

(1)

The Regulatory Authority may, by instrument in writing, appoint a person to be

an inspector or an investigator.

(2)

The Regulatory Authority shall provide to each inspector and investigator an

identity card approved by the Regulatory Authority.

(3)

An inspector or investigator, when exercising a power conferred by this Act,

shall, on reasonable demand, produce his or her identity card for inspection,

but failure to do so does not make the exercise of the power invalid.

[Ch4608s55]55. Routine inspections of licensed non-bank

financial institutions

(1)

An inspector may at any time inspect the affairs or any part of the affairs of

a person who is, or at any time has been, a licensed non-bank financial

institution to check whether the institution-

(a) is complying or has complied with the

financial services laws and the conditions of its licence;

(b) satisfies criteria or standards set out in

or made under a financial services law; or

(c) is or has been involved in financial crime.

(2)

For the purpose of such an inspection-

(a) the inspector may enter any premises used

or apparently used by the licensed non-bank financial institution for business

purposes, at any reasonable time; and

(b) inspect and make copies, or take extracts

from, any relevant records, documents or things in those premises.

(3) A

licensed non-bank financial institution, and its directors, officers and

employees, shall afford an inspector full and free access to the premises,

records and documents of the institution as are relevant to the inspection.

(4) A

person who, without reasonable excuse, contravenes subsection (3) shall be

liable to a civil penalty not exceeding P2,500 for each day on which the

contravention occurs or continues to occur to be imposed by the Regulatory

Authority.

[Ch4608s56]56. Investigations

(1)

This section applies if an investigator-

(a) has reasonable grounds to believe that-

(i) an offence under a financial services law

has been or may have been committed; or

(ii) a licensed non-bank financial institution

is not complying with, or has not complied with, a financial services law; and

(b) suspects on reasonable grounds that a

person (the "relevant person") has in its possession or under its

control anything that may afford evidence relevant to the matter (the

"relevant evidence").

(2)

For the purpose of investigating the offence or suspected offence, the

investigator may do any of the following-

(a) subject to subsection (6), enter any

premises used or apparently used by the licensed non-bank financial institution

for business purposes, at any reasonable time and search for any record,

document or other thing that the investigator considers may be relevant to the

inspection;

(b) inspect and make copies, or take extracts

from, and where necessary in an appropriate case to take possession of, such

records, documents or things;

(c) give a direction (orally or in writing) to

the licensed non-bank financial institution, to a director or employee of the

institution, or to the relevant person, to produce the relevant evidence to the

investigator as specified in the direction;

(d) give a direction (oral or written) to a

relevant person to do any of the following-

(i) produce to the investigator, at a

reasonable time and place specified in the direction, any relevant evidence;

(ii) give the investigator explanations or

further information about the relevant evidence;

(iii) attend before the investigator at a

reasonable time and place specified by the authorised person, and answer under

oath questions relating to the matter.

(3) A

licensed non-bank financial institution, and its directors, officers and

employees, shall afford an inspector full and free access to the premises,

records and documents of the institution as are relevant to an investigation

under this section.

(4) A

person who, without reasonable excuse, refuses or fails to comply with a

direction in terms of subsection (2) shall be liable to a civil penalty not

exceeding P2,500 for each day on which the refusal or failure to comply occurs

or continues to occur to be imposed by the Regulatory Authority.

(5) A

person who , without reasonable excuse, says anything in answering a question

put to the person by an investigator in terms of this section-

(a) that the person knows to be false or

misleading in a material particular; or

(b) reckless as to whether it is false or

misleading in a material particular, commits an offence and on conviction is

liable to a fine not exceeding P50,000 or to imprisonment for a period not

exceeding five years, or to both.

(6)

An investigator shall not enter premises in terms of subsection (2) (a)

unless-

(a) with the consent of the person apparently

in charge of the premises at the time of entry; or

(b) in accordance with a warrant under

subsection (7); or

(c) in an emergency, under subsection (9).

(7) A

warrant for the purposes of this section is a warrant issued by a magistrate on

application by an investigator.

(8) A

magistrate shall not issue a warrant under this section unless satisfied that

this section applies to the case, as provided in subsection (1).

(9)

An investigator may enter premises and exercise powers under this section

without the consent mentioned in subsection (6) (a) or a warrant only if

there are reasonable grounds to suspect that it is necessary to do so to

prevent loss or destruction of, or damage to, relevant evidence.

[Ch4608s57]57. Investigators' powers

An

inspector or investigator acting in terms of section 55 or 56 has all the

powers and protections of a Commissioner in terms of the Commissions of Inquiry

Act. Cap. 05:02

Self-regulatory organizations (ss 58-64)

[Ch4608s58]58. Self-regulatory organizations

(1)

The Minister may by order, on the recommendation of the Regulatory Authority,

declare a person or body that has functions in relation to a class of non-bank

financial institutions to be a self-regulatory organization for the purposes of

this Act.

(2)

The Minister shall not make a declaration in terms of subsection (1) unless the

Regulatory Authority has entered into arrangements with the person or body for

the performance by the person or body of regulatory or supervisory functions in

relation to the class of non-bank financial institutions.

(3)

The arrangements may, if the Regulatory Authority considers it appropriate,

involve the delegation of the Regulatory Authority's powers under financial

services laws to the self-regulatory organization.

(4)

The arrangements shall provide for-

(a) the supervision by the Regulatory Authority

of the self-regulatory organization's performance of regulatory or supervisory

functions by the self regulatory organization;

(b) the approval by the Regulatory Authority of

any rules, and amendments of rules, of the self-regulatory organization for or

with respect to the matters for which the self-regulatory organization has

regulatory or supervisory functions, including such functions as delegate of

the Regulatory Authority;

(c) the variation or termination of the

arrangements where the Regulatory Authority is not satisfied that the

self-regulatory organization is performing, or is able to perform, regulatory

or supervisory functions to the satisfaction of the Regulatory Authority.

[Ch4608s59]59. Rules of self-regulatory organizations

(1) A

self-regulatory organization may make rules, not inconsistent with the

financial services laws, for or with respect to any matters for which the

self-regulatory organization has regulatory or supervisory functions, including

such functions as delegate of the Regulatory Authority.

(2)

Rules made in terms of subsection (1), and amendments of such rules, are of no

effect unless approved by the Regulatory Authority.

[Ch4608s60]60. Due process by self-regulatory

organizations

A

self-regulatory organization shall not make a decision under its rules that

adversely affects the rights of a person unless-

(a) the self-regulatory organization has given

the person an opportunity to make representations to it about the matter; or

(b) the self-regulatory organization considers

on reasonable grounds that delay in making the decision will prejudicially

affect the protection of investors and consumers of securities services.

[Ch4608s61]61. Reporting by self-regulatory organizations

A

self-regulatory organization shall notify the Regulatory Authority, as

prescribed, as soon as practicable after a person is appointed a director or

executive of the organization.

[Ch4608s62]62. Termination of arrangements and revocation

of declaration

(1)

The Regulatory Authority may recommend to the Minister the revocation of a

declaration in terms of subsection 58 (1) at any time, but shall not do so

unless the Regulatory Authority has notified the self-regulatory organization

of its intention and the reasons for the Regulatory Authority's action, and

given the organization at least 14 days to make representations to the

Regulatory Authority about the matter.

(2)

The revocation of a declaration does not affect a right of a person to apply to

the Tribunal in terms of section 85 for a review of a decision or action.

(3)

In a case mentioned in subsection (2), the Tribunal shall send a copy of the

application to the Regulatory Authority, which is entitled to be a party to the

review proceedings in the Tribunal.

[Ch4608s63]63. Amendments to self-regulatory

organizations' constitutions

Notwithstanding

anything in the Companies Act Cap. 42:01 an amendment to the memorandum or articles of

association, or other constituent documents, of a self-regulatory organization

is of no effect unless approved by the Regulatory Authority.

[Ch4608s64]64. Protections for self-regulatory

organizations, etc.

None

of the following-

(a) a self-regulatory organization;

(b) a director, executive or employee of a

self-regulatory organization;

(c) a member of a committee of a

self-regulatory organization;

shall be liable for any loss sustained by or damage caused to any person

as a result of anything done or omitted by them in the performance in good

faith of their powers, functions and duties in connection with the regulatory

or supervisory functions the self-regulatory organization performs as

self-regulatory organization, including those delegated to it by the Regulatory

Authority.

Controllers of prudentially regulated non-bank financial institutions (s 65)

[Ch4608s65]65. Controllers of prudentially regulated non-bank

financial institutions

(1)

If a person takes a step intending thereby to become a controller of a

prudentially regulated non-bank financial institution, then, unless the

Regulatory Authority has approved the person's becoming a controller of the

institution, the person shall be liable to a civil penalty not exceeding

P10,000 to be imposed by the Regulatory Authority.

(2)

If-

(a) a person is a controller of a prudentially

regulated non-bank financial institution by virtue of the degree of voting

power a person has or controls in relation to the institution; and

(b) the person takes a step as a result of

which the degree of voting power it controls varies by more than the percentage

specified in the prudential rules; then, unless the Regulatory Authority has

approved the variation, the person shall be liable to a civil penalty not

exceeding P10,000 to be imposed by the Regulatory Authority.

(3)

If-

(a) a person becomes or ceases to be a

controller of a prudentially regulated non-bank financial institution; and

(b) at the end of 14 days after the event, the

change has not been reported to the Regulatory Authority in accordance with the

regulations;

the person shall be liable to a civil penalty not exceeding P10,000 to be

imposed by the Regulatory Authority.

(4)

If-

(a) a person is a controller of a prudentially

regulated non-bank financial institution by virtue of the degree of voting

power in relation to the non-bank financial institution that it has or

controls;

(b) the degree of voting power in relation to

the non-bank financial institution that it has or controls varies by more than

the amount prescribed by the prudential rules; and

(c) at the end of 14 days after the event, the

variation has not been reported to the Regulatory Authority in accordance with

the regulations;

the person, and the prudentially regulated non-bank financial

institution, each shall be liable to a civil penalty not exceeding P10,000 to

be imposed by the Regulatory Authority.

(5) A

variation mentioned in subsection (2) or (4) may be either by way of increase

or decrease in the percentage of voting power the person has or controls.

(6) A

prudentially regulated non-banking financial institution that permits a

variation with respect to the position of a controller as mentioned in

subsections (2), (3) or (4) without the approval of the Regulatory Authority

shall be liable to a civil penalty not exceeding P50,000 to be imposed by the

Regulatory Authority.