Key Benefits:
[Ch4608s6]6. Establishment of Regulatory Authority
(1) There is hereby established a Regulatory Authority, to be called the Non-Bank Financial Institutions Regulatory Authority.
(2) The Regulatory Authority is a body corporate with perpetual succession and a common seal, capable of suing and being sued in its own name and, subject to the provisions of this Act, of performing such acts as bodies corporate may by law perform.
[Ch4608s7]7. Functions of Regulatory Authority
The Regulatory Authority has the following functions-
(a) the functions conferred by this Act and by the other financial services laws;
(b) the functions of regulatory authority in terms of the other financial services laws;
(c) the function of advising the Minister on matters related to non-bank financial institutions and financial services, whether of its own accord or at the request of the Minister;
(d) such other functions as are conferred on it by law.
[Ch4608s8]8. Principal objects of Regulatory Authority
The principal object of the Regulatory Authority is to regulate and supervise non-bank financial institutions so as to foster the-
(a) safety and soundness of non-bank financial institutions;
(b) highest standards of conduct of business by non-bank financial institutions;
(c) fairness, efficiency and orderliness of the non-bank financial sector;
(d) stability of the financial system, and
(e) reduction and deterrence of financial crime.
[Ch4608s9]9. Regulatory Authority to report on non-bank financial institutions
If the Regulatory Authority believes that a prudentially regulated non-bank financial institution is financially unsound and the situation may impair the stability of the financial system or the safety and soundness of financial institutions generally the Regulatory Authority shall report the matter to the Bank of Botswana and the Minister.
[Ch4608s10]10. Policy directions by Minister
(1) If, after consultation with the Regulatory Authority, the Minister is of the opinion that the policies being pursued by the Regulatory Authority are not adequate for, or conducive to, the achievement of the objects of the Regulatory Authority as set out in section 8, the Minister may, by directive, determine the policy to be adopted by the Regulatory Authority.
(2) The Regulatory Authority shall give effect to the notified policy while the directive remains in force.
(3) A directive issued in terms of subsection (1) shall be published in the Gazette within seven days after it is given to the Regulatory Authority.
The Board and staff of the Regulatory Authority (ss 11-20)
(1) There shall be a Board of the Regulatory Authority.
(2) Subject to this Act, the Board shall be responsible for the policy and general administration of the Regulatory Authority, and may exercise all the powers of the Regulatory Authority.
(3) The Board shall consist of-
(a) the Governor of the Bank of Botswana;
(b) the Permanent Secretary of the Ministry responsible for finance; and
(c) four other persons appointed by the Minister, one of whom shall be appointed by the Minister to be Chairperson of the Regulatory Authority.
(4) The Board shall appoint, from the members appointed in terms of subsection (3) (c), a member to be Deputy Chairperson.
(5) The performance of the Regulatory Authority's functions and the exercise of its powers shall not be affected by a vacancy in the office of a member.
[Ch4608s12]12. Appointment of Chief Executive Officer
(1) The Minister shall appoint, on the recommendation of the Board, the Chief Executive Officer of the Regulatory Authority.
(2) While holding office, the Chief Executive Officer shall devote the whole of his or her professional services to the Regulatory Authority and shall not, without the written approval of the Minister, receive any salary or supplement to salary from any source other than the Regulatory Authority, or occupy any other office or employment, whether remunerated or not, except as a nominee of the Regulatory Authority.
(3) Subsection (2) does not prevent the Chief Executive Officer from serving as a member of a board, committee or Regulatory Authority established by Government, or holding office as a member of the board of any other body, or an international financial organization, of which Botswana is a member.
(4) Subject to this Act, the terms and conditions on which the Chief Executive Officer holds office are to be as determined by the Board.
[Ch4608s13]13. Period of office
(1) The member referred to in section 11 (3) (c) shall hold office for the period specified in the instrument of his or her appointment, which shall not be more than five years.
(2) If otherwise qualified, a member is eligible for reappointment.
(1) The Minister shall not appoint a person to be a member unless satisfied that the person is qualified for appointment by virtue of his or her knowledge of, or experience in, one or more of the following fields-
(a) business;
(b) financial markets;
(c) financial products and financial services;
(d) financial, commercial or business law;
(e) economics;
(f) accounting.
(2) A person is not capable of being appointed a member if the person-
(a) is a member of the National Assembly; or
(b) is a director, secretary or executive officer of a non-bank financial institution;
(c) whether in Botswana or in another jurisdiction, has been convicted of an offence for which he or she could have been sentenced to imprisonment without the option of a fine, or an offence involving dishonesty;
(d) whether under the law of Botswana or of another jurisdiction, is insolvent or bankrupt and has not been rehabilitated;
(e) is disqualified or suspended (other than at his or her own request) by a competent authority from practising a profession on the ground of misconduct; or
(f) is disqualified from acting as a director or executive officer of a body corporate under a law relating to corporations or to the provision of financial services, whether in Botswana or in another jurisdiction.
(1) The Chairperson and Deputy Chairperson may resign office by giving at least three months' notice in writing to the Minister.
(2) Other members referred to in section 11 (3) (c) may resign office by giving at least one month's written notice to the Minister.
[Ch4608s16]16. Termination of appointment
(1) The appointment of a member immediately terminates if the member-
(a) becomes a member of the National Assembly;
(b) becomes a director, secretary or executive officer of a non-bank financial institution;
(c) is convicted of an offence in Botswana or in other jurisdiction for which he or she could have been sentenced to imprisonment without the option of a fine, or an offence involving dishonesty;
(d) becomes insolvent or is declared bankrupt and has not been rehabilitated;
(e) is disqualified or suspended (other than at his or her own request) by a competent authority from practising a profession on the ground of misconduct; or
(f) is disqualified in Botswana from acting as a director or executive officer of a body corporate under a law relating to corporations or to the provision of financial services.
(2) The Minister may terminate a member's appointment on the ground that the member-
(a) has ceased to be fit and proper person to be a member;
(b) is suffering from a mental or physical condition such that he or she cannot properly carry out the duties of the office;
(c) has failed, without leave of the Regulatory Authority, to attend more than three consecutive meetings of the Regulatory Authority;
(d) has been disqualified from acting as a director or executive officer of a body corporate under a law relating to corporations or to the provision of financial services, either in Botswana or elsewhere;
(e) is convicted of an offence outside Botswana for which he or she could have been sentenced to imprisonment without the option of a fine, or an offence involving dishonesty;
(f) is declared bankrupt under a law of a place outside Botswana and has not been rehabilitated;
(g) is disqualified outside Botswana from acting as a director or executive officer of a body corporate under a law relating to corporations or to the provision of financial services; or
(h) has failed to comply with the Code of Conduct in a material particular.
Members shall be paid such remuneration and allowances as may be determined by the Minister.
(1) The Board shall hold at least nine meetings in each financial year, and such other meetings as are necessary for the efficient performance and exercise of its functions and powers.
(2) At a meeting of the Board, four members shall constitute a quorum.
(3) At a meeting of the Board if-
(a) the Chairperson is present - the Chairperson is to preside;
(b) the Chairperson is not present but the Deputy Chairperson is present - the Deputy Chairperson is to preside; and
(c) neither the Chairperson nor the Deputy Chairperson is present - the members present shall elect one of their number to preside.
(4) A question arising at a Board meeting is to be determined by a majority of the votes of the members present and voting.
(5) The person presiding at a Board meeting has a deliberative vote and, if necessary, also has a casting vote.
(6) Subject to this Act, the Board may regulate proceedings at its meetings as it considers appropriate.
The Regulatory Authority may, on terms it thinks fit-
(a) employ or engage staff; and
(b) engage other people to provide advice to it or perform functions or services for it.
[Ch4608s20]20. Declaration of interests
(1) Each member shall disclose in writing to each other member all interests that the member has that could conflict with the proper performance of the functions of the member's office, whether the interests were acquired before or after appointment.
(2) A disclosure in terms of subsection (1) shall be given as soon as practicable after the member becomes aware of the interest.
(3) The Regulatory Authority shall record all disclosures in terms of this section.
(4) A member who has an interest that could conflict with the proper performance of the functions of his or her office in relation to a particular matter shall not perform functions in relation to the matter unless-
(a) the member has complied with subsection (1) in relation to the interest; and
(b) each of the other members has consented to the member's performing those functions in relation to the matter despite the potential conflict of interest.
(5) For the purposes of subsections (1) and (4), it does not matter whether the interest is direct, indirect, pecuniary or non-pecuniary, nor when the interest was acquired.
(6) For the purposes of this section, if-
(a) a related party of a member has an interest, and
(b) if the member had the interest, it could conflict with the proper performance of the functions of the member's office,
the member is taken to have the interest, and this section applies accordingly.
(7) In subsection (6)-
"related party" of a member means any of the following-
(a) a spouse or a relative of the member;
(b) a person in accordance with whose directions, instructions or wishes the member is accustomed to act or is under an obligation, formal or informal, to act;
(c) a person who is accustomed to act, or is under an obligation, whether formal or informal, to act, in accordance with the directions, instructions or wishes of the member;
(d) a company of which the member is a director or executive officer, and a subsidiary of such a company;
(e) a company of which the member, or a spouse or relative of the director, is a director or executive officer;
(f) a company of which the member, or a spouse or relative of the member, is a controller;
(g) if the directors of a company accustomed to act, or under obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the member - the company;
(h) if the member and another person are parties to a contract, arrangement or understanding-
(i) to acquire, hold, sell or otherwise deal in securities in concert; or
(ii) to exercise voting rights in a specified company in concert,
the other party to the contract, arrangement or understanding.
(8) The Regulatory Authority shall take reasonable steps to ensure that its employees, and other persons performing or exercising functions or powers of the Regulatory Authority under financial services laws, make proper and adequate disclosure of their interests.
Financial and accountability provisions (ss 21-30)
[Ch4608s21]21. Money of the Regulatory Authority
The funds of the Regulatory Authority shall consist of-
(a) supervisory levies imposed on financial institutions in terms of section 23, and interest in respect of unpaid supervisory levies;
(b) money raised as fees and charges, and interest from unpaid fees and charges, in respect of services rendered by the Regulatory Authority in performing its functions under a financial services law;
(c) money paid in respect of civil penalties imposed by the Regulatory Authority under this Act;
(d) money borrowed by the Regulatory Authority in terms of section 27;
(e) money paid to the Regulatory Authority as a donation or bequest;
(f) money appropriated for the purposes of the Regulatory Authority from the Consolidated Fund; and
(g) money accruing to the Regulatory Authority from any other source.
[Ch4608s22]22. Annual estimates and levy structure
(1) For each financial year, the Regulatory Authority shall prepare-
(a) annual estimates of its expenditure; and
(b) a proposal for supervisory levies for the financial year.
(2) An annual estimate of the Regulatory Authority's expenditure for a financial year shall include provision for a reserve of not more that 10 per cent of the total expenditure provided for in the estimate.
(3) The Regulatory Authority must, at least two months before the start of a financial year, publish draft annual estimates and proposal for supervisory levies for the financial year in a way that the Regulatory Authority considers will bring them to the attention of non-bank financial institutions generally, and call for submissions on the draft estimates.
(4) The Regulatory Authority must, at least two months before the start of a financial year and having regard to any submissions received as mentioned in subsection (3), submit annual estimates of its expenditure to the Minister for approval and a recommendation for supervisory levies for the financial year.
(5) The Regulatory Authority shall not make expenditures in relation to a financial year in excess of the total expenditures provided for in the annual estimates for the year approved by the Minister, unless the Minister approves the additional expenditure.
[Ch4608s23]23. Supervisory levies
(1) The Minister shall, for each financial year, on the recommendation of the Regulatory Authority, make regulations for or with respect to the imposition and collection of supervisory levies.
(2) The regulations shall set out the basis of calculation of supervisory levies for a financial year.
(3) Different bases of calculation, and different rates of supervisory levy, may be prescribed for different classes of non-bank financial institutions.
(4) For the purposes of calculating the rates of supervisory levy for a class of non-bank financial institutions, supervisory levies for a financial year may be worked out on the basis of a set rate per P1,000 of assets under management by an institution as at the end of the previous financial year, as disclosed in annual return lodged by the institution for the previous financial year.
(5) The regulations may include provision for imposing interest on unpaid supervisory levy, and for imposing penalty levy for cases where a misstatement or other non-compliance by a non-bank financial institution leads to an under-collection of supervisory levy.
[Ch4608s24]24. Fees and charges
(1) The Minister may by regulations impose fees and charges for licences and renewals of licences, and for other services provided by the Regulatory Authority.
(2) Different rates of fees may be imposed for different classes of non-bank financial services, and different classes of licence or service in performing its functions under a financial services law.
[Ch4608s25]25. Supervisory levy, fees and charges, debts to Regulatory Authority
Supervisory levy, penalty levy and fees and charges are a debt due to the Regulatory Authority and may be recovered by action in a court of competent jurisdiction.
[Ch4608s26]26. Waiver of levies or fees
The Regulatory Authority may, on application, waive payment of some or all of a supervisory levy, penalty levy or a fee.
The Regulatory Authority may borrow money from the Bank of Botswana, or from a bank, but only-
(a) to cover a short-term cash flow shortfall within the annual estimates for the year approved by the Minister in terms of section 22; or
(b) with the Minister's approval.
[Ch4608s28]28. Advances from Government
The Minister may, out of money appropriated for the purpose, make advances to the Regulatory Authority, and may enter into agreements with the Regulatory Authority for the repayment, on terms satisfactory to the Minister, of amount so advanced.
(1) The Regulatory Authority shall establish an account, to be called the Levies Account.
(2) The following shall be paid into the Levies Account-
(a) money paid to the Regulatory Authority as supervisory levies, fees or charges;
(b) money received by the Regulatory Authority as interest or profits from the investment of money standing to the credit of the Levies Account;
(c) money paid to the Regulatory Authority for the purposes of the Regulatory Authority.
(3) Money standing to the credit of the Levies Account is to be applied for the following purposes-
(a) meeting the expenses of the Regulatory Authority incurred in performing its functions; and
(b) making investments authorised in terms of this Act.
Money standing to the credit of the Levies Account but not immediately required may be invested in commercial bank deposits or in securities issued or guaranteed by the Government, as the Regulatory Authority may determine.
Financial accounting (ss 31-36)
(1) The Regulatory Authority shall keep written financial records that-
(a) correctly record and explain the transactions, financial position and performance of the Regulatory Authority, and
(b) will enable a true and fair financial report about the Regulatory Authority to be prepared and audited.
(2) The records shall be kept for at least seven years after the date of the transactions to which they relate.
(3) The records shall be kept in English.
(4) The records may be kept electronically, but shall be able to be readily produced in hard copy.
[Ch4608s32]32. Financial statements and annual report
(1) The Regulatory Authority shall prepare, for each financial year-
(a) a financial report that consists of-
(i) balance sheets, profit and loss accounts and the other financial statements for the year, as required by applicable accounting standards; and
(ii) notes to the financial statements, as required by applicable accounting standards, and
(b) an annual report.
(2) The financial report shall include all information necessary to give a true and fair view of the financial position and performance of the Regulatory Authority.
(3) The annual report for a financial year shall report on the Regulatory Authority's operations and affairs during the year.
(4) Without limiting what is to be included in the report, it shall include-
(a) a discussion of the performance of the non-bank financial sector over the year, and an account of the way in which the Regulatory Authority has performed its functions under financial services laws;
(b) details of any significant changes in the state of the affairs of the Regulatory Authority during the financial year;
(c) details of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect the operations of the Regulatory Authority in future financial years, and
(d) information about material contraventions of the Code of Conduct during the financial year.
[Ch4608s33]33. Financial reports to be audited
(1) The Regulatory Authority shall cause the financial report for a financial year to be audited by an auditor appointed by the Regulatory Authority and approved by the Minister, and shall obtain the auditor's report.
(2) For the purposes of the audit, the auditor-
(a) has a right of access at all reasonable times to the Regulatory Authority's records, and
(b) may require any member or employee of the Regulatory Authority to provide information, explanations or other assistance.
(3) A person who fails or refuses to comply with a reasonable requirement in terms of subsection (2) (b) commits an offence and on conviction is liable to a fine not exceeding P10,000 or to imprisonment for a term not exceeding 12 months, or to both.
(4) The auditor shall audit the financial report and report to the Regulatory Authority whether, in his or her opinion, the financial report is in accordance with this Act, including, in particular, whether it gives a true and fair view of the state of the affairs of the Regulatory Authority as at the end of the financial year to which it relates, and where the auditor is not of that opinion, the report shall state the reason.
[Ch4608s34]34. Financial report and annual report to be given to Minister
(1) The Regulatory Authority shall, within six months after the end of a financial year or such longer period as the Minister may approve, give the Minister a copy of the financial report and the annual report for the financial year, and of the auditor's report on the financial report.
(2) As soon as practicable after the reports have been given to the Minister, they shall be laid before the National Assembly.
(3) As soon as practicable after the reports are laid before the National Assembly, the Regulatory Authority shall cause copies of them to be published in a newspaper of general circulation and to be made available to non-bank financial services institutions.
[Ch4608s35]35. Reporting to National Assembly and industry
(1) The Regulatory Authority shall, through the Minister, comply with any request by the National Assembly or a committee of the National Assembly for information relating to the performance of its functions.
(2) The Chairperson and the Chief Executive Officer shall, as soon as practicable after the Regulatory Authority's annual report has been laid before the National Assembly, make copies of the report available to non-bank financial institutions, and make arrangements to attend such conferences or meetings with non-bank financial institutions as in their view will enable non-bank financial institutions generally to consider the report and question them about the Regulatory Authority's intended activities in the financial year after the year to which the report relates.
[Ch4608s36]36. Auditor General may examine Regulatory Authority
The Auditor General shall, if the Minister so directs, examine and report on the accounts of the Regulatory Authority on any aspects of its operations, and the Regulatory Authority shall give the Auditor General all necessary facilities for that purpose.
Other provisions (ss 37-41)
[Ch4608s37]37. Protection of Regulatory Authority, officers, etc.
None of the following-
(a) the Regulatory Authority;
(b) a member or employee of the Regulatory Authority,
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 exercise of powers or the performance of functions under a financial services law.
(1) In this section-
"officer" means a person who is or has been a member or employee of the Regulatory Authority or a person engaged by the Regulatory Authority in terms of section 19 (b).
(2) An officer who discloses to any person any information (orally or in writing) relating to the affairs of any non-bank financial institution, or any other person, that the officer has acquired in the performance of his or her duties or the exercise of his or her functions as such commits an offence and on conviction is liable to a fine not exceeding P30,000 or to imprisonment for a term not exceeding three years, or to both.
(3) Subsection (2) does not prevent-
(a) disclosure of a summary or collection of information that is prepared so that information relating to any particular person cannot be found out from it;
(b) disclosure of the name of a licensed non-bank financial institution;
(c) disclosure of the addresses at which licensed non-bank financial institutions carry on business;
(d) disclosure of any other information reasonably necessary to enable members of the public to contact non-bank financial institutions; or
(e) disclosure of information to the Commissioner General of Taxes.
(4) It is a defence to a charge in terms of subsection (2) that-
(a) the disclosure was for the purposes and in the course of the exercise of the officer's duties or the performance of the officer's functions under a financial services law;
(b) the disclosure was made to or with the consent of the non-bank financial institution or the person concerned;
(c) the disclosure was made in accordance with a lawful requirement of a court of competent jurisdiction;
(d) the disclosure was authorised by a financial services law;
(e) the disclosure was required by another law; or
(f) the disclosure was authorised by regulations made for the purposes of this section.
(5) Every person appointed under or employed in carrying out the provisions of this Act, except the Minister, shall make an oath or declaration of secrecy in the manner and form prescribed.
[Ch4608s39]39. Code of conduct
(1) The Regulatory Authority shall formulate a Code of Conduct, to apply to the members and employees of the Regulatory Authority.
(2) The Code of Conduct shall be consistent with this Act and other financial services laws, and shall make provision for at least the following matters-
(a) use and disclosure of information by members and employees of the Regulatory Authority;
(b) reducing or eliminating improper influence on the Regulatory Authority and on members and employees of the Regulatory Authority in carrying out their functions under financial services laws;
(c) trading in and ownership of securities or other financial instruments by members and employees of the Regulatory Authority;
(d) conflicts of interest;
(e) receiving, keeping, holding and reporting gifts of any description by members and employees of the Regulatory Authority.
(3) The Regulatory Authority shall review the Code of Conduct at least once a year.
(4) A member or employee of the Regulatory Authority shall not contravene the Code of Conduct.
(5) Contravention of the Code of Conduct is not of itself an offence, but (without limiting any other law)-
(a) a contravention of the Code of Conduct by a member may be evidence that the member is not fit and proper to be a member; and
(b) an employee of the Regulatory Authority who contravenes the Code of Conduct commits a breach of his or her contract of service with the Regulatory Authority.
[Ch4608s40]40. Arrangements with other agencies
(1) In carrying out its functions under financial services laws, the Regulatory Authority shall consult with the Bank of Botswana and other agencies of the Government that have functions related to the regulation or supervision of financial services, taxation, social security or the financial system.
(2) The Regulatory Authority may enter into arrangements with the Bank of Botswana and other agencies of the Government that have functions related to the regulation or supervision of financial services, taxation, social security or the financial system.
(3) Without limiting what those arrangements may deal with, they may make provision for-
(a) the exchange of information between the Regulatory Authority and the other agencies, with due regard for the need to protect appropriately personal information about persons;
(b) consultation between the Regulatory Authority and the other agencies;
(c) enforcement of financial services laws and assistance with enforcement of other laws; and
(d) the conduct of examinations and investigations on a joint basis.
(4) The Regulatory Authority may enter into similar arrangements with organizations outside Botswana in carrying out its regulatory and supervisory functions under financial services laws.
(1) The Board may delegate any of its functions or powers under this Act (other than this power of delegation) to-
(a) a member;
(b) an employee of the Regulatory Authority;
(c) an employee of the Bank of Botswana;
(d) an investigator; or
(e) a self-regulatory organization.
(2) In performing or exercising a delegated function or power, the delegate shall comply with directions given by the person delegating the function or power.
(3) A delegation in terms of this section may be subject to conditions specified in the instrument of delegation.
(4) A delegated power or function shall be exercised or performed in accordance with the instrument of delegation.
(5) A delegation may be varied or revoked at will and does not prevent the Board from exercising the delegated power or performing the delegated function.
