Non-Bank Financial Regulatory Authority - Non-Bank Financial Institutions Regulatory Authority Establishment, Objects And Constitution Of Non-Bank Financial Institutions Regulatory Authority (Ss 6-10)

Link to law: http://www.elaws.gov.bw/desplaylrpage1.php?id=1346

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[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)

[Ch4608s11]11. The Board

(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.

[Ch4608s14]14. Qualifications

(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.

[Ch4608s15]15. Resignation

(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.

[Ch4608s17]17. Remuneration

Members

shall be paid such remuneration and allowances as may be determined by the

Minister.

[Ch4608s18]18. Meetings

(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.

[Ch4608s19]19. Staff, etc.

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.

[Ch4608s27]27. Borrowings

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.

[Ch4608s29]29. Levies Account

(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.

[Ch4608s30]30. Investments

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)

[Ch4608s31]31. Record keeping

(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.

[Ch4608s38]38. Secrecy

(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.

[Ch4608s41]41. Delegations

(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.