GOVERNMENT GAZETTE OF THE
REPUBLIC OF NAMIBIA N$13.32 WINDHOEK - 9 March 1998 No. 1808
CONTENTS
Page
GOVERNMENT NOTICE
No. 41 Promulgation of Banking Institutions Act, 1998 (Act No.2 of 1998), of the Parliament ,
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Government Notice
OFFICE OF THE PRIME MINISTER
No.41 1998
PROMULGATION OF ACT OF PARLIAMENT
./ The following Act which has been passed by the Parliament and signed by the President in terms of the Namibian Constitution is hereby published in terms of Article 56 of that Constitution.
No.2 of 1998: Banking Institutions Act, 1998.
2 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
ACT
To consolidate and amend the laws relating to banking institutions; to provide for the authorisation of a person to conduct business as a banking institution, and for the control, supervision and regulation of banking institutions; to protect the interests of persons making deposits with banking institutions; to provide for the winding-up or judicial management of banking institutions and for the cancellation of authorisations; and to provide for matters incidental thereto.
(Signed by the President on 20 February 1998)
PART I
PRELIMINARY PROVISIONS
ARRANGEMENT OF SECTIONS
Section
1. Definitions
APPLICATION OF ACT
2. Application of Act
PART I I
ADMINISTRATION OF ACT
3.
4.
Guidelines or notices by the Bank
Limitation of liability
PART I I I
AUTHORISATION TO ESTABLISH A BANKING INSTITUTION
5.
6.
7.
8.
9.
Prohibition on conducting of banking business by unauthorised persons
Investigations
Repayment of monies by unauthorised persons
Name of banking institution
Banking institutions to be incorporated
10.
II.
r" 12.
13.
14.
15.
16.
17.
18.
19.
No. 1808 Government Gazette 9 March 1998 3
BANKING INSTITUTIONS ACT, 1998Act No.2, 1998
20.
2l.
22.
23.
24.
25.
26.
27.
28.
29.
30.
3l.
32.
33.
34.
35.
36.
Application for authorisation to establish a banking institution
Granting or refusal of application for authorisation and certificate of
authorisation to conduct banking business
Duration and conditions of authorisation
Annual fees
Subsidiaries, branch offices, representative offices and other interests of
banking institution
Cancellation of authorisation
Repayment of deposits upon cancellation of authorisation
Cancellation of authorisation upon winding -up
Publication of information relating to banking institutions
Representative office of foreign banking institution
PART IV
SHAREHOLDING IN BANKING INSTITUTIONS
Restriction on shareholding and changes in shareholding
Shareholder's register and registration of shares
Furnishing of information by shareholders
Absence of wrongful intent
Effects of registration of shares contrary to Act
Restriction of right to control banking institution
Prohibitions and restrictions
PART V
PRUDENTIAL REQUIREMENTS AND LIMITATIONS
Standards of corporate behaviour
Minimum capital funds
Composition of capital funds
Provision to be made for certain matters
Minimum liquid assets
Restriction on dividends
Minimum local assets
Large exposures and concentrations of credit
Lending against own shares or debt instruments
Exposure to directors, to officers with managerial responsibilities or to
shareholders to be secured
4 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
Terms of exposure to directors, officers and shareholders
Exposure to holding companies, subsidiaries and affiliates
Restriction on commercial activities
Limitation on investment in property
PART VI
DIRECTORS, PRINCIPAL OFFICERS AND AUDITORS
Directors and principal officers of banking institutions
Audit committee
Appointment of auditor
Disqualification for appointment as auditor
Duties and functions of auditor
PART VII
SUPERVISION BY BANK
Financial and other banking records
Financial statements
Disclosure of paid-up share capital
Furnishing of certain statements, notices, returns and information
Reporting of certain transactions by banking institutions
Extension of time
58.
59.
60.
Examinations by Bank
Production of records and furnishing of information
Approval of special resolutions
Undesirable practices
Powers of Bank regarding banking institutions
Additional Powers of Bank to apply for capital reduction or to acquire
shares in a banking institution
Winding-up or judicial management
Proof of claims
Unclaimed monies or property after winding-up
PART VIII
GENERAL PROVISIONS
61. Agreements restricting competition
No. 1808 Government Gazette 9 March 1998 5
BANKING INSTITUTIONS ACT, 1998Act No.2, 1998
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
Insolvent banking institutions prohibited to accept deposits
Insurance against loss due to negligence or dishonesty
Confidentiality and secrecy
Publication of information
International supervisory co-operation
Minors as depositors
Exemption of certain transactions from stamp duties
Application of other laws to banking institutions
External bureaux
Regulations and determinations
Offences and penalties
Offences by banking institutions, officers or agents
Repeal of laws and savings
Short title and commencement
SCHEDULE
BE IT ENACTED by the Parliament of the Republic of Namibia as
follows :-
PART I
PRELIMINARY PROVISIONS
Definitions
1. (1) In this Act, unless the context otherwise indicates -
"affiliate", in relation to a person, means any company, association, syndicate,
partnership or other body of persons, corporate or unincorporate, in which -
(a) 20 per cent or more of any class of voting shares or other voting
participation is directly or indirectly owned or controlled by the
person, or is held by the person with power to vote; or
(b) the election of the majority of directors is in any manner controlled
by the person;
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Act No.2, 1998
No. ] 808
BANKING INSTITUTIONS ACT, 1998
"associate", in relation to a person, but subject to subsection (2), includes -
(a)
(b)
the holding company of such person;
a subsidiary company or a fellow subsidiary of such person;
(c) a subsidiary company of any of the companies referred to in
paragraphs (a) or (b) or in this paragraph;
(d) a substantial shareholder of such person or a substantial shareholder
of such person's holding company;
(e) a business partner of -
(i) such person;
(ii) such person's substantial shareholder;
(iii) a substantial shareholder of such person's holding
company; or
(iv) any of the companies referred to in paragraphs (a), (b) or
(c);
(f) any person who is an officer of -
(i) such person;
(ii) any of the companies referred to in paragraphs (a), (b) or
(c); or
(iii) any shareholder or business partner referred to in
paragraph (d) or (e);
"auditor" means an auditor referred to in the Public Accountants and Auditors
Act, 1951 (Act 51 of 1951);
"authorised" means authorised under this Act to conduct banking business;
No. 1808 Government Gazette 9 March 1998 7
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
"Bank" means the Bank of Namibia referred to in section 4 of the Bank of Namibia
Act, 1997;
"banking business" means the business that consists of -
(a) the regular receiving of funds from the public; and
(b) the using of funds referred to in paragraph (a), either in whole, in
part or together with other funds, for the account and at the risk of
the person conducting the business -
(i) for loans or investments;
(ii) for any other purpose or activity authorised by law or by
customary banking practice in terms of this Act; or
(iii) for such activities that the Minister, in consultation with
the Bank has, by notice in the Gazette, determined to be an
authorised manner of using funds for the purpose of
conducting banking business;
"banking institution" means a public company authorised under this Act to conduct
banking business, or deemed to be so authorised;
"business practice" includes any agreement, arrangement or understanding,
whether or not enforceable under any law, entered into between two or more
persons, or any scheme, practice or method of trading, including any method or
manner of marketing or distribution;
"capital funds" has the meaning determined by the Bank under section 28;
"claim", with regard to a person, means the obligation of any other person to pay
or to deliver to such person, any value in accordance with an agreement or the
law establishing such claim;
"closed day" means a Sunday or a public holiday referred to in, or declared under,
the Public Holidays Act, 1990 (Act 26 of 1990);
8 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
"close relative", in relation to a person, means -
(a) the spouse of such person, or any other person who has a
relationship with such person as a spouse in a union in terms of
the customary law;
(b) such person's child, step-child, adopted child, brother, sister, step-
brother, step-sister, parent or step-parent; or
(c) the spouse, or any person who has a relationship as a spouse in
a union in terms of the customary law, of any of the persons
mentioned in paragraph (b);
"Companies Act" means the Companies Act, 1973 (Act 61 of 1973);
"company" means a company registered under the Companies Act;
"controlling company" means a controlling company as defined in the Companies
Act;
"day" means a calendar day, excluding a closed day;
"debt instrument" includes debentures as defined in section 1(1) of the Companies
Act, or any other security or document issued by a company, evidencing or
acknowledging the liability of a person or the company to repay an amount of
money specified in the security or other document, subject to the conditions
whereto the security or document is issued;
"deposit", when used as a noun, means an amount of money paid by one person
to any other person, or by a customer to a banking institution, subject to an
agreement in terms of which the full amount of money, or any part thereof, will,
conditionally or unconditionally, and with or without interest or a premium, be
repaid to such person or to the customer on demand or at a specified or unspecified
date, or after a predetermined period of time, or after a predetermined period of
notice of withdrawal, or subject to an agreement entered into by the parties
concerned, notwithstanding that such payment is limited to a fixed amount or
that a transferable or non-transferable certificate or other instrument providing
\)
No. 1808 Government Gazette 9 March 1998 9
BANKING INSTITUTIONS ACT, 1998Act No.2, 1998
for the repayment of the amount is issued in respect of such amount, but a deposit
shall not include an amount of money -
(a) paid as an advance, or as a part payment in terms of a contract for
the sale, letting, hiring or other provision of movable or immovable
property or for services;
(b) paid as security for the performance of a contract or as security in
respect of any loss which may result from the non-performance of
a contract;
(c) paid as security for the delivery or return of any movable or
immovable property;
(d) paid by a holding company to its subsidiary, or by a subsidiary to
its holding company, or by one subsidiary to a fellow subsidiary;
or
(e) paid by a person who, at the time of such payment -
(i) is a close relative of the person to whom such money is
paid;
(ii) is a director or an officer concerned in the management of
the person to whom such money is paid; or
(iii) is a close relative of a director or of an officer referred to
in subparagraph (ii),
and "depositor" shall have a corresponding meaning;
"determination" means a determination made by the Bank under this Act and
published by notice in the Gazette, and "determine" has a corresponding meaning;
"director" means a director as defined in section 1(1) of the Companies Act;
"exposure" means any form of exposure, including -
10 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
(a) loans, advances and irrevocable commitments to lend;
(b) leasing;
(c) guarantees;
(d) any other form of finance; or
(e) any other exposure contemplated for the purpose of capital
requirements under section 28;
"fellow subsidiary" means, in relation to a company which is a subsidiary of a
holding company, any other company which is a subsidiary of such holding
company;
"foreign banking institution" means a person authorised or registered to conduct
banking business under the laws of any state, country, colony or territory other
than Namibia, and which conducts banking business in such other state, country,
colony or territory;
"High Court" means the High Court of Namibia constituted by Article 80(1) of
the Namibian Constitution and referred to in the High Court of Namibia Act,
1990 (Act 16 of 1990);
"holding company" means a holding company as defined in section 1(4) of the
Companies Act;
"incorporated", in relation to a banking institution, means registered as a public
company under the Companies Act;
"insolvent", in relation to a banking institutio , includes a banking institution -
(a) of which the liabilities exceed i s assets; or
(b) which has committed an act of insolvency in terms of the
Insolvency Act, 1936 (Act 24 of 1936);
No. 1808 Government Gazette 9 March] 998 1 ]
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
"managerial responsibility" means the responsibility for the control or
administration of the business or affairs of a banking institution, or any part of
such business or affairs;
"Minister" means the Minister of Finance;
"officer", in relation to a company, means any director having executive
responsibilities in the company, or any manager, secretary or other employee of
the company, but does not include a juristic person holding any such position;
"prescribe" means prescribe by regulation;
"principal officer", in relation to a banking institution, means the executive
chairperson, the managing director, the executive director, the chief executive
officer or the manager, or any other person, by whatever title referred to, who is
chiefly responsible for the management of the affairs of the banking institution in
Namibia, and whose name and title the banking institution from time to time in
writing advises to the Bank, and includes a person who, in terms of section 10,
applies for an authorisation to establish a banking institution;
"receiving funds from the public", for the purpose of ascertaining if a person is
conducting banking business, means that the person -
(a) accepts deposits or similar funds from the public, including from
employees, members, shareholders or partners of the person, as a
regular feature of his or her business;
(b) solicits or advertises for deposits or similar funds;
(c) obtains, as a regular feature of his or her business, money through
the sale of an asset to a person other than to a banking institution
or a statutory body or other institution referred to in section 2(2),
subject to an agreement in terms of which the seller undertakes to
repurchase from the buyer at a future date the asset sold, or any
other asset;
(d) conducts any other activity which the Bank, by notice in the
12 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
Gazette, has declared to be the acceptance of deposits from the
public; or
(e) accepts or obtains money, whether directly or indirectly, from
members of the public, as a regular feature of a business practice,
with the prospect of any of such members (in this section referred
to as the "participating members"), receiving any payment or any
other money-related benefits, directly or indirectly -
(i) on or after the introduction of other members of the public
to the business practice (in this section referred to as the
"new participating members"), and from which new
participating members, in their turn, money is accepted or
obtained, directly or indirectly, as a regular feature of the
business practice, whether or not -
(aa) the introduction of the new participating members
is limited to their introduction by participating
members or extends to the introduction of the new
participating members by other persons; or
(bb) new participating members are required to acquire
movable or immovable property, rights or services;
(ii) on or after the promotion, transfer or change of status of
the participating members or new participating members
within the business practice; or
(iii) from funds accepted or obtained from participating
members or new participating members in terms of the
business practice;
or the soliciting of, or advertising for, whether directly or indirectly, money
or persons for the purpose of introducing into or participating in a business
practice referred to in this section,
but does not include -
'\ -_/
No. 1808 Government Gazette 9 March 1998 13
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(ab) any activity of the public sector, governmental or other institution,
or of any person or category of persons, designated by the Minister,
on the recommendation of the Bank, by notice in the Gazette, and
if such activity is performed in accordance with the conditions
that the Minister may specify in the notice; or
(ac) the acceptance of money against debentures or other similar debt
instruments, if such money is not used for the purpose of granting
advances, loans or credit to the public, excluding customary credit
in respect of the sale of goods or the provision of services by the
issuer of these instruments;
"regulations" mean the regulations made under this Act;
"representative office", in respect of a foreign banking institution, means an office
of the foreign banking institution in Namibia;
"risk weighting" means attaching a weight of one, or a fraction of one, to each
class of assets or other exposures of a banking institution in accordance with the
determinations by the Bank for the purpose of calculating the minimum capital
requirements under section 28;
"subsidiary" means a subsidiary company as defined in section 1(3) of the
Companies Act, and includes a subsidiary company of a subsidiary;
"substantial shareholder" means any person or registered shareholder that, directly
or indirectly, holds, controls or is entitled to exercise the voting rights in more
than five per cent of any class of voting shares of a company, and for the purpose
of determining whether a person is a substantial shareholder -
(a) a person that controls a substantial shareholder shall be deemed to
be a substantial shareholder; and
(b) any shares owned or controlled, or the voting rights of which are . .
exercisable, by an individual's close relative shall be deemed to
be owned or controlled by that individual; and
14 Government Gazette 9 March 1998
Act No.2, 1998
No. 1808
BANKING INSTITUTIONS ACT, 1998
"this Act" includes the regulations and the determinations.
(2) For the purposes of -
(a) paragraph (e) of the definition of "associate" in subsection (1), a
business partner means a business partner who is able, by virtue
of his or her own shareholding, to contribute to or to affect the
influence which the person, substantial shareholder or company
referred to in that paragraph is, in his or her or its capacity as a
shareholder; and
(b) paragraph (f) of the definition of "associate" in subsection (1), an
officer means an officer who is able to contribute to or to affect
the influence which the person, company, shareholder or business
partner referred to in that paragraph is, by virtue of his or her or its
shareholding,
able or in a position to exercise.
(3) Any application or notice made or given, or any other
communication, in terms of or pursuant to this Act, shall -
(a) be in the official language of Namibia; and
(b) unless otherwise provided for in this Act, be in writing.
Application of Act
2. (1) This Act, in so far as it provides for a limitation on the
fundamental freedoms contemplated in Article 21 of the Namibian Constitution
by authorising restrictions relating to the conducting of business, is, unless
otherwise provided, enacted upon the authority conferred by that Article.
(2) This Act shall not apply to -
(a) the Bank, except insofar as it confers upon the Bank the power to
perform the functions contained in this Act;
, ,
Act No.2, 1998
Government Gazette 9 March 1998 15
(b)
(c)
(d)
(e)
BANKING INSTITUTIONS ACT, 1998
any international bank or international financial organisation, or
any associated or affiliated bank or financial organisation of such
international bank or international organisation, of which the
Government of Namibia or the Bank is a member;
any insurer registered under the Insurance Act, 1943 (Act 27 of
1943);
the Agricultural Bank of Namibia, established by the Agricultural
BankAct, 1944 (Act 13 of 1944);
any pension fund registered under the Pension Funds Act, 1956
(Act 24 of 1956);
(f) any friendly society registered under the Friendly Societies Act,
1956 (Act 25 of 1956);
(g) any unit trust registered under the Unit Trusts Control Act, 1981
(Act 54 of 1981);
(h) any scheme registered under the Participation Bonds Act, 1981
(Act 55 of 1981);
(i) any building society registered under the Building Societies Act,
1986 (Act 2 of 1986);
the Development Fund of South West Africa / Namibia, established
by the Development Fund of South West Africa / Namibia Act,
1987 (Act 29 of 1987);
(k) the Post Office Savings Bank as defined in the Posts and
Telecommunications Act, 1992 (Act 19 of 1992);
(1) the Namibia Development Corporation, established by the Namibia
Development Corporation Act, 1993 (Act 18 of 1993);
(m) the National Housing Enterprise, established by the National
Housing Enterprise Act, 1993 (Act 5 of 1993);
]6 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(n)
(0)
(p)
any medical scheme registered under the Medical Aid Funds Act,
1995 (Act 23 of 1995);
any co-operative society registered under the Co-operative
Societies Act, 1996 (Act 23 of 1996); or
any other institution or body designated by the Minister, on the
recommendation of the Bank, by notice in the Gazette.
(3) The Minister may, on the recommendation of the Bank, by notice
in the Gazette, remove any institution or body from subsection (2).
(4) A person, other than a person who solicits or advertises for deposits,
shall not be deemed to be accepting deposits if he or she does not, at any time,
hold deposits -
(a) for or on behalf of more than 20 persons; or
(b) amounting in aggregate to more than N$ 500 000, excluding
interest payable on the deposits.
(5) The Minister may, on the recommendation of the Bank, by notice
in the Gazette amend -
(a) the number of persons specified in paragraph (a); or
(b) the amount specified in paragraph (b),
of subsection (4).
PART I I
ADMINISTRATION OF ACT
Guidelines or notices by the Bank
3. (1) The Bank may from time to time, for the purpose of
promoting sound and prudential banking practices, furnish banking institutions
No. 1808 Government Gazette 9 March 1998 17
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
with guidelines or notices not inconsistent with this Act, relating to the application
of this Act by banking institutions or to the conducting of banking business in
general.
(2) The guidelines or notices contemplated in subsection (1) shall be
in writing and shall be delivered by the Bank to the principal officer of a banking
institution.
Limitation of liability
4. (1) No liability shall attach to -
(a) the Government of Namibia;
(b) the Minister;
(c) the Bank;
(d) the Governor or Deputy Governor, or any member of the Board or
officer or employee of the Bank; or
(e) any person acting on behalf of the Government or of the Bank,
either in his or her personal or official capacity, for any loss sustained or damage
caused by any person as a result of anything done or omitted by any such person
in good faith and not attributable to wrongful intent or to negligence, in the
performance of any function or duty under this Act.
(2) For the purposes of this section -
(a) "Governor" means the Governor of the Bank; and
(b) "Deputy Governor" means the Deputy Governor of the Bank,
as defined in the Bank of Namibia Act, 1997.
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No. 1808
BANKING INSTITUTIONS ACT, 1998
PART I I I
AUTHORISATION TO ESTABLISH A BANKING INSTITUTION
Prohibition on conducting of banking business by unauthorised persons
5.
(a)
(1) No person shall -
conduct banking business;
(b) receive, accept or take a deposit;
(c) by any means, including advertising or soliciting, procure or
attempt to procure a deposit;
(d) pretend to be a banking institution; or
(e) subject to subsection (2), use the expression "bank" or "banking
institution", or any other expression, name, title or symbol
indicating or calculated to create the impression that the person is
conducting, or is authorised to conduct, business as a banking
institution,
unless such person is under this Act authorised to so conduct business as a banking
institution.
(2) Paragraph (e) of subsection (1) shall not apply if the expression
"bank" or any equivalent or derivative of the expression, is -
(a) included in the name or title of a staff association or similar
organisation of a banking institution;
(b) included in the name or title of an association of banking
institutions; or
(c) used for any other purpose approved by the Bank in writing.
I -'
No. 1808 Government Gazette 9 March 1998 19
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(
Investigations
6. (1) This section, in so far as it provides for a limitation on the
fundamental rights contemplated in Sub article (1) of Article 13 of the Namibian
Constitution by authorising interference with the privacy of any person's home,
correspondence or communication, is enacted upon the authority conferred by
Subarticle (2) of that Article.
(2) The Bank may, if it has reason to believe that a person is conducting
banking business in contravention of section 5, in writing authorise an officer of
the Bank to -
(a) mutatis mutandis in accordance with Chapter 2 of the Criminal
Procedure Act, 1977 (Act 51 of 1977), at any time and without
prior notice -
(i) enter any premises which the Bank or the officer has reason
to believe is occupied or used by any person for the purpose
of or in connection with the conducting of banking business
in contravention of section 5;
(ii) search for any book, record, statement, document or other
item used, or which is believed to be used, in connection
with the banking business referred to in subparagraph (i);
or
(iii) seize or make a copy of any book, record, statement,
document or other item referred to in subparagraph (ii), or
seize any money found on the premises,
as if the officer were a police official referred to in that Act and
the book, record, statement, document or other item were used in
the commission of a crime;
(b) question any person who is present on the premises referred to in
paragraph (a)(i), or the auditors, directors, members or partners of
any person conducting business on the premises, in connection
with the conducting of the business on the premises;
(c) direct that the premises referred to in paragraph (a)(i), or any part
of, or anything on, the premises, be left undisturbed for as long as
it is necessary to search the premises for any book, record,
statement, document or item referred to in paragraph (a)(ii); ')_J
(d) by notice in writing addressed and delivered to any person who
has control over or custody of any book, record, statement,
document or other item referred to in paragraph (a)(i), require the
person to produce the book, record, statement, document or other
item to the officer of the Bank addressing the notice, at the place,
on the date and at the time specified in the notice;
(e) examine any book, record, statement, document or other item
referred to in paragraph (a)(i), and may require from any person
referred to in paragraph (b) an explanation regarding any entry in
the book, record, statement, document or other item;
(f) by notice in writing delivered to a banking institution, instruct
such banking institution to summarily freeze any banking account
or accounts of any person referred to in this subsection with such
banking institution, and to retain all moneys in any such banking
account or accounts, pending the further instructions of the Bank;
(g) by notice in writing delivered to any person referred to in this
section, direct that the business of such person be summarily
suspended, pending the investigation by the Bank under this
section;
(h) if any person has been convicted of an offence in terms of section
5, close down the business of such person; or ",I
(i) require a member of the Namibian Police Force, or may request
any other person, to assist him or her in the exercising, performance
or execution of his or her powers, duties or functions under this
section.
(3) If the officer of the Bank referred to in subsection (2) exercises,
20 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808 Government Gazette 9 March 1998 21
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
performs or executes a power, duty or function under this section in the presence
of any person affected by the exercising, performance or execution of the power,
duty or function, the officer shall at the request of the person so affected, exhibit
to the person the written authorisation referred to in that subsection.
(4) No person shall -
(a) hinder or obstruct an officer of the Bank authorised under
subsection (2) in the exercising, performance or execution of his
or her powers, duties or functions;
(b) refuse or fail to comply with any request made by an officer referred
to in paragraph (a) in the exercising, performance or execution of
such officer's powers, duties or functions;
(c) subject to Article 12(1)(f) of the Namibian Constitution, refuse or
fail to answer any question which an officer referred to in paragraph
(a) lawfully directs at such person in the exercising, performance
or execution of such officer's powers, duties or functions.
(d) wilfully furnish false or misleading information to an officer
referred to in paragraph (a); or
(e) falsely give himself or herself out as an officer referred to in
paragraph (a).
(5) For the purposes of this section, "premises" shall include any
building or structure, or part of such building or structure, whether above or below
the surface of the land or water, or any vehicle, vessel or aircraft.
Repayment of monies by unauthorised persons
7. (1) If the Bank is satisfied that a person has obtained any
monies in contravention of section 5, the Bank shall in writing direct the person
to repay all the monies so obtained by him or her, including any interest or other
amounts which may be owing by the person in respect of such monies -
22 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
(a) to the respective persons from whom he or she has obtained the
mOllles;
(b) in the manner and in accordance with the requirements; and
(c) within the period of time,
imposed by the Bank and specified in the direction.
(2) Any person referred to in subsection (1) who refuses or fails to
comply with a direction under that subsection, shall, for the purposes of section
345 of the Companies Act, be deemed to be unable to pay its debts, or for the
.purposes of section 8 of the Insolvency Act, 1936 (Act 24 of 1936), be deemed to
have committed an act of insolvency, as the case may be, and the Bank may apply
to the High Court for the winding-up, or for the sequestration of the estate, of
such person, as the case may be.
(3) Subsections (1) and (2) shall be in addition to, and not derogate
from, any criminal liability in terms of this Act or of any other law, of a person
referred to in those subsections.
(4) Section 60 shall mutatis mutandis apply to monies referred to in
subsection (1), or to any other property which a person referred to in that subsection
may have in his or her possession as a lessor of a safe deposit box, as a trustee, a
fiduciary or in any other capacity on behalf of any other person.
Name of banking institution
8. (1) No authorisation to conduct banking business shall be
issued to any person under a name which, in the opinion of the Bank, may mislead
the public as to the identity of the banking institution concerned, or as to the
nature of its activities.
(2) No banking institution shall, without the written approval of the
Bank, use, refer to itself by, or conduct banking business under, a name other
than the name under which it was authorised to conduct banking business as
contemplated in subsection (1).
No. 1808 Government Gazette 9 March 1998 23
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(3) Upon a written application by a banking institution, the Bank may,
subject to such conditions as it may impose, change the name under which the
banking institution was authorised to conduct banking business to the name applied
for by the banking institution, or may refuse the application.
(4) If the Bank is satisfied that the authorised name of a banking
institution or the name under which the banking institution conducts business, as
the case may be, may mislead the public as to the identity or nature of the business
of the banking institution, the Bank may, subject to subsection (5), by written
notice addressed and delivered to the banking institution -
(a) change the authorised name of the banking institution; or
(b) instruct the banking institution to change the name under which it
is conducting business to a name approved by the Bank.
(5) The Bank shall not change the name of a banking institution under
subsection (4), unless -
(a) the Bank has given the banking institution 30 days written notice
of its intention to change the name of the banking institution,
furnishing reasons for the intended change of name; and
(b) has afforded the banking institution the opportunity to, within the
30 day period of time contemplated in paragraph (a), make written
representations to the Bank relating to the intended change of name.
(6) If the Bank under subsection (3) or (4), as the case may be, changes
the name under which a banking institution was authorised, the Bank shall under
section 11 issue an amended certificate of authorisation in the name of the banking
institution, specifying the changed name of the banking institution.
Banking institutions to be incorporated
9. (1) No person shall be authorised to conduct business as a
banking institution unless such person is incorporated as a public company under
the Companies Act and has the minimum capital funds specified in or determined
under section 28.
24 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(2) No company shall, without the written approval of the Bank, be
incorporated under the Companies Act for the purpose of conducting banking
business.
Application for authorisation to establish a banking institution
10. (1) Any person who intends to conduct banking business may,
subject to the further provisions of this section, apply to the Bank for the granting
of an authorisation to so conduct banking business.
(2) An application contemplated in subsection (1) shall -
(a) be made in the form and manner required by the Bank in writing;
(b) be signed on behalf of the applicant by its principal officer, or if
the applicant is a company to be registered, by its trustees or by
the subscribers to its memorandum and articles of association; and
(c) be accompanied by the prescribed application fee.
(3) On receipt of an application contemplated in subsection (1), the
Bank may, before considering the application, in writing require the applicant to
furnish to the Bank -
(a) a report in writing by a public accountant as defined in section 1
of the Public Accountants' and Auditors' Act, 1951 (Act 51 of
1951), or by another person approved by the Bank, on such aspects
relating to the application as the Bank may deem necessary; or
(b) such further information, books, records, statements or other
documents as the Bank may request.
Granting or refusal of application for authorisation and certificate to conduct
banking business
11. (1) Before considering an application for an authorisation
lodged with the Bank in terms of section 10, the Bank shall conduct such
No. 1808 Government Gazette 9 March 1998 25
BANKING INSTITUTIONS ACT, 1998Act No.2, 1998
investigations, both in or outside Namibia, relating to the applicant or to the
application as it may deem necessary in order to ascertain -
(a)
(b)
(c)
(d)
(e)
the validity and authenticity of the information submitted by the
applicant to the Bank in terms of section 10;
the financial status and history of the applicant, including its assets
and liabilities, and its policies and strategies relating to the future
development of its banking business;
whether the applicant has an adequate capital structure, ascertained
in the manner, and in accordance with the criteria, determined by
the Bank under section 28;
the integrity of the applicant and its competence to conduct, or
experience in conducting, banking business;
the ability of the applicant to comply with the provisions of this
Act;
(f) whether the directors and officers of the applicant are fit and proper
persons for the purpose of conducting banking business, according
to the criteria as the Bank may determine;
(g) the structure and shareholding of the group of companies of which
the applicant forms a part or intends to form a part;
(h) whether the granting of the application for authorisation will be in
the economic interest of Namibia;
(i) whether the applicant is or will be able to apply or maintain
adequate, effective and proper internal control systems when
conducting the banking business in terms of the authorisation; and
U) any other matter which the Bank may regard as relevant to the
applicant or to the application.
26 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(2) No application for authorisation to conduct banking business shall
be considered by the Bank unless the Bank is satisfied that -
(a) the applicant complies with, or is able to comply with, all the
relevant provisions of this Act; and
(b) the banking business to which the application relates would be to
the economic advantage of Namibia.
(3) After having considered an application made in terms of subsection
(1) of section 10, the Bank shall, before taking any decision relating to the
application, consult with the Minister.
(4) After consultation with the Minister in terms of subsection (3),
the Bank shall, subject to the further provisions of this Act -
(a) refuse the application; or
(b) grant the application; or
(c) grant the application subject to such conditions as the Bank may
Impose,
and shall in writing inform the applicant of its decision.
(5) The application fee paid by or on behalf of the applicant in terms
of section 1O(2)(c) shall, irrespective of whether the application is granted or
refused, not be refunded.
(6) If the Bank under subsection (4) grants an application for
authorisation to conduct banking business, the Bank shall, against payment of the
prescribed authorisation fee by or on behalf of the person who applied for the
authorisation, issue, in the name of such person, a certificate of authorisation to
conduct banking business.
(7) A certificate contemplated in subsection (6) shall -
No. 1808 Government Gazette 9 March 1998 27
Act No.2, 1998
(a)
(b)
(c)
.
BANKING INSTITUTIONS ACT, 1998
be in the form;
contain the particulars; and
be issued and signed by a person,
decided on by the Bank.
Duration and conditions of authorisation
12. (1) An authorisation issued under section 11 shall, subject to
section 15 or 17, as the case may be, be valid for an indefinite period of time.
(2)
(a)
A banking institution shall -
if it intends to effect any change in, or in any of the circumstances
relating to, any of the particulars furnished by the banking
institution when it in terms of section 10 applied to the Bank for
the granting of an authorisation under section 11, give the Bank at
least 30 days written notice of such intended change; or
(b) if any change occurs in any of the circumstances referred to in
paragraph (a), immediately in writing inform the Bank of such
change which has so occurred,
together with full particulars of such change or intended change, as the case may
be.
(3) The Bank may, on receipt of a notice contemplated in paragraph
(a) or (b) of subsection (2), as the case may be, or if a banking institution effects
a change, or a change occurs, as the case may be, in the circumstances contemplated
in that subsection, and the banking institution fails to inform the Bank of such
change as required by that subsection, and if in the opinion of the Bank, the
change or the intended change in the circumstances of the banking institution
contemplated in that subsection is of such a nature or extent that the Bank considers
it necessary to amend any of the conditions subject to which the authorisation
was granted, the Bank shall -
28 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(a) in writing notify the banking institution of the Bank's intention to
so amend such conditions; and
(b) together with the notice contemplated in paragraph (a) -
(i) furnish the banking institution with full particulars of the
intended amendments to the conditions; and
(ii) request the banking institution to, in writing and within
the period of time specified in the notice, make written
representations to the Bank relating to such intended
amendments.
Annual fees
13. (1) An authorised banking institution shall, subject to
subsection (2), in respect of the authorisation to conduct business as a banking
institution, and before 31 January of each year, pay to the Bank the prescribed
annual fees in respect of such year.
(2) The Bank may, upon receipt of a written request made by a banking
institution before the date for payment of the annual fees specified in subsection
(1), and on good cause shown in writing grant an extension oftime to such banking
institution for the payment of such fees for such period of time and subject to
such conditions as the Bank may impose.
(3) If a banking institution fails to pay the prescribed annual fees before
or on the date specified in subsection (1), or within the extended period of time, if
any, granted by the Bank under subsection (2) -
(a) the authorisation referred to in subsection (1) shall terminate on
that date or on the last day of the extended period of time, as the
case may be; and
(b) the unpaid annual fee and any penalty payable in terms of
subsection (4) -
No. 1808 Government Gazette 9 March 1998 29
BANKING INSTITUTIONS ACT, 1998Act No.2, 1998
(i) shall be a debt due to the Bank by the banking institution; and
(ii) may be recovered by the Bank from the banking institution
by means of action instituted in any court having
jurisdiction.
(4) If the annual fees payable in terms of subsection (1) are not paid
on or before the date specified in that subsection, such late payment of the annual
fees shall, subject to subsection (2), be subject to the payment of a penalty at the
prescribed rate.
Subsidiaries, branch offices, representative offices and other interests of a
banking institution
14. (1) A banking institution shall not, without the prior written
approval of the Bank -
(a) establish or acquire a subsidiary;
(b) open a branch outside Namibia;
(c) acquire any direct or indirect interest in any undertaking outside
Namibia; or
(d) establish a representative office outside Namibia.
(2) A banking institution shall not less than 30 days prior to -
(a) the opening of a branch in Namibia by the banking institution;
(b) the disposal of a subsidiary, or of any interest in any other
undertaking; or
(c) the closing of a representative office or of a branch office,
in writing inform the Bank of the intended opening, disposal or closing, as the
case may be.
30 Government Gazette 9 March] 998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
Cancellation of authorisation
15. (1) The Bank may, after consultation with the Minister and
subject to subsection (2), by notice in writing addressed and delivered to a banking
institution, cancel, from a date specified in the notice, the authorisation to conduct
banking business granted to the banking institution under section 11, if the banking
institution -
(a) fails to commence with the conducting of banking business within
a period of six months -
(i) after the date for commencement of the conducting of
banking business specified by the Bank upon the granting
of the authorisation; or
(ii) if no date for commencement contemplated in
subparagraph (i) is specified by the Bank, after the date of
issue of the certificate of authorisation under section 12;
(b) fails to comply with any condition imposed by the Bank under
section 11(4)(c);
(c) ceases to conduct the business for which it is authorised;
(d) is found guilty of an offence under any provision of this Act, and
if the Bank is of the opinion that the banking institution concerned
is conducting its business in a manner detrimental to (d) of
subclause (1); or
(e) in the circumstances contemplated in section 39(5), and if the Bank
is of the opinion that the banking institution concerned is
conducting its business in a manner detrimental to the interests of
its customers or the general public.
(2) The Bank shall, before cancelling the authorisation of a banking
institution under subsection (1), but subject to subsection (5), in writing give the
banking institution not less than 30 days written notice of its intention to so cancel
the authorisation.
/ '--.
No. 1808 Government Gazette 9 March 1998 31
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(3) A notice to a banking institution contemplated in subsection (2)
shall -
(a) state that the Bank intends to cancel the authorisation of a banking
institution;
(b) specify the reason or reasons for the intended cancellation; and
(c) invite the banking institution to, within the period of time specified
in the notice, in writing make representations to the Bank to show
cause why the authorisation shall not be cancelled.
(4) The Bank may, at the expiration of the 30 day period contemplated
in subsection (2) and after considering the representations, if any, made by the
banking institution concerned after consultation with the Minister -
(a) cancel the authorisation under subsection (1); or
(b) without cancelling the authorisation, amend the conditions subject
to which the authorisation was granted; or
(c) decide not to cancel the authorisation or to amend the conditions
referred to in paragraph (b),
and shall immediately in writing inform the banking institution of its decision.
(5) Notwithstanding subsection (2), the Bank may, after consultation
with the Minister, in circumstances contemplated in subsection (1) and without
prior notice, direct a banking institution by means of a notice delivered in
accordance with section 26(3)(d), to summarily suspend all, or any part of, the
banking business of the banking institution for such period and subject to such
conditions as the Bank may specify in such notice.
(6) A banking institution to which a notice under subsection (5) has
been delivered may, within a period of 14 days after receipt of the notice, in
writing submit to the Bank representations relating to the notice and to the
suspension of its banking business, or part thereof, under that subsection.
32 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
(7) On receipt of representations by a banking institution under
subsection (6), the Bank may confirm or rescind the suspension made by it under
subsection (5), or may vary the conditions subject to which the banking business
of the banking institution was so suspended.
Repayment of deposits upon cancellation of authorisation
16. (1) If the authorisation to conduct banking business granted
to a banking institution ceases or has been cancelled, the Bank may give notice to
the banking institution -
(a) to repay all monies due by it to its depositors, including any interest
on, or any other amounts owing by it in respect of, such monies;
and
(b) to change its name and to amend its memorandum and articles of
association,
in accordance with the directions and within the period of time specified by the
Bank in the notice.
(2) Different directions or periods of time may, in respect of different
kinds of deposits, be specified by the Bank under subsection (1)(a).
(3) Notwithstanding subsection (2), the Bank shall, in specifying the
directions or periods of time contemplated in that subsection, not give any
preference to any depositor which such depositor does not enjoy in terms of any
other law.
(4) A banking institution which in accordance with a notice under
subsection (I) repays a deposit before the due date agreed upon for the repayment
of the deposit, shall not be bound to pay any interest or any other amounts which
would have been payable in respect of the deposit for the period calculated from
the date of the actual repayment up to the due date.
(5) A banking institution which fails to comply with a notice under
subsection (I) shall for the purposes of sections 344 and 345 of the Companies
Act be deemed not to be able to pay its debts.
No. 1808 Government Gazette 9 March 1998 33
BANKING INSTITUTIONS ACT, 1998Act No.2, 1998
Cancellation of authorisation upon winding-up
17. When the affairs of a banking institution have been completely
wound up in terms of section 419 of the Companies Act -
(b)
(a) the Master of the High Court shall transmit to the Bank a copy of
the certificate contemplated in that section of the Companies Act;
and
an authorisation granted to the banking institution shall, from the
date of the dissolution of the company concerned contemplated in
subsection (3) of that section of the Companies Act, be deemed to
be cancelled.
Publication of information relating to banking institutions
manner -
18. The Bank, by notice in the Gazette in the prescribed form and
(a) shall inform -
(i) the authorisation of a person to conduct business as a
banking institution;
(ii) any change of name of a banking institution; or
(iii) the cancellation of an authorisation; or
(b) may inform the suspension of the authorisation, of the business or
of any part of the business of a banking institution,
under any provision of this Act.
Representative office of foreign banking institution
19. (1) No foreign banking institution shall establish a
representative office in Namibia without the prior written approval of the Bank.
34 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
(2) A foreign banking institution shall, in the form and manner required
by the Bank, apply for an approval contemplated in subsection (1) and shall,
together with the application, furnish such particulars or documents relating to
the application as the Bank may specify and inform the applicant.
(3) An application in terms of subsection (2) shall be accompanied by
the prescribed application fee.
(4) The representative office in Namibia of a foreign banking
institution shall -
(a) not less than 20 days prior to the foreign banking institution -
(i) changing its name;
(ii) substituting its chief representative officer;
(iii) changing the address or location of its representative office
in Namibia; or
(iv) closing down the representative office,
in writing inform the Bank of such intended change, substitution
or closing, as the case may be;
(b) not conduct banking business in Namibia; and
(c) only be engaged in such activities in Namibia as the Bank may
approve and in writing inform the foreign banking institution.
PART IV
SHAREHOLDING IN BANKING INSTITUTIONS
Restriction on shareholding and changes in shareholding
20. (1) Notwithstanding the Companies Act, but subject to the prior
'\, )
No. 1808 Government Gazette 9 March 1998 35
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
written approval of the Bank -
(a) no banking institution shall allot or issue, or register the transfer
of, any of its shares to a person; or
(b) no person shall acquire any shares in a banking institution,
to the extent to which the nominal value of the shares so allotted, issued, transferred
or acquired, together with the nominal value of any other shares in the banking
institution already registered in the name of such person or in the name of any
related party of such person, equals or exceeds in total 20 per cent of the total
nominal value of all issued vote-bearing shares in the banking institution.
(2) Without prior written notification to the Bank -
(a) no banking institution shall allot or issue, or register the transfer
of, any of its shares to a person; or
(b) no person shall acquire any shares in a banking institution,
to the extent to which the nominal value of such shares so allotted, issued,
transferred or acquired, together with the nominal value of any other shares in the
banking institution already registered in the name of such person or any related
party of such person, equals or exceeds, subject to subsection (1), five per cent of
the total nominal value of all issued vote-bearing shares in the banking institution.
(3) If the nominal value of shares in a banking institution issued or to
be registered in the name of a person, together with the nominal value of the
shares already held by the person, amount to the lesser of N$ 100 000 or one per
cent of the value of all the shares issued in the banking institution, the banking
institution may, unless it has knowledge to the contrary, accept that the person is
not a related party of any other shareholder in the banking institution.
(4) No person who is not a fit and proper person in accordance with
the criteria for fitness and properness relating to substantial shareholders as
determined by the Bank, shall become a substantial shareholder of a banking
institution.
36 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(5) No banking institution shall allot or issue, or register a transfer of,
shares to a person -
(a) who is; or
(b) who shall, as a result of the allotment, issue or registration, become,
a substantial shareholder of the banking institution, if such person is prohibited in
terms of subsection (4) to be, or to become, a substantial shareholder of a banking
institution.
(6) For the purposes of this section, a "related party" in respect of a
person means -
(a) an associate or close relative of the person; or
(b) any other person who has entered into an agreement with the person
relating to -
(i) the acquisition, holding or disposal; or
(ii) the exercising of voting rights in respect,
of shares in a banking institution or in any trust controlled or
administered by the person.
Shareholder's register and registration of shares
21. (1) Subject to subsection (3), a banking institution shall, in
such form and manner as the Bank may approve, maintain a register of the current
beneficial holders of all vote-bearing shares in the banking institution.
(2) The transfer of a share referred to in subsection (1), shall not be
valid until such time as the transfer has been recorded in the register contemplated
in that subsection.
(3) If the Bank is satisfied that the register kept by a banking institution
No. 1808 Government Gazette 9 March 1998 37
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
in terms of section 93 of the Companies Act clearly reflects the particulars of the
current beneficial holders, and a record of any change in the holders, of all the
shares referred to in subsection (1) of this section, the Bank may, at the request of
the banking institution, in writing exempt the banking institution from the
requirement to maintain the register contemplated in that subsection.
(4) Notwithstanding the provisions of the Companies Act, a banking
institution shall not, without the prior written approval of the Bank -
(a) allot or issue any of its shares to, or register any of its shares in the
name of, any person other than the intended beneficial shareholder;
(b) transfer any share in the name of any person other than the
beneficial shareholder; or
(c) allow any of its shares registered in the name of a person other
than the beneficial shareholder before the commencement date of
this Act, to remain so registered.
(5) Subsection (4) shall, subject to subsection (6), not affect the
allotment or issue, or the registration of a transfer, of shares in a banking institution -
(a) in the name of a trustee of a unit trust scheme as defined in the
Unit Trust Control Act, 1981 (Act 54 of 1981), or of a nominated
company of the trustee approved by the Registrar of Unit Trust
Companies referred to in that Act;
(b) in the name of an executor, administrator, trustee, curator, guardian
or liquidator, as the case may be, in the circumstances referred to
in section 103(3) of the Companies Act; or
(c) for a period of not more than six months in the name of a stock
broker, or in the name of a company established by him or her for
any purpose contemplated in section 12(3) of the Stock Exchanges
Control Act, 1985 (Act 1 of 1985), or in the name of an employee
of the company,
38 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
if the banking institution is satisfied that the shares are allotted, issued or registered
in such a manner in order to facilitate delivery of the shares to the purchaser
thereof.
(6) The banking institution referred to in subsection (5) shall in writing
furnish the Bank with full particulars of the transaction relating to the allotment,
issue or registration of the shares contemplated in that subsection.
(7) The voting rights attached to the shares registered in terms of
subsection (5) shall, unless otherwise determined by the Bank, not be more than
25 per cent of the aggregate of the voting rights attached to all the issued shares
of the banking institution concerned.
Furnishing of information by shareholders
22. (1) At the written request of a banking institution addressed
to a person who has notified the banking institution that he or she or it intends to
acquire shares in the banking institution, such person shall, subject to subsection
(2), furnish the banking institution with the information or particulars specified
in such request and which the banking institution considers necessary to enable it
to comply with sections 20 or 21, as the case may be.
(2) The information or particulars contemplated in subsection (1) shall
be furnished to the banking institution in such form as the banking institution
may specify in the request contemplated in that subsection.
Absence of wrongful intent
23. If a banking institution or a controlling company, or any director,
officer, employee or agent of the banking institution or controlling company, on
the strength of information or particulars reasonably obtained by him or her, in
good faith and without wrongful intent, acts, or fails to act, in contravention of
section 20(1), (2), (3), (4) or (5) or 21(1), (2), (4), (6) or (7), such act or failure to
act shall not constitute an offence.
No. 1808 Government Gazette 9 March 1998 39
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
Effects of registration of shares contrary to Act
24. (1) No person shall -
(a) either personally or by proxy granted to any other person, cast a
vote attached to; or
(b) receive a dividend payable in respect of,
any share in a banking institution allotted or issued to him or her, or registered in
his or her name, in contravention of any provision of this Act.
(2) A vote cast in contravention of paragraph (a) of subsection (1)
shall, for the purposes of this Act, be null and void.
(3) A dividend referred to in paragraph (b) of subsection (1) shall
accrue to the banking institution or the controlling company concerned, as the
case may be.
Restriction of right to control banking institution
25. (1) No person shall acquire, or subject to subsection (3),
directly or indirectly exercise control over, a banking institution, unless the Bank
is satisfied that such person is a fit and proper person as contemplated in section
20(4) .
(2) The Bank may by notice in writing addressed to a person, prohibit
the person to acquire or, subject to subsection (3), to exercise control over a banking
institution, if the person is, in the opinion of the Bank and having regard to the
structure and business activities of the corporate group of which the person is a
member, not a fit and proper person in terms of this Act to acquire or to control a
banking institution.
(3) Any person who fails to comply with a notice under subsection
(2) within the period of time or before the date specified in such notice, shall be
guilty of an offence.
40 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(4) The provisions of subsections (1) and (2) relating to the exercising
of control over a banking institution, shall, subject to the further provisions of
this Act, not apply in respect of a person's control over a banking institution if -
(a) the person was exercising control over the banking institution
concerned; and
(b) the banking institution was registered as a bank under any law
repealed by this Act,
immediately prior to the commencement of this Act.
Prohibitions and restrictions
26. (1) The Bank may, if it is satisfied that a banking institution or
any other person has contravened, or has failed to comply with, any of the
provisions of section 20, 21, 22 or 25, as the case may be, in writing make a
preliminary order imposing one or more of the restrictions specified in subsection
(2) on the person or on the banking institution, as the case may be, as the Bank
may consider appropriate.
(2) A preliminary order by the Bank contemplated in subsection (1)
may, in respect of any of the shares forming the subject of, or related to, the
contravention or failure referred to in that subsection, prohibit -
(a) the transfer of, or the due performance in terms of any agreement
to transfer, the shares; or
(b) in the case of unissued shares, the transfer of, or the right to be
issued with, the unissued shares;
(c) the exercise of any voting rights in respect of the shares;
(d) the issue of any further shares in pursuance to any offer made to
the holder of the shares; or
(e) except in the case of liquidation, the payment of any amount
whatsoever due by the banking institution in respect of the shares.
\.
No. 1808 Government Gazette 9 March 1998 41
BANKING INSTITUTIONS ACT, 1998Act No.2, 1998
(3) A preliminary order made by the Bank under subsection (1) shall-
(a) be in the form required, and signed by a person appointed, by the Bank;
(b) be addressed to the banking institution or person concerned;
(c) specify, and contain full particulars of, the order made by the Bank;
and
(d) during normal hours of business be delivered by a person appointed
in writing by the Bank for such purpose, upon the principal officer
of the banking institution or upon the other person contemplated
in subsection (1), as the case may be, to whom the preliminary
order is directed, or, in the case of a banking institution, if the
principal officer is not available, upon any person over the age of
16 years employed by the banking institution.
(4) The person to whom the preliminary order is delivered in terms of
subsection (3)(d), shall-
(a) in writing acknowledge receipt of the order, specifying -
(i) the full names and designation of the person who received
the order; and
(ii) the date and time of such receipt; and
(b) sign the acknowledgment of receipt contemplated in paragraph
(a).
(5) The Bank may, at its discretion and in addition to the delivery of
the preliminary order in terms of subsection (3)(d) upon the banking institution
or upon the other person concerned, publish the preliminary order in one or more
newspapers in the manner and form as the Bank may specify.
(6) A preliminary order delivered upon a banking institution or other
person in terms of subsection (3)(d) shall, from the date of such delivery, be
42 Government Gazette 9 March 1998
Act No.2, 1998
No. 1808
BANKING INSTITUTIONS ACT, 1998
binding upon the banking institution or the other person, as the case may be, to
whom the order is directed and to whom it is delivered in terms of that subsection.
(7) A person holding shares in a banking institution and to whom a
preliminary order has been delivered in terms of subsection (3)(d) shall, within
seven days after the date of such service, or within such longer period of time as
the Bank may allow, surrender the share certificates concerned to the Bank,
together with such other documents relating to the shares as the Bank may specify
in the order.
(8) Any person to whom a preliminary order has been delivered in
terms of subsection (3)( d), or any other person prejudiced by the order, may within
a period of 14 days after the date of service of the order, or after the date upon
which he or she became aware of the order, as the case may be, make written
representations to the Bank applying for -
(a)
(b)
the cancellation of the order on the grounds that the person had
not contravened, or had not failed to comply with, any provision
of this Act as specified in the order; or
an amendment of the order on the grounds specified in the
application.
(9) The Bank may, after considering the representations made to it in
terms of subsection (8) -
(a)
(b)
(c)
confirm the preliminary order;
cancel the preliminary order; or
confirm the preliminary order subject to such amendments as the
Bank may consider appropriate.
(10) If the Bank confirms a preliminary order under subsection (9), it
may dispose of the shares surrendered to it in terms of subsection (7), in such
manner as it may consider appropriate, to a person qualified to hold such shares
in terms of this Act.
No. 1808 Government Gazette 9 March 1998 43
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(11) The proceeds of a sale of shares under subsection (10) shall, subject
to subsection (12), be paid by the Bank to the person entitled to the proceeds.
(12) If the Bank is for any reason unable to pay the proceeds referred
to in subsection (11) to the person entitled thereto under that subsection, section
60( 1) shall mutatis mutandis apply to the proceeds.
(13) The Bank may in writing give such instructions or directions to
the directors or officers of a banking institution contemplated in subsection (1) as
the Bank may consider necessary tG give effect to an order made by the Bank
under this section.
(14) Any transaction, including any agreement or arrangement, in
relation to any shares or security, or to any interest in any shares or security,
which is in contravention of -
(a) any order made under this section; or
(b) any instruction or direction given under subsection (13),
by the Bank, shall be null and void.
(15) The Bank may, irrespective of whether a person contemplated in
subsection (1) has been prosecuted in respect of the contravention of, or failure to
comply with, a provision of this Act referred to in that subsection, make a
preliminary order or take such other steps as the Bank may consider appropriate.
(16) Any person who fails to comply with any provision of subsection
(4) shall be guilty of an offence and on conviction be liable to a fine not exceeding
N$2000 or to imprisonment for a period not exceeding six months or to both such
fine and such imprisonment.
44 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
PART V
PRUDENTIAL REQUIREMENTS AND LIMITATIONS
Standards of corporate behaviour
27. (1) A banking institution, its holding company in respect of
its activities conducted in Namibia or its subsidiaries shall, in accordance with
guidelines or notices issued by the Bank under section 3 and to the satisfaction of
the Bank, at all times conduct its business in a prudent manner and consistent
with the best standards and practices of corporate governance and sound financial
management.
(2) Unless otherwise prescribed or determined, a banking institution
shall comply with the standards of corporate governance generally practised, or
required to be so practised, by companies listed on any stock exchange established
in Namibia under the Stock Exchanges Control Act, 1985 (Act 1 of 1985).
Minimum capital funds
28. (1) The minimum capital funds, unimpaired by losses, of a
banking institution shall, subject to subsection (2), (4) or (5), as the case may be,
at any time not be less than the greater of -
(a) an amount of N$ 10 000 000; or
(b) an amount which represents a percentage of the risk weighted assets
and other exposures of a banking institution as the Bank may
determine.
(2) A banking institution which is immediately prior to the
commencement date of this Act registered as a banking institution under any law
repealed by this Act and which on that date does not comply with the requirements
determined by or under subsection (1), shall, within the period of time and subject
to the conditions imposed by the Bank, comply with the requirements so imposed.
(3) A banking institution referred to in subsection (2) which does not
comply with the requirements contemplated in that subsection immediately prior
No. 1808 Government Gazette 9 March 1998 45
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
to the commencement date of this Act, but which, within the period of time
specified by the Bank for compliance as contemplated in that subsection, complies
with the requirements so contemplated, shall not be guilty of an offence.
(4) Notwithstanding any provision of this section, the Bank may, if it
is of the opinion that there is a risk of the existing capital funds of a banking
institution being impaired, require the banking institution to, in addition to the
capital funds required by or under subsection (1), acquire such further capital
funds as the Bank my specify.
(5)
(a)
(b)
(c)
The Bank may -
on application in writing and on good cause shown, in writing
permit a banking institution to, for such limited period of time as
the Bank may specify, have capital funds which are lower than the
capital funds determined by or under subsection (1), and which
limited period of time and the amount of the lower capital funds
shall be specified in the permission;
determine that the capital requirements of a banking institution
contemplated in subsection (1), shall, on a consolidated basis, apply
to, and the capital be reflected in the consolidated accounts of, the
banking institution, its holding company or the affiliate or associate
of the banking institution or its holding company; or
for the purposes of this section, determine the percentage and risk
weighting of assets or other exposures.
Composition of capital funds
29. The Bank may, for the purposes of section 28, determine the
composition and proportions of the different classes of capital constituting capital
funds contemplated in, and other requirements and criteria of approval relating
to, the last mentioned section.
46 Government Gazette 9 March] 998 No. ] 808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
Provision to be made for certain matters
30. (1) A banking institution shall, in order to ascertain whether
the banking institution is complying with section 28, or before any dividend is
declared, take into account and in its calculations make provision for -
(a) bad or doubtful debts, and the depreciation of assets, to be
calculated not less than quarterly;
(b) operating losses, including depreciation and bad debts not yet
written off;
(c) any amount representing expenses relating to the organisation or
extension of business or goodwill, or other intangible assets, to be
calculated not less than quarterly; or
(d) such other item or items as the Bank may determine.
(2) The minimum standards for provision for bad or doubtful debts,
the accounting treatment and suspension of interest of non-performing loans as
contemplated in subsection (1) may be determined by the Bank.
(3) If a capital requirement is to be applied on a consolidated basis in
terms of section 28(5)(b), subsection (1) of this section shall apply to all persons
within the group constituting the consolidation.
Minimum liquid assets
31. (1) The Bank may determine the minimum, or minimum
average, liquid assets which a banking institution shall hold at any time, or over
the period of time as specified in the determination.
(2) If a banking institution fails to comply with a determination under
subsection (1), it shall immediately in writing report such failure to the Bank and
shall in such report state the reasons for such failure.
(3) During any period of time which a banking institution fails, or is
)
)
No. 1808 Government Gazette 9 March 1998 47
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
unable, to comply with a determination under subsection (1), it shall not grant
any loan or credit to any person without the prior written approval of the Bank.
Restriction on dividends
32. A banking institution shall not, unless its capital is adequate in
terms of section 28, without the written approval of the Bank, declare, payor
credit any dividend, or make any transfer from its profits other than to a reserve
account.
Minimum local assets
33. (1) A banking institution shall maintain the minimum local
assets as determined by or under this section.
(2) The minimum local assets contemplated in subsection (1) shall be
determined by the Bank.
(3) For the purposes of this section, "local assets" means any asset
consisting of exposures with persons permanently resident in Namibia and other
assets situated in Namibia.
Large exposures and concentrations of credit
34. (1) A banking institution shall not, without the prior written
approval of the Bank, undertake exposure to a single person, to a group of related
persons, or to any industry in or outside Namibia which exceeds such percentage
of its capital funds as the Bank may determine.
(2) The total amount of large exposures of a banking institution shall
not exceed such percentage of its capital funds as the Bank may determine.
(3) For the purposes of this section, the Bank may determine the
meaning of "a group of related persons" or of "a large exposure".
48 Government Gazette 9 March 1998
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BANKING INSTITUTIONS ACT, 1998
Lending against own shares or debt instruments
35. No banking institution shall, directly or indirectly, lend money or
issue guarantees against the security of -
(a)
(b)
the shares; or
such debt instruments which may qualify as capital,
of the banking institution, of its holding company or of any of its subsidiaries.
Exposure to directors, to officers with managerial responsibilities or to
shareholders to be secured
36.
any exposure to -
(a)
(1) No banking institution shall, subject to subsection (4), have
any director or officer with managerial responsibility in the banking
institution;
(b) any substantial shareholder in the banking institution;
(c) any of the banking institution's auditors;
(d) any affiliate, associate or close relative of a person referred to in
paragraph (a), (b) or (c), as the case may be, if such person is a
natural person; or
(e) any body corporate or unincorporate of or in which a person
referred to in paragraph (a), (b) or (c), as the case may be, is a
director, a substantial shareholder or a guarantor, or otherwise has
an interest,
except if such exposure is incurred with the prior approval of the board of directors
of the banking institution and is fully secured.
(2)
the Bank -
A banking institution shall, in the form and manner required by
No. 1808 Government Gazette 9 March 1998 49
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(a) within one month after incurring an exposure under subsection
(1), whether or not such exposure is -
(i) incurred with the prior approval of the board of directors; or
(ii) is fully secured,
in writing submit to the Bank full particulars of such exposure or
security; and
(b) before 31 January of each year, in writing submit to the Bank
particulars of all exposures existing on the first day of that month,
irrespective of whether -
(i) such exposures were incurred before or after the
commencement date of this Act; or
(ii) the particulars of any of the exposures were submitted to
the Bank in terms of paragraph (a).
(3) The Bank shall determine the criteria and conditions to be
employed for establishing the acceptability or valuation of collateral for the purpose
of security exposures under this section.
(4) This section shall, from a date to be determined, apply to a banking
institution conducting banking business under any provision of any law repealed
by this Act, immediately before the commencement date of this Act.
Terms of exposure to directors, officers and shareholders
37. (1) No banking institution shall, subject to subsection (2),
directly or indirectly grant, or permit to be outstanding, to any -
(a) of its directors or officers, with or without managerial
responsibility; or
(b) shareholder or other person referred to in section 36( 1),
50 Government Gazette 9 March] 998 No. ] 808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
any loan, advance or credit facility.
(2) Subsection (1) shall not apply to a loan, advance or credit facility
granted to a person referred to in that subsection if the loan, advance or credit
facility was granted -
(a) subject to the same criteria and conditions applied for granting a
loan, advance or credit facility to a member of the public; or
(b) to an officer in the employment of the banking institution in terms
of the agreement of service entered into between the banking
institution and the officer.
Exposure to holding companies, subsidiaries and affiliates
38. (1) Notwithstanding section 226 of the Companies Act, but
subject to subsection (2) of this section, a banking institution may, with the written
approval of the Bank, grant a loan, advance or credit facility to its holding company,
subsidiary or affiliate.
(2) A banking institution shall not grant a loan, advance or credit
facility under subsection (1) unless such loan, advance or credit facility -
(a) is fully secured;
(b) is subject to the criteria or conditions for the granting of, or the
terms and conditions relating to the payment of interest on, or the
repayment of, the loan, advance or credit facility which is not more
favourable than the criteria or conditions ordinarily applicable to
any member of the public; and
(c) has been approved by the board of directors or a committee of the
board of directors.
(3) Any banking institution which -
(a) without the approval of the Bank in terms of subsection (1), grants
"'\i
'\
No. 1808 Government Gazette 9 March 1998 . 51
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
a loan in terms of that subsection; or
(b) grants a loan in contravention of subsection (2),
shall be guilty of an offence.
Restriction on commercial activities
39. (1) A banking institution shall only conduct financial business
or transactions which are usually or ordinarily conducted by banking institutions
in terms of this Act or of any other law.
(2) A banking institution shall not, subject to subsection (6), conduct,
or have any direct interest in, any activities relating to merchandise, trade, industry,
insurance, mining, agriculture, fisheries or commerce unless such activities -
(a) are permitted in terms of subsection (1); or
(b) may, in exceptional circumstances, be necessary in the course of -
(i) the banking business of the banking institution, or in the
course of the satisfaction of debts which may be incurred
as a result of such banking business; or
(ii) any trusteeship or the administration of the estate of a
deceased person.
(3) The Minister may, on the recommendation of the Bank, by notice
in the Gazette define the activities of a banking institution contemplated in
subsection (2).
(4) If a banking institution fails to comply with this section, or conducts
activities which are in contravention of this section, the Bank may by means of a
written notice delivered to such banking institution mutatis mutandis in accordance
with section 26(3)(d) instruct such banking institution to, within the period of
time specified in the instruction, comply with this section or to discontinue the
activities so conducted in contravention of this section, as the case may be.
52 Government Gazette 9 March] 998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. ] 808
(5) If a banking institution fails to comply with an instruction under
subsection (4), the Bank may, under section 15, cancel the authorisation to conduct
banking business granted to the banking institution.
(6) The Bank may, upon a written application made by a banking
institution and delivered to the Bank, and subject to such conditions as the Bank
may impose, exempt the banking institution from the restrictions in subsection
(2), or from such provisions of that subsection as the Bank may specify in the
exemption.
Limitation on investment in property
40. (1) No banking institution shall, subject to the restrictions in
this section, directly or indirectly, purchase, acquire or take on lease any immovable
property, except as may be necessary for the purposes of conducting its banking
business, for housing its staff, or for such other purposes or in such other
circumstances as the Bank may determine.
(2) The total amount of the investments made, or disbursed in respect
of the purchases, acquisitions or leases by a banking institution under subsection
(1), shall unless otherwise approved by the Bank upon a written application and
on good cause shown by the banking institution concerned, not exceed the amount
of the capital funds of the banking institution.
(3) A banking institution may, against any immovable property, secure
a debt owing to itself by, or an advance made or to be made by itself to, any
person, whether or not the ownership in respect of the property vests in, or the
property is registered in the name of, the person or any other person.
(4) In the event of a default in the repayment of a debt or an advance
referred to in subsection (3), or if the property referred to in that subsection is for
any reason sold in execution or in any other manner, the banking institution
concerned may, subject to subsection (5), acquire such property.
(5) The acquisition of property by a banking institution under
subsection (4) shall for a period of five years from the date of the acquisition, not
be deemed property acquired under subsection (1).
I
No. 1808 Government Gazette 9 March 1998 53
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
PART V I
DIRECTORS, PRINCIPAL OFFICERS AND AUDITORS
Directors and principal officers of banking institutions
41. (1) The number of directors of a banking institution shall,
subject to subsection (2), not be less than five.
(2) Not more than one half of the total number of the directors
contemplated in subsection (1) shall be employed by the banking institution
concerned, or by any of its subsidiaries or by its holding company, including any
of the subsidiaries of the holding company, as the case may be.
(3) Subsections (1) and (2) shall, subject to subsection (4), only from
the day following the date of the first annual general meeting held by a banking
institution which immediately prior to the commencement date of this Act was
registered as a banking institution under the repealed Banks Act, 1965 (Act 23 of
1965), apply to such banking institution.
(4) The Bank may, upon a written request by a banking institution, in
writing exempt the banking institution from subsection (1) or (2) for such period,
and subject to such conditions, as the Bank may impose and specify in such
exemption.
(5) Subject to subsection (6), the Bank may determine-
(a) the conduct and the qualifications applicable to, or to be complied
with by; and
(b) the manner of, and the criteria and procedures relating to, the
election or appointment of a person as,
a director or the principal officer of a banking institution.
(6) Subsection (5) shall not, during his or her current term of office,
apply to a director or principal officer of a banking institution elected or appointed
before, and in office at, the commencement date of this Act, but shall apply to
54 Government Gazette 9 March 1998
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No. 1808
BANKING INSTITUTIONS ACT, 1998
such director or principal officer when he or she is re-elected or re-appointed to
office after the commencement date of this Act.
(7)
(a)
(b)
(c)
The board of directors of a banking institution shall -
be responsible for the good corporate governance and business
performance of the banking institution;
ensure that the board is in full control of the affairs and business
operations of the banking institution;
ensure, and report to the shareholders at the annual general meeting
of the banking institution, that the internal controls and systems
of the banking institution -
(i) are designed to provide reasonable assurance as to the
integrity and reliability of the financial statements of the
banking institution, and to adequately safeguard, verify and
maintain accountability of its assets;
(ii) are based on established and written policies and
procedures, and are implemented by trained and skilled
officers with an appropriate segregation of duties; and
(iii) are continuously monitored, reviewed and updated by the
board of directors to ensure that no material breakdown
occurs in the functioning of such controls, procedures and
systems;
(d) immediately inform the Bank if they have reason to believe that -
(i) the banking institution may not be able to properly conduct
its business as a going concern;
(ii) the banking institution appears to be, or will in the near
future be, unable to meet all, or any of, its obligations;
No. 1808 Government Gazette 9 March 1998 55
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(iii) the banking institution has suspended, or is about to
suspend any payment of any kind; or
(iv) the banking institution does not, or may not be able to,
meet its capital requirements determined by or under
section 28; and
(e) constitute from among its members an audit committee as
contemplated in section 42.
(8) A director shall, in relation to the banking institution or to the
controlling company of which he or she is a director, act honestly and in good
faith in the best interest and for the benefit of the banking institution and its
depositors, or of the controlling company, as the case may be, and shall in the
performance of his or her functions as a director comply with this Act.
(9) The principal officer of a banking institution or -
(a) any other officer of the banking institution acting on his or her
behalf, shall, notwithstanding any action taken by the board of
directors, immediately inform the Bank if he or she has reason to
believe that any of the events contemplated in subsection (7)(d)
may, or is likely to, occur;
(b) a manager of a branch of a banking institution, shall not -
(i) engage in any commercial business activities other than -
(aa) for or on behalf; and
(bb) in his or her capacity as an officer,
of the banking institution; or
(ii) be an agent of any other person engaged in any business
contemplated in subparagraph (i),
56 Government Gazette 9 March 1998
Act No.2, 1995 BANKING INSTITUTIONS ACT, 1998
No. 1808
unless the position held by such person is that of a director of a company which is
in liquidation, whether provisionally or final, or is being wound-up or is under
judicial management, or if the Bank, on the recommendation of the board of
directors of the banking institution, has exempted the principal officer or the
manager from paragraph (b).
(10) No director of a banking institution or a member of a committee
of the board of directors established for the purpose of granting credit to customers,
and no principal officer or a manager of a division or a branch, shall take part in
the discussion or consideration of, or the taking of a decision relating to, any
matter -
(a) in which -
(i) he or she or any of his or her close relatives;
(ii) any company in which he or she or any of his or her close
relatives is a substantial shareholder; or
(iii) any other organisation in which he or she or any of his or
her close relatives is a partner or member,
has any personal or economic interest; or
(b) which is, subject to subsection (11), of particular economic interest
to a municipality, company, association or any other public or
private institution towards which he or she has, in his or her capacity
as mayor, board member, manager or representative, a duty to
protect the economic interests of such municipality, company,
association or institution.
(11) Paragraph (b) of subsection (10) shall not apply in respect of the
election of officers or the consideration of remuneration relating to positions of
trust.
(12) Before a matter contemplated in subsection (10) is considered by
the decision-making body concerned, any person who is not entitled to take part
No. 1808 Government Gazette 9 March 1998 57
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
in the consideration of, or the taking of a decision relating to, the matter shall -
(a) inform the decision-making body accordingly; and
(b) recuse himself or herself from the meeting.
(13) The proceedings contemplated in subsection (12) shall be recorded
in the minutes of the meeting of the decision-making body concerned.
Audit committee
42. (1) The audit committee established by the board of directors
of a banking institution in terms of section 41 (7)( e) shall, subject to this section
or to the determinations issued by the Bank, have such powers, duties and functions
as the board of directors may specify and inform the audit committee in writing.
(2) The audit committee referred to in subsection (1) shall consist of
so many members, but not less than two, as the banking institution may decide
on, who shall all be directors without any executive responsibility in the banking
institution.
(3) The board of directors of the banking institution concerned shall,
from amongst the members of the audit committee concerned, designate a
chairperson for the audit committee, which chairperson shall, subject to subsection
(5), have the powers, duties and functions as decided on by the banking institution.
(4) The audit committee shall meet not less than four times during
any financial year of the banking institution concerned, which meetings shall be
attended by -
(a) the members of the audit committee;
(b) the officer responsible for the internal audit function of the banking
institution;
(c) the auditor of the banking institution appointed in terms of section
43;
58 Government Gazette 9 March 1998
Act No.2, 1998
No. 1808
(d)
(e)
(5)
(a)
(b)
BANKING INSTITUTIONS ACT, 1998
any other auditor of the banking institution; and
the officer responsible for the financial or treasury functions of
the banking institution.
The powers, duties and functions of the audit committee are to -
ascertain the nature, scope or extent of the audit of the banking
institution to be undertaken by the auditor appointed in terms of
section 43;
review the internal audit programme of the banking institution, to
ensure co-ordination between the internal audit programme and
the audit undertaken by the auditor appointed in terms of section
43, and to ensure that sufficient trained and skilled officers of
appropriate standing, to the satisfaction of the audit committee, in
the banking institution undertake and implement the internal audit
programme of the banking institution;
(c) review and update the internal controls and systems ofthe banking
institution;
(d) consider, discuss and make recommendations to the board of
directors relating to any issue or reservation raised by the auditor
appointed in terms of section 43, or any finding made during
internal investigations arising from the internal audit programme
of the banking institution;
(e) review the financial statements of, or to make recommendations
to, the banking institution relating to the financial statements; and
(f) perform such other duties and functions as the board of directors
of the banking institution may specify.
(6) The company secretary shall be the secretary of the audit committee
and shall have such duties and perform such functions as the board of directors of
the banking institution may specify.
No. 1808 Government Gazette 9 March 1998 59
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
Appointment of auditor
43. (1) Notwithstanding Chapter X of the Companies Act, a
banking institution shall annually appoint an auditor for the banking institution.
(2) Within a period of 30 days after the appointment of an auditor in
terms of subsection (1), the banking institution shall, in the form as the Bank may
require, apply to the Bank for the Bank's approval of the appointment.
(3) On receipt of an application in terms of subsection (2), the Bank
shall -
(a) refuse to approve the appointment;
(b) approve the appointment; or
(c) approve the appointment subject to such conditions as the Bank
may impose and specify.
and shall in writing inform the banking institution of its decision.
(4) If the Bank under paragraph (c) of subsection (3) approves the
appointment subject to conditions, the Bank shall in writing furnish the banking
institution concerned with particulars of the conditions so imposed.
(5) No person shall hold office as an auditor of a banking institution
unless his or her appointment as such has been approved by the Bank under
subsection (3).
(6) The Bank may determine criteria or procedures relating to the
appointment of, the conduct by, the duties of, and the requirements or qualifications
in respect of, an auditor.
(7) If-
(a) a banking institution fails to appoint an auditor in terms of
subsection (1);
60 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(b) the Bank under subsection (3) refuses to approve the appointment
of an auditor appointed by a banking institution; or
(c) an auditor appointed by a banking institution in terms of subsection
(1) is disqualified in terms of section 44 to act as an auditor,
the Bank may, for or on behalf of the banking institution, appoint an auditor.
(8) An auditor appointed by the Bank for or on behalf of a banking
institution under subsection (7) shall be deemed to be an auditor appointed by the
banking institution in terms of subsection (1) and approved by the Bank under
subsection (3).
(9) The Bank may, at any time, withdraw an approval granted under
subsection (3) or an appointment made under subsection (7), if the auditor
concerned -
(a) fails to comply with -
(i) the conditions, if any, imposed by the Bank under paragraph
(c) of subsection (3); or
(ii) the criteria determined by the Bank as contemplated in
subsection (6); or
(b) becomes disqualified in terms of section 44 to act as an auditor.
Disqualification for appointment as auditor
44. No person shall qualify to be appointed or to act as an auditor of a
banking institution, if -
(a) any of the grounds for disqualification stipulated by section 275
of the Companies Act applies to the person;
(b) the appointment of the auditor by a banking institution was not
approved by the Bank, or an approval granted by the Bank has
been withdrawn under section 43(9);
"
No. 1808 Government Gazette 9 March 1998 61
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(c)
(d)
(e)
the auditor, either directly or indirectly, has a material interest in
the banking institution or in its affiliate or associate;
any other circumstances exist which, in the opinion of the Bank,
may impair the independence or impartiality of the auditor; or
the criteria, or any of the criteria determined by the Bank as
contemplated in section 43(6) are not complied with.
Duties and functions of auditor
45. (1) An auditor appointed by a banking institution in terms of
section 43 shall in writing inform the board of directors of the banking institution
and the Bank of -
(a) the banking institution's ability or inability to meet with the
requirements of section 28 or 31;
(b) any other matter which the auditor becomes aware of in the
performance of his or her duties or functions as an auditor and
which, in his or her opinion, may -
(i) prejudice the ability of the banking institution to continue
conducting business as a going concern;
(ii) be detrimental to the interest of the customers of the
banking institution concerned or the general public; or
(iii) violate the principles of sound financial management or
the maintenance of adequate internal controls and systems
by, the banking institution.
(2) The duties of an auditor appointed in terms of section 43 shall
include the duties of an auditor -
(a) in terms of the Companies Act;
62 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(b) in terms of this Act or any other law; and
(c) determined by the Bank as contemplated in subsection (6) of that
section.
(3) The auditor shall assess, and in writing comment on, the report of
the board of directors made in terms of section 41 (7)( C)before the report is tabled
at the annual general meeting.
(4) A copy of the comments made by an auditor in terms of subsection
(3), signed by the auditor and by the chairperson of the board of directors, shall
be transmitted by the banking institution concerned to the Bank not more than 20
days after the receipt by the board of the auditor's comments.
(5) If an auditor, acting in good faith and not negligently or with
wrongful intent, furnishes any information to any person in terms of subsection
(1), (2) or (4), or makes any comments in terms of subsection (3), such actions by
the auditor shall not -
(a) constitute a contravention of any provision of any law or a breach
of a code of professional conduct which the auditor may be subject
to; or
(b) cause the auditor to incur any liability to any person as a
consequence of the furnishing of the information or the making of
the comments.
PART VII
SUPERVISION BY BANK
Financial and other banking records
46. (1) A banking institution shall, in the official language of
Namibia, keep such accounting and other banking records as are necessary to
reflect the true and fair state of its affairs and to explain its transactions and financial
position in such a manner so as to enable the Bank to ascertain whether the banking
institution is complying with this Act.
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Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(2) The accounting and other banking records contemplated in
subsection (1) shall be kept in Namibia and shall, subject to subsection (4), comply
with the requirements -
(a) of section 284 of the Companies Act; and
(b) determined by the Bank,
and shall be kept and maintained by the banking institution for a period of not
less than five years after the date of the last entry in such records.
(3) No person shall, with the intent to deceive, in any book, record,
report, statement or other document relating to the business, affairs, transactions,
conditions, property, assets, liabilities or accounts of a banking institution -
(a) make a false entry, knowing such entry to be false, or cause such
an entry to be made; or
(b) omit an entry, or cause such an entry to be omitted; or
(c) alter, abstract, conceal, remove or destroy an entry, or cause an
entry to be altered, abstracted, concealed, removed or destroyed.
(4) For the purposes of this section, "other banking records" shall
include any book, record, report, statement or other document relating to the
business, affairs, transactions, conditions, property, assets or liabilities of a banking
institution.
Financial statements
47. (1) The Companies Act shall, subject to the further provisions
of this section, apply to the financial statements of a banking institution.
(2) Notwithstanding subsection (1) -
(a) the Bank may determine -
(i) that all or any of the exemptions contained in paragraph
64 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(ii)
70 of Part V of Schedule 4 to the Companies Act shall not,
subject to such determination, apply to a banking
institution;
additional requirements not in conflict with this Act relating
to the financial statements contemplated in subsection (1);
and
(b) a banking institution shall -
(i)
(ii)
(iii)
in its annual financial statements disclose the name of a
shareholder who holds 20 per cent or more of the total
voting rights in the banking institution;
subject to subsection (3), within a period of three months
after the end of its financial year, submit a copy of its
audited annual financial statements to the Bank; and
subject to subsection (3) or (4), within a period of one
month from the date of acceptance of the financial
statements at an annual general meeting of the banking
institution, publish the financial statements in a newspaper
as may be approved, and in the form specified, by the Bank.
(3) Notwithstanding subparagraph (iii) of subsection (2)(b), a banking
institution which holds its annual general meeting within a period of three months
after the end of its financial year, shall, subject to subsection (4), publish the
financial statements in terms of that subparagraph within a period of three months
after the acceptance of the financial statements at the annual general meeting so
held.
(4) The Bank may, at the written request of a banking institution and
subject to such conditions as the Bank may impose, in writing extend any period
of time specified in subsection (2)(b )(ii), (2)(b )(iii) or (3), as the case may be.
(5) If the Bank is satisfied that the financial statements of a banking
institution do not comply with this Act or with any additional requirement
No. 1808 Government Gazette 9 March 1998 65
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
determined by the Bank as determined in accordance with subsection (2)(a)(ii),
or contain information that may be misleading in any way, or are not published in
the form specified by the Bank, the Bank may by notice in writing require the
banking institution -
(a) to amend or correct the financial statements to comply with this
Act or with the additional requirements;
(b) to correct the misleading information;
(c) to re-publish the amended or corrected financial statements; or
(d) to submit to the Bank -
(i) such further or additional documents or information; or
(ii) such explanation or amplification relating to any document
or information,
to the satisfaction of the Bank or as the Bank may consider necessary.
Disclosure of paid-up share capital
48. If a banking institution publishes a statement or issues a document
in which the amount of its authorised share capital is disclosed, the amount of its
paid-up share capital shall also be disclosed in such statement or document.
Furnishing of certain statements, notices, returns and information
49. (1) A banking institution shan, at such times and in such
manner as the Bank may in writing require and notify the banking institution
mutatis mutandis in accordance with section 26(3)(d), submit to the Bank a
statement containing full particulars of all the assets and liabilities of the banking
institution, including information relating to all the assets and liabilities of the
banking institution outside Namibia.
(2) In addition to the particulars to be furnished to the Bank by a
66 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
banking institution as specified and contemplated in subsection (1), the Bank
may at any time by means of a notice delivered to the banking institution demand
from any banking institution or from its principal officer to furnish the Bank with
such information relating to the banking business of the banking institution or
any of its transactions, and within such period of time, as the Bank may specify in
the demand.
(3)
(a)
(b)
(c)
(d)
If a banking institution -
forwards to its shareholders a notice of a meeting or of the
declaration of a dividend, or a report on its activities during a
financial year, or part of a financial year;
in terms of section 170(2) of the Companies Act, gives notice to
the Registrar of Companies of any change in the situation of its
registered office or of its postal address;
in terms of section 216(2) of the Companies Act, lodges with the
Registrar of Companies a return regarding its directors; or
in terms of section 302(4) of the Companies Act, forwards to the
Registrar of Companies a copy of its annual financial statements,
the banking institution shall simultaneously with the forwarding or lodging of the
notice, report, return or statements, as the case may be, furnish the Bank with a
copy of the notice, report, return,or statements, as the case may be, so forwarded
or lodged.
(4) A banking institution shall -
(a) within a period of one month after a general meeting of
shareholders, forward to the Bank a copy of the minutes of the
meeting kept in terms of section 204 of the Companies Act; or
(b) at the written request of the Bank, within the period of time and in
the form stated in the request, furnish the Bank with particulars to
enable the Bank to ascertain whether the banking institution is
complying with section 28.
No. 1808 Government Gazette 9 March 1998 67
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(5) The Bank may require the auditors of a banking institution
appointed in terms of section 43 to certify as correct and accurate any information
submitted by the banking institution to the Bank in terms of this section.
Reporting of certain transactions by banking institutions
50. The Bank may require a banking institution to report to the Bank,
or to any other person or authority the Bank may specify, any money transaction
which it becomes aware of and which indicates or arises a suspicion that the
person conducting, or any person involved in, the transaction may be engaged in
an illegal activity.
Extension of time
51. If a banking institution has to furnish any information or document
to the Bank in terms of this Act within a specified period of time, the Bank may,
at the written request of the banking institution, in writing extend the period of
time specified for the furnishing of the information or document, as the case may
be.
Examinations by Bank
52. (1) The Bank may, in order to determine whether a banking
institution is in a sound financial condition and whether the provisions of this Act
or any other legal requirements pertaining to banking business have been, and are
being, complied with by the banking institution, and without prior notice, at any
reasonable time, through or by means of -
(a) its own officers; or
(b) any person appointed by the Bank on account of his or her special
knowledge or expertise, including a legal practitioner registered
to practise as such under the Legal Practitioners Act, 1995 (Act 15
of 1995); or
..
(c) the auditor of a banking institution or any other auditor appointed
by the Bank,
68 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
conduct an examination of the affairs of a banking institution.
(2) Section 6 shall mutatis mutandis apply to an examination under
this section.
(3) In the conducting of an examination in terms of subsection (1),
the Bank, or the person appointed by the Bank under that subsection, shall, in
addition to the powers, duties and functions he or she or it has in terms of this
Act, have the powers conferred upon a registrar by section 4 of the Inspection of
Financial Institutions Act, 1984 (Act 38 of 1984), to conduct an inspection of the
affairs of a financial institution in terms of section 3 of that Act.
(4) The person, legal practitioner or auditor referred to in subsection
(1) shall, upon the completion of his or her examination in terms of that paragraph,
submit a report to the Bank relating to the examination so conducted, in the form
and manner as the Bank may require.
(5) The Bank may, if an examination contemplated in subsection (1)
reveals that the banking institution concerned is not conducting its affairs in terms
of this Act or is contravening any other law, recover from the banking institution
the costs incurred by the Bank relating to the examination, including the fees and
expenses of a person appointed by the Bank under subsection (1).
(6) If not less than one-fifth of the total number of the depositors of a
banking institution representing not less than one-fifth of the total value of the
deposits made with the banking institution, in writing request the Bank to conduct
an examination in terms of subsection (1), the Bank shall, subject to subsection
(7), conduct an examination mutatis mutandis in terms of this section.
(7) The Bank shall only conduct an examination contemplated in
subsection (6) if the depositors referred to in that subsection, together with their
request as contemplated in that subsection, provide the Bank with proof, to the
satisfaction of the Bank, that such an examination may be justified.
(8) After the completion of an examination under this section, the
Bank may furnish the board of directors of the banking institution concerned
with a report relating to the examination, which report shall contain the findings
of the Bank in respect of the conducting of business by the banking institution.
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No. 1808 Government Gazette 9 March 1998 69
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(9) In the report furnished to the board of directors of the banking
institution in terms of subsection (8), the Bank may direct such board of directors
to, within the period of time specified in the report, rectify the deficiencies
mentioned in the report.
(10) For the purposes of this section and of section 53, a banking
institution shall include an affiliate or associate of the banking institution.
Production of records and furnishing of information
53. (1) For the purpose of an examination by the Bank under
section 52, the banking institution concerned shall produce or furnish to the person
conducting the examination -
(a) all cash or other liquid assets, books, minutes, vouchers, records,
accounts, deeds, securities or other documents in the possession
or custody of the banking institution and relating to the business
of the banking institution; and
(b) all information concerning the business of the banking institution
as may be required by such person,
at such time and place as shall not unduly disrupt the conduct of the normal
business of the banking institution.
(2) Any person authorised by the Bank in writing to conduct an
examination under section 52, may, for the purposes of such examination, take
possession of any document or other item referred to in subsection (1) of, and to
which such person has access under, this section.
(3) Any offer of a banking institution, affiliate or associate who fails
to allow any person referred to in subsection (2) access to or possession of, or
refuse or fail to produce to such person any document or other item referred to in,
or to give information in accordance with, that subsection, or to provide to the
person suitable facilities for the purposes of conducting an examination under
that subsection.
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No. 1808
BANKING INSTITUTIONS ACT, 1998
Approval of special resolutions
54. (1) A banking institution shall not, without the prior written
approval of the Bank -
(a) enter into a merger or consolidation;
(b) transfer, or otherwise dispose of, the whole or part of its property,
whether situated in or outside Namibia, other than in the ordinary
course of business;
(c) effect a reduction of its paid-up share capital;
(d) change the name of the banking institution; or
(e) take any other action which requires a special resolution of the
shareholders of the banking institution.
(2) A banking institution which requires the approval of the Bank in
terms of subsection (1) shall in writing apply to the Bank for the granting of the
required approval and shall, to the satisfaction of the Bank, in the application
furnish the Bank with full particulars relating to the proposed transaction or action.
(3) After considering an application made in terms of subsection (2),
the Bank shall -
(a) refuse the application;
(b) grant the application; or
(c) grant the application subject to such conditions as the Bank may
Impose,
and shall in writing inform the banking institution of its decision under this
subsection.
(4) If the Bank, under paragraph (a) of subsection (3) refuses an
No. 1808 Government Gazette 9 March 1998 71
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
application made in terms of subsection (2), or under paragraph (C) of that
subsection grants an application subject to conditions, the Bank shall in writing
furnish the banking institution with reasons for the refusal of the application or
for the imposition of the conditions, as the case may be.
Undesirable practices
55. (1) A banking institution shall not conduct, permit or become
involved in the conducting of, an undesirable practice.
(2) For the purpose of this section, "undesirable practice" in respect
of a banking institution, subject to subsection (3), means -
(a) the holding of shares in a company of which the banking institution
is a subsidiary;
(b) the holding of assets of the banking institution in the name of any
other person, excluding any asset -
(i) which is bona fide hypothecated to secure an actual or
potential liability;
(ii) in respect of which the Bank has, upon a written application
made by the banking institution concerned, in writing
approved that the asset may be held in the name of the
other person; or
(iii) which the Minister has, on the recommendation of the
Bank, by notice in the Gazette designated as an asset which
may be held in the name of another person;
(c) the payment of dividends on shares out of profits before pre-
incorporation expenditure had been accounted for;
(d) the entering into a repurchase agreement in respect of a fictitious
asset or an asset created by means of a simulated transaction;
72 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
(e) the entering into a repurchase agreement without -
(i) the agreement being substantiated by a written document
signed by the other party to the agreement; and
(ii) the details of the agreement being recorded in the accounts
of the banking institution as well as the accounts, if any,
kept by the banking institution in the name of the other
party; and
(f) any other practice which the Minister may, on the recommendation
of the Bank, by notice in the Gazette declare an undesirable practice
in respect of all banking institutions, or in respect of the banking
institution or banking institutions specified in the notice.
(3) Notwithstanding subsection (2), the Bank may in writing notify a
banking institution that a practice employed by the banking institution and specified
in the notice, constitutes an undesirable practice in respect of the banking
institution, irrespective of whether the practice so specified in the notice is an
undesirable practice in terms of that subsection.
Powers of the Bank regarding banking institutions
56. If the Bank is satisfied -(1)
(a) that a banking institution, or an affiliate or associate of the banking
institution -
(i) is insolvent, or is likely to become insolvent;
(ii) is conducting its business -
(aa) in contravention of any provision of this Act or of
any other law pertaining to banking business; or
(bb) in a manner detrimental to its customers or the
general public; or
J
No. 1808 Government Gazette 9 March 1998 73
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(iii) is unable to meet all or any of its obligations, or is likely to
become unable to so meet its obligations; or
(iv) is about to suspend any, or part of any, payment; or
(b) that any of the officers or substantial shareholders of the banking
institution are no longer fit and proper persons to satisfactorily fill
their positions in, or in relation to, the banking institution,
the Bank may, in addition to any other action that it may take under this Act or
under any other law, take any of the actions contemplated in subsection (2).
(2) The Bank may, in any of the circumstances contemplated in
subsection (1), by means of an order in writing addressed and delivered to the
banking institution concerned, and in the manner and within the period of time,
or before a date, specified in the order -
(a) require the banking institution, affiliate or associate, as the case
may be, to -
(i) take the action or steps, or to discontinue any action, as the
case may be, relating to the banking institution, to affiliate
or associate, or to the officers or substantial shareholders;
(ii) discontinue the extension of credit for such period of time;
(iii) subject to the Labour Act, 1992 (Act 6 of 1992), but
notwithstanding any provision to the contrary -
(aa) in any contract of employment entered into between
the banking institution, its affiliate or associate, and
any director or officer; or
(bb) in the memorandum and articles of association of
the banking institution, its affiliate or associate,
remove from office a director or officer;
74 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
(iv) appoint a person -
(aa) as a director of the banking institution; or
(bb) to advise the banking institution in relation to the
proper conduct of its business,
and to specify that the person so appointed shall be paid
by the banking institution the remuneration; or
(b) if the Bank is satisfied that the banking institution is conducting
its business in a manner detrimental to the interest of its customers
or the general public, without prejudice to the powers of the Bank
under paragraph (a), and in addition to any action taken by the
Bank under that paragraph, assume control of the entire property,
business and affairs of the banking institution, or any part thereof,
and conduct the entire business and affairs of the banking
institution, or the part so assumed control of, for and on behalf of
the banking institution, or appoint a person to so conduct the
business and affairs of the banking institution in the name of the
Bank.
(3) A banking institution, its affiliate or associate, as the case may be,
shall be bound by, immediately comply with, and give effect to, an order under
subsection (2).
(4) An officer removed from office under subsection (2) shall cease
to hold the office from which he or she is so removed with effect from the date
specified in the order made under that subsection, and shall after the date so
specified -
(a) not hold any office in the banking institution, or in its affiliate or
associate; and
(b) not be entitled to the payment of any remuneration from the banking
institution or from its affiliate or associate.
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No. 1808 Government Gazette 9 March 1998 75
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(5) No order shall be made under subsection (2) unless the banking
institution has been given a reasonable opportunity to make representations to
the Bank relating to the proposed order.
(6) The costs and expenses incurred by the Bank, or the remuneration
payable to any person appointed by the Bank under section (2), shall,
notwithstanding any provision to the contrary in the Insolvency Act, 1936 (Act
24 of 1936) or in any other law contained, be payable as a preferential claim out
of the funds of the banking institution.
(7) If the Bank assumes control of a banking institution pursuant to
an order made under subsection (2), the banking institution, its directors and
officers shall submit the property, business and affairs of the banking institution
so assumed to the control of the Bank, and shall provide or make available to the
Bank or to the person appointed under that subsection, as the case may be, all the
facilities required to properly conduct the business and affairs of the banking
institution.
(8) In the circumstances contemplated in subsection (7), the Bank or
the appointed person, as the case may be, shall -
(a) remain in control of the property, business and affairs of the banking
institution for or on behalf of the banking institution; and
(b) execute all the powers of the banking institution or of its directors
under the memorandum and articles of association of the banking
institution,
until such time as the order made under subsection (2) is cancelled by the Bank.
(9) During, or in respect of, the period when an order made under
subsection (2) is in force, no director ofthe banking institution to which the order
relates, shall -
(a) directly or indirectly, engage in any activity of, or in relation to,
the banking institution; or
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Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. ] 808
(b) .
receive any remuneration from the banking institution,
except the activities to be engaged in or the payment of remuneration as the Bank
may in writing approve.
(10) No order made under subsection (2) shall confer upon, or vest in,
the Bank or any person appointed by the Bank, any title to, or any beneficial
interest in, any property of the banking institution to which the order relates.
Additional powers of Bank to apply for capital reduction or to acquire shares
in a banking institution
57. (1) If the Bank assumes control of a banking institution in terms
of an order made under subsection (2) of section 56, and if the share capital of the
banking institution has been lost or is not represented by available assets, the
Bank or the person appointed by the Bank under paragraph (a)(iv) of that
subsection, as the case may be, may apply to the High Court for an order reducing
the share capital of the banking institution so as to reflect the actual available
assets of the banking institution, and the High Court may, notwithstanding any
provision to the contrary in any other law, grant such an application and issue
such an order.
(2) If the High Court issues an order under subsection (1), the share
capital of the banking institution shall be reduced in accordance with the order so
issued, and, notwithstanding any provision to the contrary in any other law or in
the memorandum and articles of association of the banking institution, the Bank
or the person referred to in that subsection, may issue new shares to an amount
specified by the Bank in order to satisfy the capital requirements of the banking
institution as determined tinder section 28.
(3) Notwithstanding any provision to the contrary contained in the
Bank of Namibia Act, 1997, or in any other law, but subject to subsection (4), the
Bank may, with the concurrence of the Minister, subscribe to and acquire any
shares in a banking institution issued under subsection (2).
(4) If a banking institution referred to in subsection (3) at any time
becomes able to satisfy the capital requirements relating to the banking institution
No. 1808 Government Gazette 9 March 1998 77
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
as determined under section 28, the Bank shall dispose of the shares in the banking
institution acquired by the Bank under that subsection within such period of time
as the Minister, in consultation with the Bank, may in writing determine.
Winding-up or judicial management
58. (1) Notwithstanding section 346,349 or 427 ofthe Companies
Act, no person shall apply for the winding-up or judicial management, or
commence with a voluntary winding-up, as the case may be, of a banking
institution, unless such person has given the Bank 14 days written notice of his or
her or its intention to so apply for the winding-up or judicial management, or to
commence with the voluntary winding-up, as the case may be, of the banking
institution.
(2) Upon receipt of a notice contemplated in subsection (1), the Bank
may -
(a) if an application for judicial management of the banking institution
is to be made, take such action under section 56 or 57 as the Bank
may consider appropriate; or
(b) if a voluntary winding-up is to be commenced with,
notwithstanding the provisions of the Companies Act, allow the
voluntary winding-up to be proceeded with, subject to the terms
and conditions which the Bank may impose.
(3) The Bank may, if an application for the winding-up of a banking
institution is brought to the High Court -
(a) appear before the Court at the hearing of the application; or
(b) make representations to the Court relating to the application.
(4) The Bank may, notwithstanding section 346 of the Companies
Act, or notwithstanding having taken action under section 56 or 57 of this Act,
make an application to the High Court for the winding-up of any banking
institution.
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Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
Proof of claims
59. For the purpose of the winding-up of a banking institution, and
notwithstanding any provision to the contrary in the Insolvency Act, 1936 (Act
24 of 1936), or in the Companies Act, an entry in the books, accounts or records
of the banking institution relating to a depositor of the banking institution, shall
be prima facie proof of a claim of the depositor.
Unclaimed monies or property after winding-up
60. (1) Sections 410 and 411 of the Companies Act relating to
unpaid dividends shall mutatis mutandis apply to the funds of a banking institution
wound-up under that Act.
(2) The Minister, on the recommendation of the Bank, may prescribe
the procedures to be followed relating to the disposal of property held by a banking
institution in its capacity as a lessor of a safe deposit box, as a trustee, a fiduciary
or in any other capacity on behalf of any person, and which property had not been
claimed by, or been returned to, the rightful owner thereof.
PART VIII
GENERAL PROVISIONS
Agreements restricting competition
61. (1) An agreement relating to the restricting of competition
entered into by a banking institution with another banking institution or its affiliate
or associate shall, unless the parties to such agreement are of the same corporate
group, be submitted by the parties to the Bank for its approval.
(2) An agreement referred to in subsection (1) shall, unless it is
approved by the Bank under that subsection, be void ab initio.
Prohibition to accept deposits by insolvent banking institutions
62. A banking institution shall, if it is or becomes insolvent,(1)
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Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
not accept any monies as a deposit from any person, unless with the prior written
approval of the Bank.
(2) An approval by the Bank contemplated in subsection (1) shall
specify the amount of, and the person from whom, a deposit may be taken by the
banking institution.
(3) No director of, and no officer with managerial responsibilities in,
a banking institution shall, if he or she is aware that the banking institution is
insolvent, receive, authorise, permit or allow the banking institution to accept
deposits.
Insurance against loss due to negligence or dishonesty
63. A banking institution -
(a) shall, subject to paragraph (b), contract an insurance policy with
an insurer as defined in the Insurance Act, 1943 (Act 27 of 1943)
and approved by the Bank, to insure itself to such an amount as
the Bank in writing may approve, against any loss which the
banking institution or any of its customers may suffer as a result
of the negligence, dishonesty or fraud of any of the officers of the
banking institution; or
(b) may, if the insurance contemplated in paragraph (a) -
(i) is not available; or
(ii) is available, but at a premium which is, in the opinion of
the Bank, too high in relation to the cover provided,
with the written approval of the Bank and in lieu of the insurance, maintain a
special reserve account exclusively for the purpose of compensating any person
in respect of any loss suffered by the person as a result of the negligence, dishonesty
or fraud referred to in paragraph (a) and which is, in the opinion of the Bank,
sufficient for such purpose.
80 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
Confidentiality and secrecy
64. (1) No person employed or duly authorised by the Bank to
examine the affairs of a banking institution shall, subject to subsection (2) or
except for the purpose of the performance or exercise of his or her duties or
functions, or when lawfully required to do so by a court having jurisdiction or
under any law, disclose any information acquired in the performance or exercise
of such duties or functions.
(2) If the Bank seeks advice from a qualified person on a matter of
law, of accountancy or of valuation of property, or on any other matter requiring
the exercise of professional skills, as the case may be, in order to enable the Bank
to perform any of its functions under this Act, the Bank may, notwithstanding
subsection (1), but subject to subsection (3), disclose to the qualified person such
information as the Bank may deem necessary to ensure that the qualified person
is properly informed with respect to the matters on which his or her advice is
sought.
(3) The qualified person referred to in subsection (2) shall be subject
to the same duty of secrecy as a person employed by the Bank under subsection
(1).
(4) Notwithstanding the further provisions of this Act or of the Bank
of Namibia Act, 1997, the Bank may, for the purpose of the prudential supervision
of financial institutions, but subject to the confidentiality of the information
transmitted, furnish information acquired by the Bank to an authority in Namibia
or in a foreign state, country, colony or territory with supervisory responsibilities
in respect of financial institutions in Namibia or in the foreign state, country,
colony or territory concerned, as the case may be.
(5) Subsection (1) shall apply to information received from an authority
referred to in subsection (4).
(6) Any person may, notwithstanding subsection (1), against payment
of a fee determined by the Bank, inspect or obtain a copy of -
(a) a certificate of authorisation; or
( 'J
, /
No. 1808 Government Gazette 9 March 1998 81
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(b) the memorandum and articles of association,
of a banking institution.
(7) A director or officer of a banking institution, during his or her
tenure of office or employment, as the case may be, or after such tenure of office
or employment, or any other person who for any reason has by any means access
to any record, book, register, correspondence or other document, information or
material relating to the affairs or the account of any customer of the banking
institution, shall not, subject to subsection (10 ), provide, produce, divulge, reveal,
publish or in any manner disclose to any other person, or make a record for any
person, of any information or document whatsoever relating to the affairs or
account of such customer.
(8) Subsection (7) shall not apply to any record, book, register,
correspondence or other document, information or material referred to in that
subsection and which has lawfully been made available to the public from any
source other than the banking institution concerned, or to any information which
is in the form of a summary or collection of information set out in such a manner
that does not enable information relating to any particular banking institution, or
to any particular customer of a banking institution, to be ascertained or identified
from such summary or collection.
(9) A person who has any record, book, register, correspondence or
other document or material referred to in subsection (7) in his or her possession,
and which to his or her knowledge has been disclosed in contravention of that
subsection, shall not in any manner whatsoever disclose such record, book, register,
correspondence or other document or material to any other person.
( (10) Subsection (7) shall not apply to the disclosure of any record, book,
register, correspondence or other material referred to in that subsection -
(a) which the customer concerned, or his or her authorised
representative, has in writing given permission to be disclosed;
(b) if the estate of the customer has been sequestrated, whether
provisionally or final, or, if the customer is a body corporate, the
82 Government Gazette 9 March 1998
Act No.2, 1998
No. 1808
(c)
(d)
(e)
BANKING INSTITUTIONS ACT, 1998
body corporate has been, or is in the process of being, wound-up;
if information is required by a party to a bona fide commercial
transaction to which transaction the customer is a party, for the
purpose of, subject to subsection (11), assessing the
creditworthiness of the customer relating to such transaction;
for the purpose of instituting, or in the course of, any criminal
proceedings;
for the purpose of instituting, or in the course of any proceedings -
(i) between a banking institution and its customer, or his or
her guarantor relating to the customer's transaction with
the banking institution; or
(ii) betw'een the banking institution and two or more parties
making opposing or adverse claims to money in a
customer's account, if the banking institution seeks relief
by way of interpleader proceedings;
(f) if a writ of attachment or of execution attaching monies in an
account of a customer of a banking institution is served on the
banking institution;
(g) if the disclosure is required or authorised by any other provision
of this Act or by any other law;
(h) if the disclosure may, subject to subsection (12), in terms of any
law be made to a police officer investigating an offence specified
in such law; or
(i) if the disclosure is authorised by the Bank in writing.
(11) The information furnished in terms of paragraph (c) of subsection
(10) shall be of a general nature and shall not enable the details of the customer's
affairs or account to be ascertained from the information so furnished.
, ~'
No. 1808 Government Gazette 9 March 1998 83
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(12) A disclosure contemplated in paragraph (h) of subsection (10) shall
be limited to the affairs or account of the customer suspected of such offence.
(13) In civil proceedings referred to in paragraph (b) or (e) of subsection
(10), the court may, if it appears that any record, book, register, correspondence
or other document, information or material referred to in subsection (7) will be
disclosed, ex mero motu or on application by any of the parties to the proceedings,
conduct the proceedings in camera.
(14) Subsection (7) shall apply to any record, book, register,
correspondence or other document, information or material disclosed in terms of
subsection (13).
(15) For the purposes of this section, "financial institution" means a
statutory body or other institution referred to in section 2(2), and includes a banking
institution.
Publication of information
65. (1) The Bank may, subject to subsection (2) -
(a) publish in whole or in part, in such form and at such time as it may
deem appropriate; or
(b) for the purpose of tabling in the National Assembly, provide,
any information or data furnished or collected under this Act.
(2) The information or data referred to in subsection (1) shall not,
unless with the written consent of a banking institution or of a customer of a
banking institution, as the case may be, disclose particulars relating to the affairs
of the banking institution or of the customer of a banking institution, as the case
may be.
International supervisory co-operation
66. (1) A person who, under the laws of a foreign state, country,
84 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
colony or territory, exerCIses supervisory authority in respect of banking
institutions conducting business in such foreign state, country, colony or territory,
may, with the written approval of the Bank granted under subsection (3), examine
the books, accounts or transactions of -
(a) a banking institution in Namibia which is a subsidiary; or
(b) a representative office in Namibia,
of the banking institution so conducting business in such foreign state, country,
colony or territory, or cause such books, accounts or transactions to be examined.
(2) The person referred to in subsection (1) shall in writing apply to
the Bank for its approval as contemplated in that subsection.
(3) The Bank may, on receipt of an application in terms of subsection (2) -
(a) refuse the authority;
(b) grant the authority; or
(c) grant the authority subject to such conditions as the Bank may
Impose
(4) The Bank shall in writing inform the applicant of its decision under
subsection (3) and of the conditions, if any, imposed under that subsection.
(5) Section 53(1) shall, subject to the conditions contemplated in
subsection (3), mutatis mutandis apply to an examination by a person in terms of
subsection (1).
(6) If so imposed by the Bank under subsection (3), the person
conducting an examination in terms of subsection (1) shall, within a period of 30
days after the completion of the examination, furnish the Bank with a report on
the examination so conducted.
(7) The Bank may enter into an agreement with a person referred to
in subsection (1) -
No. 1808 Government Gazette 9 March] 998 85
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(a) to regulate -
(i)
(ii)
the establishment -
(aa) in the foreign state, country, colony or territory
concerned of representative offices or of
subsidiaries of banking institutions conducting
business in Namibia; or
(bb) III Namibia of representative offices or of
subsidiaries of foreign banking institutions
conducting business in Namibia; and
the supervisory powers, duties and functions of the Bank
and of such person relating to the representative offices or
of the subsidiaries established in Namibia and in the foreign
state, country, colony or territory respectively, as
contemplated in subparagraph (i);
(b) to provide for -
(i)
(ii)
(iii)
the furnishing of information relating to representative
offices or subsidiaries;
the co-operation and exchange of information relating to
examinations by the Bank or by such person; and
the confidentiality relating to information referred to in
subparagraphs (i) and (ii); and
(c) any other matter which the parties may consider of importance
relating to the conducting of business by banking institutions.
(8) For the purposes of this section, the "supervisory authority" of a
person referred to in subsection (1) means supervisory authority corresponding
to the supervisory authority of the Bank in respect of banking institutions
conducting business in Namibia.
86 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
Minors as depositors
67. Notwithstanding anything to the contrary in any law contained, a
minor person of 16 years and older, and who has not been declared mentally ill
under the Mental Health Act, 1973 (Act 18 of 1973), may open an account and be
a depositor with a banking institution and may, without the assistance of his or
her parent or guardian, as the case may be, execute all necessary documents, give
all necessary receipts or acquittances and may cede, pledge, borrow against, and
generally deal with, his or her deposit as he or she may consider appropriate, and
shall enjoy all the privileges and be liable to all the obligations and conditions
applicable to depositors.
Exemption of certain transactions from stamp duties
68. No stamp duty imposed by the Stamp Duties Act, 1993 (Act 15 of
1993) shall be payable in respect of the transfer of shares in a banking institution
or any of its subsidiary companies, sold or disposed of in any manner by the
banking institution to its controlling company, if such sale or disposal has been
approved by the Bank.
Application of other laws to banking institutions
69. (1) A company registered as a banking institution or as a
controlling company shall continue to be a company in terms of the Companies
Act, and that Act shall, subject to subsection (2), continue to apply to any such
company to the extent to which that Act is not inconsistent with this Act.
(2) Notwithstanding subsection (1) -
(a) the provisions of the Companies Act relating to the conversion of
public companies into other forms of companies shall not apply to
a company referred to in that subsection; and
(b) the Minister may, on the recommendation of the Bank, by notice
in the Gazette provide that a provision of the Companies Act
specified in the notice -
No. 1808 Government Gazette 9 March 1998 87
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(i) shall not apply to a company authorised to conduct business
as a banking institution, or to a controlling company of the
banking institution;
(ii) shall only apply to a company referred to in subparagraph
(i) subject to the conditions and qualifications specified in
the notice; or
(iii) shall in respect of a company referred to in subparagraph
(i), if such provision, in respect of a company, confers a
power, duty or function on the Registrar of Companies, be
deemed to confer on the Bank the power, duty or function
specified in the notice.
(3) The Minister shall table a copy of a notice under subsection (2) in
the National Assembly within a period of 14 days after the publication thereof, if
the National Assembly is then in ordinary session, or, if the National Assembly is
not then in ordinary session, within a period of 14 days after the commencement
of its next ensuing ordinary session.
(4) If the National Assembly, by resolution passed during the session
in which the notice referred to in subsection (3) was tabled, rejects the notice, the
notice shall cease to be in force as from the date it was so rejected.
(5) An authorisation granted under this Act shall not exempt a banking
institution from the obligation, if any, to obtain a licence, a permit or an
authorisation, or to comply with any requirement, as the case may be, under any
other law to conduct banking business.
External bureaux
70. (1) An external bureau established or utilised by one or more
banking institutions for the purposes of accounting or payment by the banking
institutions or their affiliate or associate shall, irrespective of the ownership of
the external bureau, for the purpose of supervision by the Bank, be deemed to be
a part of the accounting or payment system of the banking institutions which
established, or which utilise or utilised the external bureau.
88 Government Gazette 9 March 1998
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
No. 1808
(2) For the purposes of this section, "external bureau" means an office,
an establishment or an agency in Namibia owned or retained by one or more
banking institutions, or their affiliates or associates, for the purpose of accounting,
payment or other banking services.
Regulations and determinations
71. (1) The Minister may, on the recommendation of the Bank,
make regulations relating to -
(a) any matter which is required or permitted by this Act to be
prescribed;
(b) the requirements relating to the citizenship and place of residence
of the members of a board of directors, or of the employees, of
banking institutions;
(c) the manner in which the payment of any monies in terms of this
Act shall be made to the Bank; and
(d) all other matters which the Minister considers necessary or
expedient to prescribe in order to achieve the objects and purposes
of this Act.
(2) A regulation made under subsection (1) may in respect of any
contravention thereof or failure to comply therewith prescribe a penalty not
exceeding a fine of N$l 00 000 or imprisonment for a period not exceeding two
and a half years or both such fine and such imprisonment.
(3) The Bank may by notice in the Gazette make determinations not
inconsistent with this Act relating to -
(a) any matter which is required or permitted by this Act to be
determined by the Bank; and
(b) all other matters which the Bank considers necessary or expedient
to determine for the conducting of banking business in a prudent
\ --
No. 1808 Government Gazette 9 March 1998 89
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
manner and consistent with the best standards and practices of
corporate governance and sound financial management.
(4) Any person or banking institution, as the case may be, shall, on
contravention of, or failure to comply with, any determination made under
paragraph (a) of subsection (3) -
(a)
(b)
as provided for in section 28(5)(b) or (c), 30(2),41(5) or 43(6) in
respect of any person, including a banking institution; or
as provided for in section 21(7), 28(1)(b), 30(1)(d), 31(1), 33(1),
34(1) or (2), 46(2)(b) or 47(2)(a) in respect of any banking
institution,
be guilty of an offence and on conviction be liable to the penalties provided for in
section 72(1)(a).
(5) A determination made under paragraph (b) of subsection (3) may
in respect of any contravention thereof or failure to comply therewith determine
a penalty not exceeding a fine of N$50000 or imprisonment for a period not
exceeding one and a half years or both such fine and such imprisonment.
Offences and penalties
72.
(a)
(1) Any person who -
contravenes or fails to comply with any provision of section 5,
25(2),46(3) or 64(7); or
(b) contravenes or fails to comply with any provision of section 6(4),
20(1)(b), (2)(b) or (4), 24(1), 26(7), 41(7), (8), (9), (10), (12) or
(13),43(5),45(1)(2) or (3), 46(3),56(4), (7) or (9),58(1),62(3),
64(1), (3), (7) or (9), or 66(2); or
(c) contravenes or fails to comply with any order, direction or
instruction made or issued under section 6(2)(g), 7(1), 26(1) or
(13),56(3) or 66(6) in respect of any person, including a banking
institution; or
90 Government Gazette 9 March 1998
Act No.2, 1998
No. 1808
(d)
BANKING INSTITUTIONS ACT, 1998
when furnishing information to the Bank, to a banking institution
or to any other person in terms of section 6(4)(d), 10,22,49(1),
(2), (3) or (4), wilfully and with the intent to deceive or to mislead,
furnishes false, untrue or misleading information, or furnishes a
forged document,
shall be guilty of an offence.
(2)
(a)
(b)
Any person convicted of an offence -
under paragraph (a) of subsection (1), shall be liable to a fine not
exceeding N$ 1 000 000 or to imprisonment for a period not
exceeding ten years or to both such fine and such imprisonment;
or
under paragraph (b), (c) or (d) of subsection (1), shall be liable to
a fine not exceeding N$ 500 000 or to imprisonment for a period
not exceeding five years or to both such fine and such
imprisonment.
Offences by banking institutions, officers or agents
with -
73. A banking institution which contravenes or fails to comply(1)
(a) any provision of section 8(2), 12(2), 14, 16(1), 19(1) or (4),
20(1)(a), (2)(a) or (5),21(1), (4), (6) or (7), 27(2), 28(1), 30(1)(a),
(b) or (c), 31(2) or (3),32,35,36(1),37(1),38(1) or (2),39(1) or
(2), 40(1) or (2), 41(1) or (2), 42(2) or (4), 43(1) or (2), 45(4),
46(1) or (2)(a), 47(2)(b) or (3),48,49(2), (3) or (4), 53(1) or (3),
54(1),55(1),61(1),62(1) or 63; or
(b) any notice, demand, instruction or request made or issued under
any section referred to in paragraph (a); or
(c) any order, direction or instruction made or issued under section
6(2)(f), 8(4)(b), 15(5),39(4) or 52(9); or
I . ''-J
No. 1808 Government Gazette 9 March] 998 91
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
(d) any condition or requirement laid down under section 8(3), 28(2)
or (4), 36(2), 47(5),49(1) or (5) or 50,
shall be guilty of an offence.
(2) A banking institution convicted of an offence under subsection
(1) shall be subject to the penalties prescribed by section 72(2)(a).
(3) If a banking institution is convicted of an offence under subsection
(1), any person who at the time of the commission of the offence was an officer,
a director or a substantial shareholder of the banking institution, or was purporting
to act in any such capacity, or was in any manner or to any extent responsible for
the management of any of the affairs of the banking institution, or was assisting
in the management, as the case may be, shall, if it is proven that the offence was
committed at the instructions of, or with the consent or connivance of, such person,
be guilty of the same offence, and be subject to the same penalty, which the
banking institution is guilty of and is subject to.
(4) If an officer, employee or agent of a banking institution is convicted
of an offence under section 72, any person who at the time of the commission of
the offence was in a position of authority in relation to the officer, employee or
agent, or who was a director or a substantial shareholder of the banking institution,
as the case may be, or was purporting to act in any such capacity, and if it is
proven that the offence was committed by the officer, employee or agent in the
course of his or her employment and at the instructions of, or with the consent or
connivance of the person in authority, or the director or substantial shareholder,
as the case may be, the person in authority or the director or shareholder shall be
guilty of the same offence, and shall be subject to the same penalty, which the
officer, employee or agent is guilty of or is subject to.
Repeal of laws and savings
74. (1) Subject to subsection (2), the laws specified in the Schedule
are hereby repealed to the extent set out in the third column of the Schedule.
(2) Any regulation made or in force, or any banking institution
registered as such for the purpose of conducting banking business, under any
SCHEDULE
LAWS REPEALED
Section 74
No and year of law Short title Extent of repeal
Act No. 23 of 1965 Banks Act, 1965 The whole
Act No. 80 of 1969 Financial Institutions Amendment Act, 1969 section 2
Act No. 23 of 1970 Financial Institutions Amendment Act, 1970 section 6
Act No. 91 of 1972 Financial Institutions Amendment Act, 1972 sections 12(a)(ii), 12(a)(iii)
and 13
Act No. 67 of 1973 Financial Institutions Amendment Act, 1973 section 4
Act No.1 01 of 1976 Financial Institutions Amendment Act. 1976 sections 37(a), (b), (d)
and (0, 40, 42, 43, 47, 48, I \ 49,50,51,52 and 53 J
Act No. 94 of 1977 Financial Institutions Amendment Act, 1977 sections 20 and 21
92 Government Gazette 9 March 1998 No. 1808
Act No.2, 1998 BANKING INSTITUTIONS ACT, 1998
provision of any law repealed by subsection (1) shall be deemed to have been
made or to be in force, or to have been authorised to conduct banking business,
under the corresponding provision of this Act.
, i \...J
Short title and commencement
75. This Act shall be called the Banking Institutions Act, 1998, and
shall come into operation on a date to be determined by the Minister by notice in
the Gazette.
Act No. 80 of 1978 Financial Institutions Amendment Act, 1978 sections l8(b), (c) and (d),
19, 20(l)(c) and 21(c)
Act No. 103 of 1979 Financial Institutions
