CHAPTER 42:03
BUILDING SOCIETIES

ARRANGEMENT OF SECTIONS

   SECTION

PART I
Preliminary

   1.   Short title

   2.   Interpretation

   3.   Application

   4.   Name of terminating society

PART II
Registration of Societies and Matters Incidental thereto

   5.   Prohibition of unregistered society

   6.   Mode of forming society

   7.   Matters which must be provided in rules of society

   8.   Alteration of rules

   9.   Rules open to public

   10.   Registration of societies

   11.   Registrar may inspect books and accounts of any association

   12.   Effect of registration

   13.   Conclusiveness of certificate of registration

   14.   Cancellation or suspension of registration

   15.   Name of society

   16.   Change of name of society

PART III
Powers of Societies, Deposits, Shares, Advances and Financial Provisions
with respect to Societies

   17.   Powers of society

   18.   Minors and married women may be members of society

   19.   Conditions in regard to savings deposits and fixed deposits

   20.   Maximum savings deposit or fixed deposit by individual

   21.   Saving in the case of deposits by a trustee

   22.   Conditions relating to shares

   23.   Maximum shareholding by individual

   24.   Society may redeem share in certain circumstances

   25.   Advances must be reducible or fixed-term advances

   26.   Limit as to amount of advance

   27.   President may guarantee repayment of advances

   28.   Limit as to amount of advance when President has guaranteed repayment

   29.   Method of calculating interest must be stated in advertisement relating to advances

   30.   Advance on property already mortgaged prohibited

   31.   Society may make further advances for certain purposes

   32.   Limitation as to sum total of advances

   33.   Valuation of property for purposes of advance

   34.   Valuator must have no pecuniary interest in advance

   35.   Duty of director, etc. to disclose interest in advance

   36.   Society may recover certain amounts in addition to amounts entitled to under mortgage or cession

   37.   Registrar may examine books of society

   38.   Non-compliance with Act does not invalidate advance

   39.   Establishment of statutory reserve fund

   40.   Restriction on pledging of investments and mortgages

   41.   Restriction on borrowings

   42.   Society must hold certain amount daily as security for repayments

PART IV
Management and Administration

   43.   Head office of society

   44.   Financial year of society

   45.   Periodical statements as to financial position

   46.   Annual accounts

   47.   Society must provide fidelity cover

   48.   Annual and special general meetings

   49.   Minutes of proceedings of meetings of society or directors

   50.   Inspection of minute books

   51.   Keeping of books of account

   52.   Appointment of auditors

   53.   Disqualifications for appointment as auditor

   54.   Contents of auditor's report

   55.   Auditor's right of access to books and to attend general meetings

   56.   Investigation of society's affairs on application of members

   57.   Investigation of society's affairs in other cases

   58.   Production of documents and evidence on investigation

   59.   Inspector's reports

   60.   Proceedings on inspector's report

   61.   Expenses of investigation of society's affairs

   62.   Saving for attorneys and bankers

   63.   Inspector's report to be evidence

   64.   Directors and secretary

   65.   Validity of acts of directors

   66.   Disqualification for appointment as director

   67.   Amalgamation of two or more societies

   67A.   Conversion of a society into a company

   67B.   Protective provisions

   67C.   Tax exemptions

   67D.   Licences

   68.   Modes of winding up

   69.   Liability of members

   70.   Liability of borrowers

   71.   Judicial management of society

PART V
Foreign Building Societies

   72.   Registration of foreign building societies

   73.   Provisions of this Act to apply

PART VI
General

   74.   Lost or destroyed share certificates, etc.

   75.   Inspection of documents by public

   76.   Default in rendering accounts and furnishing information

   77.   Acceptance of benefits prohibited

   78.   False statements

   79.   Default in complying with financial provisions

   80.   Evidence

   81.   Penalties

   82.   Regulations

      First Schedule

      Second Schedule

      Third Schedule

Proc. 36, 1961,
H.C.N. 17, 1963,
HMC Order 1, 1963,
L.N. 84, 1966,
Act 43, 1970,
Act 70, 1970,
Act 39, 1978,
Act 1, 1986,
Act 18, 2006
Act 3, 2014,
S.I. 81, 2014.

An Act to provide for the control of building societies.

[Date of Commencement: 3rd May, 1961]

PART I
Preliminary
(ss 1-4)

1.   Short title

   This Act may be cited as the Building Societies Act.

2.   Interpretation

   In this Act, unless inconsistent with the context-

   "advance" includes one or more advances on the security of a mortgage or a cession of a lease of one property or of two or more properties jointly;

   "approved investment" means an investment approved in terms of section 17(1)(j);

   "authorized deposit" means a deposit mentioned in section 17(1)(g);

   "board of directors", in relation to any society, means the managing body thereof by whatever name it may be called;

   "cession" means a cession of a registered lease of immovable property, the unexpired period of which is at the date of cession not less than 30 years;

   "court" means the High Court of Botswana and in relation to any offence under this Act includes a magistrate's court having jurisdiction in respect of that offence;

   "director" includes any person occupying the position of director or alternate director of a society by whatever name he may be called;

   "fixed deposit" means a deposit for a period which is fixed in accordance with the provisions of section 19(e);

   "fixed-period share" means a paid-up share issued for a period of five years or for a longer period which may not be redeemed before the expiry of the period for which it is issued;

   "fixed-term advance" means an advance on terms and conditions which provide for the repayment of the capital amount advanced within a fixed period;

   "general reserve fund" means any general reserve fund established by a society other than a statutory reserve fund and built up out of profits and not set aside for any specific purpose;

   "member", in relation to a society, means a person who holds shares therein, whether fully or partly paid-up, which participate in the profits thereof whether or not such shares are held by the society as security for an advance;

   "mortgage" means a mortgage of immovable property;

   "officer", in relation to a society, means any director, manager, secretary, clerk, agent or other employee of the society but does not include an auditor of the society;

   "permanent share" means a fully paid-up share of which the holder is not entitled at any time to demand redemption but which the society may redeem after six months' notice to the holder if its rules so provide;

   "prescribed" means prescribed by regulations;

   "reducible advance" means an advance on terms and conditions which provide for the reduction of the capital amount advanced by periodical payments;

   "Registrar" means the person holding the post of Permanent Secretary, Ministry of Finance and Development Planning, and includes any officer acting as such for the time being;

   "savings deposit" means-

   (a)   a deposit other than a fixed deposit;

   (b)   a deposit for a fixed period not exceeding 12 months;

   "secretary", in relation to a society, includes any executive officer of the society acting in the capacity of secretary;

   "society" means a building society as defined in section 3;

   "statutory reserve fund" means a statutory reserve fund established in terms of section 39;

   "subscription share" means a share which-

   (a)   is paid for by periodical contributions;

   (b)   is calculated to mature at the expiry of a period of not less than three years; and

   (c)   may not be redeemed before the expiry of the maturity period.

3.   Application

   (1) The provisions of this Act shall apply to every building society.

   (2) For the purposes of this Act the expression "building society" means an association of persons-

   (a)   whose name or title contains the words "building society" or;

   (b)   whose principal object is raising money by issuing shares to its members and by accepting deposits or loans from its members and others, and using such money to make advances to members and others upon the security of a mortgage or cession for the purpose of enabling the persons to whom such advances are to be made to acquire immovable property or to erect and maintain buildings upon immovable property,

but does not include a terminating society, that is to say, an association which by its rules has no power to accept deposits or to borrow money otherwise than from another section of the same society, and which is bound to terminate on the expiry of a fixed period or upon the occurrence of an event specified, or the rules of which provide for the organization of its members in sections, for the separate administration of the affairs of each section or the joint administration of the affairs of all sections and for the termination of each section upon the expiry of a fixed period or upon the occurrence of an event specified in the rules.

4.   Name of terminating society

   (1) No terminating society shall carry on business in Botswana unless the word "terminating" forms part of its name or title.

   (2) Any society which contravenes the provisions of subsection (1) shall be guilty of an offence and liable to a fine not exceeding P1000.

PART II
Registration of Societies and Matters Incidental thereto
(ss 5-16)

5.   Prohibition of unregistered society

   (1) No society, association or company shall carry on business in Botswana as a building society unless it is registered in terms of this Act.

   (2) Any society, association or company which contravenes the provisions of subsection (1) shall be guilty of an offence and liable to a fine not exceeding P1000.

6.   Mode of forming society

   Any seven or more persons may form a building society by subscribing their names and addresses to rules agreed to by them for the government of such society, and by obtaining registration under this Act.

7.   Matters which must be provided in rules of society

   (1) The rules of every society shall provide for the following matters-

   (a)   the name of the society and the situation in Botswana of its head office or in the case of a foreign building society registered under this Act the name of the society and the situation and postal address of its principal office in Botswana;

   (b)   the principal objects of the society;

   (c)   the manner in which the funds of the society are to be raised, the purposes to which they are to be applied and the manner in which surplus funds are to be invested;

   (d)   the manner in which a person may become a member and may cease to be a member;

   (e)   the classes of shares to be issued, the conditions of redemption or repayment of shares, and the preferential and other special rights attaching to each class of shares;

   (f)   the manner in and the conditions upon which advances upon the security of a mortgage or cession are to be made and repaid, and the conditions upon which a borrower shall be entitled to repay the amount owing by him before the expiry of the period for which the advance was made;

   (g)   the conditions upon which the society will accept and repay deposits;

   (h)   the fees, fines and charges that may be demanded from or imposed upon shareholders, depositors and borrowers;

   (i)   the manner of appointment of an auditor of the society;

   (j)   the manner in which profits or losses are to be ascertained and dealt with or provided for;

   (k)   the manner of altering and rescinding the rules of the society and of making additional rules;

   (l)   the manner of electing, appointing, removing and fixing the remuneration of directors, their qualifications, powers and duties, and the manner of appointment, removing and fixing the remuneration of members of local boards or committees and of officers of the society;

   (m)   the manner of calling annual general meetings and special general meetings of members, the quorum necessary for the transaction of business at such meetings, and the manner of voting thereat;

   (n)   whether disputes between the society and any of its members, or between the society and any persons claiming under the rules or whose claims are derived from members shall be settled by the court or by arbitration;

   (o)   such other matters as may be prescribed from time to time.

   (2) The registered rules and any registered amendments thereto as hereinafter provided shall be binding on the society and members and officers thereof, and on all persons claiming under the rules or whose claim is derived from a member.

8.   Alteration of rules

   (1) A society may, in the manner directed by its rules, alter or rescind any rule, or make any additional rule, but no such alteration, rescission or addition shall be valid if-

   (a)   it purports to affect the right of a creditor of a society who is not a member thereof;

   (b)   it is directed against any particular individual; or

   (c)   it purports to alter the rights of members in a winding up.

   (2) Two copies of every resolution for the alteration or rescission of any rule or the making of any additional rule shall be signed by two directors and the secretary of the society, and shall be transmitted by the secretary of the society to the Registrar, who, if he is satisfied that such alteration, rescission or addition is in conformity with this Act, shall register the resolution and return one of the copies to the secretary of the society, with the date of registration endorsed thereon, and as from the date of registration the alteration, rescission or addition, as the case may be, shall take effect.

9.   Rules open to public

   (1) Every society shall make a copy of its rules available for inspection by members of the public during the normal business hours of the society.

   (2) Any society which contravenes the provisions of subsection (1) shall be guilty of an offence and liable to a fine not exceeding P200.

10.   Registration of societies

   (1) Any persons intending to establish a building society shall lodge with the Registrar the rules agreed upon by them for the government of the society and signed by them, together with such particulars relating to the signatories thereto as the Registrar may require.

   (2) The Registrar shall, after consideration of such rules and particulars and such further information and arguments as may be submitted to him by such persons, determine whether, according to its rules, the society to be established is or is not a building society.

   (3) If it is determined in terms of subsection (2) that the society to be established is not a building society, the Registrar shall inform such persons accordingly:

   Provided that-

   (a)   the decision of the Registrar under this subsection shall be subject to an appeal to the President, if such appeal is made within one month after the decision of the Registrar has been announced; and

   (b)   the decision of the President on any such appeal shall be subject to an appeal to the court, if such appeal is noted within three months after the decision of the President has been announced.

   (4) If it is determined in terms of subsection (2) that the society to be established is a building society, the Registrar, if he finds that the rules are in conformity with the provisions of this Act, and if he is satisfied that the rules are financially sound and that the methods of transacting the business of the society as laid down are not undesirable, shall recommend to the President that permission be granted to register the society as a building society.

   (5) On receipt of a recommendation from the Registrar under subsection (4), and after consideration of all such matters as he may consider relevant, the President may in his discretion direct the Registrar to register the society as a building society.

   (6) The decision of the President under subsection (5) shall be final, and shall forthwith be communicated to all persons interested therein.

   (7) On receipt of a direction by the President under subsection (5), the Registrar shall, upon payment to him of the prescribed fee, register the society under this Act as a building society and record his approval of the rules, and shall endorse on a copy of the rules presented to him for that purpose the date of registration of the society, and shall issue a certificate of registration.

11.   Registrar may inspect books and accounts of any association

   The Registrar may at any time make an inspection or cause an inspection to be made of the books, accounts and records of any association of persons for the purpose of determining whether the association is a building society or not.

12.   Effect of registration

   (1) From the date of registration of a society under this Act such society shall be a body corporate which shall be capable of suing and of being sued in its registered name and subject to the provisions of its rules and of this Act, of doing all such acts as a body corporate may by law perform.

   (2) Whenever a society which is registered under a law relating to companies is registered under this Act, the Registrar shall notify the Registrar of Companies in writing of such registration, and the Registrar of Companies shall thereupon strike the name of the society off the register of companies.

13.   Conclusiveness of certificate of registration

   A certificate of registration of a society issued by the Registrar shall, upon its mere production, in the absence of proof of fraud, be conclusive evidence that all the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with and that the society is duly registered.

14.   Cancellation or suspension of registration

   (1) Where the Registrar has reasonable grounds for believing-

   (a)   that a certificate of registration has been obtained for a society by fraud or mistake;

   (b)   that a society exists for an illegal purpose;

   (c)   that a society has wilfully and after notice from the Registrar exceeded its powers or contravened any of the provisions of this Act applicable to it; or

   (d)   that a society has ceased to conduct business as a building society,

the Registrar, with the approval of the President, may apply to the court for an order for the cancellation or suspension of the registration of the society.

   (2) The Registrar shall, before making any such application, give to the society not less than two months previous notice in writing of his intention to make the application, specifying briefly the grounds of the proposed application.

   (3) The court may order the cancellation of the registration of the society or order the suspension of such registration for such period as it thinks fit, and may attach to any order such conditions as it thinks desirable, or may make any other order which in the circumstances it thinks desirable; and the Registrar shall forthwith give effect to any order for cancellation or suspension of registration.

   (4) Unless the court otherwise orders, the costs in connection with the application shall be paid by the society and shall be a first charge upon the assets of the society.

   (5) The Registrar shall cancel the registration of a society if the society by resolution, passed, by a majority of the members voting in accordance with the rules of the society, at a special general meeting convened for that purpose, resolves that the registration of the society be cancelled:

   Provided that where the members so voting in favour of such resolution do not hold more than one half of the value of shares of the society, as shown in the books of the society, the resolution shall not become effective until the concurrence in writing is obtained of other members whose shares together with the shares of the members who voted in favour of the said resolution exceed in value one half of the total value of shares of the society, as shown in the books of the society.

   (6) The Registrar shall, as soon as practicable after any cancellation or suspension under subsection (3) or (5), cause notice thereof to be published in the Gazette and in a newspaper circulating in the district in which the head office is situate or, in the case of a foreign building society registered under this Act, in the district in which the principal office of the society is situate.

   (7) Any cancellation or suspension of registration shall be without prejudice to any right acquired by any person against the society before the publication in the Gazette of the notice referred to in subsection (6).

15.   Name of society

   (1) No society shall be registered by a name which is identical with that of a registered society or which so nearly resembles such name as to be calculated to deceive unless the registered society is in liquidation and consents to the registration.

   (2) The Registrar may refuse to register a society by a name which in his opinion is calculated to mislead the public or to cause offence to any person or class of persons or is suggestive of blasphemy or indecency, and shall so refuse, if, in his opinion the name imports or suggests that the society enjoys the patronage of the President, of the Government of Botswana or of any department of such Government.

This section of the article is only available for our subscribers. Please click here to subscribe to a subscription plan to view this part of the article.

Please click here to login