CHAPTER 46:08
NON-BANK FINANCIAL INSTITUTIONS REGULATORY AUTHORITY

ARRANGEMENT OF SECTIONS

   SECTION

PART I
Preliminary

   1.   Short title

   2.   Interpretation

   3.   Subsidiaries

   4.   Controllers

   5.   Republic, etc. to be bound

PART II
Non-Bank Financial Institutions Regulatory Authority

Establishment, objects and constitution of Non-Bank Financial Institutions Regulatory Authority

   6.   Establishment of Regulatory Authority

   7.   Functions of Regulatory Authority

   8.   Principal objects of Regulatory Authority

   9.   Regulatory Authority to report on non-bank financial institutions

   10.   Policy directions by Minister

The Board and staff of the Regulatory Authority

   11.   The Board

   12.   Appointment of Chief Executive Officer

   13.   Period of office

   14.   Qualifications

   15.   Resignation

   16.   Termination of appointment

   17.   Remuneration

   18.   Meetings

   19.   Staff, etc.

   20.   Declaration of interests

Financial and accountability provisions

   21.   Money of the Regulatory Authority

   22.   Annual estimates and levy structure

   23.   Supervisory levies

   24.   Fees and charges

   25.   Supervisory levy, fees and charges, debts to Regulatory Authority

   26.   Waiver of levies or fees

   27.   Borrowings

   28.   Advances from Government

   29.   Levies Account

   30.   Investments

Financial accounting

   31.   Record keeping

   32.   Financial statements and annual report

   33.   Financial reports to be audited

   34.   Financial report and annual report to be given to Minister

   35.   Reporting to National Assembly and industry

   36.   Auditor General may examine Regulatory Authority

Other provisions

   37.   Protection of Regulatory Authority, officers, etc.

   38.   Secrecy

   39.   Code of conduct

   40.   Arrangements with other agencies

   41.   Delegations

PART III
Licensing of non-bank financial institutions

   42.   Non-bank financial institutions to be licensed

   43.   Licensing

   44.   Period of licence

   45.   Display of licence

   46.   Variation, suspension or cancellation of licence on request

   47.   Variation, suspension and cancellation of licence

   48.   Exemptions from and modifications of this Part

PART IV
Supervision and regulation of non-bank financial institutions

   49.   Prudentially regulated non-bank financial institutions

Prudential rules

   50.   Prudential rules

Information, reports, etc.

   51.   Information to be given to Regulatory Authority

   52.   Reporting

Directions

   53.   Powers to give directions

Inspections and investigations

   54.   Appointment of inspectors and investigators

   55.   Routine inspections of licensed non-bank financial institutions

   56.   Investigations

   57.   Investigators' powers

Self-regulatory organisations

   58.   Self-regulatory organisations

   59.   Rules of self-regulatory organisations

   60.   Due process by self-regulatory organisations

   61.   Reporting by self-regulatory organisations

   62.   Termination of arrangements and revocation of declaration

   63.   Amendments to self-regulatory organisations' constitutions

   64.   Protections for self-regulatory organisations, etc.

Controllers of prudentially regulated non-bank financial institutions

   65.   Controllers of prudentially regulated non-bank financial institutions

PART V
Regulating market practices of non-bank financial institutions

   66.   Operation of this Part with other laws

   67.   Prohibition of false and misleading statements

   68.   Unfair practices

   69.   Disclosure of information

PART VI
Amalgamations of, transfers of business of, statutory management of and winding up of prudentially regulated non-bank financial institutions

Compromises and arrangements and transfers of business

   70.   Compromises and arrangements involving prudentially regulated non-bank financial institutions

   71.   Transfers of business of prudentially regulated non-bank financial institutions

   72.   Sections 70 and 71 prevail over Companies Act

Statutory management

   73.   Appointment of statutory managers

   74.   Statutory management

   75.   Termination of statutory management

Winding up

   76.   Winding up prudentially regulated non-bank financial institutions

PART VII
Enforcement of financial services laws

   77.   Enforceable undertakings

   78.   Compensation for breaches of financial services laws

   79.   Administrative penalties

   80.   Powers of High Court

   81.   Exemptions and modifications of financial services laws for non-bank financial institutions

PART VIII
Powers relating to the International Financial Services Centre

   82.   Application of Part

   83.   Enforcement of IFSC rules

   84.   Power to recommend revocation of tax certificate

PART IX
Review of decisions by the Tribunal

   85.   Establishment of Tribunal

   86.   Review of decisions

   87.   Application for review of decisions

   88.   Implementation of decisions pending review

PART X
Miscellaneous

   89.   Advisory bodies

   90.   Requirement to answer questions

   91.   Requirement to comply with directions

   92.   False and misleading statements to Regulatory Authority

   93.   False statements

   94.   Self-incrimination not a reasonable excuse

   95.   Offence of holding out as licensed, etc.

   96.   Destruction of documents

   97.   Hindering Regulatory Authority, etc.

   98.   Preventing compliance

   99.   Extension of time

   100.   Evidence

   101.   Conduct of directors, servants and agents

   102.   Liability of directors, etc.

   103.   Offence committed partly within and partly beyond Botswana

   104.   Penalties for bodies corporate

   105.   Regulations

PART XI
Transitional and consequential provisions

   106.   Existing licences and registrations preserved

Act 2, 2007,
S.I. 35, 2007,
S.I. 20, 2008,
S.I. 49, 2008.

An Act to provide for the regulation of non-bank financial institutions for the purpose of enhancing the safety and soundness of non-bank financial institutions, setting high standards of conduct of business by non-bank financial institutions, improving the fairness, efficiency and orderliness of the non-bank financial sector and the stability of the financial system and reducing and deterring financial crime and for purposes incidental thereto and connected therewith

[Date of commencement: Sections 2, 6, 11-20, 37-39, 41 and 105: 28th May, 2007;
sections 1, 3-5, 7-10, 21-36, 40, 42-84, 89-104,
First Schedule - paragraph 1, Second Schedule - paragraphs 1-10,
Third Schedule - paragraphs 1-6, paragraph 7 (except with respect to section 83), paragraph 8,
Fourth Schedule - paragraphs 1-5, paragraph 6 (except with respect to section 118), paragraphs 7-8,
Fifth Schedule - paragraphs 1-5, paragraph 6 (except with respect to
section 10 subsections (5), (6) and (7), paragraphs 7-8,
Sixth Schedule - paragraphs 1-3 and paragraph 4 (except with respect to section 30):
1st April, 2008; sections 106-107: 16th June, 2008.]

PART I
Preliminary (ss 1-5)

1.   Short title

   This Act may be cited as the Non-Bank Financial Institutions Regulatory Authority Act.

2.   Interpretation

   In this Act, unless the context otherwise requires-

   "administrator", in relation to a pension or provident fund, means a person who provides administration or similar services to the fund;

   "asset manager" means a person who, under an agreement with another person, applies assets of the other person by way of investment, whether the asset manager makes those investments in its own name or not but does not include a custodian or a trustee;

   "bank" means-

   (a)   a bank licensed in terms of the Banking Act;

   (b)   the Botswana Savings Bank;

   (c)   the National Development Bank;

   "Board" means the Board of the Regulatory Authority established under section 11;

   "central securities depository" means a facility for the deposit, clearing or settlement of securities transactions, whether physically, electronically or otherwise;

   "Chairperson" means the person appointed as Chairperson in terms of section 11(3)(c);

   "Chief Executive Officer" means the person appointed as Chief Executive Officer in terms of section 12(1);

   "Code of Conduct" means a code formulated in terms of section 39;

   "collective investment undertaking" has the meaning assigned to it under the Collective Investment Undertakings Act;

   "controller", of a non-bank financial institution, has the meaning assigned to it under section 4;

   "custodian" means a person who holds property of another person for safekeeping;

   "Deputy Chairperson" means the person appointed as Deputy Chairperson in terms of section 11(4);

   "Director", in relation to a body corporate, means each of the following-

   (a)   a person who is appointed to a position of director;

   (b)   a person who is appointed to a position of alternate director and is acting in that capacity;

   (c)   a person who, although not appointed to a position of director or alternate director, acts as a director;

   (d)   a person in accordance with whose instructions or wishes the directors of the body corporate are accustomed to act,

but paragraph (d) does not apply merely because the directors act on advice given by the person in the proper performance of functions attaching to the person's professional capacity, or the person's business relationship with the directors or the body corporate;

   "financial crime" means any of the following-

   (a)   a criminal offence (whether or not arising under this Act) that involves fraud or dishonesty relating to a non-bank financial institution;

   (b)   financing or facilitating a criminal offence (whether or not it arises under this Act) relating to a non-bank financial institution;

   (c)   dealing with the proceeds of a criminal offence (whether or not it arises under this Act, whether or not related to non-bank financial institution and whether or not the Proceeds of Serious Crime Act, applies in relation to the matter);

   (d)   the offence of money laundering in terms of section 14 of the Proceeds of Serious Crime Act;

   (e)   financing of terrorist activity in any place;

   "financial group" means a group of companies under common control comprised one or more prudentially regulated non-banking financial institutions and their subsidiaries;

   "financial report", in relation to a financial year, means the report prepared for the year in terms of section 32(1)(a);

   "financial services" means services relating to financial matters;

   "financial services law" means any of the following-

   (a)   this Act;

   (b)   the Insurance Industry Act ;

   (c)   the International Insurance Act, 2005;

   (d)   the Pension and Provident Funds Act;

   (e)   the Botswana Stock Exchange Act;

   (f)   the Collective Investment Undertakings Act;

   (g)   Part XVI of the Income Tax Act, so far as it relates to non-bank financial institutions;

   (h)   a law that declares itself to be a financial services law for the purposes of this definition;

   (i)   a law prescribed for the purposes of this definition; and includes the prudential rules;

   "financial year" means a period of 12 months starting on 1 April;

   "finance or leasing company" means a body corporate that provides loans, advances or leasing products, but does not include a bank or a deposit-taking institution;

   "friendly society" means an association of persons established with no share capital for the purpose of aiding members of the association or their dependants, being an association that does not employ a person whose main occupation is canvassing for members of, or collecting contributions or subscriptions for, the association;

   "insurance agent" means a person who solicits applications for insurance or collecting premiums for an insurer;

   "insurer" means a person who undertakes liabilities by way of insurance (including general insurance, life insurance and re-insurance), whether or not as a member of an association of underwriters, and includes a person operating a medical aid fund;

   "insurance broker" means a person who arranges insurance otherwise than as agent of the insurer;

   "international insurance firm" has the meaning assigned to it in the International Insurance Act;

   "investment adviser" means a person who gives other persons investment advice or recommendations (including about holding and disposing of investments) in relation to securities or other assets;

   "investigator" means each of the following-

   (a)   an employee of the Regulatory Authority appointed in terms of section 54 as an investigator;

   (b)   a person appointed in terms of section 19 (b) to conduct an examination or investigation under this Act;

   "licence" means-

   (a)   a licence issued in terms of this Act; or

   (b)   a licence, registration or other permission issued in terms of another financial services law;

   "manager", in relation to a non-bank financial institution, includes an employee of the institution who exercises managerial functions in relation to the institution;

   "management company", for a collective investment undertaking, has the meaning assigned to it in the Collective Investment Undertakings Act;

   "medical aid fund" means a scheme that provides cover for financial or other assistance to persons in connection with prescribed medical services;

   "member" means a member of the Board;

   "member of the insurance industry" means an insurance surveyor, a risk manager, a loss assessor, a loss adjuster or a claims settlement agent;

   "micro lender" means a person who advances loans to persons, where the loans do not exceed the prescribed amount, but does not include a person licensed in terms of the Banking Act or the Building Societies Act;

   "non-bank financial institution" means any of the following-

   (a)   an asset manager;

   (b)   an administrator of a pension or provident fund;

   (c)   a person operating a central securities depository;

   (d)   a collective investment undertaking that is an investment company with variable capital;

   (e)   a person operating a collective investment undertaking other than one described in paragraph (d);

   (f)   a custodian;

   (g)   a finance or leasing company;

   (h)   a friendly society;

   (i)   an insurance agent;

   (j)   an insurance broker;

   (k)   an insurer;

   (l)   an international insurance firm;

   (m)   an investment adviser;

   (n)   a management company for a collective investment undertaking;

   (o)   a member of the insurance industry;

   (p)   a micro lender;

   (q)   a pension or provident fund;

   (r)   a securities dealer;

   (s)   the operator of a securities exchange;

   (t)   a trustee of a collective investment undertaking or a pension or provident fund;

   (u)   a financial group;

   (v)   a person prescribed for the purposes of this definition, and includes such an institution that provides financial services to persons outside Botswana;

   "pension or provident fund scheme" means a fund as defined in the Pension and Provident Funds Act;

   "principal officer", of a non-bank financial institution, means the person responsible for the daily management of the principal office in Botswana of the institution;

   "prudentially regulated non-bank financial institution" means an institution declared as such under section 49;

   "prudential rule" means a rule made in terms of section 50;

   "records" of a non-bank financial institution means documents and information used in the ordinary course of the business of the institution, whether in written form or kept on microfilm, magnetic tape or any other form of mechanical or electronic medium;

   "Regulatory Authority" means the Non-Bank Financial Institutions Regulatory Authority established under section 6;

   "securities" means each of the following-

   (a)   shares in, or debentures of, a company, a corporation or an unincorporated body;

   (b)   stocks, bonds, certificates of deposit or depository receipts or treasury bills issued or proposed to be issued by a government;

   (c)   rights, options or interests in respect of securities referred to in paragraph (a) or (b);

   (d)   interests in a collective investment undertaking;

   (e)   interests and instruments prescribed for the purposes of this definition;

   (f)   derivatives;

   "securities dealer" means any of the following-

   (a)   a stockbroker as defined in the Botswana Stock Exchange Act;

   (b)   a person who buys or sells securities on behalf of other persons;

   (c)   a person who regularly buys or sells securities on his own behalf otherwise than through a licensed securities dealer;

   "securities exchange" means a market, exchange, place or facility that provides for bringing together, on a regular basis, buyers and sellers of securities to negotiate or conclude sales of securities;

   "self-regulatory organisation" means a body declared to be a self-regulatory organisation in terms of subsection 58 (1);

   "self-regulatory organisation arrangements" means arrangements described in subsection 58 (2);

   "statutory manager", for a prudentially regulated non-bank financial institution, means a person appointed as statutory manager in terms of section 73 for the institution;

   "supervisory levy" means a levy imposed by regulations made under section 23;

   "tax certificate" means a certificate in terms of section 138(2) of the Income Tax Act;

   "Tribunal" means the Tribunal established under section 85;

   "trustee" means-

   (a)   a collective investment undertaking that is a unit trust in relation to a person acting as trustee of the trust; and

   (b)   in relation to a pension or provident fund, a person acting as a trustee of the fund.

3.   Subsidiaries

   For the purposes of a financial services law, the question whether a body corporate is a subsidiary of another body corporate shall be determined in accordance with the Companies Act as if both bodies corporate were companies for the purposes of that Act.

4.   Controllers

   (1) For the purposes of a financial services law, each of the following is a controller of a person (in this section called "the relevant person")-

   (a)   a person who is in a position to control or exert significant influence over the business or financial operations of the relevant person;

   (b)   if the relevant person is a body corporate-

      (i)   a director or member of the governing body of the body corporate;

      (ii)   a person that has the power to appoint a person to be a director or member of the governing body of the body corporate;

      (iii)   a person whose consent is needed for the appointment of a person as a director of the body corporate;

      (iv)   a person that holds at least 20 per cent of the shares of the body corporate;

      (v)   a person that has the power to control at least 20 per cent of the voting rights attached to shares or other securities of the body corporate;

      (vi)   a person that holds rights in relation to the body corporate that, if exercised, would result in that person holding at least 20 per cent of the shares of the body corporate; or that person having the power to control at least 20 per cent of the voting rights attached to shares or other securities of the body corporate;

   (c)   if the relevant person is a subsidiary of another person, a person that is a controller of the other body;

   (d)   if the relevant person is a prudentially regulated non-bank financial institution, a person declared by the Regulatory Authority in terms of subsection (3) to be a controller of the institution,

but a Minister or the Regulatory Authority, in that capacity, is not a controller of a relevant person.

   (2) Prudential rules may modify subsection (1) (b) (iv), (v) or (vi) by substituting a lower percentage for 20 per cent, either generally or in a class of cases specified in the rules.

   (3) The Regulatory Authority may declare in writing that a specified person is or is not a controller of a prudentially regulated non-bank financial institution, and notice of such declaration shall be given to the person so declared.

   (4) The Regulatory Authority shall not make a declaration in terms of subsection (3) that a person is a controller of a prudentially regulated non-bank financial institution unless-

   (a)   the person has been given notice of the proposed declaration and a reasonable opportunity to make representations to the Regulatory Authority about the matter; and

   (b)   the Regulatory Authority is satisfied that the person is in a position to control or exert significant influence over the business or financial operations of the institution.

5.   Republic, etc. to be bound

   This Act and the financial services laws bind the Republic and the Government.

PART II
Non-Bank Financial Institutions Regulatory Authority

Establishment, objects and constitution of Non-Bank Financial
Institutions Regulatory Authority
(ss 6-10)

6.   Establishment of Regulatory Authority

   (1) There is hereby established a Regulatory Authority, to be called the Non-Bank Financial Institutions Regulatory Authority.

   (2) The Regulatory Authority is a body corporate with perpetual succession and a common seal, capable of suing and being sued in its own name and, subject to the provisions of this Act, of performing such acts as bodies corporate may by law perform.

7.   Functions of Regulatory Authority

   The Regulatory Authority has the following functions-

   (a)   the functions conferred by this Act and by the other financial services laws;

   (b)   the functions of regulatory authority in terms of the other financial services laws;

   (c)   the function of advising the Minister on matters related to non-bank financial institutions and financial services, whether of its own accord or at the request of the Minister;

   (d)   such other functions as are conferred on it by law.

8.   Principal objects of Regulatory Authority

   The principal object of the Regulatory Authority is to regulate and supervise non-bank financial institutions so as to foster the-

   (a)   safety and soundness of non-bank financial institutions;

   (b)   highest standards of conduct of business by non-bank financial institutions;

   (c)   fairness, efficiency and orderliness of the non-bank financial sector;

   (d)   stability of the financial system, and

   (e)   reduction and deterrence of financial crime.

9.   Regulatory Authority to report on non-bank financial institutions

   If the Regulatory Authority believes that a prudentially regulated non-bank financial institution is financially unsound and the situation may impair the stability of the financial system or the safety and soundness of financial institutions generally the Regulatory Authority shall report the matter to the Bank of Botswana and the Minister.

10.   Policy directions by Minister

   (1) If, after consultation with the Regulatory Authority, the Minister is of the opinion that the policies being pursued by the Regulatory Authority are not adequate for, or conducive to, the achievement of the objects of the Regulatory Authority as set out in section 8, the Minister may, by directive, determine the policy to be adopted by the Regulatory Authority.

   (2) The Regulatory Authority shall give effect to the notified policy while the directive remains in force.

   (3) A directive issued in terms of subsection (1) shall be published in the Gazette within seven days after it is given to the Regulatory Authority.

The Board and staff of the Regulatory Authority (ss 11-20)

11.   The Board

   (1) There shall be a Board of the Regulatory Authority.

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