NON-BANK FINANCIAL INSTITUTIONS REGULATORY AUTHORITY

NON-BANK FINANCIAL INSTITUTIONS REGULATORY AUTHORITY ACT

ARRANGEMENT OF SECTIONS

SECTION

PART I
Preliminary

1. Short title

2. Interpretation

3. Conflict with other laws

PART II
Establishment and Functions of Regulatory Authority

4. Continuation of Regulatory Authority

5. Objectives and functions of Regulatory Authority

PART III
Non-Bank Financial Institutions Regulatory Authority Board

6. Board of Regulatory Authority

7. Membership of Board

8. Tenure of office of members

9. Disqualifications, suspension and removal of members

10. Vacation of office by members

11. Resignation from Board

12. Filling of vacancy in Board

13. Remuneration and allowances

PART IV
Meetings and Proceedings of Board

14. Meetings of Board

15. Disclosure of interest

16. Confidentiality

17. Committees of Board

18. Signification of documents

19. Co-option of advisory panel

PART V
Chief Executive Officer and Other Employees of Regulatory Authority

20. Chief Executive Officer

21. Tenure of office of Chief Executive Officer

22. Appointment of Secretary of Board

23. Functions of Secretary of Board

24. Accountability to Regulatory Authority

25. Conditions of service of Secretary of Board

26. Appointment of employees of Regulatory Authority

PART VI
Financial Provisions

27. Funds of Regulatory Authority

28. Investments

29. Financial year

30. Accounts and audit

31. Annual estimates and levy structure

32. Borrowing

33. Advances from Government

34. Annual reports

35. Auditing of accounts of Regulatory Authority by Auditor-General

36. Pension and other funds

PART VII
Supervisory Levies, Fees and Charges

37. Supervisory levies

38. Fees and charges

39. Supervisory levies, fees, charges and debts to Regulatory Authority

40. Waiver of levies, fees or charges

PART VIII
Licensing of Non-Bank Financial Institutions

41. Non-bank financial institutions to be licensed

42. Licensing

43. Offence of holding out as licensed

44. Display of licence

45. Variation, suspension or cancellation of licence upon request

46. Variation, suspension or cancellation of licence by Regulatory Authority

47. Continuation of licensed activity after suspension or cancellation

PART IX
Approval of Controllers of Non-Bank Financial Institutions

48. Fit and proper persons

49. Controllers of non-bank financial institutions

50. Approvals and notifications relating to controllers

51. Removal of persons from position of controller

PART X
Supervision and Regulation of Non-Bank Financial Institutions

52. Administrative rules

53. Interpretation guidance notes

54. Information to be submitted to Regulatory Authority

55. Reporting

56. Power to give directions

57. Prohibition of misleading and deceptive conduct

58. Unfair practices

PART XI
Regulation of Market Practices of Non-Bank Financial Institutions

59. Arrangements or compromises involving non-bank financial institutions

60. Transfer of business of non-bank financial institutions

61. Inconsistencies with Companies Act

62. Appointment of statutory managers

63. Statutory management

64. Termination of office of statutory manager

65. Winding up of non-bank financial institutions

66. Statutory management and winding up of unlicensed non-bank financial institutions

67. Enforceable undertakings

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

PART XII
Self-Regulatory Organisations

69. Self-regulatory organisations

70. Revocation of declarations

71. Rules of self-regulatory organisations

72. Due process by self-regulatory organisations

73. Reporting of appointment of directors or executives of self-regulatory organisations

74. Amendment of self-regulatory organisations’ constitutions

75. Exemption from liability of self-regulatory organisations, etc.

PART XIII
Supervision of Financial Conglomerates

76. Designation of financial conglomerates

77. Directives to holding companies

PART XIV
Regulation of International Financial Services Centre Accredited Non-Bank Financial Institutions

78. Application of Income Tax Act to non-bank financial institutions

79. Tax certificate compliance

80. Revocation of tax certificate

PART XV
Inspections and Investigations

81. Appointment of inspectors and investigators

82. Inspections of non-bank financial institutions

83. Investigations

84. Powers of inspectors and investigators

PART XVI
Non-Bank Financial Institutions Tribunal

85. Non-Bank Financial Institutions Tribunal

86. Review of decisions

87. Application for review of decisions

88. Implementation of decisions pending review

PART XVII
Miscellaneous Provisions

89. Public notices

90. Advisory bodies

91. Arrangements with other agencies

92. Delegations

93. Extension of period

94. Temporary closure for non-compliance

95. Confidentiality by employees of Regulatory Authority, inspectors and investigators

96. Exemption from personal liability

97. Code of Conduct

98. Conduct of directors, employees and agents of non-bank financial institutions

99. Liability of directors of non-bank financial institutions

100. Administrative penalties

101. Failure to respond to questions by Regulatory Authority

102. False and misleading statements to Regulatory Authority

103. Destruction of documents

104. Obstruction of functions of Regulatory Authority

105. Hindering compliance

106. Offences committed partly within and partly outside Botswana

107. General penalties

108. Regulations

109. Repeal of Cap. 46:08

110. Savings and transitional provisions

Act 21, 2023,
S.I. 1, 2024.

An Act to continue the establishment of the Non-Bank Financial Institutions Regulatory Authority and to provide for its powers and functions; for the purposes of improving the fairness, efficiency and orderliness of the non-bank financial sector and the stability of the financial system; and for matters incidental thereto.

[Date of Commencement: 15th January, 2024]

PART I
Preliminary

1. Short title

This Act maybe cited as the Non-Bank Financial Institutions Regulatory Authority Act, 2023, and shall come into operation on such date as the Minister may, by Order published in the Gazette, appoint.

2. Interpretation

(1) In this Act, unless the context otherwise requires—

"administrator of a medical aid fund" means a person who provides administration or similar services to a medical aid fund in terms of an administration agreement;

"administrator of a retirement fund" has the same meaning assigned to it under the Retirement Funds Act;

"arrangement or compromise" means—

(a) an arrangement or compromise in relation to a non-bank financial institution, as provided under the Companies Act; and

(b) any other arrangement (however described) for the amalgamation of a non-bank financial institution with one or more other body corporates, or the reconstruction of a non-bank financial institution;

"asset manager" has the same meaning assigned to it under the Securities Act;

"bank" means a bank licensed in terms of the Banking Act;

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

"central counterparty" has the same meaning assigned to it under the Securities Act;

"central securities depository" has the same meaning assigned to it under the Securities Act;

"Chairperson" means the Chairperson of the Board appointed under section 7(4);

"Chief Executive Officer" means the Chief Executive Officer of the Regulatory Authority appointed under section 20;

"Code of Conduct" means a Code of Conduct issued in terms of section 97;

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

"committee" means a committee of the Board established under section 17;

"custodian" means a person who holds the property, securities or money of another person for safekeeping;

"director" has the same meaning assigned to it under the Companies Act;

"finance company" means a body corporate that advances loans, invoice discounting, purchase order financing, factoring, debt financing, debt administration, project finance, loan syndication or such other facility identified as a credit facility, availed by the finance company to any client, but does not include a bank or deposit taking institution;

"financial conglomerate" means a group of companies under common control or ownership, comprised of one or more non-bank financial institutions and their subsidiaries;

"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, its controller or key person;

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

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

(d) the offence of money laundering in terms of the Proceeds and Instruments of Crime Act; or

(e) the financing of a terrorism, financing of proliferation or financing illicit dealing in arms or ammunition;

"financial services" means services relating to financial matters;

"financial services law" means any of the following—

(a) this Act;

(b) the Insurance Industry Act;

(d) the Retirement Funds Act;

(e) the Collective Investment Undertakings Act;

(f) the Securities Act;

(g) the Banking Act;

(h) the Bank of Botswana Act;

(i) the Financial Intelligence Act;

(j) the Financial Reporting Act;

(k) the Virtual Assets Act;

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

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

(n) such law concerning financial services as the Minister may, by Order published in the Gazette, prescribe;

"fit and proper" means the necessary skills, competencies, knowledge, traits and any other quality that allows a controller, director or key person to perform the duties and carry out the responsibilities of his or her position with a non-bank financial institution, including integrity demonstrated in personal behaviour and personal conduct, soundness of judgment, financial soundness, sufficient degree of knowledge, experience and professional qualifications;

"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;

"information" means a document, book, record, account, oral and written statements, testimony on oath, unsworn testimony, affirmation, testimony not affirmed, and any other information stored or recorded mechanically, electronically or in any other medium;

"insurance agent" has the same meaning assigned to it under the Insurance Industry Act;

"insurance broker" has the same meaning assigned to it under the Insurance Industry Act;

"insurer" has the same meaning assigned to it under the Insurance Industry Act;

"issuer of initial token offerings" has the same meaning assigned to it under the Virtual Assets Act;

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

"interpretation guidance note" means a statement published by the Regulatory Authority under section 53 regarding the interpretation or application of a specified provision of a financial services law under circumstances specified in the statement;

"inter-related" means connected in such a way that each person has an effect on or depends on the other person;

"investment adviser" has the same meaning assigned to it under the Securities Act;

"key person", in relation to a non-bank financial institution, means—

(a) a member of the governing body of the non-bank financial institution;

(b) the Chief Executive Officer of the non-bank financial institution;

(d) a person, other than a member of the governing body of the non-bank financial institution, who makes or participates in the making of decisions that—

(i) affect the whole or a substantial part of the business of the non-bank financial institution, or

(ii) have the capacity to affect significantly the financial standing of the non-bank financial institution;

(e) a person, other than a member of the governing body of the non-bank financial institution, who oversees the enforcement of policies and the implementation of strategies approved or adopted by the governing body of the non-bank financial institution; or

(f) the head of a function of the non-bank financial institution that a financial services law requires to be performed;

"leasing company" means a body corporate which engages in a contract with a person using the equipment or machinery of the leasing company, and paying an agreed fee for such use, but does not include a bank or deposit taking institution;

"licence" means the authority, regardless of its specific title or form, issued to a non-bank financial institution and in terms of which it is authorised to conduct its business;

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

"market maker" has the same meaning assigned to it under the Securities Act;

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

"medical aid fund administrator" means a body corporate that provides administration or similar services to a medical aid fund in terms of an administration agreement and which has been licensed as such by the Regulatory Authority;

"medical aid fund broker" means a body corporate that provides broker services for a medical aid fund;

"member" means a member of the Board appointed as such under section 7;

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

"micro lending agent" means any person who solicits a loan application on behalf of a micro lender;

"non-bank financial institution" means any of the following institutions, and where relevant, shall mean a person operating the institution—

(a) an asset manager;

(b) an administrator of a retirement fund;

(d) a central securities depository;

(e) a collective investment undertaking;

(f) a custodian;

(g) a finance company;

(h) a leasing company;

(i) a financial conglomerate;

(j) a friendly society;

(k) an insurance agent;

(l) an insurance broker;

(m) an insurer;

(n) an international insurance firm;

(o) an investment adviser;

(p) an issuer of initial token offerings;

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

(r) a market maker;

(s) a micro lender;

(t) a retirement fund;

(u) a securities broker or dealer;

(v) a securities exchange;

(w) a transfer agent or transfer secretary;

(x) a medical aid fund;

(y) a medical aid fund administrator;

(z) a medical aid fund broker;

(aa) a trustee of a collective investment undertaking;

(bb) a securities institution;

(cc) a micro lending agent;

(dd) a participant;

(ee) a pawnshop;

(ff) a virtual asset service provider; and

(gg) a person declared by the Minister to be a non-bank financial institution by notice published in the Gazette;

"participant" has the same meaning assigned to it under the Securities Act;

"pawn" means the delivery of personal property by a pawner to a pawnshop as security for money advanced, and includes the transaction of pawning personal property as collateral for money advanced;

"pawnshop" means a person licensed to operate a business that—

(a) advances money on personal property that is physically delivered to him or her as security for the money advanced or advances money upon goods, wares or merchandise pledged, stored or deposited as security; or

(b) purchases tangible personal property to be left in pawn on the condition that it may be redeemed by the seller for a fixed price within a fixed period of time;

"records", in relation to a non-bank financial institution, means any documents and information used in the ordinary course of the business of the non-bank financial 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 continued under section 4;

"repealed Act" means the Non-Bank Financial Institutions Regulatory Authority Act repealed under section 109;

"retirement fund" has the same meaning assigned to it under the Retirement Funds Act;

"securities" has the same meaning assigned to it under the Securities Act;

"securities broker or dealer" has the same meaning assigned to it under the Securities Act;

"securities exchange" has the same meaning assigned to it under the Securities Act;

"securities institution" has the same meaning assigned to it under the Securities Act;

"self-regulatory organisation" means a body declared to be a self-regulatory organisation in terms of section 69(1);

"supervisory levies" means the supervisory levies imposed and collected under Part VII;

"tax certificate" means a certificate issued in terms of the Income Tax Act as it applies to an International Financial Services Centre company;

"transfer agent or transfer secretary" has the same meaning assigned to it under the Securities Act;

"Tribunal" means the Non-Bank Financial Institutions Tribunal established under section 85;

"trustee" means a person acting as a trustee in relation to a collective investment undertaking that is a unit trust, and a person acting as a member of the board of a retirement fund;

"Vice Chairperson" means the Vice Chairperson of the Board elected as such under section 7(5); and

"virtual asset service provider" has the same meaning assigned to it under the Virtual Assets Act.

(2) For purposes of a financial services law, each of the following is a controller of a person (in this subsection called "the relevant person")—

(a) a key person;

(b) a person who, directly or indirectly, alone or together with a related or inter-related person, has the ability to materially control or materially influence the business or strategy of the non-bank financial institution;

(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, or

(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; and

(d) if the relevant person is a subsidiary of another person, a person that is a controller of that other person.

3. Conflict with other laws

(1) In the event of any conflict or inconsistency between the provisions of this Act and any other law on the supervision and regulation of a non-bank financial institution, the provisions of this Act shall take precedence.

(2) Except as may be otherwise expressly provided by this Act, nothing in this Act shall be construed so as to relieve a non-bank financial institution from compliance with the provisions of other relevant financial services laws, the Companies Act and any other applicable laws.

(3) The issuance of a licence under this Act and any other relevant financial services law shall not be deemed to exempt a non-bank financial institution from obtaining any other licence, permit or authority under any law in respect of any activity carried out by the non-bank financial institution.

PART II
Establishment and Functions of Regulatory Authority

4. Continuation of Regulatory Authority

(1) The Non-Bank Financial Institutions Regulatory Authority, established under section 3(1) of the repealed Act, is hereby continued as if established under this Act.

(2) The Regulatory Authority shall be 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.

5. Objectives and functions of Regulatory Authority

(1) The objectives of the Regulatory Authority shall be to regulate and supervise a non-bank financial institution so as to foster the—

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

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

(d) stability of the financial system; and

(e) reduction and deterrence of financial crime.

(2) Without derogating from the generality of subsection (1), the Regulatory Authority shall—

(a) perform the functions conferred by this Act and any other financial services law;

(b) advise the Minister on matters related to anon-bank financial institution, whether on its own accord or at the request of the Minister;

(d) make rules, set standards and provide guidelines for Regulatory Authority and a non-bank financial institution; and

(e) give directions to any person to ensure compliance with the relevant law, rule, standard or guideline.

PART III
Non-Bank Financial Institutions Regulatory Authority Board

6. Board of Regulatory Authority

(1) There shall be a Board of the Regulatory Authority, which shall be the governing body of the Regulatory Authority and shall be responsible for the direction of the affairs of the Regulatory Authority.

(2) Notwithstanding the generality of subsection (1), the Board shall give general policy direction to the Regulatory Authority.

(3) The Minister may, after consultation with the Board, give the Board written directions of a general or specific nature regarding the exercise of its powers and the performance of its functions, which directions shall not be inconsistent with this Act or with the contractual or other obligations of the Regulatory Authority, and the Board shall give effect to such directions.

7. Membership of Board

(1) The members shall be appointed by the Minister and shall consist of eight members from amongst persons who have experience or expertise in business, financial markets, financial services, commercial law, economics or accounting, or any other area relevant to the objects and functions of the Regulatory Authority.

(2) Notwithstanding the generality of subsection (1) the Board shall consist of the following members—

(a) the Chairperson;

(b) the Vice Chairperson;

(d) a representative of the Ministry responsible for finance; and

(e) four other persons.

(3) The Chief Executive Officer shall be an ex-officio member of the Board but shall not vote.

(4) The Minister shall appoint the Chairperson of the Board from amongst the members.

(5) The Vice Chairperson of the Board shall be elected by the members amongst their number.

(6) The Minister shall, within 30 days of the appointments under this section being made, by notice in the Gazette, publish the appointment of the members, specifying the dates of their appointments and the period for which they are appointed to the Board.

8. Tenure of office of members

A member appointed in terms of section 7(2)(a), (b) or (e)—

(a) shall hold office for a period not exceeding four years, on such terms and conditions as may be specified in their instruments of appointment; and

(b) may be eligible for re-appointment for one further term not exceeding four years.

9. Disqualifications, suspension and removal of members

(1) A person shall not qualify for appointment as a member or continue to hold office, if he or she—

(a) has, in terms of any law in force in any country—

(i) been adjudged or otherwise declared bankrupt or insolvent and has not been rehabilitated or discharged, or

(ii) made an assignment to, or arrangement or compromise with, his or her creditors, which has not been rescinded or set aside;

(b) has, within a period of ten years immediately preceding the date of his or her proposed appointment, been convicted—

(i) in Botswana, of a criminal offence which has not been overturned on appeal or in respect of which he or she has not received a free pardon, or

(ii) outside Botswana, of an offence, which in Botswana, would have been a criminal offence, and sentenced by a court of competent jurisdiction to imprisonment for one month or more without the option of a fine, whether that sentence has been suspended or not, and which conviction has not been overturned on appeal and in respect of which he or she has not received a free pardon;

(d) is a controller or key person of a non-bank financial institution;

(e) has been dismissed for incompetence, bribery, corruption in a financial market within Botswana or outside, or has been adjudged for misconduct to the detriment of the financial market; or

(f) has been disqualified from acting as a director or executive officer of a body corporate under a law relating to a corporation or to the provision of a financial service within Botswana or outside Botswana.

(2) The Minister may suspend from office, a member against whom criminal proceedings are instituted for an offence in respect of which a sentence of imprisonment without an option of a fine may be imposed, and while the member is so suspended, such member shall not carry out any functions under this Act or be entitled to any remuneration or allowances.

(3) The Minister shall remove a member from office, if the member-

(a) becomes subject to a disqualification under subsection (1);

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