banking institutions amendment act - parliament of namibia

N$7.00 WINDHOEK-5November2010 No.4598

GOVERNMENT GAZETTEOF THE

REPUBLIC OF NAMIBIA

CONTENTSPage

GOVERNMENT NOTICE

No.247 PromulgationofBankingInstitutionsAmendmentAct,2010(ActNo.14of2010),of theParliament..................................................................................................................... 1

________________

Government Notice

OFFICE OF THE PRIME MINISTER

No.247 2010

PROMULGATIONOFACTOFPARLIAMENT

ThefollowingActwhichhasbeenpassedbytheParliamentandsignedbythePresidentintermsoftheNamibianConstitutionisherebypublishedintermsofArticle56ofthatConstitution.

No.14of2010: BankingInstitutionsAmendmentAct,2010._______________

2 GovernmentGazette5November2010 No.4598

Act No. 14, 2010 BANkING INSTITUTIONS AMENDMENT ACT, 2010

EXPLANATORY NOTE:

___________ Wordsunderlinedwithasolidlineindicateinsertionsinexistingprovisions.

[] Wordsinboldtypeinsquarebracketsindicateomissionsfromexistingprovisions.

ACTTo amend the Banking Institutions Act, 1998, so as to provide for certain

definitions; to provide for consolidated supervision; to provide for the registration of controlling companies and cancellation thereof; to regulate investment by controlling companies and the restructuring within group of companies; to authorise foreign banking institutions to open branches in Namibia; to prohibit banking institutions from converting to branches of foreign banking institutions; to authorise the Bank to determine minimum capital funds in respect of banking institution or banking group; to oblige banking institutions and controlling companies to notify the Bank of nomination of any person for appointment as director or principal officer 30 days prior to such appointment; to prohibit and criminalise pyramid schemes; to subject the appointment of provisional liquidator, provisional judicial manager, liquidator or judicial manager by the Master of the High Court to the recommendation of the Bank; to oblige the Master of the High Court to appoint persons designated by the Bank to assist provisional liquidators, provisional judicial managers, liquidators or judicial managers; to empower the Minister to regulate unfair terms in transactions and contracts between banking institutions and their customers or the general public; to empower the Minister to regulate the ownership of a banking institution or a controlling company; to empower the Bank to determine administrative fines; to provide procedure for the imposition of fines and to decriminalise certain provisions; to provide for the appointment of an Appeal Board; and to provide for incidental matters.

(Signed by the President on 19 October 2010)

BE IT ENACTEDbytheParliamentoftheRepublicofNamibiaasfollows:

Amendment of section 1 of Act No. 2 of 1998

1. Section1of theBankingInstitutionsAct,1998(ActNo.2of1998)(hereinafterreferredtoastheprincipalAct)isamended-

(a) by the insertion after the definition of “banking business” of thefollowingdefinition:

“bankinggroup”,meansagroupconsistingof twoormorepersons,whethernaturalorjuristicpersons,thatarepredominantlyengagedinfinancialactivities,andoneormoreofwhichisabankinginstitutionand-

(a) eachofwhichpersonisanassociateofanyoneoftheothers;or

No.4598 GovernmentGazette5November2010 3


(b) whichpersonsaresointerconnectedthatshouldoneofthemexperience financial difficulties, another one or all of themwouldlikelybeadverselyaffected,irrespectiveofwhetheranyofthosepersonsisdomiciledinthesamecountryasanyoftheothers;”;

(b) bythesubstitutionforthedefinitionof“controllingcompany”ofthefollowingdefinition:

“controlling company’ means a [controlling company as defined in the Companies Act] company registered under section 12A as acontrollingcompanyinrespectofabankinginstitution,and“holdingcompany”hasacorrespondingmeaning;”;

(c) by the insertion after the definition of “controlling company” of thefollowingdefinition:

“core banking systems’means all core systems that contain recordsanddocumentscoveringcorefunctionalareasofabankinginstitution,and include all IT systems and subsystemskeeping andmaintainingrecords anddocuments relating to the business, affairs, transactions,conditions,property,assetsorliabilitiesofabankinginstitution;”;

(d) by the insertion after the definition of “director” of the followingdefinition:

“executiveofficer”meansanyperson,bywhatevernamedescribed,whocouldexercisesignificantinfluence,andisinthedirectemploymentof,or acting for, or by arrangementwith thebanking institution, and isprincipally responsible for themanagement and conduct of the riskmanagement, compliance, accounting, auditing, secretarial, treasuryandoperationfunctions,andincludesachiefexecutiveofficer,deputychief executive officer, and any manager of a significant businessunit;”;

(e) by the insertion after the definition of “fellow subsidiary” of thefollowingdefinition:

“financialrecords”,includesbankingandaccountingrecords;”;

(f) by the insertion after the definition of “officer” of the followingdefinition:

“person”meansanaturalorjuristicperson,andincludesapartnership;”;

(g) by the insertionafter thedefinitionof“managerial responsibility”ofthefollowingdefinition:

“merger”meanswhenoneormorebankinginstitutionsorcontrollingcompanydirectly or indirectly acquire or establish direct or indirectcontrol over the whole or part of the business of another bankinginstitutionorcontrollingcompany,inanymeansincluding-



(a) the purchase or lease of shares, an interest, or assets of thatotherbankinginstitutionorcontrollingcompany;or

(b) theamalgamationorothercombinationwithanyotherbankinginstitutionorcontrollingcompany;”;

(h) by the substitution for the definition of “principal officer” of thefollowingdefinition:

“principal officer’, in relation to a banking institution or controllingcompany,meanstheexecutivechairperson,themanagingdirector,theexecutivedirector, thechiefexecutiveofficeror themanager,oranyotherperson,bywhatevertitlereferredto,whoischieflyresponsibleforthemanagementoftheaffairsofthebankinginstitutionorcontrollingcompanyinNamibia,andwhosenameandtitlethebankinginstitutionor controlling company from time to time inwriting advises to theBank,andincludesapersonwho,intermsofsection10,appliesforanauthorizationtoestablishabankinginstitution;”;

(i) bythedeletionofparagraph(e)of thedefinitionof“receivingfundsfromthepublic”;and

(j) bythesubstitutionforthedefinitionof“substantialshareholder”ofthefollowingdefinition:

“substantialshareholder’meansanypersonor registeredshareholderthat,directlyorindirectly,holds,controlsorisentitledtoexercisethevotingrightsin [more]notless thanfivepercentofanyclassofvotingshares of a company, and for the purpose of determiningwhether apersonisasubstantialshareholder-

(a) a person that controls a substantial shareholder [shall be] isdeemedtobeasubstantialshareholder;and

(b) anysharesownedorcontrolled,orthevotingrightsofwhichareexercisable,by[an individual’s]aperson’scloserelative[shall be] is deemed to be owned or controlled by [that individual]suchperson;and”.


2. Section 2 of the principal Act is amended by the substitution forsubsection(2)ofthefollowingsubsection:

“(2) ThisAct[shall]doesnotapplyto–

(a) theBank,exceptinsofarasitconfersupontheBankthepowertoperformthefunctionscontainedinthisAct;

(b) anyinternationalbankorinternationalfinancialorganisation,oranyassociatedoraffiliatedbankorfinancialorganisationofsuchinternationalbankorinternationalorganisation,ofwhichtheGovernmentofNamibiaortheBankisamember;



[(c) any insurer registered under the Insurance Act, 1943 (Act No. 27 of 1943);]

(d) the Agricultural Bank of Namibia, established by the[Agricultural Bank Act,1944 (Act No. 13 of 1944)]AgriculturalBankofNamibiaAct,2003(ActNo.5of2003);

[(e) any pension fund registered under the Pension Funds Act, 1956 (Act No. 24 of 1956);

(f) any friendly society registered under the Friendly Societies Act, 1956 (Act No. 25 of 1956);

(g) any unit trust registered under the Unit Trusts Control Act, 1981 (Act No. 54 of 1981);

(h) any scheme registered under the Participation Bonds Act, 1981 (Act No. 55 of 1981);]

(i) any building society registered under the Building SocietiesAct,1986(ActNo.2of1986);

[(j) the Development Fund of South West Africa/Namibia, established by the Development Fund of South West Africa/Namibia Act, 1987 (Act No. 29 of 1987);]

(k) the Post Office Savings Bank as defined in the Posts andTelecommunicationsAct,1992(ActNo.19of1992);

(l) the Namibia Development Corporation, established by theNamibiaDevelopmentAct,1993(ActNo.18of1993);

(m) theNationalHousingEnterprise,establishedby theNationalHousingEnterpriseAct,1993(ActNo.5of1993);

[(n) any medical scheme registered under the Medical Aid Funds Act, 1995 (Act No. 23 of 1995);]

(o) any cooperative society registered under the Co-operativeSocietiesAct,1996(ActNo.23of1996);[or]

(p) anyotherinstitutionorbodydesignatedbytheMinister,ontherecommendationoftheBank,bynoticeintheGazette[.];or;

(q) anynon-bankingfinancialinstitutiongovernedbystatuteandregulated by the Namibia Financial Institutions SupervisoryAuthority established by the Namibia Financial InstitutionsSupervisoryAuthorityAct,2001(ActNo.3of2001).”.

Substitution of section 3 of Act No. 2 of 1998

3. Thefollowingsectionissubstitutedforsection3oftheprincipalAct:



“Guidelines, circulars or notices by the Bank

“(1) TheBankmay from time to time, for thepurposeofpromoting sound and prudential banking practices, furnish bankinginstitutions and controlling companies with guidelines, circularsor notices not inconsistent with thisAct, relating to the applicationof this Act by banking institutions or controlling companies or tothe conducting of [banking] business, as a banking institution orcontrollingcompanyingeneral.

(2) The guidelines, circulars or notices contemplatedin subsection (1) [shall] must be in writing and [shall] must bedeliveredbytheBanktotheprincipalofficerofabankinginstitutionorcontrollingcompany.”.


4. Section6oftheprincipalActisamended–

(a) bythesubstitutionfortheintroductorysentenceofsubsection(2)ofthefollowingintroductorysentence:

“(2) TheBankmay,ifithasreasontobelievethatapersonisconductingbankingbusinessincontraventionofsection5orsection55A,inwritingauthoriseanofficeroftheBankto–”;

(b) bythesubstitutionforsubparagraph(i)ofparagraph(a)ofsubsection(2)ofthefollowingsubparagraph:

“(i) enteranypremiseswhich theBankor theofficerhas

reasontobelieveisoccupiedorusedbyanypersonforthe purpose of or in connectionwith the conductingofbankingbusiness in contraventionof section5orsection55A;”;and

(c) bythesubstitutionforparagraph(h)ofsubsection(2)ofthefollowingparagraph:

“(h) ifanypersonhasbeenconvictedofanoffenceintermsofsection5orsection55A,closedownthebusinessofsuchperson;or”.


5. Section 7 of the principal Act is amended by the substitution forsubsection(1)ofthefollowingsubsection:

“(1) IftheBankissatisfiedthatapersonhasobtainedanymoniesincontraventionofsection5orsection55A,theBank[shall]mustinwritingdirectthepersontorepayallthemoniessoobtainedbyhimorher,includinganyinterestorotheramountswhichmaybeowingbythepersoninrespectofsuchmonies-



(a) totherespectivepersonsfromwhomsuchpersonhasobtainedthemoniesasverified;

(b) in the manner and in accordance with the requirementsimposed;and

(c) withintheperiodoftimeimposed,

[imposed]bytheBankandspecifiedinthedirection.”.


6. TheprincipalActisamendedbythesubstitutionforsection9ofthefollowingsection:

“[Banking institutions to be incorporated] Prerequisite for conducting banking business

9. (1) [No]Aperson[shallbe]isnotauthorisedtoconductbankingbusiness[as a banking institution]unlesssuchpersonis-

(a) incorporatedasapubliccompanyundertheCompaniesActandhastheminimumcapitalfunds[specified in or]asdeterminedundersection28;or

(b) a branch of a foreign banking institution authorised undersection19A.

(2) [No]Acompany[shall]maynot,withoutthewrittenapprovalof the Bank, be incorporated under the CompaniesAct for the purpose ofconductingbankingbusiness.

(3) AnincorporatedbankinginstitutionmaynotunderthisActoranyotherlawconverttoabranchofaforeignbankinginstitutioncontemplatedinsection19A.”.


7. Section11oftheprincipalActisamended-

(a) bythesubstitutionforparagraph(g)ofsubsection(1)ofthefollowingparagraph:

“(g) the structure and shareholdingof thegroupof companiesofwhich the applicant forms a part or intends to form a partmaynothindereffectivebankingsupervisionorendangerthestabilityofthebankingsector;”;

(b) bytheinsertionafterparagraph(i)ofsubsection(1)ofthefollowingparagraph:

“(iA) whether the applicant complies or is able to comply withthe lawsrelating toanti-moneylaunderingandcombatingoffinancingofterrorism;and”;



(c) bythedeletionofsubsection(3);

(d) bythesubstitutionforsubsection(4)ofthefollowingsubsection:

“(4) After [consultation with the Minister, in terms of subsection (3)], having considered an applicationmade in terms ofsection10(1),theBank[shall],withtheconcurrenceoftheMinister,andsubjecttothefurtherprovisionsofthisAct,may-,

(a) refusetheapplication;or

(b) granttheapplication;or

(c) granttheapplicationsubjecttosuchconditionsastheBankmayimpose,

and[shall]mustinwritinginformtheapplicantofitsdecision.”.

Insertion of sections 12A, 12B, 12C, 12D, and 12E in Act No. 2 of 1998

8. TheprincipalActisamendedbytheinsertionaftersection12ofthefollowingsections:

“Application for registration as controlling company

12A. (1) Acompanywhich-

(a) desirestoexercisecontroloveranybankinginstitution;or

(b) is a controlling company in respect of any other publiccompanywhich–

(i) hasbeenauthorizedtoconductbankingbusiness;or

(ii) hasappliedintermsofsection10forauthorizationtoconductbankingbusiness,

may,subjecttothissection,applytotheBanktoberegisteredasacontrollingcompany.

(2) Anapplicationcontemplatedinsubsection(1)must–

(a) bemadeinwritingintheformandmannerdeterminedbytheBank;

(b) be signedby thedirector(s) onbehalf of the company toberegisteredorbythesubscriberstoitsmemorandumandarticlesofassociation;and

(c) beaccompaniedbytheprescribedapplicationfee.



(3) For the purposes of thisAct, a person is deemed to exercisecontroloverabankinginstitutionif,inthecasewherethatpersonisacompany,thebankinginstitutionisasubsidiaryofthatcompany,or,whetherornot thatpersonisacompany,ifthatpersonaloneortogetherwithhisorherassociates–

(a) holdssharesinabankinginstitutionofwhichthetotalnominalvaluerepresentsmorethan50percentofthenominalvalueofalltheissuedsharesofthebankinginstitutions,unless,duetolimitationsonthevotingrightsattachedtothesharessoheldby the person alone or together with his or her associates,such person voting independently or such person and his orherassociatesvotingasagroup,isorareunabletodecisivelyinfluencetheoutcomeofthevotingatageneralmeetingofthebankinginstitution;

(b) isentitledtoexercisemorethan50percentofthevotingrightsinrespectoftheissuedsharesofthatbankinginstitution;or

(c) hasthepowertodeterminetheappointmentofthemajorityofthedirectorsofthatbankinginstitution,including-

(i) the power to appoint or remove, without theconcurrenceofanyotherperson,allorthemajorityofsuchdirectors;or

(ii) thepowertopreventanypersonfrombeingappointedasdirectorwithouttheconsentofanyotherperson,

and if a person is appointed as a director of the banking institutionmainlybecause he or she is a director of the person who exercises control over abanking institution, suchappointment, for thepurposesof this subsection, isdeemedtobeanappointmentbyvirtueofthepowerofapersonexercisingsuchcontrol.

(4) Despite subsection (3), if on any other grounds a person isdeemed toexercisecontroloverabanking institution, theBankmaysubjectsuchpersontotheprovisionsofthisActrelatingtoacontrollingcompany.

(5) If the applicant referred to in subsection (1) is a financialinstitution as defined in section 1 of the Namibia Financial InstitutionsSupervisory Authority Act, 2001 (Act No. 3 of 2001), the applicant mustestablishalegalentityseparatefromtheoperationsoftheapplicanttocarryonitsbusinessasacontrollingcompany.

(6) If a company contemplated in subsection (1) has afinancialinstitution as defined in section 1 of the Namibia Financial InstitutionsSupervisoryAuthorityAct,2001(ActNo.3of2001)aspartofitsgroupofcompanies, the Bank and the Namibia Financial Institutions SupervisoryAuthoritymustenterintoanagreementonmattersofconcurrentjurisdictiontogiveeffecttotherelevantlegislationinrespectofthefunctionsoftheBankandtheAuthority.



Granting or refusal of application for registration as controlling company

12B. (1) Before considering an application for registration asacontrollingcompanyin termsofsection12A,theBankmustconductsuchinvestigation, both in or outsideNamibia relating to the applicant or to theapplicationasitmayconsidernecessarytoascertain-

(a) thattheregistrationoftheapplicantasacontrollingcompanyisnotcontrarytothepublicinterest;

(b) thatinthecaseofanapplicantapplyingforregistrationinthecircumstancesreferredtoinsubsection(1)(a)ofsection12A,the applicant is able to establish control, as contemplated inthatsection,overthebankinginstitutionconcerned;

(c) thatnoprovisionofthememorandumorarticlesofassociations

oftheapplicantisinconsistentwiththisActorisundesirableinsofarasitconcernsbankinginstitutions;

(d) that every director or every principal officer, as far as canreasonablybe ascertained, is afit andproperperson toholdtheofficeassuchdirectororprincipalofficer,andthateverysuchdirectororprincipalofficerhassufficientknowledgeandexperiencetomanagetheaffairsoftheapplicantinitscapacityofacontrollingcompany;

(e) thattheapplicantisinafinanciallysoundcondition;

(f) that no interest which any person has in the applicant isinconsistentwiththisAct;and

(g) that the application complies with the requirements of thisAct.

(2) Noapplicantwhichhasappliedforregistrationasacontrollingcompanyinthecircumstancesreferredtoinsection12A(1)(b)mayberegisteredassuchcontrollingcompany,unlessthecompanyinrespectofwhichitmadesuchapplicationisanauthorizedbankinginstitution.

(3) After having considered an application made in terms ofsection12A,theBankmay–

(a) refusetheapplication;


(c) grant the application subject to such conditions as theBankmayimpose,

andmust,subjecttofurtherprovisionofthisAct,inwritinginformtheapplicantofitsdecision.



(4) If the Bank under subsection (3) grants an application forregistration of a controlling company, the Bank must, against payment ofthe non-refundable prescribed registration fee, register the applicant as acontrollingcompanyinrespectofthebankinginstitutionconcernedandissuetotheapplicantacertificateofregistrationasacontrollingcompany.

(5) Acertificatereferredtoinsubsection(4)must–

(a) beintheform;

(b) containtheparticulars;and

(c) beissuedandsignedbyaperson,

determinedbytheBank.

(6) A company which, on the date of commencement of thisAmendmentAct,isacontrollingcompanyinrespectofabankinginstitution,is,witheffectfromthatdate,deemedtobeacontrollingcompanyregisteredassuchintermsofthissectioninrespectofthebankinginstitutionconcerned.

Cancellation by Bank of registration of controlling company

12C. (1) Subjecttosubsection(2),theBank,bynoticeinwritingaddressedanddeliveredtoacontrollingcompany,maycanceltheregistrationofacontrollingcompanyfromthedatespecifiedinthenotice-

(a) ifthecontrollingcompany–

(i) has failed to establish control over the bankinginstitution in respect ofwhich it is registeredwithina periodof sixmonths after the date of issue of thecertificateofregistrationoranyotherdateastheBankmayspecify;

(ii) nolongerexercisessuchcontrolintermsofsection25orunderanyothercircumstances;or

(iii) has submitted a special resolution contemplated insection 200 of the CompaniesAct authorising suchcancellation;or

(b) iftheauthorizationofabankinginstitutioninrespectofwhichacontrollingcompanyisregistered,iscancelled,theregistrationof that controlling company in respect of that bankinginstitutionisdeemedtohavebeencancelledsimultaneously.

(2) Nocancellationofanyregistrationundersubsection(1)(a)(i)and(ii)maybeofforce,unlesstheBankhaspreviouslybynoticeinwritinggiventhecontrollingcompanyconcernedanopportunitytoshowcausewithinaperiodspecifiedinthenotice,notbeinglessthan30days,whyitsregistrationshouldnotbecancelled.



Investment by controlling company

12D. Acontrollingcompanyinvesting–

(a) in undertakings other than a banking institution, institutionswhichconductbusiness similar to thebusinessof abankinginstitution in a country other than Namibia, controllingcompaniesorcompaniesofwhichthemainobjectistheholdingordevelopmentofpropertyofwhichisusedorintendedtobeusedmainlyforthepurposeofconductingthebusinessofthebankinginstitutions;or

(b) in fixed property which is not used or intended to be usedmainly for the purpose of conducting the business of thebankinginstitution,

mustmanageitstransactionsinsuchinvestmentsinsuchawaythattheamountofsuchinvestmentsdoesnotatanytimeexceedapercentageofthesumofthecapitalfundsofthecontrollingcompanyandanybankinginstitutionunderitscontrol,astheBankmaydetermine.

Restructuring within group of companies

12E. No restructuring of companies within a group, of whicha banking institution or a controlling company or a subsidiary of bankinginstitutionisamember,maybeeffectedwithoutthepriorwrittenapprovaloftheBank.”.


9. Section 14 of the principalAct is amended by the addition of thefollowingsubsections:

“(3) A controlling company may not, without the prior writtenapprovaloftheBank-

(a) establishoracquireasubsidiary;or

(b) acquire any direct or indirect interest in any undertakingoutsideNamibia.

(4) A controlling companymust, not less than 30 days prior totheopening,disposalorclosingofasubsidiaryorofanyinterestinanyotherundertaking,inwritinginformtheBankoftheintendedopening,disposalorclosing.”.


10. Section 15 of the principalAct is amended by the substitution forparagraph(d)ofsubsection(1)ofthefollowingparagraph:

“(d) isfoundguiltyofanoffenceunderanyprovisionofthisAct,and if theBankisof theopinion that thebanking institution



concernedisconductingitsbusinessinamannerdetrimentalto [(d) of subclause (1)] the interest of its customers or thepublic;or”.

Insertion of sections 19A and 19B in Act No. 2 of 1998


“Branches of foreign banking institutions

19A. (1) An institution which has been incorporated in acountryotherthanNamibiaandwhichlawfullyconductsinsuchothercountryabusiness similar tobankingbusiness (hereinafter referred toas the foreigninstitution)may,despitesection9,withthepriorwrittenauthorizationoftheBankand subject to conditions, if any, as theBankmaydetermine, conductbankingbusinessbymeansofabranchinNamibia.

(2) ToobtainthepriorauthorizationoftheBankascontemplatedinsubsection(1),theforeigninstitutionconcernedmustinthemannerandformrequiredbytheBanklodgeawrittenapplicationwiththeBankwhichmustbeaccompaniedby-

(a) a written statement containing information required by theBank;and

(b) theprescribedapplicationfeewhichisnotrefundable.

(3) TheBankmayrequiretheforeigninstitutionapplyingintermsofsubsection(2)tofurnishitwith-

(a) such information or documents, in addition to informationanddocumentsfurnishedbytheforeigninstitutionintermsofsubsection(2);or

(b) suchfurtherinformationwithregardtothenatureandextentofsupervisionexercisedortobeexercisedbytheresponsiblesupervisory authority of the foreign institution’s country ofdomicileinrespectof–

(i) theproposedbranchinNamibia;

(ii) theforeigninstitutionitself;or

(iii) anygroupofinstitutionsofwhichtheforeigninstitutionmayformapart,

astheBankmayconsidernecessary.

(4) Afterhavingconsideredanapplicationintermsofsubsection(2)theBank,withtheconcurrenceoftheMinister,andsubjecttothefurtherprovisionsofthisAct,may–



(a) refusetheapplication;or


(c) grant the application subject to such conditions as theBankmayimpose,

andinwritinginformtheapplicantofitsdecision.

(5) TheBankmaynotgrantanapplicationintermsofsubsection(4)unlesstheBankissatisfiedthatalltherequirementsasdeterminedbytheBankhavebeenmet.

(6) If the Bank grants an application referred to in subsection(4), theBankmust issue to the foreign institution concerned a certificate ofauthorizationtoconductbankingbusinessbymeansofabranchinNamibia.

(7) Any foreign institution that conducts banking business bymeans of a branch in Namibia without having obtained the Bank’s writtenauthorizationreferredtoinsubsection(1)commitsanoffenceandisliabletothepenaltiesprovidedforundersection(72)(2)(a).

Application of this Act to branches of foreign banking institutions

19B. (1) A foreign banking institution authorized to conductbankingbusinessbymeansofabranchinNamibiaisconstruedasabankinginstitutionintermsofthisAct,andforallpurposesthisActappliestoanysuchbranch,buttheMinister,bynoticeintheGazette,ontherecommendationoftheBank,mayexemptsuchbranchfromtheapplicationofcertainprovisionsofthisAct.

(2) Unlessexpresslystatedotherwise,anyreferencetoabankinginstitutioninanyotherlawincludes,insofarasitmayberelevant,areferencetoabranchinNamibiaofaforeignbankinginstitution.”.



“Restriction of right to control banking institution

25. (1) Subjecttosubsection(3)andsection20,apersonmaynotacquire,ordirectlyorindirectlyexercise,controloverabankinginstitution,unlesssuchpersonis-

(a) afitandproper personascontemplatedinsection20(4);

(b) incorporatedasacompanyundertheCompaniesAct;and

(c) registeredasacontrollingcompanyintermsofsection12Binrespectofsuchbankinginstitution.



(2) The Bank, by notice in writing addressed to a person, mayprohibitthepersontoacquireortoexercisecontroloverabankinginstitution,ortocontinuetoexercisesuchcontrolwithinaperiodspecifiedinthenotice,ifintheopinionoftheBanktheperson-

(a) isnotfitandproperhavingregardtothestructureandbusinessactivities of the corporate group of which the person is amember;

(b) hasfurnishedtheBankinorinconnectionwithitsapplicationforregistrationwithinformationwhichisinamaterialrespectuntrue;

(c) is conducting its business in a manner detrimental to thebanking institution inrespectofwhich itwasregisteredasacontrollingcompany;or

(d) hascontravenedorfailedtocomplywithaprovisionoforarequirementunderthisAct.

(3) The notice under subsection (2), in the case of a companyregisteredasacontrollingcompany,must-

(a) compelsuchcompany toreduce,withinaperioddeterminedbytheBank,theshareholdingofthatcompanyinthatbankinginstitutiontoashareholdingwithatotalnominalvalueofnotmore than 20 per cent of the total nominal value of all theissuedsharesofthatbankinginstitutions;

(b) limit, with immediate effect, the voting rights that may beexercised by such person by virtue of the shareholding ofthatpersontonotmore than20percentof thevotingrightsattached to all the issued shares of the banking institutionconcerned;and

(c) limit,withimmediateeffect,thepowertoappointorremove,withouttheconcurrenceofanyotherperson,allorthemajorityofsuchdirectors.

(4) A person who fails to comply with a notice issued undersubsection(2)commitsanoffenceand is liable to thepenaltiesprovidedforundersection(72)(2)(a).”.


13. Section 26 of the principalAct is amended by the substitution forsubsection(16)ofthefollowingsubsection:

“(16) Any person who fails to comply with any provision ofsubsection(4)[shall beguilty of an offence and on conviction be] is liableto a fine [not exceeding N$2 000 or to imprisonment for a period not exceeding six months or both such and such imprisonment]determinedbytheBank.”.





(a) bythesubstitutionforparagraph(a)ofsubsection(1)ofthefollowingparagraph:

“(a) anamount [of N$10 000 000]determinedby theBank;or”;and

(b) bythedeletionofsubsections(2)and(3).

Insertion of section 28A in Act No. 2 of 1998

15. TheprincipalActisamendedbytheinsertionaftersection28ofthefollowingsection:

“Minimum capital funds in respect of banking group

28A. (1) Despitesection28(1),butsubjecttosubsection(2),acontrollingcompanymustmanageitsaffairsinsuchawaythatthesumofthecapitalfundsofthebankinggroupstructuredundersuchcontrollingcompanydoesnotatanytimeamountto-

(a) lessthanthesumoftheamountsoftherequiredcapitalfundsdetermined, for the respective entities constituting suchbanking group, in accordancewith the rules and regulationsoftherespectiveregulatorsresponsibleforthesupervisionofthoseentities;

(b) plussuchamountasmaybedeterminedbytheBankinrespectofentitiesthatareincludedinsuchbankinggroup,butarenotsubjecttothesupervisionofaregulator.

(2) Incalculatingtheaggregateamountabankinggroupisrequiredtomaintainintermsofsubsection(1),thesumofthebankinggroup’scapitalfundsiscalculatedbydeductingfromitsuchamountsasmaybedetermined.

(3) Despite paragraphs (a) and (b) of the definition of “bankinggroup”,theBank,afterhavingregardtothestructureandbusinessactivitiesofabankinggroup,andbynoticeintheGazette,mayincludeinorexcludefromthatdefinitionanypersonorpersons.”.




“(a) bad[or],doubtfulorsubstandarddebts,andthedepreciationofassets,tobecalculatednotlessthanquarterly;”;and



(b) bythesubstitutionforsubsection(2)ofthefollowingsubsection:

“(2) Theminimumstandardsforprovisionforbad [or],doubtfulorsubstandarddebts,theaccountingtreatmentandsuspensionofinterestofnon-performingloansascontemplatedinsubsection(1)maybedeterminedbytheBank.”.



“Restriction on dividends

32. (1) Abankinginstitution,[shall not, unless] ifitscapitalisadequateintermsofsection28,[without the written approval of the Bank],maydeclare,payorcredit[any]dividend,ormakeanytransferfromitsprofits[other than to a reserve account].

(2) Intheeventthatdividendstobepaid,declared,creditedoranytransfertobemadeundersubsection(1),exceedcurrentauditedprofits,priorwrittenapprovaloftheBankmustbeobtained.”.



“(3) Forthepurposesofthissection,theBankmaydeterminethemeaningofa“singleborrower”ora“groupofrelatedpersons”orofa‘largeexposure’.”.



(a) bythesubstitutionforsubsection(1)ofthefollowingsubsection:

“(1) Nobankinginstitution[shall, subject to subsection (4)]mayhaveanyexposureto-

(a) any director or officer withmanagerial responsibility in thebankinginstitution;

(b) anysubstantialshareholderinthebankinginstitution;

(c) anyofthebankinginstitution’sauditors;

(d) any affiliate, associate or close relative of a person referredtoinparagraph(a),(b),or(c),asthecasemaybe [,if such a person is a natural person];or



(e) anybodycorporateorunincorporatedoforinwhichapersonreferredtoinparagraph(a),(b)or(c)asthecasemaybe,isadirector,asubstantialshareholderoraguarantor,orotherwisehasaninterest,

exceptifsuchexposure[is incurred with the prior approval of the board of directors of the banking institution and is fully secured]complieswiththerequirementsforexposurestoconnectedpersonsasdeterminedbytheBank.”;and

(b) bythedeletionofsubsections(2),(3)and(4).



“Terms of exposure to directors, officers and shareholders

37. The Bank must determine the criteria and conditions to beemployedforestablishingtheacceptabilityorevaluationofcollateralforthepurposeofthisAct.”.



(a) bythesubstitutionforsubsection(1)ofthefollowingsubsection:

“(1) [Notwithstanding]Despitesection226oftheCompaniesAct,but subject to subsection (2) of this section, a banking institutionmay,with [the written approval of the Bank,]thepriorwrittennotificationtotheBank,statingthetermsandconditionsofaloan,grantaloan,advanceorcreditfacilitytoitsholdingcompany,subsidiaryoraffiliate,providedthatsuchnotificationisreceivedbytheBankatleast5dayspriortograntingsuchloan,advanceorcreditfacility.”;

(b) bythesubstitutionforparagraph(c)ofsubsection(2)ofthefollowingparagraph:

“(c) has been approved by the majority of the entire board ofdirectorsoracommitteeoftheboardofdirectors.”;

(c) bythesubstitutionforsubsection(3)ofthefollowingsubsection: “(3) Anybankinginstitutionwhich–

(a) without theapprovalof theBank in termsof subsection (1),grantsaloanintermsofthatsubsection;or

(b) grantsaloanincontraventionofsubsection(2),

[shallbe guilty of an offence]mustpayafineasdeterminedbytheBank.”;and



(d) bytheadditionofthefollowingsubsection:

“(4) Despite subsection (2), the Bank may object to thegrantingofaloan,advanceorcreditfacility.”.


22. TheprincipalActisamendedbythesubstitutionforsection41ofthefollowingsection.

“Directors and principal officers and executive officers of banking institutions

41. (1) The number of directors of a banking institution[shall],subjecttosubsection(2),maynotbelessthanfive.

(2) Notmore than one half of the total number of the directorscontemplated in subsection (1) [shall] may be employed by the bankinginstitutionconcerned,orbyanyofitssubsidiariesorbyitsholdingcompany,includinganyofthesubsidiariesoftheholdingcompany,asthecasemaybe.

[(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) TheBankmay,uponawrittenrequestbyabankinginstitution,inwritingexemptthebankinginstitutionfromsubsection(1)or(2)forsuchperiod,andsubjecttosuchconditions,astheBankmayimposeandspecifyinsuchexemption.

(5) Subjecttosubsection(6),theBankmaydetermine-

(a) the conduct and the qualifications applicable to, or to becompliedwithby;and

(b) themannerof,andthecriteriaandproceduresrelatingto,theelectionorappointmentofapersonas,

adirectorortheprincipalofficerorexecutiveofficerofabankinginstitutionorcontrollingcompany.

[(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 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) Theboardofdirectorsofabankinginstitutionorcontrollingcompany[shall]-



(a) [be] is responsible for the good corporate governance andbusinessperformanceofthebankinginstitutionorcontrollingcompany;

(b) mustensurethattheboardisinfullcontroloftheaffairsandbusiness operations of the banking institution or controllingcompany;

(c) mustensure,andreporttotheshareholdersattheannualgeneralmeetingofthebankinginstitutionorcontrollingcompany,thattheinternalcontrolsandsystemsofthebankinginstitutionorcontrollingcompany-

(i) are designed to provide reasonable assurance as totheintegrityandreliabilityofthefinancialstatementsof the banking institution or controlling company,and to adequately safeguard, verify and maintainaccountabilityofitsassets;

(ii) are based on established and written policies andprocedures,andareimplementedbytrainedandskilledofficerswithanappropriatesegregationofduties;and

(iii) are continuously monitored, reviewed and updatedby the board of directors to ensure that nomaterialbreakdownoccursinthefunctioningofsuchcontrols,proceduresandsystems;

(d) immediately inform theBank if they have reason to believethat-

(i) the banking institution or controlling company maynotbeabletoproperlyconductitsbusinessasagoingconcern;

(ii) thebankinginstitutionorcontrollingcompanyappearstobe,orwillinthenearfuturebe,unabletomeetall,oranyof,itsobligations;

(iii) the banking institution or controlling company hassuspended,orisabouttosuspendanypaymentofanykind;or

(iv) thebankinginstitutiondoesnot,ormaynotbeableto,meetitscapitalrequirementsdeterminedbyorundersection28;and

(e) constitute from among its members an audit committee ascontemplatedinsection42.

(8) Adirector[shall],inrelationtothebankinginstitutionortothecontrollingcompanyofwhichheorsheisadirector,mustacthonestlyandingoodfaithinthebestinterestandforthebenefitofthebankinginstitutionand



itsdepositors,orofthecontrollingcompany,asthecasemaybe,and[shall]mustintheperformanceofhisorherfunctionsasadirectorcomplywiththisAct.

(9) The principal officer of a banking institution or controllingcompanyor-

(a) any other officer of the banking institution or controllingcompanyactingonhisorherbehalf,[shall,notwithstanding]must, despite any action taken by the board of directors,immediatelyinformtheBankifheorshehasreasontobelievethatanyoftheeventscontemplatedinsubsection(7)(d)may,orislikelyto,occur;

(b) a principal officer or manager of a branch of a bankinginstitution,[shall]maynot-

(i) engage in any commercial business activities otherthan-

(aa) fororonbehalf;and

(bb) inhisorhercapacityasanofficer,

ofthebankinginstitution;or

(ii) beanagentofanyotherpersonengagedinanybusinesscontemplatedinsubparagraph(i),

unlessthepositionheldbysuchpersonisthatofadirectorofa companywhich is in liquidation,whether provisionally orfinal,orisbeingwound-uporisunderjudicialmanagement,oriftheBank,ontherecommendationoftheboardofdirectorsofthebankinginstitution,hasexemptedtheprincipalofficerorthemanagerfromthisparagraph[(b)].

(10) No director of a banking institution or a member of acommittee of the board of directors established for the purpose of grantingcredit tocustomers, andnoprincipalofficeroramanagerofadivisionorabranch,[shall]maytakepartinthediscussionorconsiderationof,orthetakingofadecisionrelatingto,anymatter-

(a) inwhich-

(i) heorsheoranyofhisorhercloserelatives;

(ii) anycompanyinwhichheorsheoranyofhisorhercloserelativesisasubstantialshareholder;or

(iii) anyotherorganisationinwhichheorsheoranyofhisorhercloserelativesisapartnerormember,

hasanypersonaloreconomicinterest;or



(b) which is, subject to subsection (11), of particular economicinterest to amunicipality, company, associationor anyotherpublic or private institution towards which he or she has,in his or her capacity asmayor, boardmember,manager orrepresentative,adutytoprotecttheeconomicinterestsofsuchmunicipality,company,associationorinstitution.

(11) Paragraph (b) of subsection (10) [shall] does not apply inrespectoftheelectionofofficersortheconsiderationofremunerationrelatingtopositionsoftrust.

(12) Beforeamattercontemplatedinsubsection(10)isconsideredbythedecision-makingbodyconcerned,anypersonwhoisnotentitledtotakepartintheconsiderationof,orthetakingofadecisionrelatingto,thematter[shall]must-

(a) informthedecision-makingbodyaccordingly;and

(b) recusehimselforherselffromthemeeting.

(13) The proceedings contemplated in subsection (12) [shall]mustberecordedintheminutesofthemeetingofthedecision-makingbodyconcerned.

(14) Every banking institution or controlling companymust givetheBankawrittennoticeofthenominationofanypersonforappointmentasadirectororprincipalofficerorexecutiveofficerbyfurnishingtheBankwithinformationinthemannerandformdeterminedbytheBank,butthenoticemustreachtheBankatleast30dayspriortotheproposeddateofappointment;

(15) The Bank may object to the proposed nomination forappointment referred to in subsection (14) on grounds that such director orprincipalofficerorexecutiveofficerisnotfitandpropertoholdsuchpositionasdeterminedbytheBank,andmustwithin20daysofreceiptof thenoticereferredtoinsubsection(14)deliverawrittennoticestatingthegroundsofitsobjectiontotheappointingbankinginstitutionorcontrollingcompany;

(16) IftheBankobjectstotheproposedappointmentasenvisagedin subsection (15), the banking institution or controlling company,may notappointthenomineeandanypurportedappointmenthasnolegaleffect.

(17) IfthebankinginstitutionorcontrollingcompanydisputestheBank’sobjection, theBankmustgivesuchperson reasonableopportunity tomakerepresentationtotheBank.

(18) After considering the banking institution’s or controllingcompany’srepresentationmadeundersubsection(17),ifany,theBankmay–

(a) accedetothenominationofthedirectororprincipalofficerorexecutiveofficer,withorwithoutconditions;or

(b) upholditsobjection,



andmustinwritinginformthebankinginstitutionorcontrollingcompanyofitsdecision.”.



“(2) The audit committee referred to in subsection (1) [shall]consists of somanymembers, but not less than [two] three, as the bankinginstitution may decide on, who [shall all be] are all directors without anyexecutiveresponsibilityinthebankinginstitution.”.



“(2) [Within a period of 30 days after the appointment of an auditor in terms of subsection (1),the]Abankinginstitutionorcontrollingcompany [shall] must, 10 days prior to the annual meeting, submit detailsregardingtheauditoritintendstoappointintermsofsubsection(1)intheformandmannerrequiredby[as]theBank[may require], andapplytotheBankfortheBank’sapprovaloftheappointment.”.



“Financial and other [banking] records

46. (1) A banking institution [shall] must, in the officiallanguage of Namibia, keep core banking systems that contain records anddocumentationcoveringcorefunctionalareasandsuchaccountingandother[banking]recordsasarenecessarytoreflectthetrueandfairstateofitsaffairsandtoexplainitstransactionsandfinancialpositioninsuchamannersoastoenabletheBanktoascertainwhetherthebankinginstitutioniscomplyingwiththisAct.

(2) The core banking systems, [and] accounting and other[banking] records contemplated in subsection (1) [shall] must be keptin Namibia and [shall] must, subject to subsection (4), comply with therequirements-

(a) ofsection284oftheCompaniesAct;and

(b) determinedbytheBank,

and[shall]mustbekeptandmaintainedbythebankinginstitutionforaperiodofnotlessthanfiveyearsafterthedateofthelastentryinsuchrecords.



(3) [No]Aperson[shall]maynot,withtheintent todeceive, inanybook,record,report,statementorotherdocumentrelatingtothebusiness,affairs, transactions, conditions, property, assets, liabilities or accounts of abankinginstitutionorcontrollingcompany-

(a) makea falseentry,knowingsuchentry tobe false,orcause

suchanentrytobemade;or

(b) omitanentry,orcausesuchanentrytobeomitted;or

(c) alter, abstract, conceal, removeordestroyanentry,or causean entry to be altered, abstracted, concealed, removed ordestroyed.

(3) For the purposes of this section, “other [banking] records”

[shall],includeanybook,record,report,statementorotherdocumentrelatingtothebusiness,affairs,transactions,conditions,property,assetsorliabilitiesofabankinginstitutionorcontrollingcompany.”.



“Financial statements

47. (1) The Companies Act [shall], subject to the furtherprovisions of this section, [apply] applies to the financial statements of abankinginstitutionoracontrollingcompany.

(3) [Notwithstanding]Despitesubsection(1)- (a) theBankmaydetermine- (i) thatalloranyoftheexemptionscontainedinparagraph

70 of Part V of Schedule 4 to the Companies Act[shall]maynot,subjecttosuchdetermination,applytoabankinginstitutionoracontrollingcompany;

(ii) additional requirements not in conflict with thisActrelating to the financial statements contemplated insubsection(1);and

(b) abankinginstitutionoracontrollingcompany[shall]must–

(i) initsannualfinancialstatementsdisclosethenameofashareholderwhoholds20percentormoreofthetotalvotingrightsinthebankinginstitutionoracontrollingcompany;

(ii) [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] despite anything to the contrary inanyotherlaw,submittotheBank,withinthreemonthsaftertheendofitsfinancialyear,butatleast30daysbeforeitsannualgeneralmeeting,itsauditedfinancialstatements;and

(iii) subjecttosubsection[3 or](4)withinaperiodofonemonth from the date of acceptance of the financialstatementsatanannualgeneralmeetingofthebankinginstitutionorcontrollingcompany,publishthefinancialstatementsinanewspaperasmaybeapproved,andintheformspecified,bytheBank.

(3) [Notwithstanding] Despite anything to the contrary in theCompaniesAct,oranyotherlaw,[subparagraph (iii) of subsection (2)(b),] a banking institution or controlling companymust, within six months afterthe end of its financial year, hold its annual general meeting [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) TheBankmay,atthewrittenrequestofabankinginstitutionorcontrollingcompanyandsubjecttosuchconditionsastheBankmayimpose,inwritingextendanyperiodoftimespecifiedinsubsection(2)(b)(ii), (2)(b)(iii)or(3),asthecasemaybe.

(5) IftheBankissatisfiedthatthefinancialstatementsofabankinginstitution or controlling company do not complywith thisAct orwith anyadditionalrequirementdeterminedbytheBank[as determined]inaccordancewithsubsection(2)(a)(ii),orcontaininformationthatmaybemisleadinginanyway,orarenotpublishedintheformspecifiedbytheBank,theBankmaybynoticeinwritingrequirethebankinginstitutionorcontrollingcompany-

(a) toamendorcorrectthefinancialstatementstocomplywiththisActorwiththeadditionalrequirements;

(b) tocorrectthemisleadinginformation;

(c) to re-publish the amended or corrected financial statements;or

(d) tosubmittotheBank-

(i) such further or additional documents or information;or

(ii) such explanation or amplification relating to anydocumentorinformation,

tothesatisfactionoftheBankorastheBankmayconsidernecessary.”.




27. Section 49 of the principalAct is amended by the addition of thefollowingsubsection:

“(6) A banking institution or controlling companywhich fails tofurnish the Bank with information required in terms of this section, withinthespecifiedperiodoftime,orknowinglyandrepeatedlyfurnishestheBankwithincorrectorincompleteinformationisliabletoafinedeterminedbytheBank.”.


28. Section 52 of the principalAct is amended by the substitution forsection52ofthefollowingsection:

“Examination by Bank

52. (1) TheBankmay,inordertodeterminewhetherabankinginstitutionorcontrollingcompanyisinasoundfinancialconditionandwhetherthe provisions of thisAct or any other legal requirements pertaining to the[banking]businessbeingconductedhavebeen,andarebeing,compliedwithbythebankinginstitutionorcontrollingcompany,andwithoutpriornotice,atanyreasonabletime,throughorbymeansof-

(a) itsownofficers;or

(b) any person appointed by theBank on account of his or herspecialknowledgeorexpertise,includingalegalpractitionerregisteredtopracticeassuchundertheLegalPractitionersAct,1995(Act15of1995);or

(c) the auditor of a banking institution or any other auditorappointedbytheBank,

conduct an examinationof the affairs of a banking institutionor controllingcompany.

(2) Section 6 [shall mutatis mutandis apply] applies withnecessarychangestoanexaminationunderthissection.

(3) Intheconductingofanexaminationintermsofsubsection(1),theBank,orthepersonappointedbytheBankunderthatsubsection,[shall,]inadditiontothepowers,dutiesandfunctionsheorsheorithasintermsofthisAct,[have]hasthepowers[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]and duties in all respects corresponding to the powers and duties conferredor imposedby the lawregulatingfinancial institutionsandmarkets upon theAuthorityorinspectorcontemplatedinthatlaw.”.

(4) The person, legal practitioner or auditor referred to insubsection(1)[shall],uponthecompletionofhisorherexaminationinterms



ofthat[paragraph]subsection,mustsubmitareporttotheBankrelatingtotheexaminationsoconducted,intheformandmannerastheBankmayrequire.

(5) TheBankmay,ifanexaminationcontemplatedinsubsection(1) reveals that the banking institution or controlling company concerned isnotconductingitsaffairsintermsofthisActoriscontraveninganyotherlaw,recoverfromthebankinginstitutionorcontrollingcompanythecostsincurredbytheBankrelatingtotheexamination,includingthefeesandexpensesofapersonappointedbytheBankundersubsection(1).

(6) Ifnotlessthanone-fifthofthetotalnumberofthedepositorsofabankinginstitutionrepresentingnotlessthanone-fifthofthetotalvalueofthedepositsmadewiththebankinginstitutionintermsofsubsection(1),theBank[shall],subjecttosubsection(7),mustconductanexamination[mutatis mutandis]withnecessarychangesintermsofthissection.

(7) The Bank [shall] must only conduct an examinationcontemplatedinsubsection(6)ifthedepositorsreferredtointhatsubsection,togetherwiththeirrequestascontemplatedinthatsubsection,providetheBankwithproof, to thesatisfactionof theBank, thatsuchanexaminationmaybejustified.

(8) After the completion of an examination under this section,theBankmayfurnishtheboardofdirectorsof thebankinginstitutionor thecontrollingcompanyconcernedwithareportrelatingtotheexamination,whichreport[shall]mustcontainthefindingsoftheBankinrespectoftheconductingofbusinessbythebankinginstitutionorthecontrollingcompany.

(9) Inthereportfurnishedtotheboardofdirectorsofthebankinginstitution in or the controlling company terms of subsection (8), the Bankmaydirectsuchboardofdirectorsto,withintheperiodoftimespecifiedinthereport,rectifythedeficienciesmentionedinthereport.

(10) For thepurposeof this sectionandof section53, abankinginstitution[shall],includesanaffiliateofthebankinginstitution.

(11) Theexaminationreportpreparedandfurnishedtotheboardofdirectorsofabankinginstitutionoracontrollingcompanyintermsofsubsection(8)remainsthepropertyoftheBankandnodisclosureofanyportionthereofis permitted, exceptwhere suchdisclosureor exchange takesplacebetweendirectors,officersoremployeesof thatbanking institutionor thecontrollingcompanyandisnecessarytofacilitatethedaytodayefficientfunctioningofthatbankinginstitution.”.



“(3) Any[offer of a]bankinginstitution,itsaffiliateorassociatewhofailstoallowanypersonreferredtoinsubsection(2)accesstoorpossessionof,orrefusesorfailstoproducetosuchpersonanydocumentorotheritemreferredtoin,ortogiveinformationinaccordancewith,thatsubsection,ortoprovide



tothepersonsuitablefacilitiesforthepurposesofconductinganexaminationunderthatsubsection,isliabletoafinedeterminedbytheBank.”.



(a) by the substitution for the heading of section 54 of the followingheading:

“Approval of special resolutions, amalgamation and transfer of assets and liabilities”;and

(b) bytheadditionofthefollowingsubsection:

“(5) IftheBankinwritingapprovesanapplicationreferredtoinsubsection(1)(a)or(b)intermsofsubsection3(b)or(c)-

(a) thenoticeofthepassingofaspecialresolutionbytheshareholdersof thebanking institutionorcontrollingcompanytogetherwithacertifiedcopyoftheBank’sapprovalintermsofsubsection3(b)or(c)-

(i) containing full particulars of the merger,consolidation,transferorotherdisposition;and

(ii) dulycertifiedbytwodirectorsandthesecretaryof each party to the merger, consolidation,transferorotherdisposition,

must be sent by each of the parties to the Registrarof Companies, who must register the merger,consolidation,transferorotherdisposal,withtheBankandtheRegistrarofDeeds;

(b) upon registration of the special resolution by theRegistrarofCompanies–

(i) all the assets and liabilities of the bankinginstitution or controlling company involved inthemerger or consolidation become the assetsand liabilities of the merged or consolidatedbankinginstitutionorcontrollingcompany;

(ii) all rights and obligations that vested in therespective banking institutions or controllingcompany prior to the merger or consolidationare, from the date of registration by theRegistrarofCompanies,vestedinthemergedorconsolidated banking institution or controllingcompany;and



(iii) in the case of a transfer or other disposal ofproperty in terms of subsection (1)(b), suchpropertyisvestedinthetransferee;

(c) uponreceiptofacertifiedcopyofthespecialresolutionregisteredbytheRegistrarofCompanies,theRegistrarof Deeds must endorse the transfer of rights andobligationsfromthebankinginstitutionsorcontrollingcompanywho havemerged or become consolidatedto themerged or consolidated banking institution orcontrollingcompanyoneverydeed,bond,instrumentordocumentregisteredintheDeedsRegistry;and

(d) despite section16of theDeedsRegistriesAct, 1937(Act47of1937)andthedateonwhichthetransferofsuchrightsandobligationshavebeenendorsedbytheRegistrarofDeeds,allsuchrightsandobligationsaretransferred to themerged or a consolidated bankinginstitution or controlling company on the date ofregistrationof thespecial resolutionby theRegistrarofCompanies.”.


31. Section 55 of the principal Act is amended by the deletion ofsubparagraph (iii)ofparagraph(b)ofsubsection(2).

Insertion of section 55A of Act No. 2 of 1998

32. TheprincipalActisamendedbytheinsertionaftersection55ofthefollowingsection:

“Pyramid Schemes

55A. (1) A person or banking institution may not conduct,permitorbecomeinvolvedintheconductingof,ortheacceptanceorobtainingofmoney,directlyorindirectly,frommembersofthepublic,asaregularfeatureofabusinesspractice,withtheprospectofanyofsuchmembers(hereinafterreferredtoasthe“participatingmembers”)receivingpaymentsorothermoney-relatedbenefits,directlyorindirectly–

(a) on or after the introduction of othermembers of the publicto the business practice (hereinafter referred to as the “newparticipating members”), from which new participatingmembers,intheirturn,moneyisacceptedorobtained,directlyor indirectly, as a regular feature of the business practice,whetherornot-

(i) the introduction of the newparticipatingmembers islimitedtotheirintroductionbyparticipatingmembersorextendstotheintroductionofthenewparticipatingmembersbyotherpersons;or



(ii) new participating members are required to acquiremovableorimmovableproperty,rightsorservices;

(b) onorafter thepromotion, transferorchangeofstatusof theparticipatingmembers or new participatingmembers withinthebusinesspractice;or

(c) fromfundsacceptedorobtainedfromparticipatingmembersornewparticipatingmembersintermsofthebusinesspractice,

orthesolicitingof,oradvertisingfor,directlyorindirectly,moneyorpersonsfor introduction into or participation in a business practice in terms of thebusinesspracticereferredtointhissection,butdoesnotincludeanyactivityof-

(i) thepublicsector,governmentalorotherinstitution;or

(ii) anypersonorcategoryofpersons,designatedbytheMinister,ontherecommendationoftheBank,bynoticeintheGazette,ifsuchactivityisperformedinaccordancewiththeconditionsthattheMinistermayspecifyinthenotice.

(2) Apersonwhocontravenessubsection(1)commitsanoffenceandisliabletoafineprescribedbysection72(2)(a).”.


33. Section56oftheprincipalActisamended–

(a) bythesubstitutionforsubparagraph(iii)ofparagraph(a)ofsubsection(2)ofthefollowingsubparagraph:

“(iii) subjecttotheLabourAct,[1992 (Act 6 of 1992)]2007(ActNo.7of2007),but[notwithstanding]despiteanyprovisiontothecontrary–”;

(b) bythesubstitutionforsubsection(4)ofthefollowingsubsection:

“(4) [An]Adirectororanofficerremovedfromofficeundersubsection(2)[shall]ceasestoholdtheofficefromwhichheorsheissoremovedwitheffectfromthedatespecifiedintheordermadeunderthatsubsection,and[shall]afterthedatesospecified-

(a) may not hold any office or participate in the affairsof-[inthe banking institution orin itsaffiliate or associate; and]

(i) thebanking institutionfromwhichheorshewasremoved;

(ii) anyotherbankinginstitution;or

(iii) thecontrollingcompany;and



(b) isnot[be]entitledtothepaymentofanyremunerationfrom the banking institution or [from its affiliate or associate.] any other banking institution or thecontrollingcompany,

providedthattheBankmay,uponwrittenapplicationbysuchdirectororofficerrescindormodifytheremovalordersubjecttoanyconditionsastheBankmayimpose.”;and

(c) bythedeletionofsubsection(9).


34. Section 58 of the principalAct is amended by the addition of thefollowingsubsection:

“(5) DespiteanythingtothecontraryintheCompaniesActoranyotherlaw,theMasteroftheHighCourt–

(a) maynotappointapersonasprovisionalliquidator,provisionaljudicialmanager,liquidatororjudicialmanagerofabankinginstitution, other than a person recommended by the Bankunderparagraph(b);

(b) 30daysbeforeappointingapersonforanypositionreferredtoinparagraph(a),mustsubmittheparticularsandqualifications,and experience, if any, of such person and other relevantinformationtotheBankforitsrecommendation;and

(c) the Master of the High Court must appoint a persondesignatedbytheBank,who,intheopinionoftheBank,haswide experience of, and is knowledgeable about the latestdevelopmentsin,thebankingindustry,toassistaprovisionalliquidator,provisionaljudicialmanager,liquidatororjudicialmanager referred to in paragraph (a) in the performanceof his or her functions in respect of the banking institutionconcerned.”.



“Proof and repayment of claims

59. (1) Despitetheprovisionsofanyotherlaw,intheeventofwinding-upofabankinginstitution,allassetsofthebankinginstitutionmustbemadeavailabletomeetalldepositliabilitiesofthebankinginstitutionintheorderofpriorityasdeterminedbytheBank.

(2) For the purpose ofwinding-up of a banking institution, and[notwithstanding]despiteanyprovisiontothecontraryintheInsolvencyAct,1936(Act24of1936),orintheCompaniesAct,oranyotherlaw,anentryin



thebooks,accountsorrecordsofthebankinginstitutionrelatingtoadepositorof the banking institution, [shall be] isprima facie proof of a claim of thedepositor.”.


36. Section 64 of the principal Act is amended by the insertion afterparagraph(i)ofsubsection(10)ofthefollowingparagraph:

“(j) if the exchange of individual customers’ information takesplacewithinabanking institutionbetweendirectors,officersoremployeesofthatbankinginstitutionandwhichisnecessarytofacilitatetheday-to-daybankingbusiness.”.



“Regulations and determinations

71. (1) TheMinistermay,ontherecommendationoftheBank,makeregulationsrelatingto-

(a) anymatterwhich is required or permitted by thisAct to be

prescribed;

(b) therequirementsrelatingtotheownership,orthecitizenshipandplaceofresidenceofthemembersofaboardofdirectorsorofficer,ofabankinginstitutionoracontrollingcompany;

(c) themannerinwhichthepaymentofanymoniesintermsofthisAct[shall be]ismadetotheBank;[and]

(cA) unfair terms in transactions or contracts between bankinginstitutionsandtheircustomersorthegeneralpublic;and

(d) all other matters which theMinister considers necessary orexpedient to prescribe in order to achieve the objects andpurposesofthisAct.

(2) Aregulationmadeundersubsection(1)mayinrespectofany

contravention thereof or failure to comply therewith prescribe a penalty notexceedingafineofN$100000orimprisonmentforaperiodnotexceedingtwoandahalfyearsorbothsuchfineandsuchimprisonment.

(3) TheBankmaybynoticeintheGazettemakedeterminations

notinconsistentwiththisActrelatingto- (a) anymatterwhich is required or permitted by thisAct to be

determinedbytheBank;and



(b) all other matters which the Bank considers necessary orexpedient to determine for the conducting of [banking]business, as a banking institution or controlling company,in a prudent manner and consistent with the best standardsand practices of corporate governance and sound financialmanagement.

(4) Any[person or]bankinginstitutionorcontrollingcompany,asthecasemaybe,[shall,]oncontraventionof,orfailuretocomplywith,anydeterminationmadeunderparagraph(a)ofsubsection(3)-

(a) asprovided for in section28(5)(b) or (c), 28A,30(2), 41(5)or 43(6) in respect of [any person, including] a bankinginstitutionorcontrollingcompany;or

(b) 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 anybankinginstitutionorcontrollingcompany;

[be guilty of an offence and on conviction be liable to the penalties provided for in section 72(1)(a)]isliabletoafinedeterminedbytheBank.

(5) Abankinginstitutionorcontrollingcompanythatcontravenesor fails to comply with a determination made under paragraph (b) ofsubsection (3) [may in respect of any contravention thereof or failure to comply therewith determine a penalty not exceeding a fine of N$50 000 or imprisonment for a period not exceeding one and a half years or both such fine and such imprisonment]isliabletoafinedeterminedbytheBankandimposedinaccordancewithsection73A.”.


38. Section 72 of the principalAct is amended by the substitution forparagraph(a)ofsubsection(1)ofthefollowingparagraph:

“(a) contravenesorfailstocomplywithanyprovisionofsection5,19A(1),[25(2),]46(3),55Aor64(7);or”.




“(a) anyprovisionofsection8(2),12(2),12Dand12E,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)or63;or”;and



(b) bythesubstitutionforparagraph(d)ofsubsection(1)ofthefollowingparagraph:

“(d) any condition or requirement laid down under section 8(3),[28(2)]or(4),36(2),47(5),49[(1) or](5)or50,”.

Insertion of sections 73A and 73B in Act No. 2 of 1998


“Imposition of administrative fines by Bank

73A. (1) If the Bank on reasonable grounds believes that abankinginstitutionorcontrollingcompanycontravenesorfailstocomplywithsection,26(16),38(3),49(6),53(3),or71(4),underwhichtheBankisrequiredto determine a fine, theBankmay impose a fine not exceedingN$100 000foreverydayduringwhichcontraventionornon-compliancewiththesectioncontinues.

(2) Beforeimposingafine,theBankmustinwriting-

(a) inform the banking institution or controlling company of itsintentiontoimposeafine;

(b) specify the particulars of the alleged contravention ornoncompliance;

(c) providereasonsfortheimpositionoftheintendedfine;

(d) specifytheamountofthefineintendedtobeimposed;and

(e) invite the banking institution or controlling company tomake written representations within 14 days of receipt ofthe invitationand to showcausewhy thefine shouldnotbeimposed.

(3) If the Bank after consideration of the representationsmade,decidestoimposeafine,theBankmustbywrittennoticeinformthebankinginstitutionorcontrollingcompanythatitmust,within30daysofreceiptofthenotice,paythefine.

(4) Abanking institution or controlling companymay appeal totheAppealBoardagainst thedecisionmadeorfineimposedbytheBankbylodginganoticeofappealwiththeMinisterwithin14daysofreceiptof thenoticereferredtoinsubsection(3).

(5) After consideration of an appeal, the Appeal Board mayconfirm,amendorsetasidethedecisionmadeorfineimposedbytheBank.

(6) IfabankinginstitutionorcontrollingcompanyisdissatisfiedwiththedecisionoftheAppealBoard,itmayappealtotheHighCourtwithin14daysafterthedecisionwasmade.



(7) A contravention of or failure to comply with any sectionreferredtoinsubsection(1)isnotacriminaloffence.

Appeal Board

73B (1) UponreceiptofthenoticeofappealbyabankinginstitutionorcontrollingcompanyagainstthedecisionoftheBankmadeundersection73A,theMinistermustconstituteanAppealBoardtodecidetheappeal.

(2) TheAppealBoardconsistsofajudgeoftheHighCourt,whoisthechairperson,designatedbytheJudgePresidentandothertwomembersappointedbytheMinister.

(3) Thequalifications,termsandconditionsandotherrequirementsforappointmentasmembersoftheAppealBoardareasprescribed.”.

Insertion of certain expressions in Act No. 2 of 1998

41. The principalAct is amended by the insertion after the expression“banking institution” or “banking institutions”wherever it appears in section 3, 13,20,21,22,24,26,27(2),43,44,45,49,51,54,65,66,72,or73,respectively,ofthefollowingexpression,respectively:

“orcontrollingcompany’or‘orcontrollingcompanies”.

Short title

42. ThisActiscalledtheBankingInstitutionsAmendmentAct,2010.________________

banking institutions amendment act - parliament of namibia

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