Financial Institutions Act, 2005
Act 6 of 2005
- Assented to on 26 October 2005
- Commenced on 3 March 2006 by Financial Institutions Act (Date of Commencement), Notice 2006
- [This is the version of this document at 1 December 1998.]
Part I – Preliminary provisions
1. Short title and commencementThis Act may be cited as the Financial Institutions Act, 2005, and shall come into operation on such date as the Minister may, by notice in the Gazette, appoint.
2. InterpretationIn this Act, unless the context otherwise requires—“affiliate”, in respect of any financial institution, means—(a)any company, association, syndicate, partnership or other body of persons corporate or unincorporate in which twenty-five percent or more of any class of voting shares or other voting participation is directly or indirectly owned or controlled by such financial institution, or is held by it with power to vote; or(b)any company, association, syndicate, partnership or other body of persons corporate or unincorporate in which the election of a majority of directors is controlled in any manner by such financial institution;“Bank” means the Central Bank of Swaziland established under the Central Bank of Swaziland Order, 1974;“bank” means a company incorporated in accordance with the provisions of the Companies Act, 1912, which is licensed under this Act to conduct banking business;“banking business” means—(i)the business of receiving funds from the public through the acceptance of money, deposits of money payable upon demand or after a fixed period or after notice or any similar operation through the periodic sale or placement of bonds, certificates, notes or other securities and the use of such funds either in whole or in part for loans, advances, investments or any other operation authorized by law or customary banking practice, for the account and at the risk of the person doing such business;(ii)any other activity recognized by the Bank as customary banking practice which a financial institution may be authorized by the Bank to engage in;“calendar year” means the period form 1st January to 31st December;“credit institution” means any financial institution other than a bank;“conglomerate” means a conglomerate as defined in section 15(2);“Court” means the High Court;“director” includes any person, by whatever title he may be referred to, empowered to carry out substantially the same functions in relation to the direction of a financial institution as those carried out by a director of a company as defined in the Companies Act, 1912;“financial institution” means any person licensed under this Act to carry on banking business;“financial year” means any continuous twelve month period designated by a financial institution as its accounting year;“foreign financial institution” means any financial institution, incorporated or otherwise, other than a local financial institution, doing business in Swaziland, whether such business is banking or other business;“licensed”—(a)in relation to an agent, means licensed under section 17 of this Act;(b)in relation to a financial institution, means licensed under section 6 or 17 of this Act;“local financial institution” means a financial institution established under the laws of Swaziland;“Minister” means the Minister responsible for Finance;“other financial institution” means any institution which may be licensed by or otherwise subject to the supervision and regulation of the Bank;“place of business” means any branch or office of a financial institution in Swaziland, including a mobile agency, open to the public for the transaction of banking business;“principal officer” means the Chief Executive Officer or other person in Swaziland, by whatever title he may be referred to responsible for the management of the affairs of a licensed financial institution;“public in Swaziland” includes the Government of Swaziland, the Bank, any statutory body and every licensed financial institution;“records” means any documents or information used in the ordinary course of the business of banks or financial institutions, whether in written form or kept on microfilm, magnetic tape or any other form of mechanical or electronic medium;“unsecured” in relation to loans, advances or credit facilities means loans, advances, or credit facilities granted without special security; or in the case of loans, advances or credit facilities granted against special security, any part of such loans, advances or credit facilities which at any given time exceeds the market value of the assets comprising the security given, or which exceeds the valuation approved by the Bank whenever it deems that no market value exists for such assets.
3. Non-applicability of the Act
Part II – Licences
5. Prohibition against carrying-on of business by a financial institution without a licence
6. Application for licence to carry on banking business
7. Financial institutions deemed to be licensed under this ActAll financial institutions licensed in terms of this Act shall be announced through the Gazette.
8. Investigation of persons suspected of carrying on business without a licence
9. Authority to take deposits
10. Use of word “bank” in title
11. Certain words not to be used in name of financial institution
12. Local financial institutions to be incorporated
13. Licensed persons to display name and licence under Act
14. General prohibitions
15. Formation of conglomerates
16. Revocation of licence of a financial institution
17. Licensing of agents and annual fees
18. Disclosable information
Part III – Financial requirements and limitations
19. Capital and reserve account
20. Amount of capital and reserve account
21. Provisions to be made for certain itemsIn making the calculations necessary to ascertain that a financial institution has complied with the requirements of sections 19 and 20—
22. Prescribed investments to be maintainedThe Bank may from time to time, by notice published in the Gazette, prescribe that every financial institution of a given class or classes shall maintain in Swaziland specified investments of an amount to be determined as a percentage of its liabilities to the public in Swaziland as shown in its last preceding monthly statement furnished to the Bank under section 36:Provided that—
23. Minimum liquid assets to be maintained
24. Limitations on specified operations and activities
25. Loans and advances secured by hypothec
26. Foreclosure of hypothec
27. Allocation of proceeds
28. Hypothecation deeds to be prepared by the financial institution
Part IV – Audit, information and examination
29. Appointment and duties of auditors
30. Auditor’s right of access to booksEvery auditor of a financial institution shall have the right of access at all times to such books, accounts, vouchers, and securities of that institution and shall be entitled to require from the officers and agents of that institution such information and explanations as he requires to correctly perform his duties as auditor.
31. Powers of the bank in relation to auditors
32. Audit committee
33. Termination of appointment of auditor
34. Financial recordsEvery financial institution shall keep such records in Swaziland as are necessary to show clearly and correctly the state of its affairs and to explain its transactions and financial position and to enable the Bank to determine whether the institution has complied with the provisions of this Act, and Regulations and By-laws made under this Act, and it shall preserve every such record for a period of at least five years as from the date of the last entry therein.
35. Annual account
37. Failure to provide information
38. Reporting of suspicious transactions
40. Production of records and information for examiner
41. Other offencesAny director, officer, employee or agent of a financial institution commits an offence and shall be liable on conviction to a fine of one hundred thousand Emalangeni (E100,000), or imprisonment for not less than one year or both, if he—
42. Powers after examinationWithout derogating from its powers under Part V of this Act or the Schedule hereto, the Bank may, if, in its opinion, an examination or other information about the institution shows that the financial institution concerned is conducting its business in an unlawful or unsound manner or that it is otherwise in an unsound condition—
43. Confidentiality of information
44. Publication of information
45. Annual report by bankThe Bank shall annually submit to the Minister a report on all financial institutions and agents licensed under this Act and on all matters relating to such institutions and agents during the year under review, and the Minister shall lay the report before Parliament.
Part V – Miscellaneous provisions
46. Enforcement of compliance
47. Liabilities of directors and officersAny person being a director, chief executive officer, manager, or other officer of a financial institution, who—
48. Failure to secure complianceAny director, chief executive officer, manager, or other officer of a financial institution who fails to take all reasonable steps to secure compliance by the institution with any requirement of this Act, or Regulations or By-laws made under this Act, and the Central Bank of Swaziland Order, 1974, commits an offence and shall be liable on conviction to a fine of not less than fifty thousand (E50,000) or imprisonment for not less than one year, or both.
49. Persons disqualified as directors, etc.
50. Reserve for losses due to negligence or dishonestyEvery financial institution shall either maintain a special reserve account which is, in the opinion of the Bank, adequate and which is reserved exclusively for the purpose of making good any loss resulting from the negligence or dishonesty of any of its officers and other personnel, or it shall insure itself against such loss, to an amount which the Bank deems adequate, with a person approved by the Bank and carrying on insurance business or the business of guaranteeing against any such loss.
51. Financial holidays
52. Substitution for depositor’s signatureIf in any transaction connected with the opening of, deposit into, or withdrawal from, a deposit account, the depositor is unable to sign, his thumb impression affixed in the presence of an officer of the financial institution shall have the same legal effect as if it were the depositor’s signature.
53. Acceptance of deposits by insolvent financial institutions
54. Anti-competitive agreementsEvery contract, combination or conspiracy in restraint of banking business shall be illegal and any person who shall make any such contract or engage in any such combination or conspiracy commits an offence and liable on conviction to a fine of not less than five hundred thousand Emalangeni (E500,000) or to imprisonment for one year or both.
55. Tying provisions
56. Board of directors
57. Transactions involving directors, principal shareholders, officers, or affiliates
58. Acquisition and ownership of facilities, fixed assets, and other real propertyFor the purposes of this section, “facility” means real property, including an improvement, that a financial institution owns or leases, to the extent the lease or the leasehold improvement is capitalised, for the purpose of—
59. Investment in facility
60. Other real propertyA financial institution may not acquire real property except—
61. Liquidation and re-organization of a financial institution
Part VI – General provisions and repeal
62. RegulationsThe Minister may, in consultation with the Bank, make Regulations for the better carrying out of the purposes and provisions of this Act, including—
63. By-lawsThe Bank shall make By-laws, including prescribing—
65. Application to swaziland development and savings bankThis Act shall apply to the Swaziland Development and Savings Bank to the extent that it is not inconsistent with any law regulating the affairs of that bank.
66. RepealThe Financial Institutions (Consolidation) Order, No. 23 of 1975 is hereby repealed.
History of this document
03 March 2006
26 October 2005
01 December 1998 this version
Documents citing this one 4
- Swaziland Government Gazette dated 2006-03-03 number 20
- Swaziland Government Gazette dated 2008-06-12 number 83
- Swaziland Government Gazette supplement dated 2011-07-22 number 80