Zambia Act or statute

Zambia legislation

Banking and Financial Services Act, 1994

account disclosureadministrative officeadministrative procedureadvancesadvertisingamalgamationamending corporate documentsannual financial statementsannual reportingappealappealsapplication determinationapplication of lawapplication procedureapplication requirementsapprovalasset distributionasset protectionasset securityasset transferattachments and liensaudit committeeaudit obstructionaudit reportingauditor appointmentauditor cooperationauditor liabilityauditor qualificationauditor remunerationauditor reportingauditor reportsauditor resignationauditor terminationbank approvalbank approvalsbank authorisationsbank insolvencybank inspectionsbank licensingbank liquidationbank management and controlbank opening hoursbank possessionbank powersbank regulationbank reportingbank reserve obligationsbank resolutionbank supervisionBanking and financebanking businessbanking regulationboard compositionboard governancebranch noticebranch openingbranch operationsbusiness communicationsbusiness conductbusiness locationbusiness namesbusiness naming compliancebusiness restrictionbusiness structurecapital adequacychargesclaimed propertyclaims filingcollateralcollateral contractscompetitioncomplaint handling procedurescompliancecompliance checkscompulsory dissolutioncompulsory liquidationconfidential information handlingconfidentialityconflict of interest disclosureconsent applicationcontinuity of rights and liabilitiescontractscontrolcontrol of financial service providerscorporate constitutionsCompany lawcorporate restructuringcorporate restructuring consentcost recoverycourt filingcourt notificationcourt procedurecourt proceedingscredit disclosurecredit documentationcreditor claimscreditor noticecreditor prioritycreditor repaymentcriminal liabilitycustodycustody of fundscustomer complaintsdeadlinesdebt enforcementdecision-makingdefinitionsdeposit protectiondeposit-takingdirector conductdirector liabilitydirector qualificationsdirector residency/independencedirector suspensiondirectors' reportsdisclosuredissolutiondistribution of claimsdivestmentdividendsdocument disclosuredocument productiondocument retentiondocument submissiondocumentselectronic recordsemployment contractsequity holdingsexemptionsexpense recoveryfeesfiduciary assetsfinancial businessesfinancial compliancefinancial insolvencyfinancial institutionsfinancial obligationsfinancial penaltiesfinancial reportingfinancial service businessfinancial service provider compliancefinancial service providersBanking and financefinancial services compliancefinancial statementsforeign bank accessforeign bank subsidiaryforeign banksforeign exchangefree tradeguidelineshearingholidaysimmunityimprisonmentinformation securityinsolvencyinspectioninspection complianceinspection feesinspectionsinsuranceinteraction with other lawsinterest ratesinternal controlsinternal reportinginvestment limitslease terminationlendinglending limitslicence applicationslicence conditionslicence feeslicence refusallicence revocationlicence surrenderlicence transferlicensed name usageBusiness registrationlicensing representationliquidationliquidityliquidity advancesliquidity ratioliquidity requirementsmanagement controlmanagement dutiesmanager removalmerchant bankingmoney circulation schemesname usage restrictionsnoticenotice requirementsnotificationnotificationsobjectionsoffencesoffences and penaltiesownershipownership limitsownership restrictionspartnership liabilitypayment servicespayment timingpenaltiespersonal propertyplan refusalpolicy formulationpossession noticepossession of financial service providerpossession of financial service providersprimary capitalprocedural fairnessproperty acquisition limitsprudential complianceprudential reportingprudential supervisionpublic disclosurepublic inspectionpublic invitationspublicationpublication of informationrecord keepingrecord productionrecord retentionrecordkeepingrecords managementrecords productionregister accessregister 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documentationtransaction validitytribunal powerstrustsunclaimed fundsunsafe or unsound practicesuse of banking namesvoluntary liquidationvoluntary winding upvoting controlvoting sharesvoting trustswinding upwinding-up

Jurisdiction: Zambia
Structure: 160 provisions
Citation: Act 21 of 1994
Dates: As at 31 Dec 1996

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Dates: As at 31 Dec 1996

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“This section says the Act may be cited as the Banking and Financial Services Act.”

This section says the Act may be cited as the Banking and Financial Services Act. This section defines key terms used in the Act, including bank, banking business, deposit, financial institution, and control. This Act applies to all banks, financial institutions and financial businesses, including those not created under an Act. The Bank of Zambia is generally not bound by the Act unless the Act expressly imposes a duty on it. A company may apply for a banking licence, and the Registrar may grant it after consultation with the Minister. The Registrar must decide whether to grant a licence application within 180 days after receiving it.

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Short title and commencement .......................................................................................................................................................... 1

This section says the Act may be cited as the Banking and Financial Services Act.

Section 1

Conduct of directors, chief executive ofﬁcers, chief ﬁnancial ofﬁcers and managers ......................................... 20

Directors, chief executive officers, chief financial officers, and managers of a financial service provider must act honestly, in good faith, and with due care, diligence, and skill when carrying out their office.

Section 33

Prudential liquidity ratio ........................................................................................................................................................ 35

The Bank of Zambia must make regulations prescribing which assets and liabilities are used to compute the prudential liquidity ratio for financial institutions.

Section 70A

*** ........................................................................................................................................................................................................ 49

This section has been repealed.

Section 97

Repeal of Cap. 700 and savings of the 1971 Edition ......................................................................................................... 58

This section repeals the Banking Act and keeps certain existing licences, applications, rights, liabilities, and regulations in effect under this Act.

Section 131

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Showing 160 of 160 provisions

Repeal 84Amendment 53Provision 15Commencement 7

Part

Chapter I

§ 1Short title and commencement .......................................................................................................................................................... 1Short title

This section says the Act may be cited as the Banking and Financial Services Act.

1. Short title and commencement This Act may be cited as the Banking and Financial Services Act. [Cap. 387]

Section 1Verify source

§ 2Interpretation ............................................................................................................................................................................................. 1Repeal

This section defines key terms used in the Act, including bank, banking business, deposit, financial institution, and control.

2. Interpretation (1) In this Act, unless the context otherwise requires— "advance" means— (a) any direct or indirect advance of funds, a loan or extension of credit, to a person or common enterprise— (i) made on the basis of an obligation of that person or common enterprise to repay the funds; or (ii) repayable from speciﬁc property pledged by or on behalf of, a person or common enterprise; (b) all credit risks arising from actual claims, potential claims of all kinds and credit substitutes; or (c) commitments to extend credit and any commitment to acquire a debt security or other right to payment of a sum of money" "bank" means a company conducting banking business; [As amended by Act No. 18 of 2000] "banking licence" means a licence granted under section four; "Bank of Zambia" means the Bank of Zambia established under the Bank of Zambia Act. [As amended by Act No. 18 of 2000] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 1 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed "banking business" means the business of— [Cap. 360 Act No. 43 of 1996] (a) receiving deposits from the public including chequing account and current account deposits and the use of such deposits, either in whole or in part, for the account of and at the risk of the person carrying on the business, to make loans, advances or investments (b) providing ﬁnancial services; and (c) any custom, practice or activity prescribed by the Bank of Zambia as banking business; [As amended by Act No. 18 of 2000 and Act No. 25 of 2005] "branch" means any place of business of a bank or ﬁnancial institution that is open to the public, and includes a mobile ofﬁce and a banking machine installation; "company" has the same meaning as in the Companies Act; [Cap. 388] "Court" means the High Court or any other court of competent jurisdiction; "board" means a board of directors of a bank or ﬁnancial institution as provided in section thirty; "chief executive ofﬁcer" means the person responsible, under the immediate authority of the directors, for the conduct of the business of a bank or ﬁnancial institution; "chief ﬁnancial ofﬁcer" means the person responsible for maintain the accounts and related records of a bank or ﬁnancial institution; "common enterprise" means two or more persons representing a single risk arising from the direct or indirect control of one of those persons over the others; and "control" a situation where— (a) one person. or a combination of two or more persons acting in concert, directly or indirectly owns, controls or has the power to vote twenty-ﬁve centum or more of any class of voting shares of another person; (b) one person, or a combination of two or more persons acting in concert, controls in any manner, the election of a majority of the directors, trustees, or other persons exercising similar functions, of another person; or (c) any circumstances exist which indicate that one person, or a combination of two or more persons acting in concert, directly or indirectly, exercise a controlling inﬂuence over the management, policies or affairs of another person; "de facto control" of a company by a person means direct or indirect inﬂuence of a kind that, if exercised, would result in the person's controlling the ﬁnancial provider in fact, and includes any such inﬂuence exercisable by virtue of any such inﬂuence over, or the de jure control of, another ﬁnancial service provider or other companies; "de jure control" of a ﬁnancial service provider by a person means beneﬁcial ownership of more than ﬁfty per centum of any class of the issued voting shares of the ﬁnancial service provider by a person; "deposit" means— (a) an amount of money paid to a bank or ﬁnancial institution in respect of which— (i) an equal amount of any part thereof is conditionally or unconditionally repayable, with or without a premium, on demand or at speciﬁed or unspeciﬁed dates in terms agreed to, by, or on behalf of, the person making the payment and the bank or ﬁnancial institution receiving it; and By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 2 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (ii) no interest is payable on the amount so paid or interest is payable thereon at speciﬁed or unspeciﬁed intervals, notwithstanding that the payment is limited to a ﬁxed amount that a transferable or non-transferable certiﬁcate or other instrument providing for the repayment of the amount referred to in subparagrph (i) or the interest referred to in this subparagraph is issued in respect of that amount or interest; (b) trust funds received from or held by a bank or ﬁnancial institution; (c) money received or held by a bank or ﬁnancial institution or the credit given for money or its equivalent received or held in the usual course of business for a special or speciﬁc purpose, regardless of the legal relationship thereby established, including: (i) escrow funds and funds held as security for an obligation due to the bank or ﬁnancial institution; (ii) funds deposited by a debtor to meet maturing obligations; and (iii) funds held to meet its acceptances or letters of credit; but does not include funds which are received by the bank or ﬁnancial institution for immediate application to the reduction of an indebtedness to the receiving bank or ﬁnancial institution; (d) outstanding dreaft, cashier's cheque, money order, or other ofﬁcer's cheque issued by the bank or ﬁnancial institution and drawn on customer funds for any purpose in the ordinary course of business; or (e) such other obligations of a bank or ﬁnancial institution as the Bank of Zambia may prescribe from time to time; [As amended by Act No. 18 of 2000] "director" means a person who holds ofﬁce as a member of the board of directors of a bank or ﬁnancial institution in accordance with section thirty; "ﬁnancial business" means a person that conducts a ﬁnancial service business but does not accept deposits; "ﬁnancial institution" means a person other than a bank, conducting a ﬁnancial service business which includes receiving deposits from the public but does not include chequing; "ﬁnancial institution's licence" means a licence issued under section ten; "ﬁnancial service" means any one or more of the following services: (a) commercial or consumer ﬁnancing services; (b) credit reference services; (c) deposit brokering; (d) factoring, with or without recourse; (e) ﬁnancial leasing or ﬁnance leasing; (f) ﬁnancing of commercial transactions, including forfeiting; (g) the issue and administration of credit cards, debit cards, travellers' cheques or bankers' drafts; (h) the issue guarantees, performance bonds or letters of credit; (i) lending on the security of, or dealing in, mortgages or any interest in real property; (j) merchant banking services; By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 3 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (k) money transfer or transmission services or the payment of cheques or other demand payment orders drawn or issued by customers and payable from deposits held by the payer; (l) purchase and sale of foreign exchange; (m) issuance of debentures and money market instruments and the acceptance of six months (or such other period as prescribed by the Bank of Zambia) term deposits, other than current accounts and chequing deposits; (n) issuance of building society and mutual society shares, having characteristics similar or identical to those of deposits; (o) venture capital funding; (p) secured or unsecured credit services including micro ﬁnancing; (q) development ﬁnancing; and (r) any other services as the Bank of Zambia may designate, but does not inculde— (i) the underwriting, marketing or administration of contracts of insurance or reinsurance; or (ii) any service excluded from the scope of this deﬁnition by a provision of this Act or by the Bank of Zambia under this Act; "ﬁnancial service provider" means a bank, ﬁnancial institution or ﬁnancial business; "foreign bank" or "foreign ﬁnancial institution" means a bank or ﬁnancial institution which is not incorporated in Zambia; "foreign company" has the same meaning as in the Companies Act "incorporated" means— (a) formed under the Companies Act; or (b) established under an Act of Parliament as a body corporate; "non-performing loan" means a loan in respect of which any payment of principal or interest is in arrears in excess of ninety days; "person" includes an individual, a company, a partnership, an association and any group of persons acting in concert, whether or not incorporated; "Register" means the Register of Banks and Financial Institutions established under this Act; "Registrar" means the person holding ofﬁce or acting as the Registrar of Banks and Financial Institutions under this Act; "Registrar of Companies" means the person holding ofﬁce or acting as Registrar under the Companies Act; "regulated ﬁnancial service business" means the business of performing or offering to perform any regulated ﬁnancial services to the public; [Cap. 388] "voting shares" means common shares in the capital of the share in the capital of a bank or ﬁnancial institution and any other shares of any designation or description that carry the right to vote on any resolution at any meeting. "manager" means a person (other than a chief executive ofﬁcer and chief ﬁnancial ofﬁcer) who, under the immediate authority of a director or chief executive ofﬁcer of a bank or ﬁnancial institution— By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 4 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (a) exercises managerial functions; (b) is responsible for maintaining accounts or other records; or (c) is responsible for the management of credits; [Cap. 388] "money circulation scheme" means a scheme, plan, arrangement, agreement or understanding, between two or more persons which involves the pooling and distribution of funds by recruitment of subscribers, the continuation of whose existence and the realisation of any of its beneﬁts substantially depends on the incremental recruitment of subscribers from the public for an unspeciﬁed period; "primary capital" means any one or more of the following— (a) paid up common shares; (b) qualifying preferred shares consisting of: (i) perpetual preferred shares; (ii) compulsory convertible preferred shares where conversion to securities which would qualify as primary capital represents the only redemption option; or (iii) preferred shares which have an original term of maturity of twenty years or more, where no redemption occurs within the ﬁrst ten years and where the maximum redemption obligation in any one year is restricted to ﬁve per cent or less of the original issued amount; (c) such other capital components as may be prescribed by the Bank of Zambia; [Cap. 388] "regulatory capital" means the instruments which comprise capital resources of a bank or ﬁnancial institution, and the total of which is used by the Bank of Zambia for determining compliance by a bank or ﬁnancial institution with the minimum capital standard and for assessing capital adequacy, calculated in a manner prescribed by the Bank of Zambia; "representative ofﬁce" means an ofﬁce in Zambia licensed under this Act to represent a foreign bank or a foreign ﬁnancial institution; "Tribunal" means an Appeal Tribunal appoint under section one hundred and thirteen; [As amended by Act No. 18 of 2000] (2) In this Act, "deposit" does not include instruments issued by a bank or ﬁnancial institution in respect of an advance or for the purpose of fulﬁlling a payment for goods supplied or services rendered to the Bank. [As amended by Act No. 18 of 2000] (3) For the purposes of this Act— (a) where two or more persons, each of whom beneﬁcially owns shares of the same company, are associated with each other, each of them shall be regarded as a single person who beneﬁcially owns the aggregate number of shares of the company; (b) two persons are associated if— (i) one person is a company of which the other person is an manager or director; (ii) one person is a company that is controlled de jure or de facto by the other person; (iii) one person is a partnership of which the other person is a partner; By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 5 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (iv) both persons are members of a voting trust or other arrangement relating to the shares of a share issuer; or (v) one person is the spouse, parent, child, brother or sister of the other person, or of the other person's parent, child, brother or sister, (c) two or more persons are afﬁliated if all are companies that are controlled, de jure or de facto, by the same person; and (d) a company is the subsidiary of another company if more than ﬁfty per centum of the issued voting shares of the company (except any qualifying directors' shares) are owned directly or indirectly by the other company. (4) In subsection (1)— (a) "mercharnt banking" includes the underwriting of securities for corporations, advising on and arranging ﬁnance for mergers and take-over bids, the ﬁnancing of foreign trade by accepting bills of exchange, underwriting new issues and investment management; and (b) "venture capital funding" includes the mobilisation of funds from various sources in risky projects which would not normally attract conventional ﬁnance. [As amended by Act No. 18 of 2000 and Act No. 25 of 2005]

Section 2Verify source

§ 3Application of this Act ........................................................................................................................................................................... 6Amendment

This Act applies to all banks, financial institutions and financial businesses, including those not created under an Act. The Bank of Zambia is generally not bound by the Act unless the Act expressly imposes a duty on it.

3. Application of this Act This Act applies to all banks, ﬁnancial institutions and ﬁnancial businesses, whether or not constituted by any Act: Provided that the requirements of this Act are not binding on the Bank of Zambia, except in so far as this Act expressly imposes a duty on that Bank. Act conters or imposes any powers or functions on that bank. [As amended by Act No. 18 of 2000 and No. 25 of 2005] Chapter II Licensing of banks and ﬁnancial institutions Part 1 – Licensing of banks

Section 3Verify source

Part

Part 1 – Licensing of banks

§ 4Licensing of companies as banks ............................................................................................................................................... 6Repeal

A company may apply for a banking licence, and the Registrar may grant it after consultation with the Minister.

4. Licensing of companies as banks (1) Upon application by a company, the Registrar, in consultation with the Minister, may grant a licence authorising the company to conduct banking business. (2) The application shall be in such form and accompanied by such fees as may be prescribed by regulation, and the form of application shall require at least the following particulars to be supplied: (a) the articles of association of the company; [Cap. 388] (b) (c) the physical and postal addresses of its head ofﬁce and the permanent residential addresses of its directors, chief executive ofﬁcer, managers and shareholders; the name and permanent residential address of every subscriber for any class or series of shares issued by the company in a number that will exceed one per centum of all the shares of that class or series, whether such shares carry the right to vote in all circumstances or not; By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 6 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (d) the addresses of each branch proposed to be opened by the applicant and, in the case of a mobile ofﬁce, the area proposed to be served: (e) full particulars of the business it proposes to conduct under the authority of the licence; (f) the amount of its capital; and (g) such assurances and evidence of the foregoing as the Registrar may require to be given by the applicant. (3) An appeal shall lie under Chapter VIII against a decision of the Registrar to refuse to grant the application. (4) At any time after receiving an application and before determining it, the Registrar may by written notice require the applicant to provide to the Registrar additional information or documents or direct the applicant to comply with such other requirements as the Bank of Zambia may require. (5) The directions and requirements given or imposed under this section may differ between different applicants or categories of applicants. (6) Any information or statement to be provided to the Registrar under this section shall be in such form as the Registrar may specify; and the Registrar may by written notice require the applicant to cause a report to be provided by an accountant or other qualiﬁed person approved by the Bank of Zambia on such aspects of that information as may be speciﬁed by the Registrar. (7) An applicant may withdraw an application by written notice to the Registrar at any time before it is granted or refused. (8) A banking licence for a subsidiary of a foreign company may be granted if— (a) (b) the foreign company is a bank and is authorised to engage in banking business in the country where its head ofﬁce is located the Bank of Zambia is satisﬁed that the foreign bank is adequately supervised by the competent authorities in the country where its head ofﬁce is located. [As amended by Act No. 18 of 2000 and Act No. 25 of 2005]

Section 4Verify source

§ 5Determination of applications ...................................................................................................................................................... 7Repeal

The Registrar must decide whether to grant a licence application within 180 days after receiving it.

5. Determination of applications The Registrar shall, within one hundred and eighty days of the receipt of an application for a licence make a decision whether to grant the licence. [Repealed and replaced by Act No. 18 of 2000 and No. 25 of 2005]

Section 5Verify source

§ 6Application for licence to be refused in certain cases ........................................................................................................ 7Repeal

The Registrar must not grant a licence if the applicant does not meet the Bank of Zambia’s prescribed requirements. An aggrieved applicant may appeal the refusal under Chapter VIII.

6. Application for licence to be refused in certain cases (1) The Registrar shall not grant a licence if the applicant does not meet the requirements prescribed by the Bank of Zambia (2) An applicant for a licence aggrieved by the refusal of the Registrar to grant a licence may appeal against that decision in accordance with Chapter VIII. [Repealed and replaced by Act No. 18 of 2000]

Section 6Verify source

§ 7Investigation of applicants ............................................................................................................................................................ 7Repeal

When deciding whether to grant a licence or what conditions to attach, the Registrar must consider the applicant’s capital, finances, history, management, community needs, and prospects for profitable operation.

7. Investigation of applicants In deciding whether or not to grant a licence, and in deciding what conditions should be attached to such a licence, the Registrar shall have regard to— (a) the capital adequacy of the applicant; By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 7 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (b) (c) the ﬁnancial condition, resources and history of the applicant and the applicant's associates and afﬁliates; the character and experience of the directors and major shareholders or other owners or founders and of persons proposing to be concerned in the management of the business to be undertaken under the authority of the licence; (d) the convenience and needs of the community intended to be served by that business; and (e) the prospects for proﬁtable operation of that business. [As amended by Act No. 25 of 2005]

Section 7Verify source

§ 8Authorised activities of banks in addition to taking of deposits ..................................................................................... 8Repeal

A banking licence authorises its holder to carry on several listed activities beyond banking business, unless the licence conditions say otherwise.

8. Authorised activities of banks in addition to taking of deposits (1) Except where the conditions attached to a particular licence otherwise provide, a banking licence shall be taken to authorise its holder to engage in any of the following activities in addition to banking business: (a) making loans and extending credit to any person on the security of property of any kind or unsecured; (b) dealing as a principal or as an agent in— (i) bills of exchange, promissory notes, cheques, travellers' cheques and like instruments; (ii) the currency of Zambia and, subject to the guidelines, bulletins and regulatory statements made under this Act, in the currency of any other country and foreign exchange transactions; and (iii) gold, silver or platinum bullion or coins; (c) providing money transfer services and facilities; (d) the issue and administration of payment, credit or debit cards and, in co-operation with others, the operation of payment, credit card and debit card systems; (e) providing guarantees, letters of credit and other assurances of payment: (f) ﬁnance leasing; (g) factoring, with or without recourse; (h) acting as a trustee of any trust, executor or administrator of any estate or in any ﬁduciary capacity for any person; (i) acting as a ﬁnancial agent for any person; (j) providing safekeeping and custodial services for ﬁnancial assets and securities; (k) Providing merchant banking services including the arrangement and underwriting of shares trade ﬁnancing, corporate ﬁnancing and the provision of ﬁnancial advice; and (l) dealing as a principal or as an agent for its customers in ﬁnancial futures and options and in exchange, currency and interest rate swap agreeements. (2) The Minister, on the recommendation of the Bank of Zambia, may by regulation prescribe the meaning to be given to any expression used in this section and not otherwise deﬁned for the purposes of this Act. [As amended by Act No. 18 of 2000] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 8 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 8Verify source

§ 9Branches, subsidiaries of other establishments of banks .................................................................................................. 9Amendment

Banks and financial institutions need prior written approval from the Bank of Zambia before opening branches, subsidiaries, or other establishments, and they must give at least 60 days’ written notice before closing a branch.

9. Branches, subsidiaries of other establishments of banks (1) A bank or ﬁnancial insitution shall not, whether of itself or by a subsidiary, open a branch, subsidiary or other establishment within or outside Zambia without the prior written approval of the Bank of Zambia. (2) A bank or ﬁnancial institution or a subsidiary of a bank or ﬁnancial institution proposing to open a branch, subsidiary or other establishment shall make an application in the form prescribed by the Bank of Zambia and accompanied by such fees as may be prescribed by the Minister on the recommendation of the Bank of Zambia. (3) At least sixty days before closing a branch, a bank or ﬁnancial institution shall notify the Bank of Zambia in writing of its intention to do so. [As amended by Act No. 18 of 2000 and No. 25 of 2005] Part 2 – Licensing of ﬁnancial institutions

Section 9Verify source

Part

Part 2 – Licensing of ﬁnancial institutions

§ 10Grant of licence ............................................................................................................................................................................... 9Repeal

A person may apply for a licence to operate as a financial institution, and the Registrar may grant it if eligibility conditions are met.

10. Grant of licence (1) Upon application by any person the Registrar may grant a licence authorizing the applicant to conduct businesses as a ﬁnancial institution, if the applicant is— (a) a company; or (b) a body corporate, created under an Act of Parliament, that is recognized by the Bank of Zambia as an acceptable form for a ﬁnancial institution; and falls within a deﬁned category of ﬁnancial institutions, as determined by the Bank of Zambia. (2) The applicant shall be in such form and accompanied by such fees as may be prescribed by the regulation, and the form of application shall require at least the particulars required under subsection (2) of section four, except as otherwise provided in this section. (3) If an applicant is not a company, then, in lieu of the information referred to in paragraphs (a) and (c) of subsection (2) of section four, the applicant shall provide information with respect to the formation, governance and owners of the applicant, by whatever term designated, as shall be prescribed by the Bank of Zambia. (4) The governance documents referred to in subsection (3) shall, in the case of a building society, include the rules of such building society. (5) The Bank of Zambia may limit the activities of a ﬁnancial institution licensed under this section to those activities that the Bank of Zambia determines are appropriate for an institution that accepts deposits: Provided that the limits referred to in this subsection may be in the form of conditions of a licence or may be prescribed by the Bank of Zambia. (6) The regulations made under subsection (5) may create different categories of ﬁnancial institutions that are permitted to conduct different ﬁnancial services. (7) An appeal shall lie under Chapter VII against a decision of the Registrar to refuse to grant the application. [As amended by Act No. 18 of 2000 and repealed and replaced by No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 9 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 10Verify source

§ 11Application of certain provisions of this Chapter to ﬁnancial institutions .............................................................. 10Repeal

Certain provisions of section 4 and sections 5, 6, 7, and 9 apply, with necessary modifications, to the licensing of financial institutions.

11. Application of certain provisions of this Chapter to ﬁnancial institutions Subsections (3) to (7) of section four and sections ﬁve, six, seven and nine shall apply with necessary modiﬁcations to the licensing of ﬁnancial institutions. [Repealed and replaced by Act No. 18 of 2000 and repealed and replaced by No. 25 of 2005]

Section 11Verify source

§ 12*** ....................................................................................................................................................................................................... 10Repeal

Section 12 is repealed.

12. *** [Repealed by Act No. 25 of 2005] Part 2A – Licensing of, and regulatory requirements for, representative ofﬁces

Section 12Verify source

Part

Part 2A – Licensing of, and regulatory requirements for, representative ofﬁces

§ 12ALicensing of representative ................................................................................................................................................... 10Commencement

A foreign bank or financial institution may not open a representative office in Zambia unless it has a licence, and existing offices had to apply in writing within three months of commencement.

12A. Licensing of representative (1) A foreign bank or ﬁnancial institution shall not establish a representative ofﬁce in Zambia unless it holds a licence for the purpose. (2) An application for licence to establish a representative ofﬁce shall be in such form and accompanied by such fees as may be prescribed by regulation and shall set out the following particulars: (a) the name and address of the applicant; (b) an authenticated copy of the laws of the country pursuant to which the applicant is established; (c) a description of the business and operations of the bank or ﬁnancial institution; (d) the physical or proposed physical address of the representative ofﬁce in Zambia; (e) the name of each ofﬁcer it is intended to assign to the representative ofﬁce; (f) a description of the manner in which the bank or ﬁnancial institution will supervise the operations of the representative ofﬁce; (g) the name and address of the ofﬁcer of the foreign bank or ﬁnancial institution to which the representative is to report directly; and (h) such other information and documents as the Registrar may reasonably require. (3) After receiving an application and before determining if the Registrar may by written notice require the applicant to provide additional information or documents. (4) Subsections (3) to (8) of section four and sections ﬁve, six and seven shall apply with necessary modiﬁcations to a representative ofﬁce. (5) Notwithstanding subsection (1), where a foreign bank or ﬁnancial institution has established a representative ofﬁce in Zambia before the date of coming into force of this Act, it shall, within three months from that date, making an application in writing to the Registrar for a licence under this Part. (6) A person who contravenes this section commits an offence and is liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a period not exceeding ﬁve years or both. [As amended by Act No. 18 of 2000] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 10 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed Part 2B – Licensing of ﬁnancial businesses

Section 12AVerify source

Part

Part 2B – Licensing of ﬁnancial businesses

§ 12BRegulatory requirements for representative ofﬁces ..................................................................................................... 11Amendment

The Bank of Zambia may set regulatory requirements for representative offices and for their representative officers and employees.

12B. Regulatory requirements for representative ofﬁces The Bank of Zambia may prescribe regulatory requirements for representative ofﬁces in existence on the date this Act comes into force or established after that and in respect of the representative ofﬁcers and employees of those ofﬁces. [As amended by Act No. 18 of 2000]

Section 12BVerify source

§ 12CGrant of licences ........................................................................................................................................................................ 11Provision

The Registrar may grant a licence for a financial service business on application, and must consider the application within 180 days. The Bank of Zambia may prescribe application requirements and different rules for different categories of financial business.

12C. Grant of licences (1) Upon application by any person, the Registrar may grant a licence authorizing the applicant to conduct a ﬁnancial service business other than as a ﬁnancial institution. (2) The applicant shall be in such form, contain such information and be accompanied by such fees as the Bank of Zambia may, by regulations prescribe. (3) The Bank of Zambia may establish designations for different categories of ﬁnancial business and may impose different requirements for each category. (4) The Registrar shall, within one hundred and eighty days after receipt of an application for a licence under subsection (1) consider the application and shall if satisﬁed that the applicant has satisﬁed the requirements for licensing under this Part grant a licence and may refuse to grant the licence if not so satisﬁed. (5) Any applicant for a licence who is aggrieved by the refusal of the Registrar to grant a licence may appeal against the decision in accordance with Chapter VIII.

Section 12CVerify source

§ 12DBranches of ﬁnancial businesses ........................................................................................................................................ 11Provision

A financial business may operate licensed services anywhere in Zambia unless its licence limits the sites, and it must notify the Bank of Zambia when opening or closing a branch.

12D. Branches of ﬁnancial businesses (1) Unless the conditions of a licence limit or restrict the ﬁnancial businesses to one or more speciﬁc sites or locations, a ﬁnancial business may conduct, at any place or places in Zambia, any ﬁnancial service that it is licensed to conduct. (2) Within fourteen days after opening a new branch, a ﬁnancial business shall notify the Bank of Zambia in writing of the fact and of its location. (3) At least sixty days before closing a branch, a ﬁnancial business shall notify the Bank of its intention to do so.

Section 12DVerify source

§ 12EExisting ﬁnancial businesses ................................................................................................................................................ 11Commencement

Some existing financial businesses are treated as licensed financial businesses and must follow the requirements for financial businesses from commencement.

12E. Existing ﬁnancial businesses Any ﬁnancial business in existence at the commencement of this Act that is licensed as a ﬁnancial institution but does not accept deposits shall be deemed to be licensed under this part as a ﬁnancial business and shall be subjected to the requirements applicable to ﬁnancial businesses beginning on the date of the commencement of this Act. [As amended by Act No. 25 of 2005] Part 3 – Operation of licences

Section 12EVerify source

Part

Part 3 – Operation of licences

§ 13Conditions of licences ................................................................................................................................................................ 11Repeal

A licence can be granted with conditions set by the Registrar, and those conditions can later be varied on application by the licensee.

13. Conditions of licences (1) A licence is subject to such conditions as the Registrar thinks ﬁt to specify in the licence when it is granted and, where those conditions are varied under this section, is subject to the conditions attached to the licence for the time being. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 11 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) Without limiting the generality of subsection (1) the conditions of a licence may: (a) contain such restrictions as to the nature and scope of the business to be conducted by the licensee as the Registrar thinks ﬁt to impose; (b) provide for the payment, on such terms and calculated in such manner as the conditions may specify, of annual or other periodic licence fees; (c) in relation to a licence for a subsidiary of a foreign bank, a foreign ﬁnancial institution or a representative ofﬁce, require the foreign bank or ﬁnancial institution to allow access by the Bank of Zambia to the ofﬁces and records of the bank or ﬁnancial institution outside Zambia for the purpose of enabling the Bank to assess compliance with this Act by the subsidiary or the representative ofﬁce. (3) Upon application made by a licensee, the Registrar may, by order in writing, vary the conditions for the time being attached to a licence. (4) In deciding whether to grant the variation, the Registrar is to have regard to such of the provisions of section seven as it considers relevant and to the public interest. (5) An appeal shall lie under Chapter VIII against a decision of the Registrar to impose a particular condition on grant of a licence or to refuse a variation of the conditions pursuant to an application under this section. [As amended by Act No. 18 of 2000]

Section 13Verify source

§ 14Duration of licences .................................................................................................................................................................... 12Provision

A licence stays in force until the Registrar revokes it under this Part.

14. Duration of licences A licence remains in force until revoked by the Registrar under this Part.

Section 14Verify source

§ 15Licences not transferable .......................................................................................................................................................... 12Repeal

A licence cannot be transferred, assigned, or encumbered, except that it may be transferred for an amalgamation or similar corporate restructuring if the Bank of Zambia approves the terms.

15. Licences not transferable A licence shall not be transferred, assigned or encumbered in any manner: Provided that a licence may be transferred in the event of an amalgamation or similar corporate restructuring transaction, on such terms and conditions as the Bank of Zambia may approve. [As repealed and replaced by No. 25 of 2005]

Section 15Verify source

§ 16Revocation of licences ................................................................................................................................................................ 12Commencement

The Registrar may revoke a licence for fraud, false statements, non-compliance, serious or persistent breaches, or if business does not start within 12 months or stops. After revocation, the licensee must surrender licence copies and the Registrar must publish notice.

16. Revocation of licences (1) The Registrar may, revoke a licence if it appears to the Registrar that— (a) the application for the licence was fraudulent or contained a materially false statement; (b) (c) (d) the licensee has failed to comply with any condition or qualiﬁcation of its licence or with any order of the Bank of Zambia under this Act; the licensee is seriously or persistently in breach of any provision of this Act or the regulations, bulletins or other regulatory statements under this Act or any of the conditions of its licence; or the licensee fails to commence to conduct the business authorised by the licence within a period of twelve months following the grant of the licence or ceases or announces its intention to cease to conduct that business. (2) An appeal shall lie under Chapter VIII against a decision of the Registrar to revoke a licence. (3) When a licence is revoked, the licensee shall surrender to the Registrar each copy of the licence that is on display in every place of business of the licensee and every other copy of the licence that is in the possession of the licence and the Registrar shall, as soon as practicable, publish notice of the By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 12 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed revocation in the Government Gazette and in a newspaper of general circulation in Zambia, and may take any additional steps which, in his opinion, are necessary to inform the public of the revocation. [As amended by Act No. 18 of 2000 and No. 25 of 2005] Part 4 – Prohibition of unlicensed business etc.

Section 16Verify source

Part

Part 4 – Prohibition of unlicensed business etc.

§ 17Prohibition of unlicensed business ........................................................................................................................................ 13Repeal

This section forbids unlicensed banking and financial service business, and sets penalties for contravention.

17. Prohibition of unlicensed business (1) A person shall not conduct or offer to conduct banking business unless the person holds a licence for that purpose. (2) A person other than a licensed bank or a licensed ﬁnancial institution or a licensed ﬁnancial business shall not conduct or offer to conduct ﬁnancial service business. (3) A bank, a ﬁnancial institution or ﬁnancial business shall not conduct any banking or ﬁnancial service business— (a) that it is not authorised, by this Act or the terms and conditions of its licence, to conduct; or (b) in contravention of the conditions of its licence. (4) a person who contravenes this section commits an offence and is liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding ﬁve years, or to both. [Repealed and replaced by Act No. 18 of 2000, amended by Act No. 25 of 2005]

Section 17Verify source

§ 18Repayment of funds .................................................................................................................................................................... 13Amendment

A person holding funds from prohibited banking or financial service activity must repay them as directed by the Bank of Zambia.

18. Repayment of funds (1) A person holding funds obtained by conducting any banking business or ﬁnancial service business in contravention of this Part shall repay such funds in accordance with the Bank of Zambia's directions. (2) A person who fails to repay funds as required under this section shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding ﬁve years, or to both. (3) To the extent that any funds repayable under this section remain unpaid at the end of the time limited by the directions of the Bank of Zambia for their repayment, they are a debt due to the Bank of Zambia upon trust for any persons appearing to the Bank of Zambia to be lawfully entitled to them and are recoverable at the suit of the Bank of Zambia in any court of competent jurisdiction. (4) Nothing in this section relieves any person from liability to criminal proceedings under the other provisions of this Act arising out of the person's contravention of any provision of this Act. [As amended by Acts No. 13 of 1994 and 18 of 2000] Part 5 – Register of licences

Section 18Verify source

Part

Part 5 – Register of licences

§ 19The Register ................................................................................................................................................................................... 13Repeal

The Registrar must create and maintain two registers and enter the particulars of all licensees and the licences they hold.

19. The Register The Registrar shall create and maintain two registers, to be known as the Register of Banks and Financial Institutions and the Register of Financial Business, in which shall be entered the particulars of all licensees and of the licences they hold. [As amended by Act No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 13 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 19Verify source

§ 20The Registrar .................................................................................................................................................................................. 14Amendment

The Minister may designate a Bank of Zambia employee as Deputy Registrar, and the Registrar must keep the register updated for licensed and revoked persons.

20. The Registrar (1) The Minister shall, on the recommendation of the Bank of Zambia, Financial Institutions and Financial Businesses to administer the registers referred to in section nineteen and to exercise and perform such other functions as are conferred or imposed upon the Registrar by or under this or any other Act or by the Governor of the Bank of Zambia, and may designate an employee of the Bank of Zambia as the Deputy Registrar of Banks, Financial Institutions and Financial Businesses who shall be subject to the control and direction of the Registrar and be competent to exercise and perform any of the powers and functions of the Registrar: Provided that any person appointed as Registrar of Banks and Financial Institutions as Deputy Registrar of Banks and Financial Institutions before the date of coming into force of this Act shall continue to hold ofﬁce as Registrar of Banks, Financial Institutions and Financial Businesses or as Deputy Registrar of Banks, Financial Institutions and Financial Businesses as if appointed under this Act. (2) The Registrar and Deputy Registrar shall each hold ofﬁce for a term of ﬁve years unless removed for negligence of duty or misconduct, and shall be eligible for reappointment. (3) The Registrar shall enter into the Register the name, the head ofﬁce address and such other particulars as the Registrar considers appropriate concerning each person granted a licence, and shall remove from the Register the name and particulars of every person whose licence is revoked. (4) Except as otherwise provided by this Act, the Registrar and Deputy Registrar, in the exercise and performance of their powers and functions, are subject to the control and direction of the Bank of Zambia. [As amended by Act No. 25 of 2005]

Section 20Verify source

§ 21Use of Register in evidence ..................................................................................................................................................... 14Provision

Register entries can be used as prima facie evidence about a person’s licensing or unlicensed status, and Registrar-certified copies or extracts are admissible in court as prima facie evidence of the Register’s contents.

21. Use of Register in evidence (1) For the purpose of ascertaining the facts concerning the licensing, or unlicensed status, of any person, entries made in the Register shall be prima facie evidence as to those facts. (2) A document certiﬁed by the Registrar as a true copy or extract from the Register shall be admissible in any court as prima facie evidence of the contents of the Register.

Section 21Verify source

§ 22Inspection of Register ................................................................................................................................................................ 14Provision

The public may inspect the Register or a copy at the Bank of Zambia’s head office during business hours, subject to any fee set by regulation.

22. Inspection of Register The Register or a copy of the Register shall be available for inspection by the public at the head ofﬁce of the Bank of Zambia during regular business hours upon payment of such fee as may be prescribed by regulation. Chapter III Organisation and administration Part 1 – Ownership and control of ﬁnancial service providers

Section 22Verify source

Part

Part 1 – Ownership and control of ﬁnancial service providers

§ 23Limitation on voting control ................................................................................................................................................... 14Repeal

Voting control over financial service provider shares is restricted, and the Bank of Zambia must approve certain share classes and acquisitions above the stated limit.

23. Limitation on voting control (1) Shares issued by a bank or ﬁnancial institution shall be only of such classes or series as may be approved by the Bank of Zambia. (2) That person or another person shall not, without the prior approval in writing of the Bank of Zambia— (a) acquire any beneﬁcial interest in the voting shares of a ﬁnancial service provider; or By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 14 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (b) enter into any voting trust or other agreement, that would enable the person to control more than twenty-ﬁve per centum of the total votes that could be cast on any general resolution at a general or special meeting of the ﬁnancial service provider. Provided that this subsection shall not apply to a company which is publicly listed on a securities exchange in a jurisdiction outside the Republic acceptable to the Bank of Zambia. (2A) Notwithstanding the provisions of paragraph (b) of subsection (2), the Bank of Zambia may prescribe a different limit of voting control for ﬁnancial businesses. [As amended by Act No. 18 of 2000 and No. 25 of 2005] (3) A ﬁnancial service provider shall not register any transfer of its voting shares to any person if, as a result of the transfer, the person would contravene subsection (2). [As amended by Act No. 18 of 2000 and No. 25 of 2005] (4) Where a person (in this subsection referred to as the "shareholder") acquires an interest in or control over voting shares in contravention of subsection (2), that person shall not, in person or by proxy, exercise the voting rights of any voting share owned or controlled by that person other than such shares as are registered in the name of that person on the share register of the ﬁnancial service provider. [As amended by Act No. 18 of 2000 and No. 25 of 2005] (5) Where, on the date this section comes into force, a person owns or controls or is deemed, by the operation of any provision of this Act, to own or control shares in contravention of subsection (2), the person may retain any such shares or control, but may not sell or otherwise dispose of the same except in such a manner that no transferee from or successor to the person will thereby contravene that subsection. (6) Any person acting in contravention of this section shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a period not exceeding ﬁve years, or to both.

Section 23Verify source

§ 23ARegulation and divestment of other control ................................................................................................................... 15Amendment

Certain existing control of a financial service provider must be reduced or unwound, and the person must do so within two years.

23A. Regulation and divestment of other control (1) A person who, by virtue of subsection (5) of section twenty-three has, immediately before the date of coming into force of this Act, the type of control of a ﬁnancial service provider that would otherwise be prohibited under subsection (2) of that section shall dispose of the beneﬁcial interest in the voting shares or terminate or modify the voting trust or other arrangement so as to reduce the person's control to the extent permissible under subsection (2) of that section. (2) A person who is required by subsection (1) to dispose of any beneﬁcial interest in voting shares or to terminate or modify a voting trust or other arrangement shall do so within a period not exceeding two years from the date of coming into force of this Act. (3) The Bank of Zambia may, in any particular case, order a person to whom subsection (1) applies to submit to the Bank of Zambia a plan of action regarding the reduction of control and may give directions for the implementation of the plan. [As amended by Act No. 13 of 1994, Act No. 18 of 2000 and No. 25 of 2005]

Section 23AVerify source

§ 24Ownership ....................................................................................................................................................................................... 15Repeal

A controller of one financial service provider must not own or control another one without prior written approval from the Bank of Zambia.

24. Ownership (1) A person who has de jure or de facto control of the ﬁnancial service provider shall not own any share in the capital of, or acquire or maintain de jure or de facto control of, any other ﬁnancial service provider without the prior written approval of the Bank of Zambia. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 15 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) This section does not preclude any person from acquiring all the voting shares in the capital of a ﬁnancial services provider for the purpose of implementing an amalgamation in accordance with this Act so long as at the completion of the corporate restructuring, that person is in compliance with subsection (1). (3) Any person acting in contravention of this section shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a period not exceeding ﬁve years, or to both. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 24Verify source

§ 24AProhibition of ownership of shares by trust ................................................................................................................... 16Amendment

A trust must not own shares, directly or indirectly, in a bank or financial institution.

24A. Prohibition of ownership of shares by trust (1) A trust shall not own shares directly or indirectly in a bank or ﬁnancial institution. (2) The Minister may, by statutory instrument, make regulations for the purpose of enabling trusts in existence on the date this Act comes into force to comply with subsection (1) [As amended by Act No. 13 of 1994 and Act No. 18 of 2000] Part 2 – Amalgamation and restructuring of banks or ﬁnancial institutions

Section 24AVerify source

Part

Part 2 – Amalgamation and restructuring of banks or ﬁnancial institutions

§ 25Meaning of "corporate restructuring transaction" ............................................................................................................ 16Amendment

This section defines “corporate restructuring transaction” for this part of the Act.

25. Meaning of "corporate restructuring transaction" In this part, "corporate restructuring transaction" means— (a) the amalgamation of a bank or ﬁnancial institution with another company; or (b) the transfer by a bank or ﬁnancial institution to any other company of the whole or more than the prescribed part of its assets or liabilities in Zambia otherwise than in the ordinary course of its business. [As amended by Act No. 25 of 2005]

Section 25Verify source

§ 26Prohibition of corporate restructuring transactions ........................................................................................................ 16Amendment

Banks and financial institutions are restricted from certain corporate restructuring transactions, except for a limited permitted case and where Bank of Zambia prior written consent is obtained.

26. Prohibition of corporate restructuring transactions (1) A bank or ﬁnancial institution shall not effect a corporate restructuring transaction with another company that is not a bank, ﬁnancial institution or ﬁnancial business. (1A) A bank or ﬁnancial institution may effect a corporate restructuring transaction with another company that is a ﬁnancial business as long as the bank or ﬁnancial institution is the surviving company and the business being acquired through such transaction only conducts activities that the bank or ﬁnancial institution is permitted to conduct. (2) A bank or ﬁnancial institution shall not effect a corporate restructuring transaction with another bank or ﬁnancial institution without the prior written consent of the Bank of Zambia. (3) A transaction effected in contravention of this section shall be void. [As amended by Act No. 13 of 1994, Act No. 18 of 2000 and No. 25 of 2005]

Section 26Verify source

§ 27Consent to corporate restructure etc. ................................................................................................................................... 16Repeal

An application for Bank of Zambia consent to a corporate restructuring must include the nature of the transaction, material documents, and any other information the Bank reasonably requires or regulations prescribe.

27. Consent to corporate restructure etc. (1) An application for any consent of the Bank of Zambia to a corporate restructuring transaction shall include— (a) a statement of the nature of the transaction proposed to be entered into; (b) the text of all material documents intended to evidence or implement the transaction; and By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 16 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (c) such other information, in such form, as the Bank of Zambia may reasonably require for the purposes of an informed consent or as may be prescribed by regulation. (2) Each bank or ﬁnancial institution or other company involved in the proposed corporate restructuring transaction shall be named in the application and is an applicant for the purposes of this Part. [As amended by Act No. 25 of 2005]

Section 27Verify source

§ 28Investigation of applicants for consent ............................................................................................................................... 17Provision

When deciding whether to approve a corporate restructuring transaction, the Bank of Zambia must consider specified factors, and if it grants consent it must set the effective date.

28. Investigation of applicants for consent (1) In considering an application for consent to a corporate restructuring transaction, the Bank of Zambia shall have regard to— (a) the adequacy of the capital of each applicant in relation to the transaction; (b) the general ﬁnancial condition, resources and history of each such applicant; (c) (d) (e) the character and experience of the directors and persons concerned in the management of each such applicant; the prospects of each such applicant for proﬁtable operation if the transaction is permitted; and the probable effects of the transaction upon competition in the banking business or the ﬁnancial services business likely to be affected by the transaction. (2) If the Bank of Zambia decides to grant its consent, it shall specify a date on which the corporate restructuring transaction will take effect. (3) An appeal shall lie under Chapter VIII against a decision of the Bank of Zambia to refuse to grant the application.

Section 28Verify source

§ 29Effect of amalgamation or transfer ....................................................................................................................................... 17Repeal

When a Bank of Zambia–consented restructuring takes effect, the new entity takes on the old entity’s assets, liabilities, rights, obligations, and related documents; registrars must update records, and specified transfer fees are not payable.

29. Effect of amalgamation or transfer (1) In this section: (a) a bank or ﬁnancial institution formed by an amalgamation, or to which assets and liabilities are transferred, in accordance with a corporate restructuring transaction to which consent has been given by the Bank of Zambia is referred to as "the new entity"; (b) an amalgamating bank, ﬁnancial institution or ﬁnancial business or ﬁnancial business transferring assets in accordance with such a transaction is referred to as "the old entity"; (2) When the corporate restructuring transaction takes effect— (a) all assets and liabilities of the old entity or, in the case of a transfer of assets and liabilities, those assets and liabilities agreed to be transferred, shall vest in and become binding upon the new entity; (b) the new entity shall have the same rights and shall be subject to the same obligations as were, immediately before the transaction took effect, binding upon the old entity or, in the case of a transfer of assets and liabilities, the same rights and obligations as were applicable to the old entity with respect to the assets and liabilities transferred; (c) all agreements, appointments, transactions and documents relating to the subject-matter of the transaction and made, entered into, drawn or executed by, with or in favour of the old entity, and in force immediately before the transaction took effect, shall remain of full force and effect and shall be deemed to have been made, entered into, drawn or executed by, with or in favour of the new entity; and By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 17 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (d) any mortgage, bond, pledge, guarantee or other instrument relating to the subject-matter of the transaction and made or given to secure past, present and future advances facilities or services by the old entity, which was in force immediately before the transaction took effect, shall remain of full force and effect and shall be deemed to be a mortgage, bond, pledge, guarantee or instrument given to or in favour of the new entity, as security for past, present and future advances, facilities or services by that entity. [As amended by Act No. 18 of 2000 and No. 25 of 2005] (3) The Registrar of Companies, the Registrar of Lands and Deeds and every ofﬁcer in charge of an ofﬁce in which is registered any title to property belonging to, or any mortgage, bond or other right in favour of, the old entity shall— (a) upon being satisﬁed that the Bank of Zambia has under this Part consented to the corporate restructuring transaction and that the transaction has been duly effected; and (b) upon the production to him of any relevant deed, instrument, mortgage, charge, bond, certiﬁcate, letter of appointment, licence or other document, make such endorsements in the register concerned and such alterations thereto as may be necessary to record the transfer thereof and of any rights or liabilities thereunder from the old entity to the new entity. (4) No transfer fees, stamp duty, registration fees, licence fees or other charges shall be payable in respect of the transfer or any endorsement or alteration made under subsection (3). (5) The provisions of this section shall not affect the rights of any creditor of the old entity or of the new entity, except to the extent provided by this section. [As amended by Act No. 25 of 2005] Part 3 – Boards of Directors

Section 29Verify source

Part

Part 3 – Boards of Directors

§ 30Boards of Directors ...................................................................................................................................................................... 18Repeal

Banks, financial institutions, and incorporated financial businesses must have a board of directors.

30. Boards of Directors (1) Every bank, ﬁnancial institution and incorporated ﬁnancial business shall have a board of directors in which shall vest all the powers of management and control and which shall be responsible for the formulation of policies of the bank, ﬁnancial institution or incorporated ﬁnancial business. (2) A board shall consist of not less than ﬁve members each of whom holds the minimum qualiﬁcations set out in Part 4 of this Chapter. [Repealed and amended by Act No. 18 of 2000 and amended by Act No. 25 of 2005] Part 4 – Directors, chief executive ofﬁcers, chief ﬁnancial ofﬁcers and managers of banks [Repealed and replaced by Act No. 18 f 2000]

Section 30Verify source

Part

Part 4 – Directors, chief executive ofﬁcers,

§ 30AChief executive ofﬁcers and chief ﬁnancial ofﬁcers ..................................................................................................... 18Repeal

Every incorporated financial service provider must have a chief executive officer and a chief financial officer, and those officers must be qualified and not disqualified under section 31. No person may hold more than one of those offices.

30A. Chief executive ofﬁcers and chief ﬁnancial ofﬁcers Every incorporated ﬁnancial service provider shall have a chief executive ofﬁcer and a chief ﬁnancial ofﬁcer, each of whom possesses the requisite qualiﬁcations, expertise and integrity to hold the relevant ofﬁce and is not disqualiﬁed under section thirty-one, but a person may not hold more than one such ofﬁce [As amended by Act No. 18 of 2000 and No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 18 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 30AVerify source

§ 31Qualiﬁcations of directors and senior ofﬁcers .................................................................................................................. 19Repeal

This section bars unqualified people from becoming or remaining directors or senior officers of certain financial businesses, and it requires Bank of Zambia approval for some exceptions.

31. Qualiﬁcations of directors and senior ofﬁcers (1) Notwithstanding anything to the contrary in the Companies Act or any other written law, a person shall not be qualiﬁed to be elected a director or to be appointed a chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager of a licensee if that person— (a) is not a ﬁt and proper person to hold the relevant ofﬁce in relation to integrity and professional expertise; (b) is not above the age of twenty-one years; (c) at any time has been adjudged bankrupt by a competent court, whether in Zambia or elsewhere, or is a person who, whether in Zambia or elsewhere, has made an arrangement or composition with the person’s creditors; (d) has been convicted of a felony or any offence involving dishonesty; (e) has been declared or otherwise adjudged in any ofﬁcial proceedings to be mentally incompetent to manage one's own affairs; (f) is under suspension or has been removed from ofﬁce under this Act; or (g) has been a director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager of a company or ﬁnancial service provider which has been adjudged insolvent, entered into a composition with creditors, gone into liquidation, declared bankrupt or has entered into any other arrangement with creditors or taken any other action with similar effect in Zambia or elsewhere unless that person shows that the person was not responsible for the insolvency, liquidation, composition with creditors, bankruptcy, other arrangement with creditors or other action with similar effect in Zambia or elsewhere; (h) has been removed by a competent court, whether in Zambia or elsewhere, from an ofﬁce of trust on account of misconduct or breach of that trust. (2) Any person who is a director or a chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager concerned in the management of a bank, ﬁnancial institution or incorporated ﬁnancial business shall forthwith cease to hold ofﬁce upon— (a) becoming bankrupt, suspending payments or compounding or proposing a compromise with that person's creditors generally; (b) being charged with a felony or any offence involving dishonesty; (c) being declared or otherwise adjudged in any ofﬁcial proceedings to be mentally incompetent to manage affairs; or (d) being suspended or removed from ofﬁce by order of the Bank of Zambia under this Act. (3) A person who has been a director or chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager concerned in the management of a licensee whose licence has been revoked shall not, without the approval of the Bank of Zambia, act or continue to act as a director or be directly concerned in the management of any bank or ﬁnancial institution or incorporated ﬁnancial business. (4) A person shall not directly or indirectly, be a director of more than one ﬁnancial service provider without the prior written approval of the Bank of Zambia. (5) Any person acting in contravention of subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a penalty not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding ﬁve years, or to both. [As amended by Act No. 13 of 1994, No. 18 of 2000 and No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 19 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 31Verify source

§ 32Directors from outside to be in the majority .................................................................................................................... 20Amendment

A bank or financial institution must have a board where most directors are not officers or employees of that institution.

32. Directors from outside to be in the majority (1) A majority of the members of the board of directors of a bank or ﬁnancial institution shall be persons who are not ofﬁcers or employees of the bank or ﬁnancial institution. (2) The Minister, on the recommendation of the Bank of Zambia, may by regulation provide for the application of subsection (1) to any other class or type of incorporated ﬁnancial business. [As amended by Act No. 25 of 2005]

Section 32Verify source

§ 33Conduct of directors, chief executive ofﬁcers, chief ﬁnancial ofﬁcers and managers ......................................... 20Repeal

33. Conduct of directors, chief executive ofﬁcers, chief ﬁnancial ofﬁcers and managers Every director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager concerned in the management of a ﬁnancial service provider, in exercising the powers and discharging the duties of that person's ofﬁce, shall — (a) act honestly and in good faith and in the best interest of the ﬁnancial service provider; and (b) exercise due care, diligence and skill. [Repealed and replaced by Act No. 18 of 2000, amended by Act No. 25 of 2005]

Section 33Verify source

§ 34*** ....................................................................................................................................................................................................... 20Repeal

Section 34 is repealed.

34. *** [Repealed by Act No. 18 of 2000]

Section 34Verify source

§ 35Disclosure of interests ............................................................................................................................................................... 20Repeal

Directors and certain senior officers of a financial service provider must disclose interests and leave board meetings when required.

35. Disclosure of interests (1) A director shall declare in writing to the board annually, the names and addresses of the director’s associates and full particulars of every material interest. (2) A director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager of a ﬁnancial service provider who— (a) is a party to, or has an interest, pecuniary or otherwise, direct or indirect, in a contract or proposed contract with the ﬁnancial service provider or in the granting of an advance by the ﬁnancial service provider shall declare the nature of the director, ofﬁcer or manager’s interest to the board of directors of the ﬁnancial service provider in accordance with this section; or (b) has an interest in, or a material relationship to, a party or prospective party to a contract or a proposed contract with the ﬁnancial service provider shall disclose in writing to the ﬁnancial service provider the nature and extent of the interest or relationship. (3) In the case of a proposed contract or a proposed advance, the declaration required by this section to be made by a director shall be made at the meeting of the directors at which the question of entering into the contract or granting the advance is ﬁrst taken into consideration, or, if the director was not at the date of that meeting interested in the proposed contract or advance, at the next meeting of the directors held after the directors becomes so interested. (4) Where a director becomes interested in a contract after it is made, the declaration required by this section shall be made at the ﬁrst meeting of the directors held after the director becomes interested in the contract. (5) At any meeting of the board, a director who has an interest or a relationship within the scope of this section shall leave the meeting at which the contract concerned is discussed, and shall refrain from voting on any matter related to the contract which becomes the subject of action by the board of the ﬁnancial service provider, but departure from the meeting shall not disqualify the interested director for the purposes of constituting a quorum. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 20 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (6) A director need not make a declaration or give a notice under this section by attending in person at a meeting of the directors, if the director takes reasonable steps to ensure that the declaration or notice is brought up and read at the meeting. (7) For the purposes of this section, a general notice given at a meeting of directors of a building society by a director to the effect that the director is a member of a speciﬁed company or ﬁrm, and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or ﬁrm, is a sufﬁcient declaration of interest in relation to any contract made after that date with that company or ﬁrm. (8) A director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager who fails to comply with the provisions of this section commits an offence and is liable on conviction to a ﬁne not exceeding seven thousand ﬁve hundred penalty units. (9) Where a director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager fails to disclose a material interest in accordance with this section— (a) the court shall, on the application of the ﬁnancial service provider concerned or of its shareholders or members or of the Bank of Zambia, set aside the contract on such terms as it may determine; and (b) the Bank of Zambia may suspend the director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager from ofﬁce in writing addressed to the person suspended. (10) For the purposes of this section— (a) an interest is material if it is material with reference to the wealth, business or family interests of the person having the interest and, without limiting the generality of the foregoing, a person has a material interest in— (i) any company of which the person owns, directly or indirectly, more than ten per centum of any class of the voting shares, or of which the person is a director; and (ii) any partnership in which the person is a partner; and (b) persons have a material relationship with each other if, by virtue of paragraph (b) of subsection (3) of section two, they are associates. [Repealed and replaced by Act No. 18 of 2000, repealed and replaced by Act No. 25 of 2005]

Section 35Verify source

§ 36False statements and obstruction of examinations ........................................................................................................ 21Repeal

Certain officers and advisers of a financial service provider must not make false or misleading entries or block an audit or inspection; doing so is an offence.

36. False statements and obstruction of examinations A director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager, employee, agent, accountant, legal adviser or any other adviser of a ﬁnancial service provider who— (a) negligently or with intent to deceive, makes any false or misleading statement or entry or omits any statement or entry that should be made in any book, account, report or statement of the ﬁnancial service provider. (b) obstructs or endeavors to obstruct— (i) the proper performance by an auditor of the auditor's duties in accordance with this provisions of this Act; or (ii) a lawful inspection of the service provider by a duly authorised inspector appointed by the Bank of Zambia, commits an offence and is liable on conviction to a ﬁne not exceeding twenty thousand penalty units or to imprisonment for a term not exceeding one year, or to both. [Repealed and replaced by Act No. 18 of 2000 and No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 21 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 36Verify source

§ 37Suspension or dismissal of directors and managers ....................................................................................................... 22Amendment

The Minister, on recommendation of the Bank of Zambia, may suspend certain financial service provider directors or managers for up to six months; the Court may extend suspension or permanently remove a director; suspended or removed persons must not act in office, and doing so is an offence.

37. Suspension or dismissal of directors and managers (1) The Minister may, on the recommendation of the Bank of Zambia, by order in writing served on him, suspend from ofﬁce for any period not exceeding six months, any director or chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager concerned in the management of a ﬁnancial service provider who fails to take all reasonable steps to secure compliance by the ﬁnancial service provider with the requirements of this Act. (2) At any time before the expiry of the period of six months referred to in subsection (1), the Bank of Zambia may apply to the Court for an order extending the suspension and the Court may, by order, suspend from ofﬁce the director or chief executive ofﬁcer, chief ﬁnancial ofﬁcer or manager concerned for such period as it thinks ﬁt or, if the Court is satisﬁed that such an order is justiﬁed, remove the director from ofﬁce permanently. (3) A director or ofﬁcer who exercises or performs any power or duty pertaining to his ofﬁce during any period of suspension imposed, or after removal from ofﬁce, under this section shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or imprisonment for a term not exceeding ﬁve years, or to both. (4) The Bank of Zambia may recommend to a ﬁnancial service provider the removal from ofﬁce a director, a chief executive ofﬁcer, a chief ﬁnancial ofﬁcer or a manager referred to in subsection (1) without ﬁrst suspending the director, ofﬁcer or manager. [As amended by Act No. 13 of 1994, Act No. 18 of 2000 and Act No. 25 of 2005] Part 4A – Organisation and administration of ﬁnancial businesses

Section 37Verify source

Part

Part 4A – Organisation and administration of ﬁnancial businesses

§ 37AStructure of unincorporated ﬁnancial institutions ........................................................................................................ 22Amendment

Unincorporated financial businesses must maintain a structure that gives members or owners voting rights and places those voting-right holders below all creditors if insolvency, dissolution, or winding up happens.

37A. Structure of unincorporated ﬁnancial institutions Every ﬁnancial business which is not incorporated shall have and maintain a structure which has the following characteristics: (a) voting rights for the members or owners; and (b) subordination of those with voting rights to all creditors in the event of insolvency, dissolution or winding up. [As amended by Act No. 25 of 2005]

Section 37AVerify source

§ 37BApplication of Parts 1, 2, and 4 to ﬁnancial institutions ............................................................................................ 22Amendment

Parts 1, 2, and 4 apply to the First Schedule financial institutions, with modifications the Minister may determine on the Bank of Zambia’s recommendation.

37B. Application of Parts 1, 2, and 4 to ﬁnancial institutions The provisions of Parts 1, 2, and 4 of this Chapter shall apply, with such modiﬁcations as the Minister, on the recommendation of the Bank of Zambia may determine, to the categories of ﬁnancial institutions set out in the First Schedule. [As amended by Act No. 18 of 2000] Part 5 – Constitution of banks and incorporated ﬁnancial institutions

Section 37BVerify source

Part

Part 5 – Constitution of banks and incorporated ﬁnancial institutions

§ 38Variation of corporate constitutions ..................................................................................................................................... 22Repeal

The Registrar of Companies must not approve or accept certain documents changing a bank or financial company’s memorandum or articles unless they are filed with written evidence of the Registrar’s knowledge and approval.

38. Variation of corporate constitutions Notwithstanding anything to the contrary in the Companies Act, the Registrar of Companies shall not approve nor accept any document, the effect of which is to add, vary or delete any provision of or change in any way the legal effect of the memorandum or articles of association of a bank or ﬁnancial institution or ﬁnancial business that is a company unless the same is submitted together with written evidence of the knowledge and approval of the Registrar. [As amended by Act No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 22 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 38Verify source

§ 39Amendment of constitution by Bank of Zambia ............................................................................................................... 23Amendment

If the Bank of Zambia gives written notice that a document clause is inappropriate, the bank or institution must amend its corporate documents before its next annual or special shareholders’ meeting.

39. Amendment of constitution by Bank of Zambia Where the Bank of Zambia notiﬁes a bank, ﬁnancial institution, or ﬁnancial business in writing that the Bank of Zambia considers that any speciﬁed provision in its memorandum, articles of association or other corporate documents is inappropriate for carrying on the business for which it is licensed or has applied to be licensed, the bank or institution shall, before the conclusion of its next annual or special meeting of shareholders, amend its corporate documents so as to remove the offending provision or amend it according to the directions of the Bank of Zambia. [As amended by Act No. 25 of 2005] Chapter IV Operations Part 1 – Anti-competitive conduct

Section 39Verify source

Part

Part 1 – Anti-competitive conduct

§ 40Interest rates and charges ........................................................................................................................................................ 23Amendment

A financial service provider must not make certain agreements or arrangements with another financial service provider about interest rates, charges, service provision or refusal, or competition-restricting service delivery.

40. Interest rates and charges (1) A ﬁnancial service provider shall not make any agreement or arrangement with another ﬁnancial service provider with respect to— (a) the rate of interest on a deposit by any person; (b) the rate of interest or charge on a loan to any person; (c) the amount of any charge to any person for the provision of a ﬁnancial service; (d) the provision of, or refusal to provide any ﬁnancial service to, any person; or (e) the provision of ﬁnancial services in a manner that restricts competition. (2) Any ﬁnancial service provider acting in contravention of this section shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units. (3) Subsection (1) does not apply to an agreement or arrangement— (a) for the performance of a ﬁnancial service by one ﬁnancial service provider to another; (b) evidencing a syndication or other agreement for the provision of credit and other banking services to a person by two or more ﬁnancial service providers; (c) (d) for the underwriting or distribution of any security by a bank or ﬁnancial institution or a group of persons including a ﬁnancial service provider; for the exchange of statistics or audit information, the development and use of systems, forms, methods, procedures and standards, the use of common facilities, joint research and development or any matter in connection therewith; (e) the provision of ﬁnancial services in a manner that restricts competition. [As amended by Act No. 13 of 1994, Act No. 18 of 2000 and No. 25 of 2005]

Section 40Verify source

§ 41Collateral contracts ..................................................................................................................................................................... 23Repeal

A financial service provider must not require someone to enter a contract for a financial service as a condition of getting access to that service, another financial service, goods, or other services.

41. Collateral contracts Any ﬁnancial service provider that requires any person to contract to receive any ﬁnancial service as a condition of being permitted to contract with it or any other person to receive any other ﬁnancial service, or any goods or other service shall be guilty of an offence and shall be liable on conviction to a ﬁne not By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 23 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed exceeding one hundred thousand penalty units or imprisonment for a term not exceeding ﬁve years, or to both. [As amended by Act No. 13 of 1994 and No. 25 of 2005]

Section 41Verify source

§ 42Other laws not affected ............................................................................................................................................................ 24Provision

This Part works alongside any other law in force and does not limit it.

42. Other laws not affected The provisions of this Part are in addition to, and do not limit the operation of, any other law in force for the promotion of competition and free trade. Part 2 – Business practices and dealings with the public

Section 42Verify source

Part

Part 2 – Business practices and dealings with the public

§ 43Principal administrative ofﬁce ................................................................................................................................................. 24Repeal

Licensed financial service providers must keep a principal administrative office in Zambia and tell the Bank of Zambia in writing where it is and before changing its location.

43. Principal administrative ofﬁce (1) Every ﬁnancial service provider licensed under this Act shall— (a) maintain a principal administrative ofﬁce in Zambia; (b) inform the Bank of Zambia in writing— (i) of the location of its principal administrative ofﬁce; and (ii) of any proposed change in the location of its principal administrative ofﬁce at least sixty days prior to the proposed change, and the change shall only be affected after written conﬁrmation by the Bank of Zambia, of the suitability of the proposed location. (2) In subsection (1), "principal administrative ofﬁce" means the ofﬁce in which the over-all administration of the affairs of a ﬁnancial service provider, other than its banking business or ﬁnancial service business is carried on. [Repealed and replaced by Act No. 18 of 2000 and No. 25 of 2005]

Section 43Verify source

§ 44Display of names ......................................................................................................................................................................... 24Amendment

Every financial service provider must display its name and licensed status in English, clearly and prominently, in specified business locations and documents.

44. Display of names (1) Every ﬁnancial service provider shall, in easily legible letters in the English language, display its name and a statement of its licensed status as a ﬁnancial service provider, as the case may be— (a) prominently at the entrance to every place where it carries on any part of its business; (b) on every letter, advertisement or other communication published or issued by or on its behalf; and (c) in every written contract that it enters into or offers to enter into and in every receipt that it issues. [As amended by Act No. 25 of 2005]

Section 44Verify source

§ 45Use of licensed name ................................................................................................................................................................. 24Repeal

A financial service provider must not change its licensed name, or use a different name or abbreviation in its business, unless it has the Bank of Zambia’s prior written consent.

45. Use of licensed name (1) A ﬁnancial service provider shall not, without the prior written consent of the Bank of Zambia, alter the name under which it is licensed, or in the course of or for any purpose connected with its business, use or refer to itself by— (a) a name other than the name under which it is licensed; or (b) an abbreviation of that name. (2) Nothing in this section shall prevent a ﬁnancial service provider, with the consent of the Bank of Zambia, from using or referring to itself in conjunction with its licensed name by the name of a By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 24 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed business or undertaking with which it has been amalgamated or, in the case of a change of name authorised under this section, by the name by which it was previously known. [As amended by Act No. 25 of 2005]

Section 45Verify source

§ 46Holidays ........................................................................................................................................................................................... 25Amendment

The Minister may set bank holidays on the Bank of Zambia’s recommendation, and banks and financial institutions generally must not be open to the public on those days, except airport and border-post branches.

46. Holidays (1) The Minister, on the recommendation of the Bank of Zambia, may by regulation prescribe one or more days to be a bank holiday on which no bank or ﬁnancial institution may be open for business with the public, whether or not such a day is also a public holiday: Provided that branches at airports and border posts shall remain open throughout. (2) A bank or ﬁnancial institution shall remain open for business with the public during hours agreed to by the Bank of Zambia. (3) A private obligation that— (a) can be discharged only with a designated bank or ﬁnancial institution; and (b) falls due on a day on which the premises of the bank or ﬁnancial institution are not open for business, shall be deemed to fall due on the ﬁrst following business day. [As amended by Act No. 18 of 2000]

Section 46Verify source

§ 47Disclosure of interest rate and charges ............................................................................................................................... 25Amendment

Banks, financial institutions, and financial service providers must give customers written disclosures about charges, interest, and borrowing costs when opening an account or offering credit.

47. Disclosure of interest rate and charges (1) When a bank or ﬁnancial institution opens a new account for a person, it shall, at the same time, provide the person in writing with— (a) a statement of all charges for maintaining the account and accessing the funds on account; (b) a statement of the interest to be paid by the bank or institution; and (c) a statement of how the bank or institution will advise the person of any new charges or changes in the charges or interest disclosed. (2) A ﬁnancial service provider that agrees to make a loan or credit available to a person shall, at the same time, disclose the cost of borrowing to the person in writing. (3) The Bank of Zambia, may prescribe the form, content, method of calculation and of disclosure, and the means and frequency of publishing, any information or change of information required by this section to be disclosed. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 47Verify source

§ 48Customer complaints .................................................................................................................................................................. 25Repeal

Banks and incorporated financial institutions must have written customer complaint procedures, appoint a customer service officer, and keep complaint records for at least two years.

48. Customer complaints A bank or incorporated ﬁnancial institution shall— (a) establish, and make available in writing to its customers in the public portion of each branch, procedures for dealing with complaints made by customers concerning their relations with the ﬁnancial service provider; (b) designate manager or employee to be the customer service ofﬁcer and to be responsible for implementing and administering those procedures, including receiving, dealing with or otherwise disposing of all complaints received; and (c) create and maintain for two years, or such longer period as may be prescribed by the Bank of Zambia, a record of every complaint received and how it was dealt with or disposed of. [As amended by Act No. 18 of 2000 and No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 25 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 48Verify source

§ 49Advertisement by licensee ....................................................................................................................................................... 26Amendment

A financial service provider must not publish or allow a false or misleading advertisement about a financial service.

49. Advertisement by licensee (1) A ﬁnancial service provider that publishes or permits the publication of any advertisement concerning any ﬁnancial service offered by it or by any other ﬁnancial service provider, or quoting a fee, rate or charge for any such service, that is false or misleading in a material particular shall be guilty of an offence and is liable on conviction to a ﬁne not exceeding ﬁfty thousand penalty units. (2) For the purposes of this section, an "advertisement" includes a paid radio or television announcement, a poster, billboard or handbill, and a paid advertisement in a regularly published newspaper or magazine. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 49Verify source

§ 50Conﬁdentiality ............................................................................................................................................................................... 26Amendment

Financial service providers and specified officers must keep confidential information confidential and not disclose it unless one of the listed exceptions applies.

50. Conﬁdentiality (1) A ﬁnancial service provider and every director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager and employee thereof shall maintain the conﬁdentiality of all conﬁdential information obtained in the course of service to the ﬁnancial service provider and shall not divulge the same except— (a) in accordance with the express consent of the customer, or the order of a court; or (b) where the interest of the licensee itself requires disclosure; or (c) where the Bank of Zambia, in carrying out its functions under this Act, so requests. (2) For the purposes of this section, conﬁdential information about a person includes information that is not public, concerning— (a) the nature, amount or purpose of any payment made by or to the person; (b) the recipient of a payment by the person; (c) the assets, liabilities, ﬁnancial resources or ﬁnancial condition of the person; (d) the business or family relations of the person; or (e) any matter of a personal nature that the person disclosed to the ﬁnancial service provider in conﬁdence. (3) Notwithstanding the provisions of any law to the contrary, in any case where evidence of commission of an offence is to be found in the books, accounts or records of a ﬁnancial service provider, such evidence shall not be sought or obtained from the bank or institution otherwise than in accordance with the provisions of any other written law. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 50Verify source

§ 51Records of constitution and of compliance with this Act ............................................................................................. 26Repeal

Certain banking companies must keep specified records at head office and let named persons inspect them, with some records excluded from shareholder and creditor inspection.

51. Records of constitution and of compliance with this Act (1) Every bank, ﬁnancial institution or ﬁnancial business that is a company shall prepare and maintain at its head ofﬁce records containing— (a) its articles and memorandum of association and all amendments thereto; (b) a register of its shareholders, including the number of shares registered in the name of each shareholder; (c) minutes of meetings and resolutions of the directors; (d) minutes of meetings and resolutions of the shareholders; (e) accounting records exhibiting clearly and correctly the state of its business affairs, explaining its transactions and ﬁnancial position in such a way as to enable the Bank of By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 26 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed Zambia conveniently to determine whether the bank has complied with all the provisions of this Act; (f) records showing, for each customer of the bank or institution on a daily basis, particulars of its transactions with or for the account of the customer and the balance owing to or by the customer; and (g) such other records as are required to be prepared and maintained by or under this Act or by order of the Bank of Zambia. (2) At all reasonable times, the records described in this section— (a) shall be open to inspection by the directors; and (b) shall (except for records described in paragraphs (c), (f) and (g) of subsection (1)) be open to inspection by the shareholders and creditors of the bank, ﬁnancial institution or ﬁnancial business and their personal representatives. [As amended by Act No. 18 of 2000 and Act No. 25 of 2005]

Section 51Verify source

§ 52Credit documentation ................................................................................................................................................................. 27Amendment

Financial service providers must create and keep proper credit documentation at their principal office in Zambia, plus any other business-related information the Bank of Zambia prescribes.

52. Credit documentation (1) Every ﬁnancial service provider shall cause to be created and shall maintain in its principal ofﬁce in Zambia proper credit documentation and any other information concerning its business relations with its customers and other persons that, the Bank of Zambia, may prescribe. (2) For the purposes of this section, "credit documentation" means, with respect to a contract entered into by a ﬁnancial service provider with any other person for the provision of a ﬁnancial service, or in respect of a ﬁnancial service performed or to be performed by the ﬁnancial service provider— (a) reasonably current ﬁnancial statements of the indebtedness of the borrower and any guarantor of the borrower to the bank or institution; (b) a description of any collateral over which the ﬁnancial service provider has any mortgage or charge as security for the due payment of the indebtedness to it; (c) a statement of the terms of the credit, including the principal amount, rate of interest, schedule of repayments and the borrower's objective or purpose for borrowing; and (d) the signature of each person who authorised the credit on behalf of the ﬁnancial service provider. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 52Verify source

Part

schedule of repayments and the borrower's objective or purpose for borrowing; and

§ 53Manner of keeping records ...................................................................................................................................................... 27Repeal

A financial service provider may keep required registers or records in several approved formats, including electronic and photographic forms, and may convert between authorised forms.

53. Manner of keeping records A register or record required or authorised by or under this Act to be prepared and maintained by a ﬁnancial service provider— (a) may be in bound or loose-leaf form or in photographic ﬁlm form; or (b) may be entered or recorded by any system of mechanical or electronic data processing or any other device or process that is capable of reproducing any required information in intelligible written form within a reasonable time; and (c) if kept in any one form, may be converted to any other form authorised by this Act. [As amended by Act No. 18 of 2000 and No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 27 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 53Verify source

§ 54Retention of records ................................................................................................................................................................... 28Amendment

Financial service providers must keep covered registers or records for at least six years, or at least ten years if the record relates to unclaimed funds.

54. Retention of records A register or record required or authorised by or under this Act to be prepared and maintained shall be retained by the ﬁnancial service provider that prepared it for a period of at least six years or, in the case of a register or record relating to unclaimed funds, for a period of at least ten years. [Repeald and replaced by Act No. 18 of 2000, amended by Act No. 25 of 2005]

Section 54Verify source

§ 55Maintenance of records ............................................................................................................................................................. 28Amendment

Banks and their managers, employees, and agents must take reasonable precautions to protect required or authorised registers and records. A financial service provider may destroy a register or record after it has been converted to another form.

55. Maintenance of records (1) Every bank, and every manager, employee and agent thereof, shall take reasonable precautions to— (a) prevent loss or destruction of; (b) prevent falsiﬁcation of entries in; (c) facilitate detection and correction of inaccuracies in; and (d) ensure that no unauthorised person obtains access to or the use of information in, every register and record required or authorised by this Act to be prepared and maintained by the ﬁnancial service provider. (2) A ﬁnancial service provider may destroy any register or record kept under this Part at any time after the register or other record has been converted to another form. Chapter V Financial accountability Part 1 – Financial statements of banks and ﬁnancial institutions [As amended by Act No. 18 of 2000]

Section 55Verify source

Part

Part 1 – Financial statements of banks and ﬁnancial institutions

§ 56Annual ﬁnancial statement ...................................................................................................................................................... 28Repeal

Directors of a financial service provider must present specified annual financial information to shareholders at every annual meeting.

56. Annual ﬁnancial statement (1) The directors of a ﬁnancial service provider shall place before the shareholders at every annual meeting— (a) annual ﬁnancial statements for the ﬁnancial year immediately preceding the meeting and the ﬁnancial year, if any, immediately preceding that year showing separately— (i) a balance sheet as at the end of each of those ﬁnancial years; (ii) a proﬁt and loss account for each of those ﬁnancial years; (iii) a cash ﬂow statement for the last ﬁnancial year; (iv) a statement of changes in the shareholders' equity for the last ﬁnancial year; (v) a capital adequacy computation as at the end of each of those ﬁnancial years; (b) a directors' report containing the following information: (i) common enterprise and related party transactions; (ii) risk management, processes and practices during the year; (iii) directors' interests disclosed; (iv) the existence of prohibited borrowings or lendings; and (v) internal control; and By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 28 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (c) any information that may be required by or under the law under which the ﬁnancial service provider is established. (2) The information and particulars referred to in subsection (1) shall contain what is necessary to present fairly, in accordance with generally accepted accounting principles consistently applied, the ﬁnancial position of the ﬁnancial service provider as at the end of the ﬁnancial year to which it relates and the results of the operations and changes in the ﬁnancial position of the ﬁnancial service provider for that ﬁnancial year. (3) The directors shall also place before the shareholders at every annual meeting— (a) the report of the auditor of the ﬁnancial service provider; and (b) an additional information concerning the ﬁnancial institution and the results of its operations as may be prescribed by the Bank of Zambia. (4) In subsection (1), a related party transaction means a transaction where by two or more persons, by virtue of their relationship, will or likely to beneﬁt severally or jointly from funds or services arising from a transaction involving any one of them and a ﬁnancial service provider. [Repealed and replaced by Act No. 18 of 2000, amended by No. 25 of 2005]

Section 56Verify source

§ 57Statement as to subsidiaries .................................................................................................................................................... 29Amendment

A financial service provider must include specified subsidiary information with its annual statement, and the Bank of Zambia may prescribe additional information.

57. Statement as to subsidiaries A ﬁnancial service provider shall include with its annual statement— (a) a list of subsidiaries, other than subsidiaries acquired upon a realisation of security, showing with respect to each subsidiary— (i) its name and the address of its head or principal ofﬁce; (ii) the book value in the aggregate of any shares of the subsidiary beneﬁcially owned by the ﬁnancial service provider and any other subsidiaries of the ﬁnancial service provider; and (iii) the percentage of the voting shares of the subsidiary that is beneﬁcially owned by the ﬁnancial service provider and by other subsidiaries of the ﬁnancial service provider; and (b) such other information as the Bank of Zambia may prescribe. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 57Verify source

§ 58Reserves for bad and doubtful debts ................................................................................................................................... 29Repeal

A financial service provider’s annual financial statements must comply with rules on creating or changing reserves for bad and doubtful debts.

58. Reserves for bad and doubtful debts Annual ﬁnancial statements of ﬁnancial service provider shall comply with any regulations, guidelines and prescriptions relating to the creation or variation of appropriate reserves for bad and doubtful debts. [Repealed and replaced by Act No. 18 of 2000, amended by No. 25 of 2005]

Section 58Verify source

§ 59Approval of annual ﬁnancial statements ............................................................................................................................ 29Repeal

Directors must approve a financial service provider’s annual financial statements and sign them to show approval.

59. Approval of annual ﬁnancial statements Annual ﬁnancial statements of ﬁnancial service provider shall be approved by the directors and the approval shall be signiﬁed by their signatures. [Repealed and replaced by Act No. 18 of 2000 and No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 29 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 59Verify source

§ 60Monthly statements .................................................................................................................................................................... 30Amendment

Banks and financial institutions must send monthly statements to the Bank of Zambia in the required form and time, and the Bank may ask for more details or periodic reports.

60. Monthly statements (1) Every bank or ﬁnancial institution shall deliver to the Bank of Zambia such number of copies of the folliwing in such form and within such time after the end of each calendar month as may be prescribed by the Bank of Zambia; (a) a statement showing, as at the close of the last business day of that month— (i) its liabilities to the public; and (ii) the amount of each of the liquid assets speciﬁed in the Second Schedule to this Act which it holds, its aggregate holding of such assets and the proportion that the aggregate holding of such assets bears to its liabilities to the public; (b) a statement showing its assets and liabilities as at the close of the last business day of that month; (c) the amount of its regulatory capital (as deﬁned by regulation) and reserve funds and the ratio that the amount of its liabilities to the public bears to the amount of its regulatory capital (as so deﬁned) and reserve funds; (d) a statement showing those of its loans that are non-performing or that have been restructured or the terms of repayment of which have been extended; and (e) such other statements concerning its operations, ﬁnancial condition and resources as may be prescribed by the Bank of Zambia (2) The Bank of Zambia may require any bank or ﬁnancial institution to supplement with further details or evidence any information provided by the bank in accordance with subsection (1). (3) The Bank of Zambia may require any ﬁnancial business to provide periodic reports showing information concerning it's operation, ﬁnancial condition and resources as the Bank of Zambia may determine. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 60Verify source

§ 61Publication of ﬁnancial statement ........................................................................................................................................ 30Repeal

Banks and financial institutions must send annual statements to shareholders and the Bank of Zambia, publish financial statements, and banks must display statements at each branch.

61. Publication of ﬁnancial statement (1) A bank or ﬁnancial institution shall, not later than twenty-one days before the date of each annual meeting, send to each shareholder and to the Bank of Zambia, a copy of its annual statement. (2) Where a bank or ﬁnancial institution fails to send a copy of the annual statement to the Bank of Zambia and to each shareholder in accordance with subsection (1), the annual meeting of the bank or ﬁnancial institution shall be adjourned until such time as that requirement has been complied with. (3) A bank or ﬁnancial institution shall publish in a newspaper of general circulation in Zambia a copy of— (a) each of its annual ﬁnancial statements; and (b) its monthly ﬁnancial statements for each quarter. (4) The Bank of Zambia shall cause to be published in a newspaper of general circulation throughout Zambia four times each year, a copy of monthly statements provided to it by each bank or ﬁnancial institution. (5) Every bank shall display in a conspicuous place in each branch, at all times when it is open for business— (a) a copy of the monthly statement last published in accordance with this Part; and By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 30 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (b) a copy of the annual statement last published in accordance with this Part. [As amended by Act No. 18 of 2000] Part 2 – Audit of accounts of banks and ﬁnancial institutions [Repealed and replaced by Act No. 18 of 2000]

Section 61Verify source

Part

Part 2 – Audit of accounts of banks and ﬁnancial institutions

§ 62Appointment of auditor ............................................................................................................................................................. 31Amendment

Financial service providers must appoint a Bank of Zambia-approved auditor each year, and auditors must audit and report on the accounts.

62. Appointment of auditor (1) Every ﬁnancial service provider shall appoint annually, at the beginning of each ﬁnancial year, an auditor approved by the Bank of Zambia who shall be a member in good standing of a professional association of accountants recognized by the Bank of Zambia. (2) The auditor's duties shall be to audit the accounts and to make a report to the shareholders or members of each such ﬁnancial service provider upon the annual balance sheet, proﬁt and loss account and other matters as required by this Act. (3) An auditor may be re-appointed from time to time. (4) The remuneration of the auditor, whether appointed by the bank, ﬁnancial institution or by the Bank of Zambia, shall be paid by the ﬁnancial service provider and, in the case of an auditor appointed by the Bank of Zambia, shall be ﬁxed by the Bank of Zambia. (5) The auditors of the subsidiary of any ﬁnancial service provider in Zambia shall be the same as the auditors of the bank or ﬁnancial institution unless the Registrar gives approval for different auditors. (6) An auditor who does not meet the requirements of subsection (1) but who: (a) was engaged by a bank or ﬁnancial institution on the enactment of this Act; and (b) is an otherwise professionally qualiﬁed person satisfactory to the Bank of Zambia, may continue his engagement until it terminates in accordance with its terms. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 62Verify source

§ 63Disqualiﬁcation of auditor ........................................................................................................................................................ 31Repeal

A person cannot be appointed or act as auditor of a financial service provider if they fall within any listed disqualifying category.

63. Disqualiﬁcation of auditor A person shall not be qualiﬁed for appointment or to act as auditor of a ﬁnancial service provider if the person is— (a) a director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager or employee of that ﬁnancial service provider or of any person associated or afﬁliated with it; (b) the spouse, parent, child or partner of a director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager or employee of that ﬁnancial service provider; (c) a body corporate; (d) a manager or employee of a company that is controlled by the ﬁnancial service provider; or (e) a person who personally, or through that person's partner or his employee, regularly performs the duties of secretary or book keeper to the bank or ﬁnancial institution. [Repealed and replaced by Act No. 18 of 2000, amended by Act No. 25 of 2005]

Section 63Verify source

§ 64Auditor's report ............................................................................................................................................................................. 31Repeal

Auditors of a financial service provider have access to the provider’s books and may require information from specified officers. Auditors must also make specified reports, and directors must send the auditor’s report and annual financial statement to the Bank of Zambia and each shareholder within three months after year-end.

64. Auditor's report (1) Every auditor of a ﬁnancial service provider shall have the right of access at all times to all books, accounts and records of the ﬁnancial service provider, and shall be entitled to require from its By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 31 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed directors, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, managers and agents such information and explanations as the auditor requires to perform the auditor's duties under this Act. (2) In every report made for the purposes of this Act by an auditor, the auditor shall— (a) express whether, in his opinion, the ﬁnancial service provider made available all necessary information to enable the auditor to comply with the requirements of this Act: (b) (c) (d) state whether, in the auditor's opinion, each of the statements included in the annual statement are fully, fairly and properly drawn up, whether they exhibit a true and fair statement of the ﬁnancial service provider's ﬁnancial condition and, if the auditor has called for explanation or information from the directors, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, managers or agents of the ﬁnancial service provider, whether a satisfactory response was received; state whether in the auditor's opinion the ﬁnancial service provider has complied with the provisions of this Act and the regulations, guidelines and prescriptions under this Act and any other written law; and report any transactions or conditions that have come to the attention of the auditor affecting the well being of the ﬁnancial service provider that, in the opinion of the auditor, are not satisfactory and require rectiﬁcation and, without limiting the generality of the foregoing, shall, report on— (i) any transaction of the ﬁnancial service provider that has come to the attention of the auditor and which, in the opinion of the auditor, has not been within the powers of the ﬁnancial service provider or which was contrary to this Act or any other law; and (ii) any loan owing to the ﬁnancial service provider by any person that is non-performing loan, or that has been restructured or the terms of repayment of which have been extended, if the principal amount of the loan is ﬁve per centum or more of the regulatory capital of the bank or ﬁnancial institution. (3) The directors shall submit a copy of the report of the auditor, together with a copy of the annual ﬁnancial statement to the Bank of Zambia and each shareholder of the bank or ﬁnancial institution within a period of three months from the end of each ﬁnancial year. [Repealed and replaced by Act No. 18 of 2000, amended by No. 25 of 2005]

Section 64Verify source

§ 65Resignation or termination of appointment of auditor .................................................................................................. 32Repeal

If an auditor resigns or is removed, written reasons must be delivered to the Bank of Zambia within 10 days, and in some cases copied to the auditor or financial service provider.

65. Resignation or termination of appointment of auditor (1) (2) If an auditor resigns from the audit of a ﬁnancial service provider, the auditor shall prepare and deliver to the Bank of Zambia within ten days after delivery to the bank or ﬁnancial institution of the auditor's resignation a written statement of the reasons therefor. If a ﬁnancial service provider terminates the appointment of its auditor, the ﬁnancial service provider shall prepare and deliver to the bank of Zambia and send a copy directly to the auditor, within ten days of the decision to terminate the appointment, written statement setting out the reasons for the termination. (3) The auditor shall, within ten days of receiving the statement referred to in subsection (2), deliver to the Bank of Zambia and to the ﬁnancial service provider a written statement on the reasons set out by the ﬁnancial service provider and the statement of the auditor may include refutations of those reasons. [Repealed and replaced by Act No. 18 of 2000, amended by Act No. 25 of 2005]

Section 65Verify source

§ 66Immunity of auditor .................................................................................................................................................................... 32Repeal

A person cannot bring a claim against an auditor for a statement or report made in good faith while performing the auditor’s functions under the Act.

66. Immunity of auditor No person shall have any claim against an auditor for or with respect to any oral or written statement or report made by the auditor in good faith in the performance of the auditor's functions under this Act. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 32 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 66Verify source

§ 67Audit committee ............................................................................................................................................................................ 33Repeal

Directors of each financial service provider must set up an audit committee, and the committee must review statements, oversee controls, meet regularly, and report to the board and directors.

67. Audit committee (1) The directors of each ﬁnancial service provider shall establish an audit committee of at least three directors, a majority of whom are persons who do not hold ofﬁces of chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager or employee of the bank or ﬁnancial institution or any company that is associated or afﬁliated to it. (2) The audit committee shall— (a) (b) review the annual ﬁnancial statement of the ﬁnancial service provider before it is approved by the directors; review or cause to be reviewed such other informational returns as the ﬁnancial service provider shall have made in accordance with the requirements of this Act and the regulations under this Act; (c) ensure that appropriate internal controls and procedures are in place; (d) review such investments and transactions that could materially adversely affect the ﬁnancial condition of the ﬁnancial service provider as the auditor or chief executive ofﬁcer, chief ﬁnancial ofﬁcer or any manager may bring to the attention of the committee; (e) meet with the auditor to discuss the annual statement, the returns, investments and transactions referred to in this subsection; and (f) meet with the chief internal auditor or the manager or employee of the ﬁnancial service provider acting in a similar capacity, and with the management, to discuss the effectiveness of the internal control procedures as practised in the ﬁnancial service provider. (3) To ensure the proper discharge of its responsibilities under subsection (2), the audit committee or any member thereof may initiate inquiries and, upon majority vote of the committee, retain at the expense of the ﬁnancial service provider any expert legal, accounting and auditing advisers that the committee may reasonably require and the audit committee shall report in writing to the board of directors the ﬁndings of any such inquiry undertaken by it. (4) The audit committee shall report to the directors before any approval required by this Act or the regulations under this Act is given by the board to any ﬁnancial statement of the ﬁnancial service provider. (5) The audit committee may call a meeting of the board to consider any matter of concern to the committee. (6) The audit committee shall meet at least once per quarter and at such other times as the board of directors may by resolution require, or as any member of the committee may request. (7) A resolution of the audit committee shall require the afﬁrmative votes of two members in order to pass. (8) A member of the committee who votes against a resolution that is carried by a majority vote shall provide a written statement to the board of directors explaining the reasons for that dissent. (9) The directors of a ﬁnancial service provider shall submit a certiﬁcate of compliance with this section to the Bank of Zambia within six months after the end of each ﬁnancial year or such other period as the Bank of Zambia may allow or at such other times as the Bank of Zambia may require any particular case. (10) The Bank of Zambia may, in respect of any category of ﬁnancial institutions as it may specify, allow the board to carry out such functions provided for in this section as it may determine. [As amended by Act No. 18 of 2000 and No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 33 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed Part 3 – *** [Repealed by Act No. 18 of 2000]

Section 67Verify source

Part

Part 3 – ***

§ 68*** ....................................................................................................................................................................................................... 34Repeal

Section 68 is repealed.

68. *** [Repealed by Act No. 18 of 2000] Chapter VI Supervision and prudential regulation Part 1 – Provisions relating to ﬁnancial service providers

Section 68Verify source

Part

Part 1 – Provisions relating to ﬁnancial service providers

§ 69Reserves ........................................................................................................................................................................................... 34Amendment

Financial service providers must keep a reserve account and transfer the prescribed minimum from yearly net profits before paying dividends.

69. Reserves (1) A ﬁnancial service provider shall maintain a reserve account and before declaring any dividend shall transfer to its reserve account, out of the net proﬁts of each year after due provision has been made for taxation, the minimum amount prescribed by the Bank of Zambia. (2) The Bank of Zambia may by regulation prescribe the amount required to be transferred to the reserve account, the method of computing that amount, the form of the reserve account and any other matter it considers necessary to give effect to this section: Provided that the Bank of Zambia may, by statutory instrument, prescribe different reserve requirements for different categories of ﬁnancial service providers and may vary any matters prescribed under this section for different categories of ﬁnancial service providers. (3) No ﬁnancial service provider shall declare, credit or pay any dividend or make any other transfer from surplus if to do so would result in an impairment of the capital adequacy requirements of this Act. (4) No ﬁnancial service provider shall, without the approval of the Bank of Zambia, declare, credit or pay any dividend or make any transfer from surplus if to do so would result in the impairment of the reserve account requirements of this Act. (5) The Bank of Zambia may permit a reduction of the reserve account when the relevant payment or transfer is made for the purpose of increasing the capital, and when the Bank of Zambia is satisﬁed that that is the only practicable means of preventing an impairment of the ﬁnancial service provider's capital or of enabling the ﬁnancial service provider's to make provisions that the Bank of Zambia considers to be necessary. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 69Verify source

§ 70Liquid assets .................................................................................................................................................................................. 34Repeal

Banks must keep liquid assets at or above a percentage set by the Bank of Zambia.

70. Liquid assets (1) Every bank shall at all times maintain liquid assets amounting to not less than such percentage of its total of its liabilities to the public in Zambia as the Bank of Zambia may by instrument in writing prescribe speciﬁcally for it or, in default of such prescription, as the Bank of Zambia may, by regulation, prescribe for banks or ﬁnancial institutions of the same category: Provided that— (a) the percentage in either manner prescribed shall not be greater than ﬁfty per centum; (b) the distribution of amounts between the various classes of liquid assets may be made at the discretion of each bank or ﬁnancial institution; and By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 34 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (c) no bank or ﬁnancial institution may be required to maintain any higher percentage than any other bank or ﬁnancial institution of the same category. (2) Any variation in a regulation made for the purposes of subsection (1) shall take effect— (a) if it provides for a decrease, immediately; or (b) if it provides for an increase, only after reasonable notice thereof has been given in writing to each bank affected by the variation, and only if the variation does not increase the liquid asset requirement of any bank or ﬁnancial institution by more than ﬁfteen per centum. (3) For the purpose of this section the Bank of Zambia may prescribe, by regulations— (a) assets that qualify as liquid assets; and (b) liabilities that qualify as liabilities to the public: Provided that the regulations made under this section may provide for different liquid assets and liabilities for different categories of ﬁnancial institutions. (4) For the purpose of this section, "liquid assets" means assets that are transferable free of any charge or lien whatsoever and that are of the classes described in the Second Schedule to this Act. [As amended by Act No. 18 of 2000 and Act No. 25 of 2005]

Section 70Verify source

§ 70APrudential liquidity ratio ........................................................................................................................................................ 35Amendment

The Bank of Zambia must make regulations prescribing which assets and liabilities are used to compute the prudential liquidity ratio for financial institutions.

70A. Prudential liquidity ratio The Bank of Zambia shall, by regulations, prescribe the assets and liabilities for the computation of the prudential liquidity ratio for ﬁnancial institutions. [As amended by Act No. 18 of 2000 and Act No. 25 of 2005]

Section 70AVerify source

§ 71Deﬁciency of liquid assets or prudential liquidity ratio ................................................................................................ 35Repeal

If a bank or financial institution’s liquid assets fall below the prescribed amount, the Bank of Zambia may order it to pay interest as a fine on the deficiency.

71. Deﬁciency of liquid assets or prudential liquidity ratio Where the liquid assets of a bank or ﬁnancial institution are, less than the amount for the time being prescribed in respect of it, the Bank of Zambia may order the bank or ﬁnancial institution to pay to the Bank of Zambia, as a ﬁne, interest on the amount of the deﬁciency, with respect to each day or part of a day that the deﬁciency continues, at an annual rate not exceeding the highest annual rate ﬁxed, at the time of the deﬁciency, by the Bank of Zambia under the Bank of Zambia Act for any of its operations. [Act No. 43 of 1996] [Repealed and replaced by Act No. 18 of 2000, amended by Act No. 25 of 2005]

Section 71Verify source

§ 72Prohibition of unsecured borrowing ..................................................................................................................................... 35Repeal

A bank or financial institution must not use its assets as security, except in the ordinary course of business or to secure short-term liquidity advances from the Bank of Zambia; it also must not buy an asset already subject to security unless doing so to satisfy a debt or liability owed to it.

72. Prohibition of unsecured borrowing A bank or ﬁnancial institution shall not— (a) mortgage, charge or grant security to any person over any asset of the bank or ﬁnancial institution otherwise than— (i) in the ordinary course of business; or (ii) to the Bank of Zambia to secure short-term liquidity advances made by it under the Bank of Zambia Act; or [Cap. 360] (b) acquire an asset that is subject to a mortgage, charge or other security interest in favour of any person, except to satisfy a debt or other liability to it. [As amended by Act No. 18 of 2000 and No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 35 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 72Verify source

§ 73Limitations on granting advances ......................................................................................................................................... 36Repeal

Banks and financial institutions are restricted from making certain large advances, related-party advances, and non-banking investments without Bank of Zambia approval.

73. Limitations on granting advances (1) A bank or ﬁnancial institution shall not, directly or indirectly, except as provided in the Fourth Schedule, grant any advance, or make any guarantee of the debtors of any person or common enterprise so that the total value of any such advances and guarantees with or in respect of any one person or common enterprise is at any time more than twenty-ﬁve per centum of the regulatory capital of the bank or ﬁnancial institution. (2) A bank or ﬁnancial institution shall not, directly or indirectly, grant any advance against the security of its own shares. (3) A bank or ﬁnancial institution shall not, directly or indirectly, except with the prior written approval of the Bank of Zambia and on such terms and conditions as may be prescribed, grant or permit to be outstanding any secured or unsecured advances to— (a) its directors, whether such a advances are obtained by them jointly or severally; (b) any person who has de jure or de facto control of the bank or ﬁnancial institution; or (c) any body of persons of which any one or more of its directors has de jure or de facto control or is a director, partner, manager, agent or member; grant any advance or credit, or make any guarantee of the debts of any person, so that the total value of any such grants, advances and guarantees with or in respect of any one person is at any time more than twenty-ﬁve per centum of the regulatory capital (as deﬁned by regulation) of the bank. (4) A bank or ﬁnancial institution shall not, directly or indirectly, except with the prior written approval of the Bank of Zambia and on such terms and conditions as may be prescribed, grant or permit to be outstanding to a chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager or employee of the bank or ﬁnancial institution unsecured advances, which in the aggregate exceed their respective annual remunerations. (5) A bank or ﬁnancial institution shall not, directly or indirectly, except with the prior written approval of the Bank of Zambia and on such terms and conditions as may be prescribed, engage in any trade or business except the business or businesses for which it is licensed, except in so far as may be necessary for a temporary period (and in any event for not longer than twelve months or such longer period as the Bank of Zambia may allow) in the conduct of its business or to obtain the satisfaction of debts due to it. (6) A bank ﬁnancial institution shall not, directly or indirectly, without the prior written approval of the Bank of Zambia and on such terms and conditions as may be prescribed, acquire ownership of any interest in any commercial, agricultural, industrial or other business undertaking, except such interest as it may acquire for the purpose of securing or satisfying a debt or other liability payable to it and which is disposed of within two years or subsequently continued with the prior consent of the Bank of Zambia. (7) A bank or ﬁnancial institution shall not, directly or indirectly, except with the prior written approval of the Bank of Zambia and on such terms and conditions as prescribed, purchase, lease or otherwise acquire an interest in real property except— (a) as may be reasonably necessary for the purpose of conducting its business, including provision for future expansion and providing housing accommodation for its ofﬁcers and employees; or (b) as may be reasonably necessary for the purpose of securing or satisfying a debt or other liability to it and which is disposed of within two years or subsequently continued with the prior consent of the Bank of Zambia. (8) A bank or ﬁnancial institution shall not, directly or indirectly, except with the prior written approval of the Bank of Zambia and on such terms and conditions as the Bank of Zambia may By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 36 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed prescribe lease or otherwise contract to make available to any person in consideration of periodic payments or of rent or other instalment payment terms, any personal property owned by it; but nothing in this subsection shall prevent a bank or ﬁnancial institution from lending on the security of any personal property and taking title thereto for such purpose, including the purpose of satisfying a debt or obligation to it, if the lease or other arrangement is disposed of within two years or subsequently continued with the prior consent of the Bank of Zambia. (9) In the application of the limitations imposed by subsections (1) and (3), if the Bank of Zambia determines that a group of two or more persons to whom any grants, advances or guarantees have been or are to be made are a common enterprise or are so inter-related that they should be considered as a unit, the total indebtedness of that group shall, if the Bank of Zambia by notice served on the bank or ﬁnancial institution concerned so provides, be combined and shall be deemed to be the indebtedness of a single person: Provided that a bank or ﬁnancial institution shall not be taken to have contravened subsection (1) or (3) by virtue of a determination under this subsection, if the bank or ﬁnancial institution disposes of the indebteness of the group, to the extent that it exceeds the relevant limitation, within such reasonable time as the Bank of Zambia may determine. (10) The provisions of this section shall apply with necessary modiﬁcations to ﬁnancial businesses: Provided that the Bank of Zambia may establish lending and other limits for, and impose restrictions and prohibitions on, ﬁnancial businesses similar to those speciﬁed under this section and may impose different limits for different categories of ﬁnancial businesses. [As repealed and replaced by Act No. 18 of 2000 amended by No. 25 of 2005]

Section 73Verify source

Part

Schedule, grant any advance, or make any guarantee of the debtors of any person or common

§ 74Constraints on contracts with related persons ................................................................................................................. 37Amendment

A financial service provider may contract with a related person only with advance board approval and on no-less-favourable terms, unless the contract is for a nominal sum or is exempted by the Bank of Zambia.

74. Constraints on contracts with related persons (1) For the purposes of this section, each person referred to in subsection (3) of section seventy-three is designated a "related person". (2) A ﬁnancial service provider may enter into a contract with a related person only if— (a) the board of directors approves of the contract in advance and the contract is on terms no less favourable to the bank or ﬁnancial institution than the terms of similar contracts that are entered into by the ﬁnancial service provider with persons who are not related; or (b) the contract is for a nominal sum or is of a class or type exempted by the Bank of Zambia from the operation of this section. [As amended by Act No. 25 of 2005]

Section 74Verify source

§ 75Limitations on equity investments ........................................................................................................................................ 37Repeal

Banks and financial institutions are limited in how much they can invest in equity interests, with specific percentage caps and a few exceptions.

75. Limitations on equity investments (1) A bank or ﬁnancial institution shall not invest in an equity interest in any person, property or undertaking in an amount exceeding ﬁfteen per centum of the total of all equity interests in the person, property or undertaking. (2) The aggregate investment in equity interests of persons, properties or undertakings by a bank or ﬁnancial institution shall not exceed twenty-ﬁve per centum of its regulatory capital. (3) A bank or ﬁnancial institution shall not acquire an equity interest in any single person, property or undertaking where the value of the bank's or institution's equity exceed twenty-ﬁve per centum of its regulatory capital. (4) A bank or institution shall not acquire an equity interest in any single person, property or undertaking in which an insider has a related interest that exceeds ten per centum of the bank's or ﬁnancial institution's regulatory capital. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 37 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (5) Subsection (1) does not apply to an investment or investments by a bank or ﬁnancial institution in the shares of its subsidiary, if the aggregate of all investments by the bank or ﬁnancial institution does not exceed twenty ﬁve per centum of its regulatory capital. (6) The Bank of Zambia shall prescribe a period within which a bank or ﬁnancial institution which is in breach of any of the provisions of this section on the coming into force of this Act shall be required to comply with this section. (7) Subsection (1) does not apply to an acquisition by a bank or ﬁnancial institution of an equity interest in realisation of any part of the collateral provided to the bank or ﬁnancial institution in a credit transaction with any person, if the taking ﬁnancial institution, within two years following its acquisition or such longer period as the Bank of Zambia may allow, disposes of any equity interest in excess of the limits imposed by this section. (8) In this section— (a) "equity interest in a person" means (i) (ii) in the case of a company, any share issued by the company, the terms of which entitle the registered holder or bearer to a share in the proﬁts of the company; or in the case of a partnership, association or other body of persons acting in concert, any right to share in the proﬁts of the person; (b) "equity interest in a property or undertaking" means an ownership interest and includes any right to share in the proﬁts of the operation or proceeds of disposition of the property or undertaking; and (c) in subsection (4), "insider" means— (i) any ofﬁcer, director or principal shareholder of a bank or of a ﬁnancial institution; (ii) any person who participates or has the authority to participate in major policy making functions of a bank or of a ﬁnancial institution whether employed or not by the bank or ﬁnancial institution; (iii) a bank or ﬁnancial institution in which a person referred to in subparagraph (i) or (ii) owns directly or indirectly, alone or together with one or more other persons falling within the meaning of any of those subparagraphs, more than twenty per centum of the shares; or (iv) a company in which a bank or a ﬁnancial institution owns more than ten per centum of the outstanding shares. [Repealed and replaced by Act No. 18 of 2000 and by Act No. 25 of 2005]

Section 75Verify source

§ 76Unclaimed funds or personal property ................................................................................................................................ 38Repeal

Banks or financial institutions must report presumed abandoned funds or property to the Bank of Zambia, pay or surrender them to the Bank of Zambia, and keep related records. The owner may claim the funds within six years after the Bank of Zambia receives them.

76. Unclaimed funds or personal property (1) Any funds held or owed by a bank or ﬁnancial institution under the circumstances set out in paragraph (a) or (b) of subsection (2) or any funds or personal property referred to in paragraph (c) of that subsection shall be presumed abandoned upon the expiration of the respective periods provided for in that subsection and if the person in whose name the funds were, or the personal property was, held does not respond to a notice in writing sent by the bank or ﬁnancial institution by prepaid registered post to the last known address of the person in the records of the bank or ﬁnancial institution. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 38 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) Subsection (1) applies to— (a) any demand, savings or matured time deposit together with any interest or dividend thereon, excluding any charges that may lawfully be withheld, in respect of which the owner has not, within the last ten years— (i) increased or decreased the amount of the deposit, or presented the passbook or other similar evidence of the deposit for the crediting of interest or dividends; (ii) corresponded in writing with the bank or ﬁnancial institution (iii) otherwise indicated an interest in the deposit as evidenced by a memorandum on ﬁle with the bank or ﬁnancial institution; (b) any funds paid toward the purchase of a share or other interest in a security issued by a bank or ﬁnancial instittuion and any interest or dividends relating thereto excluding any charges that may lawfully be withheld, in respect of which the owner has not, within the last ten years— (i) increased or decreased the amount of the funds or deposit; or (ii) corresponded in writing with the bank or ﬁnancial institution; or (iii) otherwise indicated an interest in the funds as evidenced by a memorandum in the records of the bank or ﬁnancial institution; and (c) any funds or other personal property, removed from a safe deposit box or any other safekeeping facility on which the lease or rental period has expired due to the non-payment of rental charges or by reason of some other default by the lessee, or any surplus amounts arising from the sale of the property thereof in accordance with law, that have been unclaimed by the owner for more than ten years from the date on which the lease or rental period expired. (3) A bank or ﬁnancial institution holding funds or personal property presumed abandoned under this section shall report to the Bank of Zambia on the amount and nature of such funds or property in such form and at such time as may be prescribed by the Bank of Zambia, and shall pay such funds or relinquish the property to the Bank of Zambia upon expiration of the time provided by this section for the presumption of abandonment to arise. (4) The bank or ﬁnancial institution shall retain its records concerning funds paid or property relinquished by it under subsection (3). (5) A person whose funds have been paid or whose property has been relinquished to the Bank of Zambia in accordance with this section may claim the funds from the Bank of Zambia within a period of six years from the date of receipt of the funds or the property by the Bank of Zambia. (6) No action to recover, and no other action in respect of any funds or property presumed abandoned and paid in or relinquished in accordance with this section may be brought against the paying bank or against the Bank of Zambia after the sixth year following payment or relinquished to the Bank of Zambia, but where the Bank of Zambia considers it desirable, to avoid hardship or injustice, the Bank of Zambia may make a payment to a claimant in respect of funds presumed abandoned or may restore the property to that person. [Repealed and replaced by Act No. 18 of 2000]

Section 76Verify source

§ 77Unsafe and unsound practices ................................................................................................................................................ 39Repeal

The Bank of Zambia may respond to unsafe or unsound banking practices by making written agreements or giving directions, and people must not carry out such practices or ignore those agreements or directions.

77. Unsafe and unsound practices (1) Where, in the opinion of the Bank of Zambia, a ﬁnancial service provider or any person on behalf of a bank or ﬁnancial institution is committing or pursuing or is about to commit or pursue on behalf of the ﬁnancial service provider any act or course of conduct that is considered by the Bank of Zambia as unsafe or unsound practice, the Bank of Zambia may enter into one or more written agreements with the ﬁnancial service provider or its board of directors to establish a programme By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 39 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed of action to counteract the unsafe or unsound practice and to establish or maintain safe and sound practices in the conduct of the business of the ﬁnancial service provider. (2) Where the Bank of Zambia is unable to obtain an agreement under subsection (1) within a time, and in a form and content, satisfactory to the Bank of Zambia, or where the Bank of Zambia considers that the need for prompt action makes the negotiation of such an agreement impractical, the Bank of Zambia may direct the ﬁnancial service provider or any director, manager or other person concerned in its management to do either or both of the following: (a) cease or refrain from doing the act or pursuing the course of conduct; (b) perform such acts as, in the opinion of the Bank of Zambia, are necessary to rectify the situation. (3) In particular, but without limiting the generality of subsection (2), the Bank of Zambia may— (a) direct the ﬁnancial service provider to refrain from adopting or pursuing a particular course of action or to restrict the scope of its business in a particular way; (b) impose any limitation on the ﬁnancial institution acceptance of deposits or the payment of the interest thereon, the granting of credit, the making of investments or the payment of dividends; (c) prohibit the solicitation of deposits or the payment of the interest thereon either generally or from speciﬁed persons or classes or persons; (d) prohibit the ﬁnancial service provider from entering into any other transaction or class of transactions, or from commencing or continuing any activity which it is permitted under this Act to carry on; or (e) require the suspension or removal from ofﬁce of any director, ofﬁcer or other person. (4) Directions given under this section shall be given by notice in writing to the ﬁnancial service provider or person concerned and may in like manner be varied or revoked. (5) A direction given under this section shall be effective immediately and shall remain in effect in accordance with its terms unless discontinued on appeal. (6) Any person acting in contravention of the provisions of an agreement made or direction given under this section shall be guilty of an offence and shall be liable on conviction to a penalty not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding ﬁve years, or to both. (7) An appeal lies under Chapter VIII against a decision of the Bank of Zambia to give a direction under this section. (8) The Minister may, in consultation with the Bank of Zambia, prescribe Acts which constitute unsafe or unsound practice. (9) A person shall not carry out any unsafe or unsound practice (10) A person who carries out any unsafe or unsound practice commits an offence and is liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or imprisonment not exceeding three years or to both. [As amended by Act No. 13 of 1994, No. 18 of 2000 and No. 25 of 2005]

Section 77Verify source

§ 78Inspection of ﬁnancial service provider .............................................................................................................................. 40Repeal

The Bank of Zambia may inspect financial service providers, related companies in Zambia, and charge inspection fees.

78. Inspection of ﬁnancial service provider (1) The Bank of Zambia may cause an examination to be made of a ﬁnancial service provider to determine whether it is in a sound ﬁnancial condition and operating safely and that the requirements of this Act, the Bank of Zambia Act and other laws of Zambia have been complied with in the conduct of its business. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 40 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) When, in conducting an examination of a ﬁnancial service provider under this section, the Bank of Zambia considers it necessary to do so, the Bank of Zambia may at the same time cause a like inspection to be made of any other company in Zambia that is a subsidiary, associate or afﬁliate of the ﬁnancial service provider concerned. (3) The Bank of Zambia may order an inspection any time it considers appropriate and may charge such inspection fees for the inspection as may be prescribed by the Bank of Zambia. [As amended by Act No. 18 of 2000]

Section 78Verify source

§ 79Scope of inspection ..................................................................................................................................................................... 41Amendment

Financial service providers must produce records and information for inspection, and auditors must cooperate and provide records when requested by the Bank of Zambia.

79. Scope of inspection (1) A ﬁnancial service provider shall: (a) produce, and cause each company that is a subsidiary afﬁliate or associate of the ﬁnancial service provider to produce, for the inspection of any inspector appointed by the Bank of Zambia, at such times as the inspector speciﬁes, all books, accounts and records relating to its business in Zambia or elsewhere; and (b) supply all information concerning its business in Zambia or elsewhere as may reasonably be required by the inspector within such time as the inspector speciﬁes. (2) Where the most recent report of the auditor of a ﬁnancial service provider contains information that the Bank of Zambia reasonably considers justiﬁes an inspection of the ﬁnancial service provider to be conducted, the auditor shall co-operate with ofﬁcials of the Bank of Zambia or the inspector to investigate, and in that connection, the auditors shall, at the request of the Bank of Zambia, produce any books, accounts and records in the possession of the auditor that, in the auditor's or the Bank of Zambia's opinion, would be of assistance in the investigation. (3) The Bank of Zambia may from time to time arrange meetings with the auditor, or with the auditor and ofﬁcers of the bank, to discuss any matters relevant to the Bank of Zambia's supervisory responsibilities which may have arisen in the course of the statutory audit of the. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 79Verify source

§ 80Inspection of representative ofﬁces ...................................................................................................................................... 41Provision

The Bank of Zambia may inspect representative offices, and the office’s chief representative or person in charge must let inspectors access the premises and required information during normal business hours.

80. Inspection of representative ofﬁces (1) The Bank of Zambia shall from time to time, make or cause to be made such inspection into the operation of representative ofﬁces and the conduct of the personnel in those ofﬁces as may be necessary for the purpose of ascertaining whether the ofﬁces are being operated, and the personnel of those ofﬁces are performing their functions, in conformity with this Act. (2) For the purposes of an inspection, the chief representative or other person in charge of the representative ofﬁce shall allow the Bank of Zambia or any person acting under its authority to have access during normal business hours to the premises of the repsentative ofﬁce and to any information required by the Bank of Zambia.

Section 80Verify source

§ 80ADuty to provide information and documents relating to representative ofﬁces ................................................ 41Repeal

The Bank of Zambia may require foreign banks or financial institutions with representative offices in Zambia to provide information, documents, or certified authorisation documents, and they must notify the Bank within one month if the authorisation changes or is withdrawn.

80A. Duty to provide information and documents relating to representative ofﬁces (1) The Bank of Zambia may, by notice in writing, require a foreign bank or ﬁnancial institution which has a representative ofﬁce in Zambia to provide the Bank of Zambia with such information or documents as the Bank of Zambia may reasonably require. (2) Without prejudice to the generality of subsection (1), the Bank of Zambia may by notice in writing, from time to time, require a foreign bank or ﬁnancial institution which has a representative ofﬁce in Zambia and is authorised to take deposits or conduct banking business by the relevant supervisory authority in Zambia within a speciﬁed period, a certiﬁed copy of any certiﬁcate from that authority conferring the authorisation. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 41 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (3) If at any time a certiﬁcate of authorisation of which a copy was required to be delivered to the Bank of Zambia under subsection (2) is amended or the authorisation is withdrawn, the foreign bank or ﬁnancial institution shall, not later than one month after the amendment or withdrawal, deliver to the Bank of Zambia a copy of the amended certiﬁcate or, as the case may be, a notice stating that the authorisation has been withdrawn. [As repealed and replaced by Act No. 18 of 2000]

Section 80AVerify source

§ 81Supervisory actions ..................................................................................................................................................................... 42Repeal

The Bank of Zambia must take supervisory action against a financial service provider if certain compliance, inspection, safety, capital, or solvency problems are found.

81. Supervisory actions (1) Where— (a) a ﬁnancial service provider refuses to comply with an order or directive of the Bank of Zambia under this Act; (b) a ﬁnancial service provider refuses to permit an inspection to be made as provided by this Act or obstructed an inspection; (c) in the opinion of the Bank of Zambia, an inspection instituted under this Act shows— (i) (ii) that the ﬁnancial service provider concerned conducts its business in breach of any written law or engages in a course of conduct that is unsafe or unsound; that for any reason the ﬁnancial service provider is unable, or is likely to become unable, to continue its operations in the ordinary course of its business; (iii) the ﬁnancial service provider's capital is less than the prescribed minimum; or (iv) the ﬁnancial service provider is insolvent; the Bank of Zambia shall take supervisory action against the ﬁnancial service provider. (2) The supervisory action the Bank of Zambia may take includes— (a) taking possession of the ﬁnancial service provider; (b) suspending the ﬁnancial service provider's licence for a period not exceeding six months; (c) restricting the ﬁnancial service provider's licence; and (d) revoking the ﬁnancial service provider's licence. (3) For the purposes of paragraph (c) of subsection (2), the Bank of Zambia may, by notice in writing served on a ﬁnancial service provider, vary the conditions of its licence so as to impose any restriction. (4) The Bank of Zambia shall, in writing, inform the Minister, regarding the state of affairs of a ﬁnancial service provider in respect of which it intends to take action under this section. [As repealed and replaced by Act No. 18 of 2000 and No. 25 of 2005]

Section 81Verify source

§ 82Special reserve or liability insurance ................................................................................................................................... 42Repeal

Banks and financial institutions must keep a special reserve, buy approved insurance, or make another commitment acceptable to the Bank of Zambia for certain losses caused by directors, officers, managers, or employees.

82. Special reserve or liability insurance A bank or ﬁnancial institution shall— (a) maintain a special reserve account, to an amount which the Bank of Zambia considers adequate, reserved exclusively for the purpose of making good any loss resulting from the negligency or dishonesty of any of its directors, chief executive ofﬁcers, chief ﬁnancial ofﬁcers, manager or employees; (b) insure itself against such loss, to an amount which the Bank of Zambia considers adequate, with a person approved by the Bank of Zambia carrying on insurance business or the business of guranteeing against such loss; or By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 42 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (c) undertake such other commitment as the Bank of Zambia may consider acceptable for the purpose of this section. [Amended by Act No. 18 of 2000]

Section 82Verify source

§ 83Capital adequacy .......................................................................................................................................................................... 43Repeal

The Bank of Zambia must set minimum capital requirements for financial service providers, and those providers must keep at least that amount of primary capital. Banks and financial institutions are also barred from issuing shares or other securities unless they receive the full-face amount in Zambian kwacha.

83. Capital adequacy (1) The Bank of Zambia shall, by Gazette Notice, prescribe the minimum required primary capital and the minimum required regulatory capital for every category of ﬁnancial service provider. (2) Every ﬁnancial service provider shall maintain primary capital in an amount at least equal to the minimum amount prescribed by the Bank of Zambia in accordance with subsection (1). (3) The minimum required primary capital of a ﬁnancial service provider— (a) shall be of such kinds, computed in such manner and of such amount as prescribed by the Bank of Zambia, having due regard to internationally accepted guidelines, and the nature of the ﬁnancial service provider's business; (b) may include such part of the ﬁnancial service provider's reserve account, undivided proﬁts, retained income and other reserves as may be prescribed by the Bank of Zambia; and (c) may be ﬁxed with reference to such of the assets and contingent liabilities or other exposures of the bank or ﬁnancial institution or to such portion, type or class thereof, as may be prescribed by the Bank of Zambia. (4) For banks or ﬁnancial institutions, the minimum required regulatory capital to be prescribed by the Bank of Zambia shall not be less than six per centum of a bank's or ﬁnancial institution's assets, contingent liabilities and other exposures and shall be calculated as may be prescribed by the Bank of Zambia; Provided that the Bank of Zambia may prescribe a minimum regulatory capital requirement for any category of ﬁnancial business that the Bank determines should be subject to such requirement. (5) A bank or ﬁnancial institution shall not issue any share in its capital or other security (other than a bonus share or share in lieu of dividend or other prescribed security) unless it receives the full-face amount thereof in Zambian kwacha. (6) Any person acting in contravention of this section commits an offence and is liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding ﬁve years or to both. [As repealed and replaced by Act No. 18 of 2000 and Act No. 25 of 2005] Part 2 – Taking possession of banks and ﬁnancial institutions

Section 83Verify source

Part

Part 2 – Taking possession of banks and ﬁnancial institutions

§ 84Notice of taking possession ..................................................................................................................................................... 43Repeal

When the Bank of Zambia takes possession of a financial service provider, it must post a notice in each branch stating that it has taken possession and when the possession takes effect.

84. Notice of taking possession When taking possession of a ﬁnancial service provider under paragraph (a) of subsection (2) of section eighty-one, the Bank of Zambia shall post in each branch of the ﬁnancial service provider a notice announcing its action and specifying the date, hour and minute at which the possession takes effect; and if the taking of possession is attributable to insolvency, the Bank of Zambia shall transmit a copy of the notice to the court. [As amended by Act No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 43 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 84Verify source

§ 84APowers and duties of the Bank of Zambia upon taking position ............................................................................. 44Amendment

When the Bank of Zambia takes possession of a financial service provider, it gets full and exclusive management and control powers.

84A. Powers and duties of the Bank of Zambia upon taking position The Bank of Zambia upon taking possession of a ﬁnancial service provider under paragraph (a) of subsection (2) of section eighty-one shall be vested with full and exclusive powers of management and control of the ﬁnancial service provider, including the power— (a) to continue or discontinue any operations; (b) to borrow money, whether or not on the security of the assets of the ﬁnancial service provider; (c) to stop or limit the payment of any obligation, including interest; (d) (e) (f) to employ, re-employ or retain in employment any ofﬁcer, employee or professional advisor the Bank of Zambia considers necessary; to execute any instrument in the name of the ﬁnancial service provider and to initiate or defend and conduct in the name of the bank or of the ﬁnancial institution any action or legal proceedings; to terminate the employment of any director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager or employee; (g) to terminate the interests of the shareholders at a value to be determined by the court; and (h) to enforce the individual liability of the directors and of the shareholders of the ﬁnancial service provider incurred in the ordinary course of business, and on unpaid shares. [As amended by Act No. 25 of 2005]

Section 84AVerify source

§ 84BStatement of affairs of assets and liabilities upon taking possession ................................................................... 44Amendment

When the Bank of Zambia takes possession of a financial service provider, it must prepare a statement of its assets and liabilities and act within 90 days.

84B. Statement of affairs of assets and liabilities upon taking possession Upon taking possess of a ﬁnancial service provider, the Bank of Zambia shall prepare a statement of affairs of the assets and liabilities and shall within ninety days from the effective date of taking possession take any of the following actions: (a) where the statement of affairs of the assets and liabilities shows the ﬁnancial service provider to be solvent— (i) to restructure or reorganise the ﬁnancial service provider; (ii) to sell the ﬁnancial service provider as a going concern; (iii) to close the ﬁnancial service provider; (iv) to take any action which is necessary to enable the Bank of Zambia to carry out its functions under this Act; or (b) where the ﬁnancial service provider is insolvent, to take such action as it considers appropriate under Part 4 of Chapter VII [As amended by Act No. 25 of 2005]

Section 84BVerify source

§ 84CAppeal for termination of possession ................................................................................................................................ 44Repeal

A financial service provider, or someone acting for it, may go to court within 21 days after the Bank of Zambia takes possession to ask for the possession to be ended.

84C. Appeal for termination of possession Within a period of twenty-one days after the date on which the Bank of Zambia takes possession of a ﬁnancial service provider, the ﬁnancial service provider or any interested person acting on its behalf may institute proceedings in court to require the Bank of Zambia to show cause why the possession should not be terminated. [As amended by Act No. 25 of 2005] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 44 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 84CVerify source

§ 84DEffect of possession ................................................................................................................................................................. 45Amendment

When the Bank of Zambia takes possession of a financial service provider, some expiring claims or rights are extended, certain attachments or liens are vacated, and some recent payments or transfers intended to prefer one creditor may be void.

84D. Effect of possession (1) When the Bank of Zambia takes possession of a ﬁnancial service provider— (a) any term, whether statutory or contractual, on the expiration of which a claim or right of the ﬁnancial service provider would expire or be extinguished, shall be extended by six months from the date of such expiration or extinction; (b) any attachment or lien (except an attachment or lien existing twelve months prior to the taking possession of the ﬁnancial service provider) shall be vacated, and no attachment or lien except an attachment or lien created by the Bank of Zambia in carrying out its role of lender of last resort or an attachment or lien created in favour of a payment or settlement system, shall attach to any of the assets or property of the ﬁnancial service provider so long as the possession continues; and (c) every payment or transfer of an asset or property of the ﬁnancial service provider made under with intent to effect a preference of the recipient over the other creditors of the ﬁnancial service provider is void if so made within a period of twelve months before the Bank of Zambia takes possession of the ﬁnancial service provider. (2) Where a payment or transfer referred to in paragraph (c) of subsection (1) has the effect of preferring the recipient, it shall be presumed to have been made with that intent, except in the case of— (a) a payment made to a creditor in the ordinary course of business to discharge in whole or in part a debt or other liability of the ﬁnancial service provider to the recipient; or (b) a transfer of an asset or property made in a current exchange for valuable consideration equal to the fair market value of the asset or property transferred. [As amended by Act No. 25 of 2005]

Section 84DVerify source

Part

part a debt or other liability of the ﬁnancial service provider to the recipient; or

§ 84ERestructuring and reorganisation ........................................................................................................................................ 45Commencement

The Bank of Zambia must send the restructuring or reorganisation plan to affected depositors and creditors, together with a notice, before proceeding.

84E. Restructuring and reorganisation (1) Where the Bank of Zambia, acting under paragraph (a) of subsection (1) of section eighty-four B decides to commence the restructuring or reorganisation, or both, of the ﬁnancial service provider, the Bank of Zambia shall, after granting a reasonable opportunity for a hearing of all interested parties, send a copy of the restructuring or reorganisation plan to each depositor and any other creditor who, under the plan, would not receive full payment. (2) The copy of the restructuring or reorganisation plan shall be accompanied by a notice stating that, if the plan is not refused in writing within a period of thirty days by persons holding at least one third of the aggregate amount of the deposits and creditors comprising at least one-third in value of the aggregate of the claims of creditors (other than subordinated creditors), or if within the same period of thirty days no objection or appeal to a court has been made and the court does not order a stay of proceedings, the Bank of Zambia will proceed to carry out the restructuring or reorganisation. [As amended by Act No. 25 of 2005]

Section 84EVerify source

§ 84FRefusal of restructuring or reorganisation of plan ........................................................................................................ 45Repeal

If creditors refuse a restructuring or reorganisation plan, or if the Bank of Zambia thinks the plan is unfair, impossible, or undesirable to carry out, the Bank may modify the plan or order compulsory liquidation of the financial service provider.

84F. Refusal of restructuring or reorganisation of plan (1) Where depositors and other creditors refuses a re-structuring or reorganisation plan prepared by the Bank of Zambia under this Part, or when in the course of retructuring or reorganistion it appears to the Bank of Zambia that circumstances render the plan inequitable or its execution impossible or undesirable, the Bank of Zambia may— (a) modify the plan; or By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 45 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (b) order the compulsory liquidation of the ﬁnancial service provider in accordance with Chapter VII [As amended by Act No. 25 of 2005]

Section 84FVerify source

§ 84GRestructuring as to execution ............................................................................................................................................... 46Amendment

A writ of execution, attachment, garnishee order, or similar process cannot be issued against a financial service provider’s assets or property while they are in the Bank of Zambia’s possession.

84G. Restructuring as to execution (1) No writ of execution, attachment, garnishee order or other process of a similar nature shall be issued or made against the assets or property of a ﬁnancial service provider in the possession of the Bank of Zambia. (2) Where a creditor has issued or made a writ of execution, attachment, garnishee order or other process of a similar nature against the movable or immovable property of a ﬁnancial service provider or has attached any debt due to the ﬁnancial service provider the creditor shall not be entitled to retain the beneﬁt of the execution or attachment unless the creditor has completed the execution or attachment before the date of the Bank of Zambia taking possession of the ﬁnancial service provider. [As amended by Act No. 25 of 2005]

Section 84GVerify source

§ 84HRecovery of expenses .............................................................................................................................................................. 46Amendment

A financial service provider must pay the Bank of Zambia’s necessary and reasonable expenses for applying this Chapter.

84H. Recovery of expenses All necessary and reasonable expenses incurred by the Bank of Zambia in the application of the provisions of this Chapter shall be defrayed from the funds of the ﬁnancial service provider. [As amended by Act No. 25 of 2005]

Section 84HVerify source

§ 84IAppointment of agent by Bank of Zambia ........................................................................................................................ 46Repeal

The Bank of Zambia may appoint an agent to carry out its functions under this Chapter.

84I. Appointment of agent by Bank of Zambia The Bank of Zambia may appoint an agent to carry out any of its functions under this Chapter. [As repealed and replaced by Act No. 18 of 2000] Chapter VII Insolvency, dissolution and liquidation of banks and ﬁnancial institutions Part 1 – Preliminary

Section 84IVerify source

Part

Part 1 – Preliminary

§ 85Precedence of this Act ............................................................................................................................................................... 46Repeal

If another written law conflicts with this Act for banking business or financial service business, this Act prevails to the extent of the conflict.

85. Precedence of this Act Where, in relation to banking business or ﬁnancial service business any written law is inconsistent with this Act, the provision of this Act shall, to the extent of the inconsistency, prevail. [Repealed and replaced by Act No. 18 of 2000]

Section 85Verify source

§ 86Meaning of "insolvent" ............................................................................................................................................................... 46Amendment

This section defines when a financial service provider is insolvent.

86. Meaning of "insolvent" For the purposes of Chapter VI and this Chapter, a ﬁnancial service provider is insolvent when it ceases to be able to meet its obligations as they fall due or when its assets are insufﬁcient to meet its liabilities. [As amended by Act No. 25 of 2005]

Section 86Verify source

§ 87Acceptance of deposits by insolvent banks ........................................................................................................................ 46Repeal

An insolvent financial service provider must not take deposits or start/continue banking or financial services, except for actions needed to orderly realise, conserve, or preserve assets. Certain pre-liquidation or pre-receivership settlement transactions are not treated as prohibited. Officers or employees who knowingly or reasonably should know of insolvency and cause or allow a breach commit an offence.

87. Acceptance of deposits by insolvent banks (1) A ﬁnancial service provider shall not, while insolvent: (a) receive any deposit; or By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 46 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (b) enter into any new, or continue to conduct any existing, banking or ﬁnancial service business, as the case may be, except that which is incidental to the orderly realisation, conservation and preservation of its assets; (2) A transaction with a depositor or a creditor and a settlement in a netting or gross settlement arrangement under the system of settlement approved by the Bank of Zambia or provided for in or under any written law shall not be treated as prohibited under subsection (1) only because of the insolvency of a ﬁnancial service provider if the transaction or settlement took place prior to a resolution to liquidate the ﬁnancial service provider or prior to the appointment of a receiver or the taking possession of the ﬁnancial service provider by the Bank of Zambia. (3) A director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager or employee of a ﬁnancial service provider who knows or, in the proper performance of his duties, could reasonably be expected to know of the insolvency of the ﬁnancial service provider and who causes or permits any act in contravention of this section shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding ﬁve years, or to both. [As amended by Act No. 13 of 1994, No. 18 of 2000 and No. 25 of 2005]

Section 87Verify source

§ 87APowers of Bank of Zambia in relation to insolvent ﬁnancial institutions ............................................................. 47Amendment

If a licensed financial service provider becomes insolvent, the Bank of Zambia must take possession or revoke the licence and direct the appropriate authority to liquidate or dissolve the institution, depending on the institution’s legal form and oversight.

87A. Powers of Bank of Zambia in relation to insolvent ﬁnancial institutions Where a fﬁnancial service provider licensed under this Act becomes insolvent— (a) if it is a company under the Companies Act or if it is a body corporate established by or under any written law, the Bank of Zambia shall take possession of the institution in accordance with the provisions of paragraph (a) of subsection (2) of section eighty-one; [Cap. 388] (b) if it not a company under the Companies Act and is subject to the supervision or control of another authority, the Bank of Zambia shall revoke its licence and give directions to the appropriate authority to place the institution into liquidation or dissolution. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 87AVerify source

§ 87BPower of Bank of Zambia in relation to insolvent ﬁnancial businesses ................................................................ 47Amendment

If a licensed financial business becomes insolvent, the company Act winding-up rules apply unless the Bank of Zambia decides the business should be dealt with under sections 84 to 84H.

87B. Power of Bank of Zambia in relation to insolvent ﬁnancial businesses Notwithstanding the provisions of sections eighty-four, eighty-four A, eighty-four B, eighty-four C, eighty-four D, eighty-four E, eighty-four F, eighty-four G and eighty-four H, where a ﬁnancial business licensed under this Act becomes insolvent, the provisions of the company Act regarding the winding up of a company or body corporate, as the case may be, shall apply to such insolvent ﬁnancial business, unless the bank of Zambia has determined that the insolvent ﬁnancial business be dealt with in accordance with provisions of sections eighty-four, eighty-four A, eighty-four B, eighty-four C, eighty-four D, eighty-four E, eighty-four F, eighty-four G and eighty-four H. [As amended by Act No. 25 of 2005] [Cap. 388] Part 2 – Voluntary winding up and liquidation

Section 87BVerify source

Part

Part 2 – Voluntary winding up and liquidation

§ 88Approval of Bank of Zambia required for voluntary winding up ................................................................................ 47Repeal

Banks and financial institutions need Bank of Zambia approval before passing a voluntary winding-up or dissolution resolution, and they must record the resolution time if they pass one.

88. Approval of Bank of Zambia required for voluntary winding up (1) A bank or ﬁnancial insitution shall not, except with the approval of the Bank of Zambia, pass any resolution for voluntary winding up or dissolution under the Companies Act; or under any other written law; and where a bank or ﬁnancial institution passes a resolution for its voluntary winding up or dissolution, it shall record the date, hour and minute of the passing of the resolution. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 47 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) The Bank of Zambia shall grant approval to a voluntary winding up on such terms and conditions it may determine and only if it appears to the Bank of Zambia that the bank is solvent and has sufﬁcient liquid assets to repay it's depositors and all it's other creditors in full and without delay. [As amended by Act No. 18 of 2000]

Section 88Verify source

§ 89Duties of bank on voluntary liquidation ............................................................................................................................. 48Amendment

If a bank or financial institution gets approval for voluntary winding up or dissolution, it must surrender its licence, stop doing business, repay depositors and other creditors in full, and wind up prior operations.

89. Duties of bank on voluntary liquidation (1) When a bank or ﬁnancial institution has received approval from the Bank of Zambia for voluntary winding up or dissolution, it shall— (a) immediately surrender its licence to the Registrar, cease to do business and thereafter exercise its powers only to the extent necessary to effect its orderly winding up or dissolution; (b) repay in full its depositors and other creditors; and (c) wind up or dissolve all operations undertaken prior to the receipt of the approval. (2) A director, chief executive ofﬁcer, chief ﬁnancial ofﬁcer, manager or employee of a bank or ﬁnancial institution who knows or, in the proper performance of his duties, could reasonably be expected to know of the insolvency of the institution and who causes or permits any act in contravention of this section shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding ﬁve years, or to both. [As amended by Act No. 13 of 1994 and Act No. 18 of 2000]

Section 89Verify source

§ 90Notice of voluntary winding up and liquidation .............................................................................................................. 48Amendment

A bank or financial institution that gets approval for voluntary winding up or dissolution must, within 14 days, notify depositors, creditors, and other entitled persons by registered mail.

90. Notice of voluntary winding up and liquidation (1) Within fourteen days after receiving approval for its voluntary winding up or dissolution, a bank or ﬁnancial institution shall by registered mail notify— (a) every depositor and other creditor of the bank or ﬁnancial institution; and (b) any person otherwise entitled to any funds or property held by the bank as a trustee, ﬁduciary, lessor of a safe-keeping facility or bailee, of its intention to wind up or dissolve. (2) A notice for the purposes of subsection (1) shall set forth such information as the Bank of Zambia may require by notice to the bank or ﬁnancial institution concerned. (3) A copy of the bank's or ﬁnancial institution notice shall be kept displayed in a conspicuous place in the public part of each branch of the bank or ﬁnancial institution and the bank or ﬁnancial institution shall publish it in the Government Gazette and in a newspaper of general circulation throughout Zambia. [As amended by Act No. 18 of 2000]

Section 90Verify source

§ 91Rights of depositors and creditors ........................................................................................................................................ 48Repeal

When a bank or financial institution is being voluntarily wound up or dissolved, depositors, creditors, and owners of held funds or property keep their rights to full payment or return of property.

91. Rights of depositors and creditors (1) The approval by the Bank of Zambia under this Part for the voluntary winding-up or dissolution of a bank or ﬁnancial institution shall not prejudice the rights of a depositor or other creditor to payment in full of a claim nor the right of an owner of funds or other property held by the bank or ﬁnancial institution to the return thereof. (2) All lawful claims shall be paid promptly and all funds and other property held by the bank or ﬁnancial institution shall be returned to their rightful owners within such maximum period as the Bank of Zambia may in writing direct. [As amended by Act No. 18 of 2000] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 48 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 91Verify source

§ 92Distribution of assets on voluntary liquidation ................................................................................................................ 49Amendment

A bank or financial institution in voluntary liquidation must distribute the remaining property to its rightful owners, but only after creditor claims are paid and required funds are turned over to the Bank of Zambia.

92. Distribution of assets on voluntary liquidation (1) Where in the opinion of the Bank of Zambia a bank or ﬁnancial institution has discharged all the obligations referred to under section eighty-nine, the remainder of its property shall be distributed to its rightful owner or owners. (2) Distribution under subsection (1) shall not be made before— (a) all claims of depositors and other creditors have been paid in full or, in the case of a disputed claim, the bank or ﬁnancial institution has turned over to the Bank of Zambia funds sufﬁcient, in the opinion of the Bank of Zambia, to meet any liability that may be judicially determined; and (b) any funds payable to a depositor or other creditor who has not claimed them have been turned over to the Bank of Zambia to be dealt with as unclaimed funds in accordance with this Act. [As amended by Act No. 18 of 2000]

Section 92Verify source

§ 93Powers of Bank of Zambia if assets insufﬁcient or completion unduly delayed ................................................... 49Repeal

The Bank of Zambia may take possession of a bank or financial institution if the approved winding-up, liquidation, or dissolution may not cover all obligations, or if completion is unduly delayed, and it considers that proper.

93. Powers of Bank of Zambia if assets insufﬁcient or completion unduly delayed If the Bank of Zambia ﬁnds that the assets of a bank or ﬁnancial institution whose voluntary winding-up or liquidation or dissolution it has approved will not be sufﬁcient for the full discharge of all its obligations or that completion of the winding-up or liquidation or dissolution is unduly delayed, it may, if it considers it proper to do so, take possession of the bank or ﬁnancial institution. [As amended by Act No. 18 of 2000] Part 3 – Seizure of banks [Repealed by Act No. 18 of 2000]

Section 93Verify source

Part

Part 3 – Seizure of banks

§ 94*** ....................................................................................................................................................................................................... 49Repeal

Section 94 has been repealed.

94. *** [Repealed by Act No. 18 of 2000]

Section 94Verify source

§ 95*** ....................................................................................................................................................................................................... 49Repeal

This section was repealed by Act No. 18 of 2000.

95. *** [Repealed by Act No. 18 of 2000]

Section 95Verify source

§ 96*** ....................................................................................................................................................................................................... 49Repeal

Section 96 has been repealed.

96. *** [Repealed by Act No. 18 of 2000]

Section 96Verify source

§ 97*** ........................................................................................................................................................................................................ 49Repeal

This section has been repealed.

97. *** [Repealed by Act No. 18 of 2000]

Section 97Verify source

§ 98*** ....................................................................................................................................................................................................... 49Repeal

This section was repealed by Act No. 18 of 2000.

98. *** [Repealed by Act No. 18 of 2000]

Section 98Verify source

§ 99*** ....................................................................................................................................................................................................... 49Repeal

This section was repealed by Act No. 18 of 2000.

99. *** [Repealed by Act No. 18 of 2000] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 49 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 99Verify source

§ 100*** ..................................................................................................................................................................................................... 50Repeal

Section 100 is marked as repealed.

100. *** [Repealed by Act No. 18 of 2000] Part 4 – Compulsory liquidation, winding up or dissolution

Section 100Verify source

Part

Part 4 – Compulsory liquidation, winding up or dissolution

§ 101Compulsory liquidation, winding up or dissolution ...................................................................................................... 50Amendment

The Bank of Zambia may order a bank or financial institution into compulsory liquidation, winding up, or dissolution, and must notify affected parties. Notified persons have 30 days to object or appeal, and the Court must decide within 30 days after the objection period ends.

101. Compulsory liquidation, winding up or dissolution (1) The Bank of Zambia may, by resolution, order the compulsory liquidation, winding up or dissolution of a bank or ﬁnancial institution; and where the Bank of Zambia makes an order under this subsection, it shall record the date hour and minute of the passing of the resolution; and (2) Upon making an order under subsection (1), the Bank of Zambia shall notify each director, shareholder, other owner, depositor and other creditor of the bank or ﬁnancial institution and every other interested party of such order by written notice to such of those persons for whom the Bank of Zambia discovers a name and address, and by published or other form of public notice. (3) Each person notiﬁed shall have a period of thirty days to ﬁle an objection or appeal to the Court. (4) The Court shall render its decision in any such application or appeal within a period of thirty days after the end of the period during which objections to the liquidation were admissible and in so doing may make any order it considers just in the circumstances. [As amended by Act No. 18 of 2000]

Section 101Verify source

§ 102Powers of Bank of Zambia to appoint agent .................................................................................................................. 50Repeal

The Bank of Zambia may appoint an agent to carry out its functions under this Part.

102. Powers of Bank of Zambia to appoint agent The Bank of Zambia may appoint an agent to carry out any of its functions under this Part. [As repealed and replaced by Act No. 18 of 2000]

Section 102Verify source

§ 103Effect of order of compulsory dissolution etc. ............................................................................................................... 50Repeal

If the Bank of Zambia makes an order under section 101, sections 84D, 84G and 84H apply to the bank or financial institution in the same way as they apply when the institution is under the Bank of Zambia’s possession.

103. Effect of order of compulsory dissolution etc. Section eighty-four D, eighty-four G and eighty four H shall apply to a bank or ﬁnancial institution in respect of which an order under section one hundred and one has been made by the Bank of Zambia in the same manner as they apply to a bank or ﬁnancial institution under possession by the Bank of Zambia. [As repealed and replaced by Act No. 18 of 2000]

Section 103Verify source

§ 104Powers of Bank of Zambia in effecting compulsory liquidation etc. ...................................................................... 50Repeal

The Bank of Zambia gets liquidation-related powers over a bank or financial institution, and must handle employment, fiduciary assets, customer statements, and unclaimed property after a compulsory liquidation or similar order.

104. Powers of Bank of Zambia in effecting compulsory liquidation etc. (1) In effecting a compulsory liquidation, winding up or dissolution of a bank or ﬁnancial institution under this Act, the Bank of Zambia may, in addition to any other powers, exercise any of the powers, whether express or implied, of the bank or ﬁnancial institution concerned. (2) Upon an order for compulsary liquidation, winding up or dissolution— (a) every contract of employment of any person with the bank or ﬁnancial institution shall terminate with effect from the date on which the order comes into effect; (b) the Bank of Zambia may terminate— (i) any contract for the provision of goods or services to which the bank or ﬁnancial institution is a party; or (ii) any obligation of the bank or ﬁnancial institution as a lessee of real property; but a lessor to whom the Bank of Zambia gives not less than ninety days' notice of termination of lease shall have not claim for rent other than rent accrued and By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 50 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed outstanding on the date of termination of the lease, nor any claim for damages by reason of such termination. (3) After the decision to liquidate, wind up or dissolve a bank or ﬁnancial institution, the Bank of Zambia shall— (a) (b) take any necessary steps to terminate all ﬁduciary functions performed by the bank or ﬁnancial institution, return to each owner all assets and property held by the bank or ﬁnancial institution as a ﬁduciary in relation to the owner, and settle its ﬁduciary account; and cause to be made available at each branch for collection by each depositor, other creditor, safe-keeping services customer and bailor of property held by the bank or ﬁnancial institution, a statement (in this Part called "the customer's statement") of the nature and amount for which each one's claim is shown in the bank's or ﬁnancial institution's records, and cause to be published in a newspaper of general circulation in Zambia, a notice informing all such persons of the availability for collection of the statement at their respective branches. (4) The customer's statement shall note that any claim must be ﬁled with the Bank of Zambia before a speciﬁed date not earlier than sixty days thereafter and shall call upon safe-keeping services customers and bailors to withdraw their property. (5) Any property held in safe-keeping on the premises of the bank or ﬁnancial institution that has not been withdrawn before the date speciﬁed in the customer's statement shall be taken into possession by the Bank of Zambia in the manner prescribed by the Bank of Zambia. (6) Any unclaimed funds and property held by the bank or ﬁnancial institution as a bailee, together with inventories pertaining thereto, shall be deemed to be unclaimed funds for the purposes of the provisions of this Act dealing with unclaimed funds and shall be dealt with accordingly. [As amended by Act No. 18 of 2000] (7) [deteled by Act No. 18 of 2000]

Section 104Verify source

§ 105Limitation of ﬁling of claims ................................................................................................................................................ 51Amendment

The Bank of Zambia must, within six months after the filing deadline in the customer’s statement, deal with late or doubtful claims, determine amounts owed and claim priority, prepare a liquidation schedule for court filing, and give public and individual notices.

105. Limitation of ﬁling of claims Within six months after the last day speciﬁed in the customer's statement for the ﬁling of claims the Bank of Zambia shall— (a) defer payment of any claim that is out of time and reject any claim that appears to be of doubtful validity; (b) determine the amount, if any, owing to each known depositor or other creditor and the priority class of his claim in accordance with this Part; (c) prepare for ﬁling with the Court a Schedule of the steps it proposes to take (in this Part called a "liquidation schedule"); and (d) notify each person whose claim has not been allowed in full and publish once a week for three consecutive weeks, in a newspaper of general circulation in every place in Zambia where the bank or ﬁnancial institution had a branch, a notice of the date and place where the liquidation schedule will be available for inspection, and the date, not earlier than thirty days after the date of the third publication of the notice, on which the Bank of Zambia will ﬁle the schedule with the Court. [As amended by Act No. 18 of 2000]

Section 105Verify source

§ 106Objections to liquidation schedule ..................................................................................................................................... 51Repeal

Certain depositors, creditors, owners, and other interested parties may object to a liquidation schedule within 20 days, and the Court must consider objections.

106. Objections to liquidation schedule (1) Within twenty days after the ﬁling of the liquidation schedule, any depositor, other creditor or owner of a bank or ﬁnancial institution, and any other interested party, may ﬁle with the Court an objection to any step proposed. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 51 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) Any objection so ﬁled shall be considered by the Court, upon such notice to the Bank of Zambia and interested parties as the Court may by order direct to be given. (3) If an objection is sustained, the Court shall direct that appropriate modiﬁcation of the schedule be made. (4) After ﬁling the schedule the Bank of Zambia may, from time to time, make partial distribution to the holders of the claims which are undisputed or which have been allowed by the Court, on condition that a proper reserve is established for the payment of disputed claims. (5) As soon as possible after all objections have been decided upon, the Bank of Zambia shall make ﬁnal distribution. [As amended by Act No. 18 of 2000]

Section 106Verify source

§ 107Priority of creditors ................................................................................................................................................................... 52Amendment

In a bank’s compulsory liquidation, winding up, or dissolution, certain debts must be paid first in a set priority order.

107. Priority of creditors (1) In any compulsory liquidation, winding up or dissolution of a bank or ﬁnancial institution there shall be paid in priority to all other debts in the following order: (a) necessary and reasonable expenses incurred by the Bank of Zambia in the application of the provisions of this Part; (b) taxes and rates due, whether payable to the Government or to a local authority; (c) wages and salaries of ofﬁcers and employees of the bank for the three-month period preceding the effective date of seizure, within the limit of an amount not exceeding one hundred thousand kwacha per person or such higher amount as may be prescribed by regulation; (d) fees and assessments due to the Bank of Zambia; (e) claims established under a deposit protection scheme. (f) other deposits; or (g) other claims against the bank in such order of priority as the Court may determine upon application by the Bank of Zambia. (2) After payment of all claims submitted and accepted, the remaining claims which are not submitted within the time allowed under this Part shall be paid and thereafter interest, if any, in the order of the priority of their submission and at a rate to be ﬁxed by the Bank of Zambia. (3) If the amount available for payment for any class of claims referred to in subsections (1) and (2) is insufﬁcient to provide payment in full, the claims within a class shall abate pari passu; and for the purposes of this section each paragraph of subsection (1) constitutes a separate class of claims and the claims referred to in subsection (2) constitute another separate class of claims. [As amended by Act No. 28 of 1995 and Act No. 18 of 2000]

Section 107Verify source

§ 108Accounts after distribution of assets .................................................................................................................................. 52Repeal

When all bank or financial institution assets have been distributed under this Part, the Bank of Zambia must account to the court.

108. Accounts after distribution of assets As soon as all assets of a bank or ﬁnancial institution have been distributed as provided for in this Part, the Bank of Zambia shall render an account to the court and shall be relieved of any liability in connection with the winding up, dissolution or liquidation. [Repealed and replaced by Act No. 18 of 2000]

Section 108Verify source

§ 109Unclaimed funds ........................................................................................................................................................................ 52Repeal

If money is still unclaimed after a final distribution under this Part, the Bank of Zambia must take it into possession and hold it.

109. Unclaimed funds Any unclaimed funds remaining after a ﬁnal distribution provided for under this Part shall be taken into possession and held by the Bank of Zambia and subsequently dealt with in accordance with this Act. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 52 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 109Verify source

§ 110Final distribution in compulsory liquidation ................................................................................................................... 53Provision

After a bank’s compulsory liquidation, any assets left after all claims are paid must be distributed among the owners according to their rights and interests.

110. Final distribution in compulsory liquidation Any assets remaining after all claims have been paid upon compulsory liquidation of a bank shall be distributed among the owners in accordance with their respective rights and interests.

Section 110Verify source

§ 110ARestriction of action by third parties .............................................................................................................................. 53Provision

When the Bank of Zambia has taken possession of a bank or financial institution under this Act, only the Bank of Zambia may bring proceedings for liquidation, winding up, dissolution, or a similar action.

110A. Restriction of action by third parties Upon taking possession of a bank or ﬁnancial institution by the Bank of Zambia under this Act, no proceedings may be instituted by any person, other than the Bank of Zambia, for the liquidation, winding up, dissolution or other action of a similar nature.

Section 110AVerify source

§ 110BRecovery of expenses ............................................................................................................................................................ 53Amendment

The bank or financial institution concerned must pay the necessary and reasonable expenses incurred by the Bank of Zambia for applying this Chapter.

110B. Recovery of expenses All necessary and reasonable expenses incured by the Bank of Zambia in the application of the provisions of this Chapter shall be defrayed from the funds of the bank or ﬁnancial institution concerned. [As amended by Act No. 18 of 2000] Chapter VIII Appeals

Section 110BVerify source

Part

Chapter VIII

§ 111Reasons for decisions and right to be heard ......................................................................................................................... 53Amendment

When the Registrar or Bank of Zambia makes an appealable decision, it must give reasons in writing and invite written representations.

111. Reasons for decisions and right to be heard (1) Where the Registrar or the Bank of Zambia makes any decision against which, as provided by this Act, an appeal lies under this Chapter, the Registrar or the Bank of Zambia as the case may require, shall, by notice in writing— (a) (b) inform the applicant or other person affected by the decision of the reasons for the decision; and invite the applicant or person to make such written representations as he wishes within a time limited by the notice. (2) The decision of the Registrar or of the Bank of Zambia shall remain in force unless reversed by the Registrar or by the Bank of Zambia, as the case may be, or set aside by the Tribunal on an appeal or by a court (3) The Registrar or the Bank of Zambia may, on receipt of any representations referred to in paragraph (b) of subsection (1), reafﬁrm, revoke or vary his or its decision and shall notify the applicant or other person accordingly. [As amended by Act No. 18 of 2000]

Section 111Verify source

§ 112Right of appeal ................................................................................................................................................................................. 53Repeal

An applicant or affected person may tell the Minister they want to appeal within 7 days after the notice reaffirming the decision. The decision is held back until that time passes, and if an appeal is filed in time, it stays pending the appeal.

112. Right of appeal (1) If, after receipt of any representations from the applicant or person affected by its decision, the Registrar or the Bank of Zambia reafﬁrms his or its decision, the applicant or other person (hereinafter called the "appellant") may, within seven days of receipt of the notice reafﬁrming the decision, notify the Minister that he desires to appeal against the decision. (2) The decision of the Registrar or of the Bank of Zambia, as the case may be— (a) does not take effect until the expiry of the period limited by subsection (1) for giving notice of an appeal; and (b) where a notice of appeal is lodged within that time, is further stayed pending the outcome of the appeal. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 53 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 112Verify source

§ 113Appointment and convening of Tribunal ................................................................................................................................. 54Repeal

The Minister must appoint and convene an Appeal Tribunal within seven days after receiving a notice under section 112(1).

113. Appointment and convening of Tribunal Within seven days after receipt of a notice under subsection (1) of section one hundred and twelve, the Minister shall appoint and convene an Appeal Tribunal consisting of a Chairman who is an advocate of the High Court of not less than seven years' standing and two other persons having qualiﬁcations and experience in relation to the matters involved in the appeal. [Repealed and replaced by Act No. 18 of 2000]

Section 113Verify source

§ 114Powers of Tribunal ........................................................................................................................................................................... 54Provision

The Appeal Tribunal may decide appeals on the merits, confirm/vary/quash the decision, set its own procedure, and is not bound by the rules of evidence. The appellant has the right to appear personally or through counsel or an agent.

114. Powers of Tribunal (1) The Appeal Tribunal is to determine the appeal on its merits, having regard to the provisions of this Act and the public interest, and may conﬁrm, vary or quash the decision the subject of the appeal. (2) The Tribunal may determine its own procedure and is not bound by the rules of evidence, and may inform itself of any matter in such manner as it sees ﬁt. (3) The Appeal Tribunal shall afford the appellant the right to appear by himself or by counsel or agent.

Section 114Verify source

§ 115Decisions of Tribunal ....................................................................................................................................................................... 54Provision

The Tribunal’s decision is final and binding on the parties to the appeal, except on points of law. If the appeal is allowed, the Registrar or the Bank of Zambia must give effect to the Tribunal’s decision.

115. Decisions of Tribunal The decision of the Tribunal is ﬁnal and binding on the parties to the appeal except as to any point of law, and in cases where the appeal is allowed, it is the duty of the Registrar or the Bank of Zambia, as the case may require, to give effect to the decision of the Tribunal. Chapter IX Miscellaneous

Section 115Verify source

Part

Chapter IX

§ 116Investigations ..................................................................................................................................................................................... 54Amendment

The Bank of Zambia may enter premises and inspect or copy books, accounts, and records when it suspects unlicensed or non-compliant banking activity.

116. Investigations (1) Whenever the Bank of Zambia has reason to believe that any person is carrying on banking business or regulated ﬁnancial service business on any premises without a licence or in contravention of the conditions of a licence, or for the purpose of ascertaining whether the provisions of this Act or the regulations under this Act are being complied with, the Bank of Zambia shall have the right by its servants or agents to enter the premises to ascertain the facts of the matter and may for that purpose— (a) require any person apparently having access to them to deliver to the Bank of Zambia the books, accounts and records of the person; and (b) examine any such books, accounts and records and take copies of or make extracts from them. (2) A person who refuses to make available for examination the person's books, accounts and records within ﬁve business days after having been duly requested to do so by the Bank of Zambia shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or imprisonment for a term not exceeding ﬁve years, or to both. [As amended by Act No. 13 of 1994]

Section 116Verify source

§ 117Use of the word "bank" .................................................................................................................................................................. 54Repeal

Non-banks may not use “bank” or similar banking words/symbols in their business materials in Zambia without Bank of Zambia consent, and no person may falsely claim to hold a financial services licence.

117. Use of the word "bank" (1) A person other than a bank shall not, without the consent of the Bank of Zambia, use the word "bank" or any of its derivatives in any language, or any other word or symbol indicating the transaction of banking business, in its name or in any prospectus, advertisement or statement of any kind published or made to describe its business in Zambia By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 54 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) A person shall not falsely represent to the public or any member of the public— (a) that the person holds a licence to conduct any ﬁnancial service business; or (b) that the person is licensed to conduct any ﬁnancial service business of a particular kind. (3) Any person acting in contravention of this section shall be guilty of an offence and shall be liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding ﬁve years, or to both. [As amended by Act No. 13 of 1994]

Section 117Verify source

§ 118Misleading and unlicensed names ............................................................................................................................................. 55Provision

A licence must not be granted under a name that is likely to mislead the public by closely resembling an existing licensee’s name, unless the applicant is associated with that licensee or has the licensee’s consent.

118. Misleading and unlicensed names A licence shall not be granted to any person under a name that so closely resembles the name of an existing licensee as would be likely, in the opinion of the Registrar, to mislead the public, unless the person is associated or afﬁliated with the licensee or otherwise has the consent of the licensee.

Section 118Verify source

§ 119Restriction on use or registration of banking and related names .................................................................................. 55Repeal

Businesses generally cannot use banking-style or financial-service names unless licensed; registration authorities also must not register prohibited names.

119. Restriction on use or registration of banking and related names (1) Subject to subsection (2), a person carrying on a business shall not use any name which indicates or may reasonably be understood to indicate (whether in English or any other language) that the business is a ﬁnancial service provider or is carrying on banking business or ﬁnancial service business unless the business is licensed under this Act. (2) Subsection (1)— (a) does not prohibit the use of the kind of name referred in that subsection by a company or other entity incorporated or otherwise established outside Zambia and which has no permanent place of business in Zambia for the purposes of soliciting business or advertising its business in Zambia (b) does not apply to— (i) a bank, ﬁnancial institution or ﬁnancial business established by or under a written law of Zambia; (ii) a regional or international bank or ﬁnancial institution whose membership consists partly or wholly of member States; or (iii) such other person as the Minister may, by statutory instrument, exempt. (3) An authority which, under any written law, is responsible for the registration of businesses or business names shall not register a business or the name of a business that would be in contravention of subsection (1). (4) Where on the coming into force of this Act a business or the name of a business is already registered in a style that is otherwise prohibited by subsection (1), the authority responsible for the registration shall, within three months after the coming into force of this Act, notify the Bank of Zambia of the registration and order the owner of the business or the business name to alter or modify the name so as to comply with subsection (1). [Repealed and replaced by Act No. 18 of 2000 and amended by No. 25 of 2005]

Section 119Verify source

§ 120Validity of certain acts by banks ................................................................................................................................................ 55Repeal

A transaction made in breach of the Act is not automatically void, ineffective, or voidable only because of that breach, except if a court decides otherwise. Banks and financial institutions do not need to pass a by-law to exercise powers given by the Act, if their memorandum and articles allow it.

120. Validity of certain acts by banks (1) A transaction entered into in contravention of this Act is not void or ineffective by reason only of the contravention, and is not voidable at the instance of the bank, ﬁnancial institution or ﬁnancial business except in a court's discretion. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 55 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) Subject to its memorandum and articles, it shall not be necessary for a bank or ﬁnancial institution to pass a by-law in order to exercise any power conferred by this Act. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 120Verify source

§ 121Documents .......................................................................................................................................................................................... 56Amendment

Banks, financial institutions, and financial businesses must provide required documents to the Bank of Zambia, and the documents must be signed in the way this section requires.

121. Documents A bank, ﬁnancial institution or ﬁnancial business does not comply with a provision of this Act requiring it to furnish or supply a document to the Bank of Zambia unless— (a) in the case of a document prepared by that bank, ﬁnancial institution or ﬁnancial business, the form of which has not been prescribed by the Bank of Zambia, the document is— (i) (ii) signed by the chief executive ofﬁcer and the chief accounting ofﬁcer of the bank, ﬁnancial institution or ﬁnancial business; or signed by such other person as is required by a provision of this Act to sign or certify the document; and (b) in the case of a document prepared by that bank or ﬁnancial institution, the form of which has been prescribed by the Bank of Zambia, the document is signed by the person holding the ofﬁce or ofﬁces required by the text of the prescribed form. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 121Verify source

§ 121APublication of information ......................................................................................................................................................... 56Amendment

The Bank of Zambia may publish information or data furnished under the Act if it considers publication to be in the public interest, but it must not reveal customer information except where lawfully required.

121A. Publication of information (1) The Bank of Zambia may publish in whole or in part, at such times as it may determine, any information or data furnished under this Act if the Bank of Zambia considers the publication to be in the public interest. (2) The Bank of Zambia shall not reveal to any person any information regarding the affairs of any customer of a bank, ﬁnancial institution or ﬁnancial business obtained in the excercise of its functions under this Act unless lawfully required to do so. [As amended by Act No. 18 of 2000 and No. 25 of 2005]

Section 121AVerify source

§ 122Extension of time limits ................................................................................................................................................................ 56Amendment

The Bank of Zambia may extend time limits for giving documents or information when someone requests it.

122. Extension of time limits At the request of a bank, ﬁnancial institution or ﬁnancial business or other person, the Bank of Zambia may extend from time to time any period within which a bank, ﬁnancial institution or ﬁnancial business is, in accordance with the provisions of this Act, obliged to furnish any document or information. [As amended by Act No. 25 of 2005]

Section 122Verify source

§ 123Immunity of Bank of Zambia ofﬁcials, etc. ............................................................................................................................. 56Provision

Bank of Zambia officers and other persons acting in good faith under the Act are protected from claims, liability, suits, or demands for those acts.

123. Immunity of Bank of Zambia ofﬁcials, etc. No act, matter or thing done by any ofﬁcer or person employed by the Bank of Zambia or by any other person in the exercise or performance or purported exercise or performance, in good faith, of any power or function under this Act shall give rise to any action, claim, liability, suit or demand against the ofﬁcer or person concerned.

Section 123Verify source

§ 124Regulations ......................................................................................................................................................................................... 56Repeal

The Minister may make regulations, but only on the recommendation of the Bank of Zambia.

124. Regulations (1) The Minister, on the recommendation of the Bank of Zambia, may make regulations for or with respect to any matter that by this Act is required or permitted to be prescribed by regulation or that is necessary or convenient to be so prescribed for carrying out or giving effect to this Act. By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 56 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (2) The regulations may provide for ﬁnes not exceeding ﬁfty thousand penalty units, and for terms of imprisonment not exceeding two years, or both, for any contravention of the regulations. [As amended by Acts No. 13 of 1994]

Section 124Verify source

§ 124AExercise of power of Bank of Zambia to prescribe ........................................................................................................... 57Amendment

If the Act authorises the Bank of Zambia to prescribe something, it must do so by publishing the matter in a Gazette Notice.

124A. Exercise of power of Bank of Zambia to prescribe Where a provision of this Act authorises the Bank of Zambia to prescribe anything, the power to prescribe shall be exercised by the publication of the matter by Gazette Notice. [As amended by Act No. 18 of 2000]

Section 124AVerify source

§ 125Guidelines ............................................................................................................................................................................................ 57Provision

The Bank of Zambia may issue guidelines, bulletins, or other regulatory statements for administering or carrying out the Act.

125. Guidelines The Bank of Zambia shall have power to prescribe and publish such guidelines, bulletins or other regulatory statements as the Bank of Zambia may consider necessary or desirable for the administration or execution of this Act.

Section 125Verify source

§ 126Bank of Zambia's report ................................................................................................................................................................. 57Commencement

The Bank of Zambia must send an annual report on bank and financial institution operations to the Minister, and the Minister must table a copy before the National Assembly.

126. Bank of Zambia's report (1) The Bank of Zambia shall, within six months from the 1st day of January in each year, submit to the Minister a report on the operations of banks and ﬁnancial institutions in Zambia during the twelve months ended on the preceding 31st December. (2) The Minister shall lay a copy of the report before the National Assembly within fourteen days of its receipt by him or, if the National Assembly is not then in session, within fourteen days after the commencement of its next sitting.

Section 126Verify source

§ 127False documents ............................................................................................................................................................................... 57Amendment

A person who issues, helps issue, or signs a document that is false in a material way commits an offence, unless they did not know and could not reasonably have known it was false.

127. False documents (1) Subject to subsection (2), if a person issues or takes part in the issue of a document referred to in this Act which is false in any material particular, that person and every other person who signed it shall be guilty of an offence and liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both (2) A person shall not be guilty of an offence under this section if the person did not know and could not reasonably be expected to have known that the document was false when the person signed it, issued it or took part in its issue as the case may be. [As amended by Acts No. 13 of 1994 and 18 of 2000]

Section 127Verify source

§ 127AProhibition of money circulation schemes ........................................................................................................................... 57Repeal

A person must not run or take part in a money circulation scheme, or circulate documents inviting the public to subscribe to one.

127A. Prohibition of money circulation schemes (1) A person shall not— (a) conduct, or participate in, a money circulation scheme; or (b) issue a notice, circular, prospectus, proposal or other document inviting the public to subscribe to a money circulation scheme. (2) A person who contravenes subsection (1) commits an offence and is liable on conviction to a ﬁne not exceeding one hundred thousand penalty units or to a term of imprisonment not exceeding three years or both. [As amended by Act No. 18 of 2000] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 57 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed

Section 127AVerify source

§ 128Penalty for offences where no speciﬁc penalty provided .................................................................................................. 58Repeal

If someone commits an offence under the Act and no specific penalty is set, they can be fined up to 100,000 penalty units, imprisoned for up to 2 years, or both.

128. Penalty for offences where no speciﬁc penalty provided A person who commits an offence under this Act for which no penalty is speciﬁcally provided is liable, on conviction, to a ﬁne not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding two years or to both. [Repealed and replaced by Act No. 18 of 2000]

Section 128Verify source

§ 129Offenses by body of persons ....................................................................................................................................................... 58Repeal

If an offence is committed by a body of persons, directors or like officers of a body corporate, and partners in a partnership, commit the offence unless they prove lack of knowledge, consent, or connivance and that they tried to prevent it.

129. Offenses by body of persons (1) Where an offence under this Act is committed by a body of persons— (a) in the case of a body corporate, every director or like ofﬁcer of the body commits the offence; and (b) in the case of a partnership every partner commits the offence; unless the director, or like ofﬁcer of the body corporate or partner proves to the satisfaction of the court that the act constituting the offence was done without the knowledge, consent or connivance of that director, like ofﬁcer, or partner did their part to prevent the commission of the offence having regard to all the circumstances of the case. [Repealed and replaced by Act No. 18 of 2000]

Section 129Verify source

§ 129AUtilisation of collateral for settlement of certain obligations ...................................................................................... 58Commencement

The Bank of Zambia must use certain collateral to settle specified obligations, following Bank-approved terms and conditions; the balance is handled under Chapter VII if winding up, dissolution, or liquidation has begun.

129A. Utilisation of collateral for settlement of certain obligations (1) Collateral held by the Bank of Zambia on behalf of a clearing house, a payment system or a payment association for the purpose of settling the obligations of a bank or ﬁnancial institution which is a member of the clearing house, payment system or payment association shall be utilised for that purpose by the Bank of Zambia in accordance with the terms and conditions approved by the Bank of Zambia and shall not be subject to any claim. (2) The Bank of Zambia shall be indemniﬁed and a certiﬁcate issued by the Governor of the Bank of Zambia that the collateral or any part thereof has been utilised to meet the obligations of the clearing house, payment system or payment association shall be prima facie evidence of the matters stated in the certiﬁcate. (3) In the case of a bank or ﬁnancial institution in respect of which the winding up, dissolution or liquidation has commenced under this Act, the balance of the collateral, after the collateral has been utilised in accordance with subsection (1), shall be dealt with in accordance with Chapter VII. [As amended by Act No. 18 of 2000]

Section 129AVerify source

§ 130Exemptions .......................................................................................................................................................................................... 58Amendment

The Minister may exempt any bank or financial institution from all or part of the Act, if recommended by the Bank of Zambia.

130. Exemptions The Minister, on the recommendation of the Bank of Zambia, may by regulation, on such terms and conditions as the Minister considers appropriate, exempt any bank or ﬁnancial institution from all or any of the provisions of this Act and may provide for the variation or revocation, by regulation or by notice in writing to the affected person or persons, of any such exemption at any time. [As amended by Act No. 18 of 2000]

Section 130Verify source

§ 131Repeal of Cap. 700 and savings of the 1971 Edition ......................................................................................................... 58Commencement

This section repeals the Banking Act and keeps certain existing licences, applications, rights, liabilities, and regulations in effect under this Act.

131. Repeal of Cap. 700 and savings of the 1971 Edition (1) The Banking Act is hereby repealed. (2) Notwithstanding the repeal of the Banking Act— (a) a commercial bank, within the meaning of that Act, that was, immediately before the commencement of this Act, registered as a bank under that Act shall be deemed to be the By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 58 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed holder of a licence under section four of this Act that is subject to the same limitations and conditions as pertained to its registration; (b) a ﬁnancial institution, within the meaning of that Act, that was, immediately before the commencement of this Act registered as such under that Act shall be deemed to be the holder of a licence under section ten of this Act that is subject to the same limitations and conditions as pertained to its registration; (c) any applications pending under that Act shall be deemed to have been made under the corresponding provisions of this Act, and shall be dealt with under this Act; (d) any right or beneﬁt accruing, or liability incurred, under that Act shall continue in accordance with and subject to this Act; and (e) any regulation, order, notice or direction made or given and in force, immediately before the commencement of this Act, under that Act shall, unless contrary to this Act, continue in force until revoked, as if made or given under this Act. (3) The Minister may by regulation make such savings and transitional provisions as he may consider just or expedient in consequence of the enactment of this Act and the repeal of the Banking Act. [Repealed by Act No. 25 of 2005] [Repealed by Act No. 25 of 2005] [Repealed by Act No. 25 of 2005] First Schedule Second Schedule Third Schedule Fourth Schedule (Section 73) The prohibition in section 73 (1) of this Act does not apply to the following transactions: (1) A transaction— (a) secured by a pledge of bills of exchange or promissory notes that have been issued for the price of goods purchased and sold in the ordinary course of trade subject to the Bank of Zambia's approval; and (b) having an original term to maturity no greater than two hundred and eighty-two days or such longer period as may be prescribed by the Bank of Zambia. (2) A transaction having an original term to maturity not greater than two hundred and seventy days and which is— (a) secured by readily marketable assets, covered to their full insurable value by all perils insurance and having an ascertainable market or other value, as security, as found in good faith by an ofﬁcer of the bank concerned, of at least ﬁfty per centum more than the amount of the obligations thereby secured. (b) secured in some other manner satisfactory to the Bank of Zambia; or By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 59 Banking and Financial Services Act, 1994 (Chapter 387) Zambia Repealed (c) a loan made to or guaranteed by the Government, a board or agency of the Government or a local authority that is enforceable by the bank within sixty days after demand following default. [As repealed and replaced by Act No. 18 of 2000] By Laws.Africa and contributors. Licensed under CC-BY. Share widely and freely. 60

Section 131Verify source

Legislative relationships

19 referenced instruments

Names are derived from the stored provision headings and citation-enrichment layer. Treat this as a research index and verify each relationship against the source text.

A–F

5 instruments

Bank of Zambia to prescribe Where a provision of this Act
Section 124A
Bank of Zambia under this Act
Sections 16, 31, 81
Bank of Zambia. 124. Regulations
Section 124
Banks and Financial Institutions before the date of coming into force of this Act
Section 20
Cap. 700 and savings of the 1971 Edition (1) The Banking Act
Section 131

T–Z

14 instruments

Zambia Act
Section 78
Zambia and subsequently dealt with in accordance with this Act
Section 109
Zambia established under the Bank of Zambia Act
Section 2
Zambia has taken possession of a bank or financial institution under this Act
Section 110A
Zambia in relation to insolvent financial institutions Where a ffinancial service provider licensed under this Act
Section 87A
Zambia is generally not bound by the Act
Section 3
Zambia may consider necessary or desirable for the administration or execution of this Act
Section 125
Zambia may prescribe regulatory requirements for representative offices in existence on the date this Act
Section 12B
Zambia may publish information or data furnished under the Act
Section 121A
Zambia officers and other persons acting in good faith under the Act
Section 123
Zambia to be dealt with as unclaimed funds in accordance with this Act
Section 92
Zambia to carry out its functions under this Act
Section 84B
Zambia to secure short-term liquidity advances made by it under the Bank of Zambia Act
Section 72
Zambia under the Bank of Zambia Act
Section 71

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19 referenced instruments

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