CHAPTER 387
BANKING AND FINANCIAL SERVICES ACT

Arrangement of Sections

   Section

CHAPTER I
PRELIMINARY

   1.   Short title

   2.   Interpretation

   3.   Application of this Act

CHAPTER II
LICENSING OF BANKS AND FINANCIAL INSTITUTIONS

PART I
LICENSING OF BANKS

   4.   Licensing of companies as banks

   5.   Determination of applications

   6.   Application for licences to be refused in certain cases

   7.   Investigation of applicants

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

   9.   Branches of banks

PART II
LICENSING OF FINANCIAL INSTITUTIONS

   10.   Grant of licence

   11.   Application of certain provisions of this Chapter to financial institutions

   12.   Repealed

PART IIA
LICENSING OF, AND REGULATORY REQUIREMENTS FOR, REPRESENTATIVE OFFICES

   12A.   Licensing of representative offices

   12B.   Regulatory requirements for representative offices

PART IIB
LICENSING OF FINANCIAL BUSINESSES

   12C.   Grant of licences

   12D.   Branches of financial businesses

   12E.   Existing financial businesses

PART III
OPERATION OF LICENCES

   13.   Conditions of licences

   14.   Duration of licences

   15.   Licences not transferable

   16.   Revocation of licences

PART IV
PROHIBITION OF UNLICENSED BUSINESS, ETC

   17.   Prohibition of unlicensed business

   18.   Repayment of funds

PART V
REGISTER OF LICENCES

   19.   The register

   20.   The Registrar

   21.   Use of register in evidence

   22.   Inspection of register

CHAPTER III
ORGANISATION AND ADMINISTRATION

PART I
OWNERSHIP AND CONTROL OF FINANCIAL SERVICE PROVIDERS

   23.   Limitation on voting control

   23A.   Regulation and divestment of other control

   24.   Ownership

   24A.   Prohibition of ownership of shares by trusts

PART II
AMALGAMATION AND RESTRUCTURING OF BANKS OR FINANCIAL INSTITUTIONS

   25.   Meaning of “corporate restructuring transaction”

   26.   Prohibition of corporate restructuring transactions

   27.   Consent to corporate restructure, etc

   28.   Investigation of applicants for consent

   29.   Effect of amalgamation or transfer

PART III
BOARDS OF DIRECTORS

   30.   Application of Parts I and II to incorporated financial institutions

PART IV
DIRECTORS, CHIEF EXECUTIVE OFFICERS, CHIEF FINANCIAL OFFICERS AND MANAGERS OF BANKS

   30A.   Chief executive officers and financial officers

   31.   Qualification of directors and senior officers

   32.   Directors from outside to be in the majority

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

   34.   Indemnity of directors and others

   35.   Disclosure of interests

   36.   False statements and obstruction of inspection

   37.   Suspension or dismissal of directors and managers

PART IVA
ORGANISATION AND ADMINISTRATION OF FINANCIAL BUSINESSES

   37A.   Structure of unincorporated financial businesses

   37B.   Application of Parts I, II and IV to financial institutions

PART V
CONSTITUTION OF BANKS AND INCORPORATED FINANCIAL INSTITUTIONS

   38.   Variation of corporate constitutions

   39.   Amendment of constitution by Bank of Zambia

CHAPTER IV
OPERATIONS

PART I
ANTI-COMPETITIVE CONDUCT

   40.   Interest rates and charges

   41.   Collateral contracts

   42.   Other laws not affected

PART II
BUSINESS PRACTICES AND DEALINGS WITH THE PUBLIC

   43.   Principal administrative office

   44.   Display of names

   45.   Use of licensed name

   46.   Holidays

   47.   Disclosure of interest rate and charges

   48.   Customer complaints

   49.   Advertisement by licensee

   50.   Confidentiality

PART III
RECORDS

   51.   Records of constitution and of compliance with this Act

   52.   Credit documentation

   53.   Manner of keeping records

   54.   Retention of records

   55.   Maintenance of records

CHAPTER V
FINANCIAL ACCOUNTABILITY

PART I
FINANCIAL STATEMENTS OF BANKS AND FINANCIAL INSTITUTIONS

   56.   Annual financial statements

   57.   Statement as to subsidiaries

   58.   Reserves for bad and doubtful debts

   59.   Approval of annual financial statements

   60.   Monthly statements

   61.   Publication of financial statements

PART II
AUDIT OF ACCOUNTS OF BANKS AND FINANCIAL INSTITUTIONS

   62.   Appointment of auditor

   63.   Disqualification of auditor

   64.   Auditor’s report

   65.   Resignation or termination of appointment of auditor

   66.   Immunity of auditor

   67.   Audit committee

PART III

[Repealed]

   68.   Repealed

CHAPTER VI
SUPERVISION AND PRUDENTIAL REGULATIONS

PART I
PROVISIONS RELATING TO FINANCIAL SERVICE PROVIDERS

   69.   Reserves

   70.   Liquid assets

   70A.   Prudential liquidity ratio

   71.   Deficiency of liquid assets or prudential liquidity ratio

   72.   Prohibition of unsecured borrowing

   73.   Limitations on granting advances

   74.   Constraints on contracts with related persons

   75.   Limitations on equity investments

   76.   Unclaimed funds or personal property

   77.   Unsafe and unsound practices

   78.   Inspection of financial service provider

   79.   Scope of inspection

   80.   Inspection of representative offices

   80A.   Duty to provide information and documents relating to representative offices

   81.   Supervisory actions

   82.   Special reserve or liability insurance

   83.   Capital adequacy

PART II
TAKING POSSESSION OF BANKS AND FINANCIAL INSTITUTIONS

   84.   Notice of taking possession

   84A.   Powers and duties of the Bank of Zambia upon taking possession

   84B.   Statement of affairs of assets and liabilities upon taking possession

   84C.   Appeal for termination of possession

   84D.   Effect of possession

   84E.   Restructuring and reorganisation

   84F.   Refusal of restructuring or reorganisation of plan

   84G.   Restructuring as to execution

   84H.   Recovery of expenses

   84I.   Appointment of agent by Bank of Zambia

CHAPTER VII
INSOLVENCY, DISSOLUTION AND LIQUIDATION OF BANKS AND FINANCIAL INSTITUTIONS

PART I
PRELIMINARY

   85.   Precedence of this Act

   86.   Meaning of “insolvent”

   87.   Acceptance of deposits by insolvent banks

   87A.   Powers of Bank of Zambia in relation to insolvent financial institutions

   87B.   Powers of Bank of Zambia in relation to insolvent financial businesses

PART II
VOLUNTARY WINDING UP AND LIQUIDATION

   88.   Approval of Bank of Zambia required for voluntary winding up

   89.   Duties of bank on voluntary liquidation

   90.   Notice of voluntary winding up and liquidation

   91.   Rights of depositors and creditors

   92.   Distribution of assets on voluntary liquidation

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

PART III
SEIZURE OF BANKS

   94.   Repealed

   95.   Repealed

   96.   Repealed

   97.   Repealed

   98.   Repealed

   99.   Repealed

   100.   Repealed

PART IV
COMPULSORY LIQUIDATION, WINDING UP OR DISSOLUTION

   101.   Compulsory liquidation, winding up or dissolution

   102.   Power of Bank of Zambia to appoint agent

   103.   Effect of order of compulsory dissolution

   104.   Powers of Bank of Zambia in effecting compulsory liquidation, etc.

   105.   Limitation of filing of claims

   106.   Objections to liquidation schedule

   107.   Priority of creditors

   108.   Accounts after distribution of assets

   109.   Unclaimed funds

   110.   Final distribution in compulsory liquidation

   110A.   Restriction of action by third parties

   110B.   Recovery of expenses

CHAPTER VIII
APPEALS

   111.   Reasons for decisions and right to be heard

   112.   Right of appeal

   113.   Appointment and convening of tribunal

   114.   Powers of tribunal

   115.   Decision of tribunal

CHAPTER IX
MISCELLANEOUS

   116.   Investigations

   117.   Use of the word “bank”

   118.   Misleading and unlicensed names

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

   120.   Validity of certain acts by banks

   121.   Documents

   121A.   Publication of information

   122.   Extension of time limits

   123.   Immunity of Bank of Zambia officials, etc.

   124.   Regulations

   124A.   Exercise of power of Bank of Zambia to prescribe

   125.   Guidelines

   126.   Bank of Zambia’s report

   127.   False documents

   127A.   Prohibition of money circulation schemes

   128.   Penalty for offences where no specific penalty provided

   129.   Offences by body of persons

   129A.   Utilisation of collateral for settlement of certain obligations

   130.   Exemptions

   131.   Repeal of Cap 700 and Savings

      FIRST SCHEDULE

      SECOND SCHEDULE

      THIRD SCHEDULE

      FOURTH SCHEDULE

AN ACT

to provide for the regulation of the conduct of banking and financial services; to provide safeguards for investors in and customers of banks and financial institutions; and to provide for matters connected with or incidental to the foregoing.

[3rd June, 1994]

Act 13 of 1994,

Act 21 of 1994,

Act 28 of 1995,

Act 18 of 2000,

Act 25 of 2005.

CHAPTER I
PRELIMINARY

1.   Short title

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

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;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“bank” means a company conducting banking business;

[Subs by s 2(a)(ii) of Act 18 of 2000.]

“Bank of Zambia” means the Bank of Zambia established under the Bank of Zambia Act.

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“banking business” means the business of—

[Am by s 2(a)(i) of Act 25 of 2005.]

      (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;

[Am by s 2(a)(ii) of Act 25 of 2005.]

      (b)   providing financial services; and

[Am by s 2(a)(iii) of Act 25 of 2005.]

      (c)   any custom, practice or activity prescribed by the Bank of Zambia as banking business;

[“banking business” subs by s 2(a)(ii) of Act 18 of 2000.]

“banking licence” means a licence granted under section 4;

“board” means a board of directors of a bank or financial institution as provided in section 30;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“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;

“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;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“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

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“company” has the same meaning as in the Companies Act;

[Subs by s 2(a)(ii) of Act 18 of 2000.]

“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 per 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;

“court” means the High Court or any other court of competent jurisdiction;

[Subs by s 2(a)(ii) of Act 18 of 2000.]

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;

[Am by s 2(c) of Act 25 of 2005.]

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;

[Am by s 2(d) of Act 25 of 2005.]

“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

      (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 subparagraph (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 draft, 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;

[Subs by s 2(a)(ii) of Act 18 of 2000.]

[“deposit taking financial institution” rep by s 2(b) of Act 25 of 2005.]

“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 30;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“financial business” means a person that conducts a financial service business but does not accept deposits;

[Ins by s 2(g) of Act 25 of 2005.]

“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;

[Subs by s 2(a)(ii) of Act 18 of 2000; am by s 2(e) of Act 25 of 2005.]

“financial institution’s licence” means a licence issued under section 10;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“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;

      (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;

[Ins by s 2(f)(i) of Act 25 of 2005.]

      (q)   development financing; and

[Ins by s 2(f)(ii) of Act 25 of 2005.]

      (r)   any other services as the Bank of Zambia may designate, but does not include—

      (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” subs by s 2(a)(ii) of Act 18 of 2000; para (q) renumbered as para (r) by s 2(f)(iii) of Act 25 of 2005.]

“financial service provider” means a bank, financial institution or financial business;

[Ins by s 2(g) of Act 25 of 2005.]

“foreign bank” or “foreign financial institution” means a bank or financial institution which is not incorporated in Zambia;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“foreign company” has the same meaning as in the Companies Act;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“incorporated” means—

      (a)   formed under the Companies Act; or

      (b)   established under an Act of Parliament as a body corporate;

[Ins by s 2(g) of Act 25 of 2005.]

“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;

“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 —

      (a)   exercises managerial functions;

      (b)   is responsible for maintaining accounts or other records; or

      (c)   is responsible for the management of credits;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“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;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“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;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

[“regulated financial business” rep by s 2(a)(i) of Act 18 of 2000.]

[“regulated financial services” rep by s 2(a)(i) of Act 18 of 2000.]

“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;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“representative office” means an office in Zambia licensed under this Act to represent a foreign bank or a foreign financial institution;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“tribunal” means an appeal tribunal appoint under section 113;

[Ins by s 2(a)(ii) of Act 18 of 2000.]

“voting shares” means common shares 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 of the shares issuer.

   (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.

[S 2(2) subs by s 2(b) of Act 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;

[S 2(3)(b)(i) am by s 2(c) of Act 18 of 2000.]

      (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;

      (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 sub-section (1)—

      (a)   “merchant 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.

[S 2(4) ins by s 2(d) of Act 18 of 2000.]

3.   Application of this Act

This Act applies to all banks, financial institutions and financial businesses, whether or not constituted by any Act:

[S 3 am by s 3 of Act 25 of 2005.]

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.

[S 3 proviso am by s 3 of Act 18 of 2000.]

CHAPTER II
LICENSING OF BANKS AND FINANCIAL INSTITUTIONS

PART I
LICENSING OF BANKS

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;

[S 4(2)(a) am by s 4(a)(i) of Act 18 of 2000.]

      (b)   the physical and postal addresses of its head office and the permanent residential addresses of its directors, chief executive officer, managers and shareholders;

[S 4(2)(b) subs by s 4(a)(ii) of Act 18 of 2000.]

      (c)   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;

      (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;

[S 4(2)(d) am by s 4(a) of Act 25 of 2005.]

      (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.

[S 4(4) ins by s 4(b) of Act 18 of 2000.]

   (5) The directions and requirements given or imposed under this section may differ between different applicants or categories of applicants.

[S 4(5) ins by s 4(b) of Act 18 of 2000; am by s 4(b) of Act 25 of 2005.]

   (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 y 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.

[S 4(6) ins by s 4(b) of Act 18 of 2000.]

   (7) An applicant may withdraw an application by written notice to the Registrar at any time before it is granted or refused.

[S 4(7) ins by s 4(b) of Act 18 of 2000.]

   (8) A banking licence for a subsidiary of a foreign company may be granted if—

      (a)   the foreign company is a bank and is authorised to engage in banking business in the country where its head office is located

      (b)   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.

[S 4(8) ins by s 4(b) of Act 18 of 2000.]

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.

[S 5 subs by s 5 of Act 18 of 2000; am by s 5 of Act 25 of 2005.]

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.

[S 6 subs by s 6 of Act 18 of 2000.]

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—

[S 7 am by s 6(a) of Act 25 of 2005.]

      (a)   the capital adequacy of the applicant;

      (b)   the financial condition, resources and history of the applicant and the applicant’s associates and affiliates;

      (c)   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;

[S 7(c) am by s 6(b) of Act 25 of 2005.]

      (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.

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 regulations, guidelines, bulletins and regulatory statements made under this Act, in the currency of any other country and foreign exchange transactions; and

[S 8(1)(b)(ii) am by s 7(a)(i) of Act 18 of 2000.]

      (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;

[S 8(1)(f) subs by s 7(a)(ii) of Act 18 of 2000.]

      (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;

[S 8(1)(j) subs by s 7(a)(iii) of Act 18 of 2000.]

      (k)   Providing merchant banking services including the arrangement and underwriting of shares trade financing, corporate financing and the provision of financial advice; and

[S 8(1)(k) subs by s 7(a)(iii) of Act 18 of 2000.]

      (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 agreements.

[S 8(1)(l) subs by s 7(a)(iii) of Act 18 of 2000.]

      (m)   …

[S 8(1)(m) rep by s 7(a)(iii) of Act 18 of 2000.]

   (2) …

[S 8(2) rep by s 7(b) of Act 18 of 2000.]

   (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.

[S 8(3) renumbered as s 8(2) by s 7(c) of Act 18 of 2000.]

9.   Branches of banks

   (1) A bank or financial institution 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.

[S 9(1) subs by s 8(a) of Act 18 of 2000; am by s 7(a) of Act 25 of 2005.]

   (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.

[S 9(2) subs by s 8(a) of Act 18 of 2000; am by s 7(b) of Act 25 of 2005.]

   (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.

[S 9(3) am by s 7(c) of Act 25 of 2005.]

   (4)…

[S 9(4) rep by s 8(b) of Act 18 of 2000.]

PART II
LICENSING \OF FINANCIAL INSTITUTIONS

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 sub-section (2) of section 4, 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 sub-section (2) of section 4, 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 sub-section (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 sub-section may be in the form of conditions of a licence or may be prescribed by the Bank of Zambia.

   (6) The regulations made under sub-section (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.

[S 10 subs by s 8 of Act 25 of 2005.]

11.   Application of certain provisions of this Chapter to financial institutions

Sub-sections (3) to (7) of section 4 and sections 5, 6, 7 and 9 shall apply with necessary modifications to the licensing of financial institutions.

[S 11 subs by s 9 of Act 25 of 2005.]

12.   …

[S 12 rep by s 10 of Act 25 of 2005.]

PART IIA
LICENSING OF, AND REGULATORY REQUIREMENTS FOR, REPRESENTATIVE OFFICES

[Part IIA ins by s 11 of Act 18 of 2000.]

12A.   Licensing of representative offices

   (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) Sub-sections (3) to (8) of section 4 and sections 5, 6 and 7 shall apply with necessary modifications to a representative office.

   (5) Notwithstanding sub-section (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.

[S 12A ins by s 11 of Act 18 of 2000.]

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.

[S 12B ins by s 11 of Act 18 of 2000.]

PART IIB
LICENSING OF FINANCIAL BUSINESSES

[Part IIB ins by s 11 of Act 25 of 2005.]

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.

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