CHAPTER 363
DEVELOPMENT BANK OF ZAMBIA ACT

Arrangement of Sections

   Section

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

PART II
ESTABLISHMENT AND ADMINISTRATION OF THE BANK

   3.   Establishment

   4.   Board of Directors

   4A.   Repealed

   5.   Quorum and meetings of Board

   6.   Establishment of committees

   7.   Employment of Managing Director

   8.   Employment of staff

PART III
SHARE CAPITAL AND OTHER ASSETS

   9.   Authorised capital and its division of shares

   10.   Subscription and allotment of shares

   10A.   Consent of Minister required in certain cases

   11.   Additional shares

   11A.   Transfer and vesting of non-performing portfolio of Bank

   11B.   Conversion of certain financial liabilities into debentures

PART IV
THE BUSINESS, PURPOSES AND FUNDS OF THE BANK

   12.   Business of Bank

   13.   Repealed

   14.   Funds of Bank

   15.   Application of funds

   16.   Financing of projects by Bank

   17.   Limits on financing by Bank

   17A.   Repealed

   18.   Repealed

   19.   Safeguards for investment

   20.   Investment of funds

   21.   Reserve funds and distribution of income

PART V
ACCOUNTS AND AUDIT

   22.   Financial year

   23.   Accounts and audit

   24.   Annual report

PART VA
INSOLVENCY AND DISSOLUTION

   24A.    Insolvency

   24B.    Effect of dissolution of Bank

PART VI
MISCELLANEOUS

   25.   Rules

AN ACT

to provide for the establishment, constitution, duties and powers of a Development Bank of Zambia to assist in the economic development of Zambia and to provide for matters incidental to or connected with the foregoing.

[6th July 1973]

Act 35 of 1972,

Act 6 of 1975,

Act 28 of 1975,

Act 6 of 1979,

Act 29 of 1982,

Act 11 of 2001,

Act 24 of 2005.

PART I
PRELIMINARY

 

1.   Short title

This Act may be cited as the Development Bank of Zambia Act.

 

2.   Interpretation

In this Act, unless the context otherwise requires—

“Bank” means the Development Bank of Zambia established under section 3;

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

[Ins by s 2 of Act 24 of 2005.]

“Board” means the Board of Directors of the Bank appointed under section 4;

“Class A Directors” means the members of the Board appointed by the Minister under sub-section (3) of section 4;

“Class B Directors” means the members of the Board appointed by the holders of Class B shares under sub-section (3) of section 4;

“Class A shares” means the shares allotted under paragraph (a) of sub-section (1) of section 10;

“Class B shares” means the shares allotted under paragraph (b) of sub-section (1) of section 10;

“Class C shares” means the Class C shares created under paragraph (a) of sub-section (9) and allotted under section 11;

“commitment fee” means a fee imposed on the allocated but the un with drawn portion of the principal of any loan;

[“economic development” rep by s 2(a) of Act 11 of 2001.]

“employee” means any person in the service of the Bank or engaged in connection with any business of the Bank;

“financial business” has the meaning assigned to it by the Banking and Financial Services Act;

[Ins by s 2 of Act 24 of 2005.]

[“long and medium term finance” rep by s 2(a) of Act 11 of 2001.]

“member” means the Chairperson or any other member of the Board.

[Ins by s 2(b) of Act 11 of 2001.]

[“recipient” rep by s 2(a) of Act 11 of 2001.]

“shareholders” means the persons who have subscribed to share capital of the Bank, and have paid the subscription;

“special funds” means the funds administered by the Bank under paragraph (d) of section 12.

[S 2 am by Act 6 of 1979.]

PART II
ESTABLISHMENT AND ADMINISTRATION OF THE BANK

 

3.   Establishment

   (1) There is hereby established the Development Bank of Zambia which shall by that name be a body corporate with perpetual succession and a common seal and shall be capable of suing and being sued and, subject to the provisions of this Act, of doing or performing all such acts or things as a body corporate may by law do or perform.

[S 3 renumbered as 3(1) by s 3(a) of Act 24 of 2005.]

   (2) The Bank is a financial business for purposes of the Banking and Financial Services Act.

[S 3(2) ins by s 3(b) of Act 24 of 2005.]

   (3) Notwithstanding sub-section (2), the Bank shall be deemed to be a financial institution for purposes of Part 2 of Chapter VI and Chapter VII of the Banking and Financial Services Act.

[S 3(3) ins by s 3(b) of Act 24 of 2005.]

   (4) After the date of the coming into force of this Act, the Bank of Zambia may prescribe such transition periods as are appropriate to permit the Bank to achieve compliance with the licensing and other requirements of the Banking and Financial Services Act.

[S 3(4) ins by s 3(b) of Act 24 of 2005.]

 

4.   Board of Directors

   (1) There shall be a Board of Directors which shall, subject to the other provisions of this Act, be responsible for the policy and general administration of the affairs and business of the Bank.

   (2) The Board shall consist of a Chairman and nine other members, shall, subject to the other provisions of this Act, hold office for a period of three years and shall be eligible for reappointment.

   (3) The Chairperson and three other members shall be appointed by the Minister and the remaining six members shall be appointed by the holders of Class B shares:

Provided that in the case of an appointment by the holders of class B shares, a true copy thereof shall be forwarded to the Minister and to the Bank

{mprestriction ids="1,2,3"}

[S 4(3) subs by s 3(a) of Act 11 of 2001.]

   (4) The Minister may at any time revoke the appointment of any Class A director, and the holders of Class B shares may at any time revoke the appointment of any Class B director.

   (5) A member appointed by the Minister or a member appointed by the holders of Class B shares may, at any time, resign from office by giving written notice to the Minister or to the Chairperson:

Provided that in the case of resignation by a member appointed by the holders of class B shares a true copy of the resignation letter shall be forwarded to the Minister and to the Bank.

[S 4(5) subs by s 3(b) of Act 11 of 2001.]

   (6) No person shall be appointed to or continue to hold office on the Board while he is—

      (a)   an undischarged bankrupt;

      (b)   of unsound mind;

      (c)   incapacitated through illness or otherwise from performing his duties;

      (d)   serving a sentence of imprisonment upon conviction for an offence involving fraud or dishonesty; or

      (e)   declared persona non grata by Government.

[S 4(6) subs by s 4(a) of Act 24 of 2005.]

   (7) A member of the Board shall cease to be a member if he is absent from three consecutive meetings of the Board without leave of the Chairman.

   (8) The Minister shall—

      (a)   in the case of a Class A director, within three weeks of making the appointment under sub-section (3);

      (b)   in the case of a Class B director, within three weeks after receiving a true copy of the written appointment under sub-section (3);

      (c)   in the case of a Class A director, within three weeks of revoking the appointment under sub-section (4);

      (d)   in the case of a Class B director, within three weeks after receiving a true copy of the written revocation under sub-section (4);

      (e)   in the case of a member of the Board resigning under sub-section (5), within three weeks after receiving a true copy of the notice;

      (f)   in the case of a member of the Board being disqualified from continuing to hold office on the Board under sub-section (6) or ceasing to hold office under sub-section (7), within three weeks of the Minister becoming aware of the disqualification or cessation, as the case may be;

notify in the Gazette the appointment, revocation, resignation, disqualification or cessation, as the case may be.

   (9) If at any meeting of the Board the Chairperson is absent, the members present shall elect one of their number from class A directors to chair the meeting.

[S 4(9) subs by s 3(c) of Act 11 of 2001.]

   (10) A member of the Board shall be paid from the funds of the Bank such remuneration or allowances as the Board may determine.

[S 4(10) subs by s 3(d) of Act 11 of 2001.]

   (11)—

      (a)   At the first meeting of the Board after a person is appointed its member, he shall declare to the Board the terms and conditions of all outstanding finance and all other assistance being provided by the Bank to him or to any of his associates.

      (b)   In addition to the requirements of the Banking and Finance Services Act whenever the Board is considering an application by a member or any associate of a member for finance or any other assistance from the Bank, or for variation of the terms or conditions of any outstanding finance or other assistance, such member shall declare his interest to the Board and shall refrain from taking part in any discussion of or vote upon such application.

[S 411(b) am by s 3(e) of Act 11 of 2001; s 4(b) of Act 24 of 2005.]

      (c)   For the purposes of this sub-section, a person is an associate of a member if that person is—

      (i)   related to that member within the third degree of affinity or consanguinity;

      (ii)   a partner, employee or employer of that member; or

      (iii)   a debtor, mortgagor, creditor or mortgagee of, or otherwise has direct, material or commercial dealings with, that member or anybody of persons, whether corporate or unincorporate, of which that member is a director or in which that member holds any office or position other than that of an auditor or in which that member holds a controlling interest.

   (12)1The Minister may, by writing, give to the Board such general directions concerning the policy to be followed by the Bank in the performance of its functions under this Act as he may deem necessary and appropriate in the public interest:

Provided that such resignation shall not become effective until it is accepted by the Minister.

[S 4 am by Act 6 of 1975.]

 

4A.   …

[S 4A rep by s 4 of Act 11 of 2001.]

 

5.   Quorum and meetings of Board

   (1) The quorum for the meeting of the Board shall be two Class A directors and three Class B Directors.

[S 5(1) subs by s 5 of Act 11 of 2001.]

   (2) Subject to the provisions of sub-section (1), the Board may from time to time prescribe rules governing its meetings.

[S 5 am by Act 6 of 1975.]

 

6.   Establishment of committees

The Board may establish one or more committees comprising some or all of its members to carry out such functions as the Board may delegate to any of such committees.

 

7.   Employment of Managing Director

   (1) The Board shall appoint a Managing Director on such terms and conditions as the Board may determine; and the Managing Director shall be the chief executive officer of the Bank who shall be responsible for the management of the affairs of the Bank in accordance with the policies and directions of the Board.

[S 7(1) subs by s 6 of Act 11 of 2001.]

   (2) The Managing Director shall be present at all Board meetings unless his presence at any meeting is excused by the Chairman or when any matter in which he is directly or indirectly interested is to be considered at such meeting.

 

8.   Employment of staff

   (1) The Board may employ at such remuneration and on such terms and conditions as it may determine, a Secretary and such other officers and agents as it may deem necessary for the conduct of the business of the Bank.

[S 8(1) am by s 7(a)(i); s 8(1) proviso rep by s 7(a)(ii) of Act 11 of 2001.]

   (2)<PW:Popup,2,2,Popup> [ED- Act 11 of 2001 and Act 24 of 2005 are contradicting each other, therefore no changes have been incorporated after sub-section 1 of section 8.]')"><CS:"footnote reference">2">   Subject to the other provisions of this Act, the Board may delegate to the Managing Director any of the powers vested in the Board by this Act including the power to make appointments under sub-section (1).

PART III
SHARE CAPITAL AND OTHER ASSETS

[Subs by s 8 of Act 11 of 2001.]

 

9.   Authorised capital and its division of shares

   (1) Subject to sub-section (2), the authorised capital of the Bank shall be the Kwacha equivalent of US$700,000,000 divided into 700,000 shares, each having a par value of the Kwacha equivalent of US$1,000 and the authorised capital shall be subscribed as follows—

      (a)   one share designated as a golden share;

      (b)   279,999 shares designated as Class A shares; and

      (c)   420,000 shares designated as Class B shares.

   (2) The Board may, with the approval of the Minister, increase the amount of authorised capital but in such manner that the ratio of the golden share together with Class A shares on the one part (constituting forty percent of the total number of shares to Class B shares on the other part (constituting sixty percent of the total number of shares) is not exceeded.

[S 9 subs by s 9 of Act 11 of 2001.]

 

10.   Subscription and allotment of shares

   (1) The share capital referred to in section 9 shall be allotted as follows:

      (a)   The golden share to the Minister;

      (b)   Class A shares to the Minister and to such public institutions as the Minister may designate and, in both cases, in such number as the Minister may determine; and

      (c)   Class B shares to persons other than the Minister or the institutions referred to in paragraph (b), as the Minister may determine.

[S 10(1) subs by s 10 of Act 11 of 2001.]

   (2) The Board, in consultation with the Minister and the shareholders, shall determine how the shares held immediately before the commencement of this Act shall be dealt with on or after the commencement of this Act.

[S 10(2) subs by s 10 of Act 11 of 2001.]

   (3) The shares of the Bank shall not be pledged or encumbered in any manner whatsoever and shall not, without the approval of the Minister, be transferred or assigned.

   (4) The liability of the shareholders shall be limited to the unpaid portion of the par value of their shares.

 

10A.   Consent of Minister required in certain cases

   (1) The Board shall not, without the written consent of the Minister as holder of the golden share, resolve—

      (a)   to wind up the Bank;

      (b)   to substantially alter the business of the Bank as provided for in section 12; or

      (c)   to sell, transfer, lease, assign or otherwise dispose of any assets of the Bank or any interest therein exceeding such value as the Minister may in consultation with the Board determine.

   (2) In a distribution of capital in a winding up of the Bank, the Minister as holder of the golden share shall be entitled to repayment of the capital paid up pari passu to any other repayment of capital to any other member.

[S 10A ins by s 11 of Act 11 of 2001.]

 

11.   Additional shares

   (1) Where the authorised capital of the Bank is increased pursuant to sub-section (2) of section 9, the Board may allot the additional shares resulting from the increase of authorised capital to such persons, whether resident in Zambia or elsewhere, as the Minister may approve.

   (2) Payment for such additional shares shall be made by the subscribers at the par value of the shares within such period as the Board may determine.

[S 11 am by Act 6 of 1979.]

 

11A.   Transfer and vesting of non-performing portfolio of Bank

   (1) For the purpose of this section, the non-performing portfolio of the Bank consist of—

      (a)   all loans advanced by the Bank and financial instruments issued by the Bank and, in each case in respect of which any payment of the principal or interest is, on the commencement of this Act, in arrears in excess of one hundred and eighty days; and

      (b)   the amount of the equity investment by the Bank in any company or other entity which, for three years or more immediately before the commencement of this Act, has not made a declaration of dividends.

   (2) With effect from the date of the commencement of this Act, all assets, liabilities, rights and obligations of the Bank relating to the non-performing portfolio of the Bank and in existence immediately before that date shall, without further assurance, vest in the Government.

   (3) Notwithstanding sub-section (2), all proceedings pending on the date of commencement of this Act by or against the Bank in respect of any matter relating to the non-performing portfolio of the Bank may be continued by or against the Bank.

   (4) The Bank shall be indemnified by the Government against all liability of the Bank which the Bank incurred before the commencement of this Act arising from any suit or other legal proceedings and from any claim or demand in respect of any matter relating to the non- performing portfolio.

   (5) The Minister shall, in writing give directions to the Board for the management and realisation, by the Bank, of the non-performing portfolio on such terms and conditions as may be agreed in writing between the Minister and the Board.

[S 11A ins by s 12 of Act 11 of 2001.]

 

11B.   Conversion of certain financial liabilities into debentures

   (1) With effect from the date of commencement of this Act, the total amount of money paid by the Government as a guarantor of the loans advanced to the Bank by the African Development Bank, the International Bank for Reconstruction and Development, the Arab Bank for Economic Development in Africa, the Netherlands Development Finance Company (FMO), and the European Investment Bank shall stand converted into long-term debentures in favour of the Government.

   (2) The debentures referred to in sub-section (1) shall carry no interest and no voting rights and shall have the same status as debentures under the Companies Act.

[S 11B ins by s 12 of Act 11 of 2001.]

PART IV
THE BUSINESS, PURPOSES AND FUNDS OF THE BANK

 

12.   Business of Bank

   (1) The business of the Bank shall be—

      (a)   to make available long, medium and short term finance and equity investment for economic development;

      (b)   to provide technical assistance and advisory services for the purpose of promoting economic development and, at the discretion of the Board, to charge fees for such services;

      (c)   to assist in obtaining and placing foreign investment for the purpose of promoting economic development;

      (d)   to administer on such terms and conditions as may be approved by the Board such special funds as may from time to time be placed at the disposal of the Bank;

      (e)   to borrow funds in Zambia and elsewhere;

      (f)   to buy and sell securities, including securities which the Bank has issued or guaranteed;

      (g)   to study and promote investment opportunities; and

      (h)   to do all other matters and things incidental to or connected with the foregoing.

   (2) In carrying on its business, the Bank may, in accordance with its business and development plans, provide borrowers with capital and other resources for investment in economic undertakings and activities for, or relating to—

      (a)   the creation of infrastructure;

      (b)   the production of goods or services;

      (c)   the creation of employment; or

      (d)   such other economic undertakings or activities as Board may determine.

   (3) The Bank may, subject to the other provisions of this Act, borrow money or other assets required by it for the purpose of meeting any of its obligations or discharging its functions under this Act.

 

13.   …

[S 13 rep by s 14 of Act 11 of 2001.]

 

14.   Funds of Bank

   (1) The funds of the Bank shall consist of—

      (a)   such sums of money as may be received by the Bank under section 10 or 11;

      (b)   such sums of money as the Bank may acquire by virtue of grants or raise by means of loans;

      (c)   such sums of money as may be appropriated for it by Parliament; and

      (d)   such other sums of money as may accrue to it in the course and on account of its business except the funds referred to in paragraph (d) of section 12.

   (2) The special funds shall be kept separate from the funds specified in sub-section (1), and the income therefrom shall be applied or distributed in such manner as the Board may approve.

   (3) No charge or lien created on any special fund shall operate as a charge or lien upon the funds of the Bank.

 

15.   Application of funds

The funds of the Bank shall be applied towards—

      (a)   the payment of salaries, fees, remuneration, allowances and expenses due and payable to the members of the Board and the employees of the Bank;

      (b)   the repayment of sums raised by way of loan by the Bank and the payment of interest thereon;

      (c)   providing finance in accordance with the provisions contained in this Part;

[S 15(c) am by s 15 of Act 11 of 2001.]

      (d)   the payment of rates, taxes, insurance premiums and other outgoings, including the expenses of maintenance of buildings which may become vested in the Bank;

      (e)   subject to section 69 of the Banking and Financial Services Act, the payment of such dividends as the Board may approve;

[S 15(e) am by s 7 of 24 of 2005.]

      (f)   such capital expenditure as the Board may authorise;

      (g)   such contributions to charitable or benevolent organisations as the Board may authorise; and

      (h)   all other expenses necessary for or incidental to the business of the Bank authorised under this Act.

 

16.   Financing of projects by Bank

The Bank shall finance only those projects which are economically viable and technically feasible.

[S 16 am by Act 6 of 1975.]

 

17.   <CS:"footnote reference"><PW:Popup,5.10417,1.78125,Popup>[ED- Act 11 of 2001 and Act 24 of 2005 are contradicting each other, therefore no changes have been incorporated in section 17.]')">3">Principles for and limits on financing by Bank

   (1) Subject to the other provisions of this Act, the Bank may alone or in conjunction with other domestic or foreign investors provide or participate in providing finance in aid of development investment.

   (2) In providing such finance, the Bank shall—

      (a)   maintain a reasonable diversification in its investments among all sectors of economic activity in Zambia; and

      (b)   maintain a satisfactory balance between the dates of maturity of its own obligations and those of the loans it grants.

 

17A.   …

[S 17A rep by s 17 of Act 11 of 2001.]

 

18.   …

[S 18 rep by Act 6 of 1975.]

 

19.   Safeguards for investment

In case of default on any loan, the Bank shall take appropriate action to safeguard its investment.

 

20.   Investment of funds

The Bank may invest all or any part of its funds not immediately required for the purposes mentioned in this Act in good and sound investment.

[S 20 am by Act 6 of 1975.]

 

21.   Reserve funds and distribution of income

   (1) The Bank shall provide against any anticipated losses by establishing and maintaining a reserve fund to which shall be allocated at the end of each financial year of the Bank—

      (a)   not less than twenty-five per centum of the net income of the Bank for that year until the total sum standing to the credit of such reserve fund shall amount to a sum equal to the paid up share capital of the Bank.

      (b)   not less than twelve and a half per centum of the net income of the Bank for that year if the total sum standing to the credit of such reserve fund exceeds a sum equal to the paid up share capital of the Bank.

   (2) The Board shall determine annually after the first three profitable years of the Bank's operations, what part of the net income of the Bank shall be allocated, after providing for the reserve fund, to surplus and what part (if any) shall be distributed to the shareholders.

   (3) Any distribution to shareholders made under sub-section (2) shall be in proportion to the number of shares held by each shareholder, and the payment shall be made in such manner as the Board shall determine:

Provided that in making any such distribution, the Board may distinguish between the holders of Class A shares and Class B shares, as one class of shareholders, and the holders of Class C shares, as another class, and may make different provision for each class of shareholders, respectively.

[S 21 am by Act 6 of 1975; 6 of 1979.]

PART V
ACCOUNTS AND AUDIT

 

22.   Financial year

The Board shall determine the financial year of the Bank.

 

23.   Accounts and audit

   (1) The Board shall cause true and full accounts and records to be kept of all the transactions with which the Bank is concerned, and the books of account and records shall be kept at the principal place of business of the Bank.

   (2) The accounts of the Bank for each financial year shall be audited by a person who publicly carries on the profession of accountant in Zambia.

   (3) The person referred to in sub-section (2) shall be appointed by the Board as auditor.

   (4) For the purpose of audit, the auditor shall at all reasonable times have access to all books and records relating to the assets, liabilities, income and expenditure of the Bank.

   (5) An auditor appointed under this section shall submit to the Board a report written in accordance with sub-section (2) of section 64 of the Banking and Financial Services Act.

[S 23(5) ins by s 9(d) of Act 24 of 2005.]

   (6) The Board shall, within three months from the end of each financial year, submit a copy of the report of the auditor, together with a copy of the annual financial statement to the Bank of Zambia.

[S 23(6) ins by s 9(d) of Act 24 of 2005.]

 

24.   Annual report

   (1) The Board shall, not later than six months after the end of each financial year, submit to each shareholder a report of its operations, including the annual statement of its accounts for that year certified by the auditor.

   (2) The Minister shall, not later than nine months after the end of the Bank's financial year, cause the annual statement of accounts and the report referred to in sub-section (1) to be laid before the National Assembly, and shall cause the annual statement of accounts together with the auditor's report thereon and the report referred to in sub-section (1) to be published in such manner as he may direct.

[S 24 am by Act 6 of 1975.]

PART VA
INSOLVENCY AND DISSOLUTION

[Ins by s 10 of Act 24 of 2005.]

 

24A.   Insolvency

   (1) In the event of the Bank becoming insolvent the Bank of Zambia may in accordance with Chapter VII of the Banking and Financial Services Act dissolve and liquidate the Bank.

   (2) In sub-section (1) insolvency has the meaning assigned to it by section 86 of the Banking and Financial Services Act.

[S 24A ins by s 10 of Act 24 of 2005.]

 

24B.   Effect of dissolution of Bank

Where the Bank is dissolved under section 24A this Act shall be repealed.

[S 24B ins by s 10 of Act 24 of 2005.]

PART VI
MISCELLANEOUS

 

25.   Rules

The Board may make such rules, consistent with the provisions of this Act, as it considers necessary or appropriate to further the objects and functions of the Bank.

   (2) This Act shall apply to proceedings commenced under the Act of 1914 and pending at the commencement of this Act, as if such proceedings had been commenced under this Act.

   (3) Until revoked or altered under this Act, rules made under the Act of 1914, and in force at the commencement of this Act, shall continue in force, and shall have effect as if made under this Act.

   (4) The provisions of this Act shall apply to and in respect of a deed of arrangement executed before the commencement of this Act if and so far as the corresponding provisions of the Act of 1914 would have applied to or in respect of such deed had this Act not been enacted.

 
 

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