REPUBLIC OF NAMIBIA THE FINANCIAL INSTITUTIONS AND MARKETS BILL, 2012 To consolidate and harmonize the laws regulating financial institutions and financial markets in Namibia; and to provide for incidental matters.
CHAPTER 1 PRELIMINARY 1 Definitions 15 2 Objects 24 3 Control 24 CHAPTER 2 INSURANCE PART I GENERAL 4 Definitions 26 5 Prohibitions 28 6 Restrictions on use of certain designations 29 7 Limitations 29 8 Classes of insurance 30 PART II REGISTRATION 9 Application for registration 37 10 Registration requirements 38 11 Registration 39 12 Insurers previously registered 39 13 Application for cancellation or variation of registration 40 14 Cancellation or variation of registration 40 PART III ADMINISTRATION 15 Principal office and principal officer 40 16 Accounts 40 17 Appointment of auditor 40 18 Appointment of valuator 41 19 Conduct of insurance 41 20 Financially sound position 42 21 Prohibitions against pledging assets and borrowing 42 22 Actuarial soundness of policies 43 23 Prohibition against tied selling 43 24 Policies: miscellaneous provisions 44 25 Publication of statements of capital 44 26 Prohibition against securing business for unregistered person 44 27 Restriction on acquisition of shares or other interests 45 28 Participating policies 45 29 Plain language 46 30 Misleading, false and deceptive statements: consequences of conviction 46 1
PART IV CERTAIN LONG-TERM POLICIES 31 Life policies: minors 46 32 Life policies: married persons 47 33 Persons married in community of property 47 34 Life policy on own life: protection during life 47 35 Life policy on own life: protection on death 48 36 Life policies: spouses or children 49 37 Protected life policies: selection for realization 50 38 Protected life policies: partial realization 50 39 Life policies ceded or trust policies not kept up 51 40 Life policies ceded or premiums paid with intent to defraud creditors 51 41 Application of provisions to funeral, disability and health policies 52 PART V PROVISIONS RELATING TO LLOYD'S 42 Definitions 52 43 Authorisation of underwriters at Lloyd s 52 44 Change to constitution, powers, rights, obligations and bye-laws 53 45 Appointment of Lloyd's representative 53 46 Trust account to be kept by Lloyd's representative 54 47 Returns to be submitted by Lloyd's representative 54 48 Application of certain provisions of Chapter to Lloyd s representative 54 49 Imposition of prohibition on activities of Lloyd s underwriters 54 50 Registration of Lloyd's intermediaries 55 51 Claims against underwriters at Lloyd's 55 52 Payment of claims against underwriters at Lloyd's 55 PART VI AGENTS AND BROKERS 53 Definitions 56 54 Unregistered person may not act as agent or broker 57 55 Registration as insurance agent 57 56 Remedial action 58 57 Application for registration as an insurance broker 59 58 Registration requirements 60 59 Registration 61 60 Agents, brokers previously registered 61 61 Insurance to be in place 61 62 Only one registration 61 63 Cancellation or variation of registration 62 64 Confirmation of cover by registered brokers 62 65 Other obligations of registered brokers 62 66 No unreasonable delays 63 67 Placing insurance outside Namibia 63 68 Broker liable to policyholder 63 69 Policies and procedures 63 2
70 Obligations of registered insurance intermediaries 63 71 Duties of registered insurance intermediaries 64 72 Other business or occupation 65 73 Registration to be produced 65 74 Powers of NAMFISA in relation to registered insurance intermediaries 65 CHAPTER 3 FINANCIAL MARKETS PART I PRELIMINARY 75 Definitions 66 76 Objects of Chapter 70 77 Non-application of gambling laws 70 PART II PROHIBITIONS AND RESTRICTIONS 78 Prohibitions 71 79 Listed securities: exception 71 PART III REGISTRATION 80 Application for registration 71 81 Registration requirements 72 82 Registration 72 83 Application for cancellation or variation of registration 73 84 Cancellation or variation of registration 73 85 Transfer or winding-up 74 86 Existing exchange 74 87 Persons approved by Registrar 74 88 Registration as authorized user, portfolio manager, authorized advisor or authorized representative 74 89 Remedial action 76 90 Stockbrokers 77 91 Existing portfolio managers 78 92 Registration as participant 78 93 Registration of authorized representative of authorized user 79 94 Remedial action 80 95 Nominees 81 96 Foreign exchange and electronic exchange 81 97 Principal office and principal officer 81 98 Appointment of auditor 82 PART IV EXCHANGES 99 Interpretation 82 3
100 Functions of exchange and power of NAMFISA 82 101 Listing of securities 83 102 Removal of listing and suspension of trading 84 103 Application of new listing requirements 85 104 Disclosure of information by issuers 86 105 Imposition of levy 86 106 Funds of registered exchange 86 107 Requirements for exchange rules 87 108 Reporting transactions in listed securities 89 109 Undesirable advertising or canvassing 89 110 Identity and source to be disclosed 89 111 Restriction on borrowing and repledging 90 112 Marking or recording securities 90 113 Restriction on alienation of securities 90 114 Segregation of funds of authorized users and other persons 90 115 Appeal from decision of exchange 91 PART V CUSTODY AND ADMINISTRATION OF SECURITIES 116 Definitions 92 117 Functions of central securities depository 93 118 Functions of participant 94 119 Uncertificated securities 94 120 Responsibilities of issuer of uncertificated securities 95 121 Depository rules 95 122 Registration of securities 97 123 Ownership of securities 98 124 Transfer of securities 98 125 Pledge or cession of securities to secure debt 99 126 Delivery of securities 99 127 Records 99 128 Warranty 99 129 Recognition of trust 100 130 Attachment 100 PART VI SELF-REGULATORY ORGANISATIONS 131 Carrying on additional business 100 132 Demutualisation of self-regulatory organisation 100 133 Amalgamation 101 134 Transfer of assets and liabilities 102 135 Duty of shareholders of controlling entity 102 136 Appointment as officer or member of the board 102 137 Limitation on control of self-regulatory organisations 103 138 Delegation of functions 104 139 Report to NAMFISA 104 140 Right of NAMFISA to attend meetings and obtain documents 104 141 Exchange rules and depository rules 104 4
142 Limitation of liability 106 143 Disclosure of information 107 PART VII SECURITIES CLEARING HOUSE 144 Limitation of liability 107 145 Amalgamation 107 146 Transfer of assets and liabilities 107 PART VIII CODE OF CONDUCT FOR REGULATED PERSONS 147 Codes of conduct 107 148 Principles of code of conduct 107 PART IX MARKET ABUSE 149 Definitions 108 150 Insider trading offences 110 151 Publication 111 152 Prohibited trading practices 111 153 False, misleading or deceptive statements, promises and forecasts 112 154 Civil liability resulting from insider trading 113 155 Powers of NAMFISA in civil proceedings 116 156 Assessment of fines and penalties 116 157 Powers and duties of NAMFISA 116 158 Protection of existing rights 117 159 Confidentiality and sharing of information 118 PART X GENERAL PROVISIONS 160 Offences and penalties 118 161 Exemption from Act 34 of 1934 118 CHAPTER 4 COLLECTIVE INVESTMENT SCHEMES PART I PRELIMINARY 162 Definitions 119 163 Principles for administration of collective investment scheme 121 164 Duties of manager 121 165 Appointment of investment manager 122 166 Disclosure of information 122 167 Limitations 122 5
PART II REGISTRATION 168 Application for registration as manager 123 169 Registration requirements 123 170 Registration 123 171 Application for cancellation or variation of registration 123 172 Cancellation or variation of registration 124 173 Registration as authorized representative of manager 124 174 Remedial action 125 175 Registration as designated representative of authorized representative 126 176 Remedial action 127 177 Approval of nominee company 128 178 Principal office and principal officer 129 179 Appointment of auditor 129 180 Limitation on investments 129 181 Rules 130 PART III COLLECTIVE INVESTMENT SCHEMES IN SECURITIES 182 Definition 130 183 Determination of fair value 130 184 Foreign securities 130 PART IV COLLECTIVE INVESTMENT SCHEMES IN PROPERTY 185 Definitions 131 186 Foreign country in which collective investment scheme in property may invest 132 187 Listing of participatory interests by exchange 132 PART V COLLECTIVE INVESTMENT SCHEMES IN PARTICIPATION BONDS 188 Definitions 132 189 Transitional 133 190 Capacity of manager 133 191 Registration of participation bonds in name of nominee company 133 192 Rights of investor 133 193 Minimum investment period 133 194 Participatory interests rank in preference concurrently 133 195 Restrictions on rights of nominee company 134 196 Collateral security in respect of participation bonds 134 6
PART VI COLLECTIVE INVESTMENT SCHEMES IN UNLISTED SECURITIES 197 Definition 134 198 Minimum investment period 135 199 Listing by exchange 135 PART VII DECLARED COLLECTIVE INVESTMENT SCHEMES 200 Definition 135 201 Declaration of specific type of business as collective investment scheme 135 PART VIII FOREIGN COLLECTIVE INVESTMENT SCHEMES 202 Definition 135 203 Restrictions on foreign collective investment scheme 136 204 Reciprocity 136 205 Withdrawal of approval 137 PART IX TRUSTEE OR CUSTODIAN 206 Appointment and termination 137 207 Qualifications and registration 138 208 Duties 139 209 Status of assets 140 210 Liability for loss of assets 140 PART X CONVERSION OF COLLECTIVE INVESTMENT SCHEME 211 Definitions 140 212 Limitations on conversion of collective investment scheme 141 213 Application for approval of NAMFISA 141 214 Consideration of application 141 215 Resolution by investors 142 216 Registration of memorandum and articles of association by Registrar of Companies 142 217 Certificate of registration of conversion and notice in Gazette 142 218 Effects of conversion 143 219 Issue of participatory interests to former investors 143 PART XI GENERAL 220 Change of name 144 221 Prohibition of misleading names and acts 144 7
222 Restrictions on sale or lending of assets 144 223 Other business of manager 145 224 Exercise of voting power by manager 145 225 Unauthorized gain 145 226 Permissible deductions 145 227 Calculation of price 145 228 Payment of full purchase price 146 229 Power of manager to borrow 146 230 Matters to be provided in deed 146 231 Void provisions and amendment 146 232 Postponement of realisation of assets on winding-up 147 233 Separation of assets 147 234 Segregation of funds 147 235 Identity and source to be disclosed 148 236 Application of Companies Act to manager 148 237 Offences 148 238 Exemption from Act 34 of 1934 149 CHAPTER 5 RETIREMENT FUNDS PART I PRELIMINARY 239 Definitions 150 240 Prohibitions 152 241 Restriction on use of designation retirement fund 152 PART II REGISTRATION 242 Application for registration 152 243 Registration requirements 152 244 Registration 153 245 Existing funds 153 246 Existing beneficiary funds 153 247 Effect of registration 153 248 Cancellation or variation of registration 153 PART III ADMINISTRATION AND POWERS 249 Principal office and principal officer 153 250 Board of fund 154 251 Exemptions 154 252 Replacement of member of board 155 253 Objects of board 155 254 Duties of board 155 255 Appointment of auditor 157 256 Appointment of valuator 157 8
257 Investigations by valuator 158 258 Business which may be carried on 158 259 Payment of contributions 159 PART IV RULES OF RETIREMENT FUND 260 Rules 161 261 Amendment of rules 161 262 Binding force of rules 162 PART V SPECIAL PROVISIONS RELATING TO BENEFITS 263 Benefits not reducible, transferable or executable 162 264 Disposition of benefits upon insolvency 163 265 Disposition of benefits upon death 163 266 Deductions from benefits 165 PART VI GENERAL 267 Voluntary dissolution of fund 167 268 Special provisions relating to liquidation of funds 167 269 Right to obtain and inspect documents 167 270 Regulations 168 271 Offences 168 272 Exemption from Act 34 of 1934 168 CHAPTER 6 FRIENDLY SOCIETIES PART I PRELIMINARY 273 Definitions 169 274 Objects 169 275 Application of Chapter 170 276 Prohibitions 171 277 Restriction on use of designation friendly society 171 PART II REGISTRATION 278 Application for registration 171 279 Registration requirements 171 280 Registration 172 281 Existing friendly societies 172 282 Effect of registration 172 283 Cancellation or variation of registration 172 9
PART III ADMINISTRATION AND POWERS 284 Principal office and principal officer 173 285 Management 173 286 Appointment of auditor 173 287 Appointment of valuator 173 288 Valuation of business subject to actuarial scrutiny 174 289 Business which may be carried on 174 290 Investments 174 PART IV RULES OF FRIENDLY SOCIETY 291 Rules 175 292 Amendment of rules 175 293 Binding force of rules 176 PART V MEMBERSHIP AND BENEFITS 294 Membership of minors 176 295 Membership of married person 176 296 Payment of benefits to nominees 176 297 Restriction of payments on death of children under sixteen 176 298 Protection of moneys due on cessation of member 177 299 Protection of moneys due on death of member 177 PART VI GENERAL 300 Voluntary dissolution of society 177 301 Special provisions relating to liquidation of societies 177 302 Right to obtain and inspect documents 177 303 Offences 178 304 Exemption from Act 34 of 1934 178 CHAPTER 7 MEDICAL AID FUNDS PART I PRELIMINARY 305 Definitions 179 306 Application of Chapter to medical aid fund established by State 181 PART II MEDICAL AID FUNDS 307 Prohibitions 181 10
308 Restriction on use of designation medical aid fund 182 309 Prohibited marketing 182 PART III REGISTRATION 310 Application for registration 182 311 Registration requirements 183 312 Registration 183 313 Existing medical aid funds 183 314 Effect of registration 183 315 Cancellation or variation of registration 184 316 Application for registration as a medical aid fund broker 185 317 Registration requirements 185 318 Registration 185 319 Existing medical aid fund brokers 186 320 Cancellation or variation of registration 186 PART IV ADMINISTRATION AND POWERS 321 Principal office and principal officer 186 322 Board of trustees 186 323 Appointment of auditor 188 324 Appointment of valuator 188 325 Financial arrangements 189 326 Insurance of liabilities 190 327 Membership of more than one fund prohibited 191 PART V RULES OF MEDICAL AID FUND 328 Rules 191 329 Amendment of rules 193 330 Waiting periods 193 331 Binding force of rules 195 PART VI BENEFIT OPTIONS 332 Additional benefit options 195 333 Prohibition on cession and attachment of benefits 195 PART VII GENERAL 334 Voluntary dissolution 195 335 Right to obtain and inspect documents 196 336 Charges by suppliers of health services 196 337 Offences 196 11
CHAPTER 8 PROPERTY HELD IN TRUST 338 Definitions 198 339 Duties with respect to Trust Property 198 340 Declaration of interest 199 341 Investment of Trust Property 199 342 Alienation of Trust Property 200 343 Records and documents as evidence 200 344 Statutory manager 200 345 Offences 201 CHAPTER 9 GENERAL PROVISIONS PART I PRELIMINARY 346 Definitions 202 347 Application of Chapter 202 348 Prohibition 202 349 Transitional 202 350 Unregistered persons to furnish information 203 PART II REGISTRATION 351 Application for registration 203 352 Registration requirements 204 353 Registration 205 354 Exceptions 205 355 Financial year 205 356 Application for cancellation or variation of registration 205 357 Cancellation or variation of registration by NAMFISA 206 358 Expiry and renewal of registration 207 359 Name and change of name 207 360 Notification of certain matters 208 PART III GOVERNANCE 361 Application of provisions to board of trustees and other boards 209 362 Principal office and principal officer 209 363 Board of a financial institution 209 364 Duties of board 210 365 Directors to act in good faith 210 366 Audit committee 211 367 Other committees 211 368 Indemnification of directors and officers 212 369 Information to be made available 212 12
370 Appointment of auditor 212 371 Appointment of valuator 214 372 Return of directors and auditors 215 373 Duties of financial intermediaries 216 PART IV GENERAL MARKET CONDUCT REQUIREMENTS 374 Operation of this Part with other financial services laws 216 375 Prohibition of false and misleading statements 216 376 Declaration of practices as irregular or undesirable 217 377 Market abuse: powers of NAMFISA 218 PART V POWERS OF NAMFISA TO REGULATE AND SUPERVISE 378 Power to issue standards 219 379 Standards 219 380 Guidelines, bulletins, rules and other measures 229 381 Power to issue directives 229 382 Application to court 231 383 Reporting obligations 231 384 Fees 232 385 Removal of board member 233 386 Administrative penalties 233 387 Enquiries to principal officer 233 388 Investigations 233 389 Appointment of inspectors 234 390 Inspections 234 391 Inspections on request of other agencies 235 392 Powers of inspectors 235 393 Time and place of examinations 236 394 Entry upon or search of premises 236 395 Professional privilege 236 396 Observance of secrecy 237 397 Disclosure to certain parties 237 398 Costs of investigations and inspections 237 399 Offences and penalties 238 400 Power of NAMFISA to verify information 238 401 Decisions to be in writing 238 402 Representative self-regulatory organisations 239 403 Changes in control of a financial institution 239 404 Right to be heard 240 405 Late filing or payment 240 PART VI ENFORCEMENT 406 Enforceable undertakings 240 407 Compensation for contraventions of Act 241 13
408 Court orders to enforce the Act 242 409 Administrative action 243 PART VII SCHEMES, STATUTORY MANAGEMENT AND WINDING-UP 410 Interpretation 244 411 Failure to maintain sound financial position 244 412 Schemes 245 413 Appointment of statutory manager 245 414 Power and duties of statutory manager 246 415 Winding-up 247 PART VIII AMALGAMATIONS AND TRANSFERS IN THE ORDINARY COURSE OF BUSINESS 416 Amalgamations 248 417 Transfers 249 418 Standards and exemptions 249 419 Application for amalgamation or transfer 249 420 Approval of amalgamation or transfer 250 421 Statement to be deposited with NAMFISA 250 422 Financial Services Compensation Scheme 250 423 Scheme manager 251 424 Functions and duties of scheme manager 251 CHAPTER 10 MISCELLANEOUS PROVISIONS 425 Confidentiality and sharing of information 252 426 Inspection of documents 252 427 Effect of certificate of NAMFISA on document 252 428 Records and documents as evidence 253 429 Alienation of property 253 430 Limitation of liability 253 431 Offences and penalties 255 432 Application to State and public entities 257 433 Power to prescribe regulations 257 434 Regulations 257 435 Conflict or inconsistency 261 436 Repeal and amendment of laws and transitional arrangements 261 437 Short title and commencement 261 14
THE FINANCIAL INSTITUTIONS AND MARKETS ACT 1 Definitions CHAPTER 1 PRELIMINARY In this Act, unless the context otherwise indicates or the expression is specifically defined in another Chapter of this Act- actuary means a person who is a fellow of an actuarial society, institute or faculty specified in the standards; Advisory Committee means the advisory committee established under the NAMFISA Act; affiliate, in relation to a company or other entity, means- (a) a subsidiary of that company or other entity; (b) the holding company of that company or other entity; or (c) another company or other entity that has the same holding company as that company or other entity. Appeal Board means the appeal board established under the NAMFISA Act; associate (a) in relation to an individual means:- (i) (ii) (iii) (iv) (v) the spouse of the individual; the child, parent, stepchild, stepparent or sibling of the individual and the spouse of any such person; another person who has entered into an agreement or arrangement with the individual relating to the acquisition, holding or disposal of, or the exercise of voting rights in respect of, shares or other ownership interests in an entity; a corporate body or other juristic person or unincorporated entity controlled, directly or indirectly, by, or the affairs or part of the affairs of which are managed or administered by, or at the direction or instructions of, the individual or any person referred to in subsections (i) and (ii); and a trust controlled by the individual; and (b) in relation to a corporate body, other juristic person or other unincorporated entity means (i) any entity which is controlled, directly or indirectly, by, or the affairs or part of the affairs of which are managed or administered by, or at the direction or instructions of, the corporate body, juristic person or unincorporated entity; 15
(ii) any entity: (A) which controls, directly or indirectly, the corporate body, juristic person or unincorporated entity; (B) which manages or administers the affairs or part of the affairs of the corporate body, juristic person or entity; or (C) on whose directions or instructions the affairs or part of the affairs of the corporate body, juristic person or entity are managed or administered; or (iii) a participating employer, where the corporate body, juristic person or unincorporated entity is a retirement fund; auditor means a person, registered as an accountant and auditor under section 23 of the Public Accountants and Auditors Act, and who is a member of the Institute of Chartered Accountants of Namibia referred to in that Act; Bank of Namibia means the Bank of Namibia established under the Bank of Namibia Act 1997 (Act No. 15 of 1997); banking institution means a banking institution as defined in section 1 of the Banking Institutions Act, 1998 (Act No. 2 of 1998); beneficiary fund means a beneficiary fund as defined in Chapter 5; board means the board of directors of a corporate body and, unless the context indicates otherwise, the board of trustees of a retirement fund, the board of trustees of a medical aid fund and any similar body of persons in relation to any such fund or any other entity; building society means a building society as defined in section (1) of the Building Societies Act, 1986 (Act No. 2 of 1986); central securities depository means a central securities depository as defined in Chapter 3; client means a specific person or group of persons, excluding the general public, who is or may become the subject to whom a financial service is rendered intentionally, or is the successor in title of such person or the beneficiary of such service; close corporation means a corporation incorporated under the Close Corporations Act; Close Corporations Act means the Close Corporations Act, 1988 (Act. No. 26 of 1988); collective investment scheme means a collective investment scheme as defined in Chapter 4; Companies Act means the Companies Act, 2004 (Act No. 28 of 2004); company means a corporate body incorporated under the Companies Act, and includes a public company; 16
corporate body means an incorporated body wherever or however incorporated, and includes a company and a close corporation; court or courts means any court or courts of Namibia having jurisdiction in the circumstances; director means a natural person who: (a) in relation to a corporate body, occupies the position of director, by whatever name called, of the corporate body, and board of directors or directors refers to the directors as a body; (b) in relation to any other juristic person or other unincorporated entity, occupies a position that is the same or similar to that of a person referred to in paragraph (a); document or record includes books, accounts and any information stored or recorded electronically, digitally, photographically, magnetically, mechanically, optically or in any other form. entity means a corporate body, any other juristic person, a trust, partnership, fund, association, joint venture and any other unincorporated organization, the government of Namibia or any subdivision thereof and the government of a foreign country or any political subdivision thereof; exchange means an exchange as defined in Chapter 3; financial advice means any recommendation, guidance, projection or proposal relating to a financial product furnished by any means or medium, to any person who is a client, potential client or group of clients, or potential clients, whether or not specifically sought by that person or group, and irrespective of whether or not such advice results in a transaction being effected: (a) in respect of buying, selling, handling or exchanging a security; (b) in respect of purchasing any other financial product; (c) in respect of investing in any financial product; or (d) in respect of the variation of any term or condition applying to a financial product, or the replacement of a financial product, or the termination of any purchase of or investment in a financial product; and includes insurance advice, as defined in section 4 and securities advice as defined in section 75, but does not include: (a) factual information given merely: (i) (ii) (iii) (iv) on the procedure for entering into a transaction in respect of a financial product; in relation to a description of a financial product; in answer to routine administrative enquiries; in the form of objective information about a particular financial 17
(v) (vi) product including information regarding the tax treatment of a particular financial product ; by the display or distribution of promotional material; or by way of an analysis or report on a financial product without any express or implied recommendation, guidance or proposal that any particular transaction in respect of the financial product is appropriate to the particular investment objectives, financial situation or particular needs of a client; or (b) advice given by: (i) (ii) the board or any board member of a retirement fund or by a friendly society to the members of the fund or society on benefits enjoyed or to be enjoyed by those members; the board of trustees or any board member of a medical aid fund to the members of the medical aid fund, on health care benefits enjoyed or to be enjoyed by those members; (iii) a member of a professional association, including without limitation, a legal practitioner, accountant or actuary, where the advice is for tax purposes or ancillary to some other advice that is not financial advice; or (iv) any other advisory activity exempted from the provisions of this Act by NAMFISA, by notice in the Gazette. financial crime means any of the following: (a) generally, an offence that involves theft, fraud, forgery or uttering a forged document, perjury or an offence under the Anti-Corruption Act, 2003 (Act No. 8 of 2003); (b) crimes relating to market abuse as defined in Chapter 3. ; (c) financing, facilitating or being involved in financing or facilitating an offence relating to a financial institution; (d) dealing with the proceeds of an offence, whether or not related to a financial institution; (e) an offence under the Prevention of Organised Crime Act, 2004 (Act No. 29 of 2004); (f) the financing of terrorist activity; or (g) any offence under the Financial Intelligence Ac; financial institution means- (a) a registered beneficiary fund; (b) a registered central securities depository; (c) a collective investment scheme of a registered manager; (d) a registered exchange; (e) a registered friendly society; (f) a registered insurer; (g) a registered medical aid fund; (h) a registered reinsurer; (i) a registered retirement fund; 18
(j) a registered securities clearing house; and (k) an entity declared by the Minister to be a financial institution by notice published in the Gazette. Financial Intelligence Act means the Financial Intelligence Act, 2007 (Act No. 3 of 2007); financial intermediary means a person who receives compensation, directly or indirectly, for providing a financial service, and includes: (a) for the purposes of Chapter 2 on Insurance and as defined in section 53: (i) an insurance agent; (ii) an insurance broker, including a corporate insurance broker; (b) for the purposes of Chapter 3 on Financial Markets and as defined in section 75: (i) an authorized user of an exchange; (ii) an authorized representative of an authorised user; (iii) a nominee of an authorised user; (iv) a stockbroker; (v) an investment manager; (vi) a portfolio manager of an investment manager; (vii) a securities advisor; (viii) an authorised advisor of a securities advisor; (ix) a securities dealer; (x) an authorised representative of a securities dealer; (xi) a participant; (xii) a nominee of a participant; (xiii) a securities rating agency; (c) for the purposes of Chapter 4 on Collective Investment Schemes and as defined in section 162: (i) a manager of a collective investment scheme; (ii) an authorised representative of a manager; (iii) a designated representative of an authorised representative; (iv) a nominee company; (v) a trustee or custodian; (d) for the purposes of Chapter 5 on Retirement Funds and as defined in section 239: (i) fund administrator; (e) for the purposes of Chapter 6 on Friendly Societies and as referred to in subsection 273(2): 19
(i) an individual or entity that controls the affairs of a friendly society; (f) for the purposes of Chapter 7 on Medical Aid Funds and as defined in section 305: (i) (ii) fund administrator; a medical aid fund broker; and (g) a person declared by the Minister to be a financial intermediary by notice published in the Gazette. financial product means: (a) a policy issued by an insurer or reinsurer pursuant to Chapter 2; (b) a benefit provided by: (i) a retirement fund or a beneficiary fund pursuant to Chapter 5; (ii) a friendly society pursuant to Chapter 6; and (iii) a medical aid fund to the members of the medical aid fund by virtue of membership; (c) a security, derivative instrument, money market instrument, or other instrument referred to in Chapter 3; (d) a participatory interest in a collective investment scheme; (e) a foreign currency denominated investment instrument; (f) any other product essentially similar in nature and character to a financial product referred to in paragraphs (a) to (e); (g) any product combining two or more of the financial products referred to in paragraphs (a) to (f); and (h) any product issued by a foreign entity and marketed in Namibia, which in nature and character is essentially similar or corresponding to a financial product referred to in paragraphs (a) to (g). financial service means: (a) the service of providing a financial product or financial advice; and (b) a service determined by NAMFISA in consultation with the Advisory Committee by notice in the Gazette to be a financial service; but does not include:- (i) (ii) financial services laws means:- the collection or accounting by a banking institution of premiums or other moneys payable by a client to a financial institution or financial intermediary in respect of a financial service, where the banking institution acts merely as a conduit between a client and the financial institution or financial intermediary; or any other service exempted from the provisions of this Act by NAMFISA, by notice in the Gazette. 20
(a) this Act; (b) the Public Accountants and Auditors Act; (c) the Financial Intelligence Act; (d) the Financial Services Ombudsman Act; (e) a law that declares itself to be a financial services law for the purposes of this definition; or (f) a law prescribed by the Minister to be a financial services law, and includes regulations, standards, and other subordinate measures made under any of those laws; Financial Services Ombudsman Act means the Financial Services Ombudsman Act, 2012 (Act No. of 2012); financial year, in relation to a financial institution, means each period not exceeding twelve months, at the end of which the annual financial statements of the financial institution are prepared in accordance with the standards; foreign entity means an entity incorporated or formed under the laws of a country other than Namibia; friendly society means a friendly society as defined in Chapter 6; Generally Accepted Accounting Practice means the accounting frameworks adopted by the Institute of Chartered Accountants of Namibia; holding company has the meaning attributed thereto by the Companies Act; Income Tax Act means the Income Tax Act, 1981 (Act No. 24 of 1981); industry association means a voluntary organisation representing the interests of a group of similar financial institutions or financial intermediaries; Insolvency Act means the Insolvency Act, 1936 (Act No. 24 of 1936) inspector means a person appointed as an inspector under Chapter 9; insurer means an insurer as defined in Chapter 2; International Auditing Standards mean the most recent version of the International Standards on Auditing published by the International Auditing Standards Board, as adopted by the Institute of Chartered Accountants of Namibia; legal practitioner means a legal practitioner within the meaning of the Legal Practitioners Act, 1995 (Act No. 15 of 1995); medical aid fund means a medical aid fund as defined in Chapter 7; Minister means the Minister of Finance; 21
NAMFISA means the Namibia Financial Institutions Supervisory Authority established under the NAMFISA Act; NAMFISA Act means the Namibia Financial Institutions Supervisory Authority Act, 2012 (Act No. of 2012); objects of NAMFISA means the objects of NAMFISA set out in section 3 of the NAMFISA Act; officer means any natural person who is, (a) in relation to a corporate body, designated as an officer by the board of directors of the corporate body; and (b) in relation to any other juristic person or other unincorporated entity, designated as an officer by the board, members or owners of the entity, as the case may be, and includes the members of the board, the principal officer, the person responsible for compliance and the person responsible for finance and investment; Ombudsman means the person appointed as Financial Services Ombudsman under the Financial Services Ombudsman Act, 2012 (Act No. of 2012) person means a natural person or individual and an entity; prescribed by the Minister means prescribed by regulation; principal office means the main place of business of an entity; principal officer means the officer of a financial institution or of the manager of a collective investment scheme appointed as principal officer who:- (a) must (i) (ii) be the chief executive officer of the financial institution or of the manager of a collective investment scheme and have the duties and the functions of a chief executive officer; or be the officer having the duties and functions normally exercised by a chief executive officer; and (b) must be the officer who is responsible for reporting to the board of directors, board of trustees or other board on behalf of the management of the financial institution or manager of a collective investment scheme. Public Accountants and Auditors Act means the Public Accountants and Auditors Act, 1951 (Act No. 51 of 1951); public company means a public company within the meaning of the Companies Act; 22
registered means registered under this Act; regulations means regulations prescribed by the Minister under this Act; reinsurer means a reinsurer as defined in Chapter 2; retirement fund means a retirement fund as defined in Chapter 5; securities clearing house means a securities clearing house as defined in Chapter 3; self-regulatory organisation means a self-regulatory organisation as defined in Chapter 3 or a representative self-regulatory organisation referred to in Chapter 9; spouse includes:- (a) a common law partner in a union recognized in common law as a life-time cohabitation arrangement; (b) a partner in a customary union according to customary law or custom; or (c) a partner in a union recognized as a marriage under the tenets of any Asiatic religion; standard or standards means the standards issued by NAMFISA under this Act; statutory manager means a person appointed as a statutory manager for a financial institution under Chapter 9; subsidiary has the meaning attributed thereto by the Companies Act; this Act includes: (a) the regulations prescribed under this Act; and (b) the standards and other subordinate measures issued by NAMFISA under this Act; Trust Moneys Protection Act means the Trust Moneys Protection Act, 1934 (Act No. 34 of 1934), trust property means any corporeal or incorporeal movable or immovable asset invested, held, kept in safe custody, controlled, administered or alienated by any person for another person; undesirable practice, in relation to a financial service, means a practice determined under Chapter 9 to be an undesirable practice in relation to that financial service; valuator means the actuary or other expert appointed or retained as a valuator by a financial institution or financial intermediary, or required by NAMIFSA to make a valuation report with respect to a financial institution or financial intermediary; and wholly owned subsidiary has the meaning attributed thereto by the Companies Act. 23
2 Objects The objects of this Act are to foster- 3 Control (a) the financial soundness of financial institutions and financial intermediaries; (b) the stability of the financial institutions and markets sector; (c) the highest standards of conduct of business by financial institutions and financial intermediaries; (d) the fairness, efficiency and orderliness of the financial institutions and markets sector; (e) the protection of consumers of financial services; (f) the promotion of public awareness and understanding of financial institutions and financial intermediaries; and (g) the reduction and deterrence of financial crime. (1) For the purposes of this Act, each of the following is deemed to control a corporate body or other entity:- (a) in the case of a corporate body- (i) a person that has the power to appoint a director or member of the board of directors; (ii) a person whose consent is needed for the appointment of a director or member of the board of directors; (iii) a person that, either alone or with one or more associates, holds 20% or more of the shares in the corporate body; (iv) a person that, either alone or with one or more associates, has the power to control 20% or more of the voting rights attached to shares or other securities in the corporate body; or (b) in the case of an entity that is not a corporate body, a person that is in a position to control or influence in essentially the same measure as a person referred to in subsection (a), the business or financial operations of the entity. (2) For the purposes of this Act, a person referred to in any of subparagraphs (1)(a)(i) to (1)(a)(iv) that is deemed to control a corporate body is also deemed to control any subsidiary of that corporate body. (3) Where a corporate body is a financial institution, for the purposes of subparagraphs (1)(a)(iii) or (1)(a)(iv), the Minister may by notice in the Gazette determine a lower percentage than 20%, to apply either generally or to a class of financial institutions. (4) NAMFISA may in a particular case determine that a person does or does not control a financial institution, subject to such terms and conditions as may be specified in such determination. (5) NAMFISA may not make a determination that a person controls a financial institution pursuant to subsection (4) unless:- (a) the person has been given notice of the proposed determination and a reasonable opportunity to make representations to NAMFISA about the 24
matter; and (b) NAMFISA is satisfied that the person is in a position to control or influence the business or financial operations of the financial institution in essentially the same measure as a person referred to in subsection (1)(a). 25
CHAPTER 2 INSURANCE PART I GENERAL 4 Definitions (1) In this Chapter, unless the context otherwise indicates- actuarial basis, in relation to a policy, means the underlying actuarial rules, specifications and formulae, approved by the valuator of the registered insurer, in terms of which a policy operates and is executed as contemplated by this Act. capital adequacy requirement means an amount which an insurer is required to have continuously in accordance with the requirements of the standards; class or classes of insurance means a class or classes of insurance described in section 8, and a reference in this Act to a particular class of insurance is a reference to the insurance of risks falling within that particular class determined in accordance with section 8; "domestic policy" means a policy issued in Namibia and which is payable in Namibia in the currency of Namibia, and, in the case of a long-term policy, includes a policy which was issued: "due date" (a) on or after March 21, 1990 but before July 1, 1998, other than such a policy in respect of which the policyholder has in writing requested the registered insurer concerned that it not be made payable in Namibia in the currency of Namibia; or (b) before March 21, 1990 and which has not been made payable outside Namibia in a currency other than that of Namibia at the request of the policyholder or has specifically been made payable in Namibia in Namibian currency by the policyholder; (a) in relation to a premium, means- (i) (ii) in the case of a new policy, the inception date of the policy; in the case of an existing policy which has been renewed, the renewal date of the policy; and (iii) in the case of any extension of, or other change to, an existing policy, the inception date of such extension or other change; and (b) in relation to an installment of a premium means, the commencement date of the period in respect of which the installment is payable; foreign insurer means a foreign entity authorised to carry on the business of insurance by a jurisdiction other than Namibia and includes, unless indicated otherwise, a foreign reinsurer; 26
"foreign reinsurer" means a foreign insurer authorised to carry on reinsurance business by a jurisdiction other than Namibia insurance means long-term insurance and short-term insurance, and includes micro insurance as prescribed by the Minister; insurance advice means any recommendation, guidance, projection or proposal on insurance furnished by any means or medium, to any person who is a client, potential client or policyholder, or group of clients, potential clients or policyholders, whether or not specifically sought by that person or group, and irrespective of whether or not such advice results in a transaction being effected in respect of insurance but does not include:- (a) factual information given merely (i) on the procedure for entering into a transaction in respect of insurance; (ii) in relation to the description of an insurance product; (iii) in answer to routine administrative enquiries; (iv) in the form of objective information about a particular insurance product, including information regarding the tax treatment of a particular insurance product; (v) by the display or distribution of promotional material; or (vi) by way of an analysis or report on insurance without any express or implied recommendation, guidance or proposal that any particular transaction in respect of insurance is appropriate to the particular insurance or investment objectives, financial situation or particular needs of a client; (b) advice given by a member of a professional association, including without limitation, a legal practitioner, auditor or actuary, where the advice is for tax purposes or ancillary to some other advice that is not insurance advice; or (c) any other advisory activity exempted from the provisions of this Chapter by NAMFISA by notice in the Gazette; insurer means a person carrying on the business of insurance; "long-term insurance means insurance of a class or classes described in section 8 as longterm insurance; Long-Term Insurance Act means the Long-Term Insurance Act, 1998, Act No. 5 of 1998 participating policy means a policy issued by a registered insurer that entitles its holder to participate in the profits of the registered insurer; participating policyholder means the holder of a participating policy; policy means a document that is a written contract of insurance or reinsurance and includes a certificate of coverage, interim receipt, renewal receipt, or any other document evidencing a contract of insurance; 27
"policy benefits" means one or more sums of money, services or other benefits under a policy, including an annuity; "policyholder" means the person who enters into a domestic policy with an insurer; "premium" means the consideration given or to be given in return for an undertaking to provide insurance; registered insurer means an insurer that is a company registered under section 11 to carry on long-term insurance or short-term insurance, and includes, unless indicated otherwise, (a) a registered reinsurer; and (b) Lloyd s; "reinsurance " means the business of insuring an insurer, reinsurer or medical aid fund in respect of the contractual obligations of that insurer, reinsurer or medical aid fund; reinsurer means an insurer the business of which is limited to reinsurance; registered reinsurer means a reinsurer that is a company registered under section 11 to carry on long-term insurance or short-term insurance, and that is limited by its certificate of registration to reinsurance; "short-term insurance means insurance of a class or classes described in section 8 as short-term insurance; Short-Term Insurance Act means the Short-Term Insurance Act, 1998, Act No. 4 of 1998, 5 Prohibitions (1) No person may carry on the business of insurance or reinsurance in Namibia, unless that person- (a) is registered pursuant to section 11, or deemed to be registered pursuant to section 12, and carries on the class or classes of insurance indicated in its certificate of insurance; and (b) carries on that business in accordance with this Act. (2) Notwithstanding subsection (1), NAMFISA, if satisfied that no registered insurer or registered reinsurer is able, in any particular case, to provide policy benefits under a policy on equitable terms, may grant an exemption to any foreign insurer or foreign reinsurer to issue a policy payable in Namibia in the currency of Namibia that provides those policy benefits. (3) NAMFISA may set out terms and conditions in the standards with respect to foreign insurers and foreign reinsurers referred to in subsection (2). (4) Subsection (1) does not apply to the activities of (a) a retirement fund registered under Chapter 5, if and in so far as it acts in 28
accordance with that Chapter; (b) a friendly society registered under Chapter 6 or exempted under that Chapter from the requirement to be so registered, if and in so far as it enters into longterm policies in respect of any of which- (i) the total value of the policy benefits, other than an annuity, to be provided; or (ii) the total amount of the premium in return for which an annuity is to be provided does not exceed N$10,000.00 per member or another maximum amount prescribed by the Minister; or (c) a medical aid fund registered under Chapter 7, if and in so far as it acts in accordance with that Chapter. (5) For the purposes of subsection (1), a person, in the absence of evidence to the contrary, is deemed to carry on the business of insurance in Namibia, if that person performs in Namibia- (a) any act the object or result of which is that another person enters into or varies a policy in which that first-mentioned person undertakes to provide policy benefits; or (b) in relation to a policy referred to in subsection (a), any act directed towards- (i) maintaining, servicing, surrendering, or otherwise dealing with, or providing a loan in respect of, or on the security of, such policy; (ii) collecting or accounting for premiums payable under such policy; or (iii) receiving, submitting, settling, assisting or otherwise dealing with the settlement of, a claim under such policy. 6 Restrictions on use of certain designations (1) No person other than a registered insurer, registered insurance broker and registered insurance agent shall carry on business under any name or description which includes any of the following words or a literal translation, derivative or abbreviation of any such words- (a) "assurer", "assurance", "insure", "insurer", "insurance", "Lloyd's", "underwriter" or "underwriting"; or (b) "consultant", "guarantee" or "indemnity", when used in conjunction or association with the word "assurance" or "insurance". (2) NAMFISA may issue standards exempting a person or class of persons from the provisions of subsection (1). 7 Limitations (1) A registered insurer must not- 29
(a) carry on the business of insurance in Namibia or elsewhere other than for the class or classes of insurance for which it is registered; (b) in Namibia issue policies other than written domestic policies; or (c) vary a domestic policy so that it becomes payable either outside Namibia or in a currency other than the currency of Namibia, or both payable outside Namibia and in a currency other than the currency of Namibia. (2) Notwithstanding subsection (1), at the request of a registered insurer and subject to the provisions of any other law, NAMFISA, by notice given to the registered insurer and published in the Gazette and if satisfied that it will not be detrimental to the interests of policyholders and that it is desirable in the public interest, may:- (a) grant prior approval to a registered insurer to effect or renew insurance outside Namibia subject to such conditions or limitations contained in the standards and as may be determined by NAMFISA in any particular case; (b) grant exemption for a class or classes of policies to be issued in a currency other than the currency of Namibia, providing that every premium in respect of that policy must be paid in the same currency as that in which the policy is issued; or (c) allow the registered insurer to carry on a business other than insurance that is ancillary to the class or classes of insurance for which it is registered in accordance with any standards that may be issued on the subject. (3) For the purposes of subsection (2)(c), an ancillary activity for an insurer registered for long-term insurance includes, but is not limited to: (a) providing investment counselling services and portfolio management services. (b) engaging in the provision of real estate brokerage services. (c) providing information processing services in Namibia to entities which the insurer controls and that do not provide information processing services to other entities; (d) acting as a custodian of property; and (e) issuing unit-linked products. (4) For the purposes of subsection (3)(e), unit-linked products shall have the meaning and shall be subject to the requirements set out in the standards. 8 Classes of insurance (1) For the purposes of subsections (2) and (3):- disability insurance business means the business of providing or undertaking to provide policy benefits under disability policies; disability event means the event of the functional ability of the mind or body of a person or an unborn becoming impaired; disability policy means a contract in terms of which a person, in turn for a premium, undertakes to provide policy benefits upon a disability event, and includes a reinsurance 30