Regulatory Alerts2010-01-01
Bank of Zambia Circular No 09 of 2010 on Treatment of Management Fees
The Bank of Zambia issued Circular No 09 of 2010 to clarify the treatment of management fees and payments to related parties following a review of commercial bank reporting practices. The directive mandates that such fees be classified as residual and exceptional, strictly limiting them to genuine managerial, administrative, or technical services while prohibiting the reporting of specific costs like software licenses or seconded employee salaries as management fees. Banks must obtain prior regulatory approval before entering into or renewing contracts for these payments, subjecting requests to strict criteria regarding demonstrated need, cost allocation methodology, and financial capacity.
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