Financial Institutions and Markets Act 2 of 2021

Financial Institutions and Markets Act 2 of 2021 ( GG 7645 ) This Act has been passed by Parliament, but it has not yet been brought into force.
It will come into force on a date set by the Minister in the Government Gazette .
ACT
To consolidate and harmonise the laws regulating financial institutions, financial intermediaries and financial markets in Namibia; and to provide for incidental matters.

(Signed by the President on 11 June 2021)
ARRANGEMENT OF SECTIONS
CHAPTER 1
PRELIMINARY

General definitions
Objects of Act
Control over corporate bodies
CHAPTER 2
INSURANCE
PART 1
GENERAL
Definitions for this Chapter
Prohibitions
Restrictions on use of certain designations
Limitations
Classes of insurance
PART 2
REGISTRATION
Application for registration
Registration requirements
Registration
Insurers and reinsurers previously registered
Application for cancellation or variation of registration
Cancellation or variation of registration
PART 3
ADMINISTRATION
Principal office and principal officer
Accounts
Appointment of auditor
Appointment of valuator
PART 4
CONDUCT OF INSURANCE BUSINESS
Conduct of insurance business
Financially sound position
Restrictions on pledging assets and borrowing
Actuarial soundness of policies
Prohibition against tied selling
Policies: miscellaneous provisions
Publication of statements of capital
Prohibition against securing business for unregistered person
Restriction on acquisition of shares or other interests
Participating policies
Plain language
Misleading, false and deceptive statements: consequences of conviction
PART 5
CERTAIN LONG-TERM POLICIES
Life policies: minors
Life policies: married persons
Persons married in community of property
Life policy on own life: protection during life
Life policy on own life: protection on death
Life policies: spouses and children
Protected life policies: selection for realisation
Protected life policies: partial realisation
Life policies ceded or trust policies not kept up
Life policies ceded or premiums paid with intent to defraud creditors
Application of provisions to funeral, disability and health policies
PART 6
PROVISIONS RELATING TO LLOYD’S
Definitions for this Part
Authorisation of underwriters at Lloyd’s
Change to constitution, powers, rights, obligations and bye-laws
Appointment of Lloyd’s representative
Trust account to be kept by Lloyd’s representative
Returns to be submitted by Lloyd’s representative
Application of certain provisions of Chapter to Lloyd’s representative
Imposition of prohibition on activities of Lloyd’s underwriters
Registration of Lloyd’s intermediaries
Claims against underwriters at Lloyd’s
Payment of claims against underwriters at Lloyd’s
PART 7
AGENTS AND BROKERS
Definitions for this Part
Unregistered person may not act as agent or broker
Registration as insurance agent and renewal of registration
Remedial action
Application for registration as insurance broker
Registration requirements
Registration and renewal of registration
Agents, brokers previously registered
Principal office and principal officer
Accounts
Insurance to be in place
Only one registration
Application for cancellation or variation of registration
Cancellation or variation of registration
Confirmation of cover by registered brokers
Other obligations of registered brokers
No unreasonable delays
Placing insurance outside Namibia
Broker liable to policyholder
Policies and procedures
Obligations of registered insurance intermediaries
Duties of registered insurance intermediaries
Other business or occupation
Registration to be produced
Powers of NAMFISA in relation to registered insurance intermediaries
CHAPTER 3
FINANCIAL MARKETS
PART 1
PRELIMINARY
Definitions for this Chapter
Objects of Chapter
Non-application of gambling laws
PART 2
PROHIBITIONS AND RESTRICTIONS
Prohibitions
Listed securities: exception
PART 3
REGISTRATION OF CERTAIN REGULATED PERSONS
Application for registration
Registration requirements
Registration and renewal of registration
Existing exchanges
Persons approved by Registrar
Application for cancellation or variation of registration
Cancellation or variation of registration
Transfer or winding-up
Registration as authorised user, portfolio manager, authorised advisor or authorised representative
Remedial action
Stockbrokers
Existing portfolio managers
Registration as authorised representative of authorised user
Remedial action
Registration as participant
Remedial action
Nominees
Remedial action
Foreign exchange and electronic exchange
Principal office and principal officer
Appointment of auditor
PART 4
EXCHANGES
Interpretation
Functions of exchange and power of NAMFISA
Listing of securities
Removal of listing and suspension of trading
Application of new listing requirements
Disclosure of information by issuers
Imposition of levy
Funds of registered exchange
Requirements for exchange rules
Reporting transactions in listed securities
Undesirable advertising or canvassing
Identity and source to be disclosed
Restriction on borrowing and re-pledging
Marking or recording securities
Restriction on alienation of securities
Segregation of funds of authorised users and other persons
Appeal from decision of exchange
PART 5
CUSTODY AND ADMINISTRATION OF SECURITIES
Definitions for this Part
Functions of central securities depository
Functions of participant
Uncertificated securities
Responsibilities of issuer of uncertificated securities
Depository rules
Registration of securities
Ownership of securities
Transfer of securities
Pledge or cession of securities to secure debt
Delivery of securities
Records
Warranty
Recognition of trust
Attachment
PART 6
SELF-REGULATORY ORGANISATIONS
Recognised self-regulatory organisations
Carrying on additional business
Incorporation of self-regulatory organisation as public company
Amalgamation and mergers
Transfer of assets and liabilities
Duty of shareholders of controlling entity
Appointment as officer of self-regulatory organisation
Limitation on control of self-regulatory organisations
Delegation of functions
Report to NAMFISA
Right of NAMFISA to attend meetings and obtain documents
Rules of self-regulatory organisations
Limitation of liability
Disclosure of information
PART 7
SECURITIES CLEARING HOUSE
Limitation of liability
Amalgamation and merging
Transfer of assets and liabilities
PART 8
CODE OF CONDUCT FOR REGULATED PERSONS
Codes of conduct
Principles of code of conduct
PART 9
MARKET ABUSE
Definitions for this Part
Insider trading offences
Publication
Prohibited trading practices
False, misleading or deceptive statements, promises and forecasts
Civil liability resulting from insider trading
Disbursement of proceeds from civil claim
Powers of NAMFISA in civil proceedings
Assessment of fines and penalties
Powers and duties of NAMFISA
Protection of existing rights
Confidentiality and sharing of information
PART 10
GENERAL PROVISION
Exemption from Act No. 34 of 1934
CHAPTER 4
COLLECTIVE INVESTMENT SCHEMES
PART 1
PRELIMINARY
Definitions for this Chapter
Principles for operation of collective investment scheme
Duties of manager
Appointment of investment manager
Disclosure of information
Limitations
PART 2
REGISTRATION
Application for registration as manager
Registration requirements
Registration
Existing management companies
Application for cancellation or variation of registration
Cancellation or variation of registration
Registration as authorised representative of manager and renewal of registration
Remedial action
Registration as designated representative of authorised representative and renewal of registration
Remedial action
Approval of nominee company
Principal office and principal officer
Appointment of auditor
Limitation on investments
Rules
PART 3
TRUSTEES AND CUSTODIANS
Appointment and termination of trustee or custodian
Registration
Existing trustees
Duties of trustee or custodian
Status of assets
Liability for loss of assets
PART 4
COLLECTIVE INVESTMENT SCHEMES IN SECURITIES
Definitions for this Part
Determination of fair value
Foreign securities
PART 5
COLLECTIVE INVESTMENT SCHEMES IN PROPERTY
Definitions for this Part
Foreign country in which collective investment scheme in property may invest
Listing of participatory interests by exchange
PART 6
COLLECTIVE INVESTMENT SCHEMES IN PARTICIPATION BONDS
Definitions for this Part
Transitional provisions
Capacity of manager
Registration of participation bonds in name of nominee company
Rights of investor
Minimum investment period
Participatory interests rank in preference concurrently
Restrictions on rights of nominee company
Collateral security in respect of participation bonds
PART 7
COLLECTIVE INVESTMENT SCHEMES IN UNLISTED SECURITIES
Definitions for this Part
Minimum investment period
Listing by exchange
PART 8
COLLECTIVE INVESTMENT SCHEMES IN MONEY MARKET INSTRUMENTS
Definitions for this Part
Determination of fair value
Foreign money market instruments
PART 9
DECLARED COLLECTIVE INVESTMENT SCHEMES
Definitions for this Part
Declaration of specific type of business as collective investment scheme
PART 10
FOREIGN COLLECTIVE INVESTMENT SCHEMES
Definitions for this Part
Restrictions on foreign collective investment scheme
Reciprocity
Withdrawal of approval
PART 11
CONVERSION OF COLLECTIVE INVESTMENT SCHEME
Definitions for this Part
Limitations on conversion of collective investment scheme
Application for approval of NAMFISA
Consideration of application
Resolution by investors
Registration of memorandum and articles by Registrar of Companies
Certificate of registration of conversion and notification
Effects of conversion
Issue of participatory interests to former investors
PART 12
GENERAL
Change of name of scheme or portfolio
Prohibition of misleading names and acts
Restrictions on sale or lending of assets
Other business of manager
Exercise of voting power by manager
Unauthorised gain
Permissible deductions
Calculation of price
Payment of full purchase price
Power of manager to borrow
Matters to be provided in deed
Void provisions and amendment
Postponement of realisation of assets on winding-up
Separation of assets
Segregation of funds
Identity and source to be disclosed
Application of Companies Act to manager
Exemption from Act No. 34 of 1934
CHAPTER 5
RETIREMENT FUNDS
PART 1
PRELIMINARY
Definitions for this Chapter
Prohibitions
Restriction on use of designation “retirement fund” or “beneficiary fund”
PART 2
REGISTRATION
Application for registration
Registration requirements
Registration
Existing pension funds
Existing beneficiary funds
Effect of registration
Application for cancellation or variation of registration
Cancellation or variation of registration
PART 3
ADMINISTRATION AND POWERS
Principal office and principal officer
Board of fund
Exemptions
Replacement of member of board
Objects of board
Duties of board
Appointment of auditor
Appointment of valuator
Investigations by valuator
PART 4
CONDUCT OF BUSINESS AND MEMBER CONTRIBUTIONS
Business which may be carried on
Payment of contributions
PART 5
RULES OF RETIREMENT FUND
Rules
Amendment of rules
Binding force of rules
PART 6
SPECIAL PROVISIONS RELATING TO BENEFITS
Benefits not reducible, transferable or executable
Disposition of benefits upon insolvency
Disposition of benefits upon death
Deductions from benefits
PART 7
GENERAL
Voluntary dissolution of fund
Winding-up by court
Special provisions relating to liquidation of funds
Right to obtain and inspect documents
Investments
Exemption from Act No. 34 of 1934
CHAPTER 6
FRIENDLY SOCIETIES
PART 1
PRELIMINARY
Definitions for this Chapter
Objects of friendly society
Application of Chapter
Prohibitions
Restriction on use of designation “friendly society”
PART 2
REGISTRATION
Application for registration
Registration requirements
Registration
Existing friendly societies
Effect of registration
Application for cancellation or variation of registration
Cancellation or variation of registration
PART 3
ADMINISTRATION AND POWERS
Principal office and principal officer
Board of friendly society
Exemptions
Replacement of member of board
Objects of board
Duties of board
Appointment of auditor
Appointment of valuator
Investigations by valuator
Business which may be carried on
Investments
PART 4
RULES OF FRIENDLY SOCIETY
Rules
Amendment of rules
Binding force of rules
PART 5
MEMBERSHIP AND BENEFITS
Membership of minors
Membership of married persons
Payment of benefits to nominees
Restriction of payments on death of children under 16 years
Protection of money due on cessation of membership
Protection of money due on death of member
PART 6
GENERAL
Voluntary dissolution of society
Winding-up by court
Special provisions relating to liquidation of societies
Right to obtain and inspect documents
Exemption from Act No. 34 of 1934
CHAPTER 7
MEDICAL AID FUNDS
PART 1
PRELIMINARY
Definitions for this Chapter
Application of Chapter to medical aid fund established by State
Prohibitions
Restriction on use of designation “medical aid fund”
Prohibited marketing
PART 2
REGISTRATION
Application for registration
Registration requirements
Registration
Existing medical aid funds
Effect of registration
Application for cancellation or variation of registration
Cancellation or variation of registration
Application for registration as medical aid fund broker
Registration requirements
Registration and renewal of registration
Existing medical aid fund brokers
Application for cancellation or variation of registration
Cancellation or variation of registration
PART 3
ADMINISTRATION AND POWERS
Principal office and principal officer
Board of medical aid fund
Exemptions
Replacement of member of board
Objects of board
Duties of board
Appointment of auditor
Appointment of valuator
Investigations by valuator
Financial arrangements
Insurance of liabilities
Investments
Membership of more than one fund prohibited
PART 4
RULES OF MEDICAL AID FUND
Rules
Amendment of rules
Waiting periods
Binding force of rules
PART 5
BENEFIT OPTIONS
Additional benefit options
Prohibition on cession and attachment of benefits
PART 6
GENERAL
Voluntary dissolution of fund
Winding-up by court
Right to obtain and inspect documents
Charges by suppliers of health services
Offences relating to medical aid funds
CHAPTER 8
FUND AND SOCIETY ADMINISTRATORS
PART 1
PRELIMINARY
Definitions for this Chapter
Prohibitions
Restriction on use of designation “fund administrator”, “society administrator” or “administrator”
PART 2
REGISTRATION
Application for registration
Registration requirements
Registration
Existing fund administrators and society administrators
Application for cancellation or variation of registration
Cancellation or variation of registration
PART 3
ADMINISTRATION AND POWERS
Principal office and principal officer
Appointment of auditor
Duties of fund administrators and society administrators
Other business of fund administrator or society administrator
Application of Companies Act to fund administrator or society administrator
CHAPTER 9
PROPERTY HELD IN TRUST
Definitions for this Chapter
Duties with respect to trust property
Declaration of interest
Investment of trust property
Alienation of trust property
Records and documents as evidence
Statutory manager
Consequences of criminal conviction
CHAPTER 10
GENERAL PROVISIONS
PART 1
PRELIMINARY
Definitions for this Chapter
Application of Chapter
General prohibition
Transitional provisions
Unregistered persons to furnish information
PART 2
GENERAL MATTERS
Financial year
Name and change of name
Notification of certain matters
PART 3
GOVERNANCE
Application of this Part
Board of financial institution
Duties of board
Directors to act in good faith
Audit committee
Other committees
Indemnification of directors and officers
Information to be made available
Appointment of auditor
Appointment of valuator
Return of directors, auditors and valuators
Duties of financial institutions and financial intermediaries
PART 4
GENERAL MARKET CONDUCT REQUIREMENTS
Application of this Part and other financial services laws
Prohibition of false and misleading statements
Declaration of practices as irregular or undesirable
Market conduct: powers of NAMFISA
PART 5
POWERS OF NAMFISA TO REGULATE AND SUPERVISE
Power to issue standards
Standards
Guidelines, bulletins, rules, directives and other measures
Power to issue directives
Application to court
Reporting obligations
Fees
Removal of member of board
Enquiries to principal officer
Inspections
Appointment of inspectors
Investigations
Investigations on request of other agencies
Powers of inspectors
Time and place of examinations
Entry upon and search of premises
Professional privilege and incriminating evidence
Observance of secrecy
Disclosure to certain parties
Costs of investigation
Offences relating to inspections
Power of NAMFISA to verify information
Decisions to be in writing
Representative self-regulatory organisations
Changes in control of financial institution
Right to be heard
Late filing or payment
PART 6
ENFORCEMENT
Enforceable undertakings
Compensation for contraventions of Act
Court orders to enforce Act
Administrative sanctions
PART 7
SCHEMES, STATUTORY MANAGEMENT AND WINDING-UP
Interpretation
Failure to maintain sound financial position
Schemes
Appointment of statutory manager
Power and duties of statutory manager
Winding-up
PART 8
AMALGAMATIONS AND TRANSFERS IN ORIDNARY COURSE OF BUSINESS [The word “ordinary” is misspelt in the Government Gazette ,

as reproduced above.
The spelling is correct in the body of the Act.]
446. Amalgamations
447. Transfers
448. Standards and exemptions
449. Application for amalgamation or transfer
450. Approval of amalgamation or transfer
451. Statement to be deposited with NAMFISA
PART 9
FINANCIAL SERVICES COMPENSATION SCHEME
452. Financial Services Compensation Scheme
453. Scheme manager
454. Functions and duties of scheme manager
CHAPTER 11
MISCELLANEOUS PROVISIONS
455. Confidentiality and sharing of information
456. Inspection of documents
457. Effect of certificate of NAMFISA on document
458. Records and documents as evidence
459. Alienation of property
460. Protection of client assets
461. Limitation of liability
462. General offences and provisions relating to offences and sentences
463. Jurisdiction of magistrates’ court
464. Application to State and public entities
465. Regulations
466. Conflict or inconsistency
467. Repeal or amendment of laws and transitional arrangements
468. Short title and commencement
Schedule 1
Classes of Insurance
Schedule 2
Laws Repealed or Amended
Schedule 3
Transitional Provisions
BE IT ENACTED as passed by the Parliament, and assented to by the President, of the Republic of Namibia as follows:- [Note that the statute uses both “percent” and “per cent”.]
CHAPTER 1
PRELIMINARY
General definitions
1.
(1) In this Act, unless the context indicates otherwise 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; “Adjudicator” means the Financial Services Adjudicator as defined in section 1 of the Financial Services Adjudicator Act, 2019 (Act No. of 2019), and includes a Deputy Adjudicator and an ad-hoc Adjudicator as defined in that section; [There is no “Financial Services Adjudicator Act, 2019” in Namibia. The Act number is missing in this reference. It may refer to an anticipated law that has not yet been passed.] “advisory committee” means the advisory committee established under section 20 of 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 by section 39 of the NAMFISA Act; “articles” means the articles of association of a company as defined in section 1 of the Companies Act; “associate” (a) in relation to an individual means - (i) the spouse of that individual; (ii) the child, parent, stepchild, stepparent or sibling of the individual and the spouse of any that individual; [The word “any” before “that” is superfluous.] (iii) another person who has entered into an agreement or arrangement with that 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; (iv) 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, that individual or any person referred to in subparagraph (i) or (ii); and (v) a trust controlled by that 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, that corporate body, juristic person or unincorporated entity; (ii) any entity - (aa) which controls, directly or indirectly, that corporate body, juristic person or unincorporated entity; (bb) which manages or administers the affairs or part of the affairs of that corporate body, juristic person or entity; or (cc) on whose directions or instructions the affairs or part of the affairs of that 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 has been admitted as 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, 2021 (Act No. 1 of 2021); [The Act referred to is “the Bank of Namibia Act, 2020 (Act No. 1 of 2020)”.] “banking institution” means a banking institution as defined in section 1 of the Banking Institutions Act, 1998 (Act No. 2 of 1998); [The Banking Institutions Act 2 of 1998 has been replaced by the Banking Institutions Act 13 of 2023.] “beneficiary fund” means a beneficiary fund as defined in section 249; “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 friendly society, 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 section 78; “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, 1988 (Act No. 26 of 1988); “collective investment scheme” means a collective investment scheme as defined in section 168; “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; “corporate body” means an incorporated body wherever or however incorporated, and includes a company and a close corporation; “court” means any court or courts of Namibia having jurisdiction in the particular matter or in the particular 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; or (b) in relation to any 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 organisation, the government of any country or any subdivision of that government or country; “exchange” means an exchange as defined in section 78;
“fee” means an appropriate fee determined by NAMFISA under section 415 or under section 33 of the NAMFISA Act; “financial advice” means any financial advice as described in subsection (2); “financial crime” means any of the following:
(a) 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 provided for in Part 9 of 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 funding of, or any offence relating to the funding of, terrorism under the Prevention and Combating of Terrorist and Proliferation Activities Act, 2014 (Act No. 4 of 2014); or (g) any offence under the Financial Intelligence Act, 2012 (Act No. 13 of 2012); “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; (j) a registered securities clearing house; and (k) any person or entity declared by the Minister by a notice under subsection (5)(a) to be a financial institution; “financial intermediary” means a person who receives compensation, directly or indirectly, for providing a financial service, and - (a) for the purposes of Chapter 2 on Insurance and as defined in section 53 includes - (i) an insurance agent, including a corporate 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 78 includes - (i) an authorised user of an exchange; (ii) an authorised representative of an authorised user; (iii) a nominee of an authorised user; (iv) a stockbroker; (v) an investment manager; (vi) a linked investment service provider; (vii) a portfolio manager of an investment manager; (viii) a portfolio manager of a linked investment service provider; (ix) a securities advisor; (x) an authorised advisor of a securities advisor; (xi) a securities dealer; (xii) an authorised representative of a securities dealer; (xiii) a participant; (xiv) a nominee of a participant; (xv) a securities rating agency; (c) for the purposes of Chapter 4 on Collective Investment Schemes and as defined in section 168 includes - (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, includes a fund administrator; (e) for the purposes of Chapter 6 on Friendly Societies, includes a society administrator and an individual or entity that controls the affairs of a friendly society; (f) for the purposes of Chapter 7 on Medical Aid
Funds includes - (i) a fund administrator; (ii) a medical aid fund broker as defined in section 321; and (g) includes a person or entity declared by the Minister by notice under subsection (5)(b) to be a financial intermediary; “financial product” means - (a) a policy issued by an insurer or a 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; or (iii) a medical aid fund to the members of the medical aid fund by virtue of membership pursuant to Chapter 7; (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); or (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; or (b) a service determined by NAMFISA after consultation with the advisory committee by notice under subsection (4)(a) to be a financial service; but does not include - (i) 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 (ii) any other service exempted from the provisions of this Act by NAMFISA, by notice under subsection (4)(b); “financial services law” means - (a) this Act; (b) the Public Accountants’ and Auditors’ Act; (c) the Financial Intelligence Act, 2012 (Act No. 13 of 2012); (d) the Financial Services Adjudicator Act, 2019 (Act No. of 2019); [There is no “Financial Services Adjudicator Act, 2019” in Namibia. The Act number is missing in this reference. It may refer to an anticipated law that has not yet been passed.] (e) the Microlending Act, 2018 (Act No. 7 of 2018); (f) the NAMFISA Act; (g) a law that declares itself to be a financial services law for the purposes of this Act; or (h) a law declared by the Minister by notice under subsection (5)(c) to be a financial services law, and includes regulations, standards, and other subordinate measures made or issued under any of those laws; “financial year”, in relation to a financial institution or financial intermediary, means each period not exceeding 12 months, at the end of which the annual financial statements of the financial institution or financial intermediary 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 section 284; “fund administrator”, in relation to - (a) a retirement fund, means a fund administrator as defined in section 363; and (b) a medical aid fund, means a fund administrator as defined in section 363; “generally accepted accounting practice” means the accounting frameworks adopted by the Institute of Chartered Accountants of Namibia referred to in section 1 of the Public Accountants’ and Auditors’ Act; “High Court” means the High Court of Namibia referred to in Article 78(1)(b) of the Namibian Constitution or any judge of that court; “holding company” means a holding company as described in section 1(6) of 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 section 419; “insurer” means an insurer as defined in section 4; “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 referred to in section 1 of the Public Accountants’ and Auditors’ Act; “legal practitioner” means a legal practitioner, including a candidate legal practitioner, referred to in section 1 of the Legal Practitioners Act, 1995 (Act No. 15 of 1995); “medical aid fund” means a medical aid fund as defined in section 321; “memorandum” means a memorandum as defined in section 1 of the Companies Act; “Minister” means the Minister responsible for finance; “NAMFISA” means the Namibia Financial Institutions Supervisory Authority referred to in section 2 of the NAMFISA Act; “NAMFISA Act” means the Namibia Financial Institutions Supervisory Authority Act, 2021 (Act No. 3 of 2021); “objects of NAMFISA” means the objects of NAMFISA set out in section 3 of the NAMFISA Act; “officer”, in relation to - (a) a corporate body, means any natural person who is designated as an officer by the board of directors of that corporate body; and (b) any other juristic person or other unincorporated entity, means any natural person who is designated as an officer by the board, members or owners of the entity, and includes - (i) the members of the board, the principal officer, the person responsible for compliance and the person responsible for finance and investment; and (ii) any other natural person designated as an officer by NAMFISA by written directive issued to the corporate body or other juristic person, or other unincorporated entity, or a group or class of natural persons designated as officers by NAMFISA by notice under subsection
(4)(c); “permanent resident” means a person who is in possession of a permanent residence permit issued to him or her in terms of section 26 of the Immigration Control Act, 1993 (Act No. 7 of 1993); “prescribed” means prescribed by the Minister under this Act; “principal office” means - (a) in the case of an entity that is a financial institution or financial intermediary, the main place of business of that entity; (b) in the case of an individual financial intermediary who is employed by a financial institution or by another financial intermediary, the main place of business of that financial institution or other financial intermediary; and (c) in the case of an individual financial intermediary who is not employed by a financial institution or by another financial intermediary, the main place of business of that individual; “principal officer” means the officer of a financial institution, financial intermediary or of the manager of a collective investment scheme appointed as principal officer who - (a) must be - (i) the chief executive officer of the financial institution, financial intermediary or of the manager of a collective investment scheme and have the duties and the functions of a chief executive officer; or (ii) 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, financial intermediary or manager of a collective investment scheme, and in the case of a financial intermediary that is a natural person, that person is deemed to be the principal officer of that financial intermediary; “Public Accountants’ and Auditors’ Act” means the Public Accountants’ and Auditors’ Act, 1951 (Act No. 51 of 1951); “public company” means a public company referred to in section 20 of the Companies Act; “registered” means registered under this Act; “regulations” means regulations made by the Minister under this Act; “reinsurer” means a reinsurer as defined in section 4; “retirement fund” means a retirement fund as defined in section 249; “securities clearing house” means a securities clearing house as defined in section 78; “self-regulatory organisation” means a self-regulatory organisation as defined in section 78 or a representative self-regulatory organisation referred to in section 432; “society administrator” means a society administrator as defined in section 363; “spouse” means - (a) a partner in a marriage solemnised in terms of the law of Namibia or of any foreign country; (b) a common law partner in a union recognised in common law as a life-time cohabitation arrangement; (c) a partner in a customary union according to customary law or custom; (d) a partner in a union recognised as a marriage under the tenets of any religion; or (e) a partner in a relationship in which the parties live together in a manner resembling a marital
partnership or customary union; “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 section 443; “subsidiary” means a subsidiary of another company as described in section 1(3) of the Companies Act; “this Act” includes - (a) regulations made, or other subordinate measures made or issued by the Minister, under this Act; and (b) 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); [The Trust Moneys Protection Act 34 of 1934 has been replaced by the Trust Administration Act 11 of 2023.] “trust property” means any corporeal or incorporeal movable or immovable asset invested, held, kept in safe custody, controlled, administered or alienated by any person on behalf of another person; “undesirable practice”, in relation to any practice or manner of conducting business of a financial institution or financial intermediary or the provision of a financial service, means a practice determined under section 407 to be an undesirable practice in relation to that financial institution, financial intermediary or financial service; “valuator” means an actuary or an expert who is a member of a category of professions or persons specified in the standards, appointed or retained as a valuator by a financial institution or financial intermediary or required by NAMFISA to make a valuation report with respect to a financial institution or financial intermediary; and “wholly owned subsidiary” means a wholly owned subsidiary or another company as described in section 1(7) the Companies Act. [The word “or” preceding the phrase “another company” should be “of”. The word “of” appears to have been omitted before “the Companies Act”.] (2) Subject to subsection (3), for purposes of this Act, financial advice includes - (a) 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 - (i) in respect of buying, selling, handling or exchanging a security; (ii) in respect of purchasing any other financial product; (iii) in respect of investing in any financial product; or (iv) 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; (b) insurance advice as defined in section 4; and (c) securities advice as defined in section 78. (3) Despite subsection (2), financial advice does not include - (a) factual information given merely - (i) on the procedure for entering into a transaction in respect of a financial product;
(ii) in relation to a description of a financial product; (iii) in answer to routine administrative enquiries; (iv) in the form of objective information about a particular financial product including information regarding the tax treatment of a particular financial product; (v) by the display or distribution of promotional material; or (vi) 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) 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; (ii) 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 or an auditor or actuary, where the advice is for tax purposes or ancillary to some other advice that is not financial advice; or (c) any other advisory activity exempted from the provisions of this Act by NAMFISA, by notice under subsection (4)(d). (4) NAMFISA may, for the purposes of - (a) paragraph (b) of the definition of “financial service”, after consultation with the advisory committee, by notice in the Gazette determine any service to be a financial service; (b) subparagraph (ii) of the definition of “financial service”, by notice in the Gazette exempt any service from the application of the provisions of this Act; (c) subparagraph (ii) of the definition of “officer”, by notice in the Gazette designate a group or class of natural persons as officers; and (d) subsection (3)(c), by notice in the Gazette , exempt any advisory activity from the application of the provisions of this Act. (5) The Minister may, for the purposes of - (a) paragraph (k) of the definition of “financial institution”, by notice in the Gazette declare any person or entity to be a financial institution; (b) paragraph (g) of the definition of “financial intermediary”, by notice in the Gazette declare any person or entity to be a financial intermediary; and (c) paragraph (h) of the definition of “financial services law”, by notice in the Gazette declare any law to be a financial services law. (6) NAMFISA may issue standards, guidelines, bulletins, rules, directives or other subordinate measures or take any other measures that NAMFISA is authorised or has been authorised to issue or take under this Act or the NAMFISA Act in order to give effect to any action that NAMFISA has taken under subsection (4) or the Minister has taken under subsection (5). (7) The Minister may make regulations, issue other subordinate legislation or measures or take other measures that the Minister is
authorised to issue or take under this Act or the NAMFISA Act in order to give effect to any action that NAMFISA has taken under subsection (4) or the Minister has taken under subsection (5). Objects of Act 2. The objects of this Act are to foster - (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. Control over corporate bodies 3. (1) For the purposes of this Act, each of the following is considered as having control over 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 voting rights attached to shares or other securities in the corporate body; and (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; and (b) in the case of an entity that is not a corporate body, a person who is in a position to control or influence in essentially the same measure as a person referred to in paragraph (a), the business or financial operations of the entity. (2) For the purposes of this Act, a person referred to in any provision of subsection (1)(a) who is considered as having control over a corporate body is also considered as having control over any subsidiary of that corporate body. (3) Where a corporate body is a financial institution, for the purposes of subsection (1)(a)(iii) or (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 on the 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).
CHAPTER 2
INSURANCE
PART 1
GENERAL
Definitions for this Chapter
4.
(1) In this Chapter, unless the context indicates otherwise - “actuarial basis”, in relation to a policy, means the underlying actuarial rules, specifications and formulae, approved by the valuator of the registered insurer or reinsurer, in terms of which a policy operates and is executed as contemplated by this Act; “capital adequacy requirement” means an amount which a registered insurer or reinsurer is required to have continuously in accordance with the requirements of the standards; “class 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 - (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 must not be made payable in Namibia in the currency of Namibia; or (b) before March 21, 1990 and which the policyholder has not requested that the policy be made payable outside Namibia in a currency other than that of Namibia or the policyholder has specifically made the policy to be payable in Namibia in Namibian currency; “due date”, in relation to - (a) a premium, means- (i) in the case of a new policy, the inception date of the policy; (ii) 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) an instalment of a premium, means the commencement date of the period in respect of which the instalment is payable; “foreign insurer” means a foreign entity that is authorised by or under the laws of a country other than Namibia to carry on the business of insurance in that country or in another country; “foreign reinsurer” means a foreign reinsurer that is authorised by or under the laws of a country other than Namibia to carry on reinsurance business in that country or in another country; “gap insurance” means gap insurance as defined in the regulations; “insurance” means long-term insurance or short-term insurance, and includes micro-insurance; “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 or an 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 under subsection (2); “insurance intermediary” means an insurance agent or an insurance broker as defined in section 53; “insurer” means a person carrying on the business of insurance or reinsurance; “long-term insurance” means insurance of a class or classes described in section 8 as long-term insurance; “Long-term Insurance Act” means the Long-term Insurance Act, 1998 (Act No. 5 of 1998); “micro-insurance” means micro-insurance as defined in the regulations; “participating policy” means a policy issued by a registered insurer or reinsurer that entitles its holder to participate in the profits of the registered insurer or reinsurer; “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; “policy benefits” means one or more sums of money, services or other benefits under a policy and includes an annuity; “policyholder” means the person who enters into a domestic policy with an insurer or reinsurer; “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 for the purposes of Part 6, includes Lloyd’s as defined in section 42; “registered insurance intermediary” means a registered insurance agent or a registered insurance or reinsurance broker as defined in section 53; “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 a person carrying on the business of reinsurance; “registered reinsurer” means a reinsurer that is a company registered under section 11 to carry on long-term reinsurance or
short-term reinsurance, and that is limited by its certificate of registration to reinsurance, and for the purposes of Part 6, includes Lloyd’s as defined in section 42; “short-term insurance” means insurance of a class or classes described in section 8 as short-term insurance; and “Short-term Insurance Act” means the Short-Term Insurance Act, 1998 (Act No. 4 of 1998). (2) NAMFISA may, for the purposes of paragraph (c) of the definition of insurance advice, by notice in the Gazette , exempt any advisory activity from the application of the provisions of this Chapter. Prohibitions 5. (1) A person may not 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 registration as an insurer or reinsurer; and (b) carries on that business in accordance with this Act. (2) Despite subsection (1), NAMFISA may, if satisfied that no registered insurer or reinsurer is able, in any particular case, to provide policy benefits under a policy on equitable terms, 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 or 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 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 long-term policies in respect 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 the prescribed maximum amount; 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 regarded as carrying on the business of insurance or reinsurance 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 paragraph (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) A person who
contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Restrictions on use of certain designations 6. (1) A person, other than a registered insurer, a registered reinsurer, a registered insurance intermediary or a Lloyd’s broker, Lloyd’s intermediary, Lloyd’s representative or Lloyd’s underwriter may not 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) “advisor”, “agent”, “broker”, “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). (3) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Limitations 7. (1) A registered insurer or reinsurer may not - (a) carry on the business of insurance or reinsurance 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) Despite subsection (1), at the request of a registered insurer or reinsurer concerned and subject to the provisions of any other law, NAMFISA, by notice given to the registered insurer or reinsurer 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 or reinsurer to effect or renew reinsurance 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, except 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 or reinsurer to carry on a business other than insurance or reinsurance that is ancillary to the class or classes of insurance or reinsurance 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 or a reinsurer
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 or reinsurer controls and that do not provide information processing services to other entities; (d) acting as a custodian of property; or (e) issuing unit-linked products. (4) For the purposes of subsection (3)(e), “unit-linked products” has the meaning and must be subject to the requirements set out in the standards. (5) Subject to subsection (6), an insurer or a reinsurer may not be registered for classes of insurance that include both long-term insurance and short-term insurance. (6) Despite subsection (5), an insurer or reinsurer registered to carry on long-term insurance or short-term insurance may also be registered to carry on micro-insurance. (7) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Classes of insurance 8. (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 person becoming impaired; “disability policy” means a contract in terms of which a person, in return for a premium, undertakes to provide policy benefits upon a disability event, and includes a reinsurance policy in respect of such a contract; “fund” means - (a) a friendly society referred to in Chapter 6; (b) a medical aid fund referred to in Chapter 7; (c) a pension fund referred to in section 255; (d) a retirement fund and a beneficiary fund referred to in Chapter 5; (e) a permanent fund, approved by the Minister, established for the purposes of providing benefits to its members in the event of sickness, accident or unemployment or of providing benefits to surviving spouses, children, dependants or nominees of deceased members or mainly for these purposes; or (f) any other prescribed person, arrangement or business; “fund insurance business” means the business of providing or undertaking to provide policy benefits under fund policies; “fund policy” means a contract in terms of which a person, in return for a premium, undertakes to provide policy benefits for purposes of funding in whole or in part the liability of a fund to provide benefits to its members in terms of its rules, other than such a contract relating exclusively to a particular member of the fund or to the surviving spouse, children, dependants or nominees of a particular member of the fund, and includes a reinsurance policy in respect of such a contract; “funeral insurance business”
means the business of providing or undertaking to provide policy benefits under funeral policies; “funeral policy” means a contract in terms of which a person, in return for a premium, undertakes to provide on the death of a particular person policy benefits, not exceeding such amount as may be prescribed, consisting mainly of the provision of a funeral for the deceased person or the granting to another person of some other non-monetary benefit, whether or not the policy provides for - (a) the payment, at the option of the insurer or the reinsurer or any other person, of a sum of money instead of the provision of such funeral or the granting of such other non-monetary benefit; or (b) the payment of a sum of money in addition to the provision of such funeral or the granting of such other non-monetary benefit, and includes a reinsurance policy in respect of such a contract; “health event” means an event relating to the health of the mind or body of a person or an unborn person; “health insurance business” means the business of providing or undertaking to provide policy benefits under health policies; “health policy” means a health policy within the meaning of the regulations; “life insurance business” means the business of providing or undertaking to provide policy benefits under life policies; “life policy” means a contract in terms of which a person, in return for a premium, undertakes to - (a) provide policy benefits - (i) on death; (ii) on the happening of an event or contingency dependent on human life; or (iii) for a term dependent on human life; or (b) pay an annuity for a certain period, and includes a reinsurance policy in respect of such a contract; “long-term insurance business” means the business of providing or undertaking to provide policy benefits under long-term policies, but does not include - (a) the activities of an association of persons established for the purposes of rendering aid to its members or their dependants, commonly called a friendly society, which is registered under Chapter 6 or which is exempted from registration under that Chapter and which does not at any time after the commencement of this Act employ a person whose main remunerated occupation consists of inducing persons to become members of the association or collecting from those members contributions of subscriptions towards the funds of the association; (b) the activities of a pension fund, a provident fund or a retirement annuity fund as defined in section 1 of the Income Tax Act, which is registered as a retirement fund under Chapter 5; (c) the activities of a medical aid fund which is registered under Chapter 7; (d) any activity connected with and subsidiary to any business other than insurance or reinsurance, which in the opinion of NAMFISA is not long-term insurance business as ordinarily understood; or (e) any such business as may be prescribed which is considered not to be long-term insurance business for the purposes of this Act; “long-term policy”
means a disability policy, fund policy, funeral policy, health policy, life policy or sinking fund policy or a contract comprising a combination of any of these policies; “sinking fund insurance business” means the business of providing or undertaking to provide policy benefits under sinking fund policies; “sinking fund policy” means a contract, other than a life policy, in terms of which a person, in return for a premium, undertakes to provide one or more sums of money on a fixed or determinable future date as policy benefits, and includes a reinsurance policy in respect of such a contract. (2) The classes of long-term insurance business in respect of which - (a) an insurer may be registered to carry on business, other than reinsurance business; and (b) a reinsurer may be registered to carry on reinsurance business only, in Namibia are those set out in Part 1 of Schedule 1. (3) The classes of short-term insurance business in respect of which - (a) an insurer may be registered to carry on business, other than reinsurance business; and (b) a reinsurer may be registered to carry on reinsurance business only, in Namibia are those set out in Part 2 of Schedule 1. (4) If a registered insurer or reinsurer or a person applying for registration and NAMFISA do not agree as to the class to which any particular long-term or short-term insurance business belongs or if that insurer or reinsurer or person so requests, NAMFISA must determine the class under which the business must be dealt with. (5) The Minister may on his or her own accord or at the request of NAMFISA, by notice in the Gazette , amend Schedule 1 by adding to or removing from that Schedule any class or classes of long-term or short-term insurance business.
PART 2
REGISTRATION
Application for registration
9.
(1) A public company that intends to carry on business as an insurer or a reinsurer in any particular class or classes of insurance in Namibia must make an application to NAMFISA for registration in respect of that class or those classes of insurance in accordance with subsection (2). (2) An application for registration as an insurer or a reinsurer must be - (a) made in the manner and form required by the standards; (b) include the information with respect to the principal office and principal officer required by the standards; [This paragraph does not fit with the structure of the introductory phrase; the word “be” does not fit together with the verb “include”.] (c) accompanied by the documents and other information required by the standards; (d) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; (e) made subject to and in accordance with any other applicable provision of this Act; and (f) accompanied by the required fee. (3) Before making an application referred to in subsection (1), the applicant must, at the expense of the applicant, give notice of the proposed application in two newspapers circulating nationally in Namibia, stating - (a) the name of the applicant; (b) the place where the application and the memorandum, articles and rules of the applicant may be inspected by members of the public; and (c) the period within which objections to the application may be lodged with NAMFISA. Registration requirements 10. (1) Before approving the application and registering the applicant as an insurer or a reinsurer for any class of insurance, NAMFISA must be satisfied on reasonable grounds that the requirements of subsection (3) have been met and that the applicant - (a) is a public company; (b) has appointed a principal officer pursuant to section 15 who is a member of the board of directors; (c) has at least five directors - (i) at least 50 percent of whom must be Namibian citizens or holders of permanent residence permits and who are resident in Namibia; (ii) at least one third of whom must be independent within the meaning of the standards; and (iii) none of whom is a registered insurance intermediary; (d) has, in respect of such insurance business in Namibia, capital that meets the capital adequacy requirements of the standards; (e) has paid up capital and surplus in Namibian dollars totalling at least - (i) N$2 000 000 for registration for one class of long-term insurance; (ii) N$8 000 000 for registration for more than one class of long-term insurance; (iii) N$2 000 000 for registration for one class of short-term insurance; (iv) N$8 000 000 for registration for more than one class of short-term insurance; (v) N$200 000 for registration for funeral insurance; (vi) N$200 000 for registration for micro-insurance; (vii) NS12 000 000 for registration for reinsurance; or [The amount in subparagraph (vii) is reproduced as it appears in the Government Gazette , but must have been intended
to read “N$12 000 000” (with a dollar sign instead of the letter S).] (viii) such greater amount in any of the cases referred to in subparagraphs (i) to (vii) as the Minister may prescribe; (f) has submitted to NAMFISA a business plan, certified by a valuator, covering a period of three years reflecting the classes of insurance proposed to be undertaken and their respective risk profiles and providing details of projected set-up costs, capital requirements, projected development of business, solvency margins and reinsurance arrangements, and such business plan has been found satisfactory by NAMFISA; (g) will be in a position to - (i) carry on the business of insurance or reinsurance in the class or classes for which the application has been made; (ii) conduct all affairs relating to its insurance or reinsurance business in accordance with sound insurance, reinsurance and financial principles and practices and the provisions of this Act; (iii) comply with the capital adequacy requirements set out in the standards; and (iv) protect the interests of policyholders; and (h) will be in a position to ensure that its organisational or group structure will not be such as to hinder effective supervision by NAMFISA. (2) For the purposes of subsection (1)(c)(i), the principal officer may not be included in calculating the 50 percent required pursuant to that subsection. (3) Before approving the application and registering the applicant, NAMFISA must be satisfied on reasonable grounds that - (a) in relation to the applicant public company - (i) every shareholder or other owner that controls the applicant, and every director, the principal officer and other officers of the applicant are fit and proper within the meaning of the standards; (ii) the memorandum, articles or other founding documents of the applicant are not inconsistent with the provisions of this Act; (iii) the direct or indirect control of the public company is not likely to be contrary to the interest of consumers of the financial services concerned; and (iv) the applicant will be in a position to ensure that its organisational or group structure will not be such as to hinder effective supervision by NAMFISA; (b) doing so is not contrary to- (i) this Act; or (iii) the public interest; [The lettering of the subparagraphs is incorrect in the Government Gazette , as reproduced above; there is no subparagraph (ii).] (c) the applicant has the attributes reasonably necessary and adequate to - (i) provide the financial services in question with professional integrity, prudence, proper skill and due diligence; (ii) maintain a sound financial position and not cause or further instability in the financial system of Namibia; and (iii) comply with this Act; (d) the name under which the applicant proposes to conduct business, or a translation, shortened form or derivative of that name is not in contravention of section 391; (e) the applicant has submitted all other information which, in the opinion of
NAMFISA, is necessary to assess the application, and such information has been found satisfactory by NAMFISA; and (f) the applicant has complied and will continue to comply with any other requirements contained in this Act or in the standards which apply to the applicant. Registration 11. (1) If NAMFISA is satisfied that the applicant complies with the provisions of sections 9 and 10, and after consideration of any objection received as a result of the notice referred to in section 9(3), NAMFISA must, subject to conditions that may be imposed under subsection (4), register the applicant as an insurer or a reinsurer to carry on the business of long-term insurance or short-term insurance in the class or classes in respect of which registration has been granted. (2) The registration referred to in subsection (1) must specify - (a) the principal office of the applicant in Namibia; and (b) the places in Namibia from which the applicant may operate. (3) Upon registration of an applicant NAMFISA must issue to the applicant a certificate of registration in a form provided by the standards. (4) NAMFISA may impose such conditions on the registration of the applicant as it considers necessary, having regard, without limitation, to all the facts and information available to NAMFISA pertaining to the applicant, and any guidelines issued by NAMFISA under this Act. (5) If an application is refused by NAMFISA or is granted subject to conditions, NAMFISA must advise the applicant of the refusal or conditions by giving notice to the applicant containing the reasons for the refusal or the conditions, and must give the applicant a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the applicant may make representations in writing to NAMFISA. (6) An insurer or a reinsurer must comply with the conditions subject to which it was registered. Insurers and reinsurers previously registered 12. An insurer or a reinsurer that was registered under the Long-term Insurance Act or the Short-term Insurance Act on the date of commencement of this Act is deemed to be a registered insurer or reinsurer under section 11 and, subject to such adjustments as may be necessary and any applicable standards, the provisions of this Act apply to that insurer or reinsurer. Application for cancellation or variation of registration 13. (1) An insurer or a reinsurer may at any time apply to NAMFISA for cancellation of a registration granted pursuant to section 11 or for a variation to the classes of insurance for which it was registered or to the conditions subject to which that registration was granted. (2) An application made under subsection (1) must be - (a) made in the manner and form required by the standards; (b) accompanied by the documents and other information required by the standards; (c) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; and (d) accompanied by the required fee.
(3) Before making an application pursuant to subsection (1), the applicant must give prior notice of the proposed application in two newspapers circulating nationally in Namibia, at the expense of the applicant, stating - (a) the name of the applicant; (b) either - (i) the reasons for the proposed cancellation; (ii) the nature of the proposed variation to the classes of insurance for which it was registered; or (iii) the nature of the proposed variation to the conditions; and (c) the period within which objections to the application may be lodged with NAMFISA. (4) Section 11 applies with the changes required by the context to an application for a variation of conditions referred to in subsection (1). (5) If, after consideration of any objection received as a result of the notice referred to in subsection (3), NAMFISA is of the opinion that it is reasonable to do so and not against the public interest, NAMFISA may, by notice to the insurer or reinsurer concerned - (a) cancel the registration; or (b) vary the conditions of registration, including the imposition of additional conditions. (6) NAMFISA must make public any cancellation of registration or variation of conditions of registration under subsection (5) and the reasons for the cancellation or variation, by notice in the Gazette or by means of any other appropriate public statement. Cancellation or variation of registration 14. (1) NAMFISA may take any of the actions set out in subsection (2), if NAMFISA acting reasonably, finds that - (a) a registered insurer or reinsurer has made a material misrepresentation or failed to provide information that was materially relevant in its application for registration; (b) a registered insurer or reinsurer has failed to comply with this Act; (c) a registered insurer or reinsurer no longer meets the requirements for registration; (d) a registered insurer or reinsurer has provided financial services without professional integrity, prudence, proper skill or due diligence; (e) a registered insurer or reinsurer is in an unsound financial position; (f) a registered insurer or reinsurer has failed to comply with a directive, request or requirement of NAMFISA issued under this Act; (g) a registered insurer or reinsurer has failed to give effect to a decision of the Appeal Board; (h) a registered insurer or reinsurer has ceased to operate or has failed to commence operating within a reasonable time after being registered; (i) a registered insurer or reinsurer is involved in a financial crime; or (j) any director, the principal officer, other officer or member of a board of the registered insurer or reinsurer no longer meets the fit and proper requirements within the meaning of the standards or has engaged in conduct identified in the standards as misconduct. (2) If NAMFISA is satisfied that any of the circumstances described in subsection (1) exist, NAMFISA may take any of the following actions with respect to the registered insurer or reinsurer - (a) cancel its
registration; (b) vary the conditions of its registration, including the imposition of additional conditions; or (c) take any other steps that NAMFISA may consider necessary or advisable. (3) Before taking any action pursuant to subsection (2), NAMFISA must give notice to the registered insurer or reinsurer of its intention to take the action, together with the reasons for taking the action, and must give the registered insurer or reinsurer a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the registered insurer or reinsurer may in writing make representations to NAMFISA on the matter. (4) Subject to such conditions as NAMFISA may impose, NAMFISA may provisionally suspend the registration or take control of the assets of a registered insurer or reinsurer without giving notice and an opportunity to be heard pursuant to subsection (3), if NAMFISA is satisfied on reasonable grounds that it is urgently necessary to do so in order to prevent or mitigate damage to the interests of financial institutions, financial intermediaries, their clients or the financial system of Namibia, but NAMFISA must - (a) give the registered insurer or reinsurer the notice and an opportunity to be heard and make representations as soon as reasonably possible; and (b) having considered any representations received, determine whether the provisional suspension should be continued until further conditions can be imposed or registration cancelled. (5) On the cancellation of the registration of an insurer or a reinsurer under section 13, subsection (2)(a) or any other applicable provision of this Act, the insurer or reinsurer must be wound-up in accordance with the requirements of Chapter 10, and NAMFISA must take such steps and may impose such conditions as are necessary in the circumstances, which steps may include the transfer of the business of the insurer or reinsurer to another insurer or reinsurer, as appropriate, but no distribution of the assets of the insurer or reinsurer may be made without the prior approval of NAMFISA. (6) NAMFISA must make public any suspension or cancellation of registration, variation of conditions of registration or any other steps taken under this section and the reasons for the suspension, cancellation or variation, by notice in the Gazette or by means of any other appropriate public statement. (7) A person who - (a) continues to operate, or engage in, the business of insurance or reinsurance after the cancellation of registration under section 13(5)(a), subsection (2)(a) or any other applicable provision of this Act or after suspension of registration under subsection (4); or (b) fails to comply with a condition imposed by NAMFISA under subsection (4), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment.
PART 3
ADMINISTRATION
Principal office and principal officer
15.
(1) Every registered insurer or reinsurer must - (a) have a principal office in Namibia where it must hold and maintain the documents referred to in the standards; and (b) appoint to be its principal officer in Namibia, a fit and proper person within the meaning of the standards, who is - (i) a Namibian citizen or permanent resident; and (ii) resident in Namibia. (2) Despite subsection (1)(b)(i), NAMFISA may, in exceptional circumstances, grant permission that a principal officer referred to in that subsection may, subject to the Immigration Control Act, 1993 (Act No. 7 of 1993), for such period as may be determined by NAMFISA, be a person other than a Namibian citizen or permanent resident. (3) After the appointment of a principal officer pursuant to subsection (1)(b), a registered insurer or reinsurer must, within the period set out in the standards, in writing notify NAMFISA of the appointment. (4) NAMFISA may, on the grounds that a principal officer is not a fit and proper person, within the meaning of the standards, and after giving the registered insurer or reinsurer and the principal officer a reasonable opportunity to be heard, direct the registered insurer or reinsurer to appoint some other person to be the principal officer of the registered insurer or reinsurer. (5) Whenever a principal officer resigns or the appointment of a principal officer is terminated by a registered insurer or reinsurer or by the expiry of a contract of employment, the registered insurer or reinsurer must, within the period set out in the standards, in writing notify NAMFISA and submit to NAMFISA a written statement of the reasons for the termination or in the opinion of the registered insurer or reinsurer, the reasons for the resignation. (6) The principal officer of a registered insurer or reinsurer must be an ex officio member of the board of the insurer or reinsurer, but the principal officer may not serve as chairperson of the board. (7) The principal officer of a registered insurer or reinsurer is authorised to act on behalf of the insurer or reinsurer to ensure compliance with this Act, and in any case where a person, including NAMFISA, communicates with that insurer or reinsurer, that person may do so by addressing the communication to the principal officer. (8) Process in any legal proceedings may be served on a registered insurer or reinsurer by serving a copy of the process at its principal office. (9) A person who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Accounts 16. A registered insurer or reinsurer must keep in Namibia proper accounts of, and financial information relating to, its insurance or reinsurance business that comply with the requirements of the standards. Appointment of auditor 17. (1) A registered insurer or reinsurer must, in accordance with
section 401, appoint and at all times have an auditor or firm of auditors to be its auditor for its insurance business in Namibia. (2) A registered insurer or reinsurer may not appoint as its auditor - (a) an auditor who is; or (b) a firm of auditors any member of which is, an employee, officer, director or shareholder of the registered insurer or reinsurer or of an insurance intermediary that is affiliated with the registered insurer or reinsurer. (3) NAMFISA may direct a registered insurer or reinsurer to change its auditor if NAMFISA is satisfied that the auditor or any member of the firm of auditors appointed as auditor is an employee, officer, director or shareholder of the registered insurer or reinsurer or of an insurance intermediary that is affiliated with the registered insurer or reinsurer. (4) An auditor appointed under subsection (1) - (a) must perform the functions and duties assigned to; (b) must exercise the powers conferred on; and (c) is subject to the obligations imposed on, an auditor by section 401. Appointment of valuator 18. (1) A registered insurer or reinsurer must, in accordance with section 402, appoint and at all times have a valuator for the purposes of this Act. (2) A registered insurer or reinsurer may not appoint as its valuator an employee, officer, director or shareholder of the registered insurer or reinsurer or of an insurance intermediary that is affiliated with the registered insurer or reinsurer. (3) A registered insurer or reinsurer that was registered under the Short-term Insurance Act must appoint a valuator within 90 days of the coming into force of this Part. (4) The valuator of a registered insurer or reinsurer that was registered under the Long-term Insurance Act may continue as the valuator of that registered insurer under this Act as long as the valuator meets the requirements of subsection (2) and section 402(2). (5) NAMFISA may direct a registered insurer or reinsurer to change its valuator if NAMFISA is satisfied that the person appointed as valuator is an employee, officer, director or shareholder of the registered insurer or reinsurer or of an insurance intermediary that is affiliated with the registered insurer or reinsurer. (6) In addition to the functions and duties assigned to a valuator by section 402, a valuator of a registered insurer or reinsurer must value the actuarial and other policy liabilities of the registered insurer or reinsurer with respect to its insurance or reinsurance business in Namibia as at the end of each financial year, and prepare a valuation report thereon for that financial year. (7) The report of the valuator referred to in subsection (6) must include any particulars set out in the standards. (8) The registered insurer or reinsurer must, within 180 days from the end of the valuation period, and subject to section 402(10)(a), deposit a copy of the valuation report referred to in subsection (6) with NAMFISA. (9) Whenever a registered insurer or reinsurer deposits
with NAMFISA a copy of a report made by a valuator under this section, it must also deposit with NAMFISA a certificate of the board and of the principal officer of the registered insurer or reinsurer that to the best of their knowledge and belief the information furnished to the valuator for the purposes of the report was correct and complete in every material respect. (10) A valuator appointed under subsection (1) - (a) must perform the functions and duties assigned to; (b) must exercise the powers conferred on; and (c) is subject to the obligations imposed on, a valuator by section 402. (11) Any person who contravenes or fails to comply with subsection (8) or (9) or makes a false or misleading statement when required to issue a certificate pursuant to subsection (9) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment.
PART 4
CONDUCT OF INSURANCE BUSINESS
Conduct of insurance business
19.
(1) A registered insurer or reinsurer must, in carrying on the business of insurance and conducting its affairs - (a) in all respects act honestly and in good faith; (b) employ sound insurance, reinsurance and financial principles and practices; and (c) comply with the provisions of this Act and any other applicable financial services law. (2) Every registered insurer or reinsurer must - (a) hold in strict confidence all information concerning the business and affairs of any client of the registered insurer or reinsurer acquired in the course of the professional relationship with that client and may not divulge any such information unless - (i) authorised in writing by the client; (ii) required by this Act or any other law or by an order of the court; or (iii) as may be necessary in order to arrange or provide for the insurance required by the client; (b) observe the requirements of this Act and all other relevant rules and legislation regarding the preservation and safekeeping of the property of the client entrusted to the registered insurer or reinsurer and, if there are no such requirements, rules or legislation or the registered insurer or reinsurer is in doubt, take the same care of such property as a careful and prudent person would take of that person’s own property of like description; (c) not stipulate, charge or accept any fee that is not fully disclosed or the basis for which is not fully disclosed, prior to the service being rendered or which is so disproportionate to the service provided as to be unconscionable; (d) maintain accounts and financial records in respect of the business carried out for a period of at least five years after the period to which those accounts and records relate; (e) comply with such instructions as may be issued by NAMFISA with respect to the specific accounting, financial and other records that must be maintained for the particular type of activity in which the registered insurer or reinsurer is engaged. (3) A registered insurer or reinsurer may not, without the prior written approval of NAMFISA, make additions to or alter the provisions of its memorandum, articles or rules, and any purported addition or alteration without that approval is void, despite any provision in any other law. Financially sound position 20. (1) A registered insurer or reinsurer must at all times maintain its business in a financially sound position by - (a) having assets exceeding the capital adequacy requirements as set out in the standards; and (b) generally conducting its business so that it is in a position to meet its liabilities and capital adequacy requirements at all times. (2) For the purposes of determining the compliance of each registered insurer or reinsurer with the capital adequacy requirements, the values of the assets and liabilities of each registered insurer or reinsurer must be determined in accordance with the standards. (3) A registered insurer or reinsurer must be regarded as having failed to comply with
subsection (1) if it - (a) does not have assets as required under this Act; or (b) has not made provision for the liabilities and the capital adequacy requirements in accordance with this Act and the standards. (4) A registered insurer or reinsurer may not declare or pay a dividend to its shareholders - (a) while it fails or is likely to fail to comply with subsection (1); (b) if the declaration or payment would result in it failing or being likely to fail to comply with subsection (1); or (c) if, after the declaration or payment, the aggregate value of assets required under this Act would be less than the aggregate value of its liabilities, issued share capital and non-distributable reserves. (5) A registered insurer or reinsurer may not declare or pay a dividend to its shareholders unless its valuator has certified that the declaration or payment will not be contrary to subsection (4). (6) A registered insurer or reinsurer may, subject to the provisions of this Act and the regulations, invest its funds in any manner provided by its memorandum, articles or rules. (7) The Minister may make regulations and NAMFISA may issue standards in respect of the investments by, or of, a registered insurer or reinsurer. (8) Any person who makes an investment in contravention of, or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Restrictions on pledging assets and borrowing 21 . (1) A registered insurer or reinsurer may not - (a) pledge, hypothecate or otherwise encumber any of its assets; or (b) allow any other person to hold any assets on its behalf, unless the asset in question forms part of assets that are regarded as free assets of the registered insurer or reinsurer as determined in the standards. (2) Where an asset of a registered insurer or reinsurer is held, pledged, hypothecated or otherwise encumbered as contemplated in subsection (1), the value of that asset must, for the purposes of this Act, be reduced proportionately to the extent to which it is so held, pledged, hypothecated or otherwise encumbered. (3) A registered insurer or reinsurer may not - (a) borrow money; or (b) guarantee to discharge, or bind itself as surety for the discharge of, the debts or other obligations of any person, unless the borrowing of money or the granting of the guarantee or surety is done or effected against the security of the free assets of the registered insurer or reinsurer as determined in the standards. (4) A person who contravenes or fails to comply with subsection (1) or (3) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Actuarial soundness of policies 22. (1) A registered insurer or insurer may not - (a) enter into any policy unless the valuator is
satisfied that the premiums, benefits and other values of the policy are actuarially sound; (b) make a distinction between the premiums, benefits or other values of different policies unless the valuator is satisfied that the distinction is actuarially justified; or (c) award a bonus or similar benefit to a policyholder unless - (i) it is done in accordance with the principles and practices of financial management of the registered insurer or reinsurer; and (ii) the valuator is satisfied that it is actuarially sound and that payment of the bonus will not cause the insurer or reinsurer to be in contravention of section 20. (2) For the purposes of subsection (1)(c)(i), “principles and practices of financial management” means a statement approved by the board of directors of the registered insurer or reinsurer setting out the discretion retained by the board of directors and the parameters within which that discretion must be exercised in respect of policies where the registered insurer or reinsurer has to exercise its discretion in awarding a bonus or similar benefit. Prohibition against tied selling 23. (1) A person (hereinafter in this section referred to as “the creditor”) may not - (a) lend or offer to lend money; (b) render or offer to render any service; (c) lease or offer to lease goods; or (d) grant or offer to grant credit, to any person (hereinafter in this section referred to as “the debtor”), on condition that the debtor or any other person must take out insurance from that creditor or from a specific insurer, reinsurer or insurance intermediary nominated by the creditor. (2) Despite subsection (1), where for the purposes of securing a debt or other obligation arising from a transaction contemplated in that subsection it is reasonable, having regard to - (a) the creditworthiness of the debtor; (b) any other security furnished or offered by the debtor; and (c) any other relevant consideration, for the creditor to require the debtor or other person concerned to take out insurance, the creditor must provide the debtor, before the transaction is entered into, with a written statement indicating, in bold face type of at least 15 points, that the debtor or other person concerned has - (i) no obligation to acquire such insurance from the creditor or from a specific insurer, reinsurer or insurance intermediary nominated by the creditor; and (ii) a reasonable period of time, which must not be less than 48 hours, to provide other alternative sources for such insurance from one or more registered insurers or reinsurers or insurance intermediaries. (3) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Policies: miscellaneous provisions 24. (1) Despite anything to the contrary contained in any domestic policy or any document relating to such policy, any
such policy issued before or after the commencement of this Act may not be invalidated, and the obligation of a registered insurer or reinsurer under that policy may not be excluded or limited, and the obligations of the policyholder may not be increased, on account of any non-disclosure or any representation made to the registered insurer or reinsurer which is not true, whether or not the representation has been warranted to be true, unless the incorrectness of such representation is of such a nature as to be likely to have materially affected the assessment of the risk under the policy at the time - (a) of its issue; (b) of any reinstatement or renewal of the policy; (c) a material change is made to the policy; or (d) the policy is converted to another policy. (2) For the purposes of subsection (1), a representation or non-disclosure is material if a reasonable and prudent person would consider that the particular information constituting the representation or which was not disclosed ought to have been correctly disclosed to the registered insurer or reinsurer so that the registered insurer or reinsurer could form its own view as to the effect of such information on the assessment of the relevant risk. (3) A policy issued by a registered insurer or reinsurer before or after the commencement of this Act will not be invalidated on account of the non-compliance by the registered insurer or reinsurer with a provision of any law applying to that policy. (4) Interest on an unpaid premium or on a loan or advance made by a registered insurer or reinsurer on the sole security of a policy under which the registered insurer or reinsurer is liable, will cease to accrue when that interest has accumulated to an amount equal to the amount of that unpaid premium, loan or advance. (5) In the case of a policy issued after 31 December 1973, a debt arising out of an unpaid premium or out of a loan or advance referred to in subsection (4), will not become prescribed before the liability of the registered insurer or reinsurer under that policy becomes prescribed. Publication of statements of capital 25. (1) A registered insurer or reinsurer may not publish any statement concerning its authorised, subscribed or paid up capital other than that shown in its audited financial statements. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Prohibition against securing business for unregistered person 26. (1) A person may not induce or attempt to induce any other person to enter into or to make an application to enter into a domestic policy with a third person who is not a registered insurer or reinsurer. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for
a period not exceeding five years or to both such fine and such imprisonment. Restriction on acquisition of shares or other interests 27. (1) In this section “registered insurance intermediary” means a registered insurance broker as defined in section 53, a registered reinsurance broker as defined in section 53 and a Lloyd’s broker as defined in section 42. (2) Except with the prior written approval of NAMFISA - (a) a registered insurance intermediary the main business of which includes providing any financial service in connection with short-term insurance or the principal officer or a representative of that insurance intermediary may not acquire or hold shares in an insurer or a reinsurer that is registered to carry on short-term insurance; (b) an insurer or a reinsurer that is registered to carry on short-term insurance may not acquire or hold shares or interests in a registered insurance intermediary the main business of which includes providing any financial service in connection with short-term insurance; (c) a registered insurance intermediary the main business of which includes providing any financial service in connection with long-term insurance or the principal officer or a representative of that insurance intermediary may not acquire or hold shares in an insurer or a reinsurer that is registered to carry on long-term insurance; and (d) an insurer or a reinsurer that is registered to carry on long-term insurance may not acquire or hold shares or interests in a registered insurance intermediary the main business of which includes providing any financial service in connection with long-term insurance. (3) Subsection (2) does not apply to shares or interests that are acquired or held as a result of - (a) an amalgamation; (b) the demutualisation of a registered insurer or reinsurer that is a mutual company; or (c) having received such shares or interests in payment of a debt. (4) A person who contravenes or fails to comply with subsection (2) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Participating policies 28. (1) The holder of one or more participating policies issued by a registered insurer or reinsurer is entitled to attend meetings of policyholders, or of shareholders and policyholders, of the insurer or reinsurer and is entitled to one vote at any such meeting. (2) The board of directors of a registered insurer or reinsurer that issues participating policies, must - (a) before issuing any participating policies; or (b) in the case of a registered insurer or reinsurer that was registered under the Long-term Insurance Act, within 12 months after the coming into force of this Part, establish, in accordance with the standards, a policy for determining the dividends and bonuses to be paid to the participating policyholders. (3) A registered insurer or reinsurer, the directors of which establish or
vary a dividend policy under subsection (2), must, within 30 days after the establishment or variation, send a copy of the dividend policy to NAMFISA. Plain language 29. Such policies, certificates of coverage, related documents and any other documents specified in the standards must be written in plain language as described in the standards. Misleading, false and deceptive statements: consequences of conviction 30. (1) Where a registered insurer or reinsurer is convicted of an offence under section 406 - (a) the registered insurer or reinsurer may not enforce a policy which a person was induced to enter into unless so requested in writing by the person induced; (b) the person who was induced to enter into the policy may cancel that policy and recover from the registered insurer or reinsurer any money or other property paid or transferred by the person under such policy, together with such compensation for any loss sustained as a result of such payment or transfer as the person and the registered insurer or reinsurer may agree upon or as a court may determine, but if that person exercises the right of recovery under this subsection, he or she will not receive any benefits under the policy and must repay any benefits already received; or (c) a person who was induced to exercise or refrain from exercising any rights under a policy referred to in paragraph (a) may, not more than 90 days after the conviction of the registered insurer or reinsurer - (i) nullify the action the person was induced to take; and (ii) exercise or refrain from exercising such rights in such manner as the person may determine regardless of a time limit that may have existed in the policy in respect of the exercise of those rights. (2) Subsection (1) does not limit any other right of a person to enforce any other rights infringed by any action for which a registered insurer or reinsurer is convicted under this Act.
PART 5
CERTAIN LONG-TERM POLICIES
Life policies: minors
31.
(1) A person who has attained the age of 18 years may, without the consent or assistance of his or her guardian - (a) effect a life policy on his or her life; (b) pay any premium due under the life policy with money which the minor has earned or with any other money at his or her disposal; (c) give an undertaking to maintain the life policy for a specified period and cede his or her present or future earnings as security for such undertaking; and (d) cede, pledge or surrender the life policy. (2) If any money becomes payable to a person who has attained the age of 18 years under a life policy effected by that person on his or her own life, the registered insurer or reinsurer that is liable under the life policy must pay that money to that person, and that person may deal therewith as he or she thinks fit without the consent of his or her guardian. (3) Any discharge given by a person referred to in subsection (1) to a registered insurer or reinsurer without the consent or assistance of his or her guardian with regard to a payment made in terms of subsection (2), will be of full force and effect. Life policies: married persons 32. Despite the provision of any law, including the law relating to community of property or donation between spouses, but subject to the provisions of this Part, a married person - (a) may effect and own a life policy; (b) may hold and, by way of gift or otherwise, acquire from or dispose of to any person, including a spouse, any right or interest in a life policy; (c) becomes the owner of - (i) any moneys paid by a registered insurer or reinsurer in respect of any right or interest held by that person in a life policy or any assets acquired with those moneys; and (ii) any moneys or assets acquired in respect of the disposal of any right or interest held by that person in a life policy or any assets acquired with those moneys; and (d) may dispose of moneys or assets referred to in paragraph (c) to any person, including a spouse, by way of gift or otherwise, in all respects as if that person were a single person of full age and capacity, and any such policy, right, interest, assets or money may be excluded from any joint estate, whether or not it was effected, acquired or paid before or during the marriage. Persons married in community of property 33. If a premium paid under a life policy effected by a spouse married in community of property or under a life policy in which that spouse holds any right or interest, was paid out of moneys which belonged to the joint estate of both spouses and the liabilities of both spouses continuously exceeded the value of their assets from the time of the payment of any such premium until their joint estate was sequestrated, the spouse by whom the life policy was effected or by whom the right or interest is held, must pay into the insolvent estate the amount of every such premium in so far as its payment created or increased the excess of liabilities over assets in the joint estate. Life
policy on own life: protection during life 34. (1) A life policy effected by a person on his or her own life which has endured for a period of at least three years from the date of the payment of the first premium and which - (a) is attached in execution of a judgment or an order of any court at the instance of a judgment creditor of that person; or (b) becomes part of that person’s insolvent estate during the lifetime of that person, is, to the extent specified in subsection (2), protected against any creditor of that person and against any claim in connection with the attachment or the insolvency. (2) The protection afforded in respect of a life policy referred to in subsection (1) extends to so much of the realisable value of the life policy as does not exceed the prescribed amount, except that - (a) where there are two or more such life policies, the protection will extend only to the amount determined in accordance with this subsection; and (b) where a life policy referred to in that subsection is pledged or ceded as security for any liability, the realisable value of the policy which forms the security for the liability in respect of which the life policy was pledged or ceded, may not be included as part of the amount determined in accordance with this subsection. (3) Where a life policy is afforded protection in the circumstances contemplated in subsection (1), the policyholder, the judgment creditor or the trustee of the insolvent estate must notify the registered insurer or reinsurer who is liable under that policy in writing of the protection, whereupon the registered insurer or reinsurer must issue an endorsement to the policy to the effect that during the time that the judgment debt remains unsettled or the owner of that policy remains an unrehabilitated insolvent, that policy may be dealt with only with the permission of the judgment creditor or the trustee or, if there is no judgment creditor or trustee, of a court. (4) For the purposes of this section - (a) a life policy issued by a registered insurer or reinsurer in exchange for or in consideration of the surrender of another life policy under which the registered insurer or reinsurer was previously liable, is deemed to have been effected on the date on which the surrendered life policy was issued, if no payment other than - (i) the value of the surrendered life policy; and (ii) any premium or premiums that would have become payable under that policy if it were not surrendered; was received by the registered insurer or reinsurer as consideration for the new life policy; and (b) a life policy issued by a registered insurer or reinsurer under section 38(3) is deemed to have been effected on the date on which the surrendered life policy for which it is substituted was issued. Life policy on own life: protection on death 35. (1) If a person has effected a life policy on his or her own life which at the date of that person’s death has endured for a period of at least three years from
the date of the payment of the first premium, and - (a) on the death of that person, and subject to the provisions of subsection (2), his or her liabilities exceed his or her assets, whether or not that person has been declared an insolvent; and (b) that person has left a surviving spouse, child or parent, any money payable to the deceased estate of that person under any such life policy must be paid to that estate. (2) Money paid to an estate pursuant to subsection (1) - (a) must, to the extent that it does not in the aggregate exceed the prescribed amount, devolve upon the surviving spouse, child or parent in accordance with the provisions of a valid testamentary disposition of that person or, if there is no valid testamentary disposition, by right of intestate succession; and (b) is, to the extent that it does not in the aggregate exceed the prescribed amount, not liable to be attached in execution of a judgment or an order of any court at the instance of a judgment creditor of that person or of any other person. (3) When calculating whether the liabilities of a deceased person exceed his or her assets, any life policy effected by the deceased person on his or her own life and which has endured for a period of at least three years from the date of the payment of the first premium, may not be included as assets of the deceased estate to the extent that the realisable value of such life policy or the aggregate realisable value of all such life policies does not exceed the prescribed amount. Life policies: spouses and children 36. (1) Subsection (3) does apply in the situation where a person - (a) cedes a life policy effected on his or her own life to, or in favour of, any person referred to in subsection (2); (b) effects a life policy on his or her own life or on the life of his or her intended spouse whom he or she thereafter marries or on the life of his or her spouse in favour of any person referred to in subsection (2); or (c) nominates his or her intended spouse (whom, for the purposes of this section, he or she thereafter marries), spouse or child as the beneficiary of a life policy mentioned in paragraph (a) or (b). (2) The persons referred to in subsection (1)(a) and (b) are the person’s - (a) intended spouse; or (b) spouse, and additionally or alternatively, child or children, including an unborn child. (3) A life policy referred to in subsection (1) or money becoming due under that life policy, subject to the provisions of this section and to the terms and conditions on which the person may have ceded or effected the policy or may have made the nomination - (a) is not liable for attachment in execution of a judgment or an order of any court at the instance of a judgment creditor of the person to whom such life policy was ceded or in whose favour it was effected or who has been nominated as beneficiary of the policy; (b) may not become part of the insolvent estate of the person to whom such life policy was ceded or in whose favour it
was effected or who has been nominated as beneficiary of the policy, but - (i) the protection afforded in terms of this section may, together with the protection afforded in respect of life policies in terms of any other provision of this Act, not exceed the prescribed amount; and (ii) where the life policy is pledged or ceded as security for any liability, the realisable value of the policy which forms the security for the liability in respect of which the life policy was pledged or ceded, must not be included as part of the amount determined in accordance with subparagraph (i). (4) The entitlement to a benefit conferred or purported to be conferred upon an intended spouse, a spouse or child under a life policy in any of the circumstances contemplated in this section is, despite - (a) any agreement to the contrary between the registered insurer or reinsurer liable under such policy and the person by whom such policy was effected; or (b) the fact that the intended spouse, spouse or child has not accepted that benefit and is not a party to the life policy, but subject to the terms and conditions on which such policy was ceded or effected or the nomination was made, enforceable against such registered insurer or reinsurer at the instance of the intended spouse, spouse or child or the legal representative of the intended spouse, spouse or child. Protected life policies: selection for realisation 37. If - (a) two or more life policies in respect of which protection is afforded under section 34, 35 or 36, are the property of one person and the life policies are attached in execution of a judgment or an order of any court at the instance of a judgment creditor of the policyholder; or (b) the estate of the policyholder of two or more life policies referred to in paragraph (a) is sequestrated, and a part only of the aggregate realisable value of those life policies is so protected, the creditor or the trustee of the insolvent estate of the policyholder may determine which life policy or policies will be realised wholly or partly in order to make available to the creditor or trustee so much of the aggregate realisable value as is not so protected. Protected life policies: partial realisation 38. (1) A judgment creditor of the holder of a life policy or the trustee of the insolvent estate of that policyholder who is entitled to a part of the realisable value of the life policy may, if the creditor or trustee is in possession of the life policy, deliver that policy to the registered insurer or reinsurer who is liable under the life policy for the purposes of the payment to the creditor or trustee of the amount to which that creditor or trustee is entitled. (2) If a judgment creditor or trustee referred to in subsection (1) is not in possession of a life policy in respect of which the creditor or trustee is entitled to a part of the realisable value, the holder of the life policy or any other person in possession of the policy must, at the request of the
creditor or trustee, deliver the life policy to the registered insurer or reinsurer who is liable under the life policy for the purposes of the payment to that creditor or trustee of the amount to which the creditor or trustee is entitled. (3) On receipt of a life policy delivered to a registered insurer or reinsurer under subsection (1) or (2), the registered insurer or reinsurer must - (a) at the request of the judgment creditor or trustee referred to in subsection (1), pay to that creditor or trustee an amount equal to the part of the realisable value of the life policy to which the creditor or trustee is entitled; and (b) pay the remaining part of the realisable value to the holder of the life policy, if at that time the full realisable value of the life policy is less than the full sum insured under that life policy, including any bonus which may have accrued in connection therewith; or (c) at the request of such policyholder, issue to the policyholder a new life policy with the same provisions, but for a sum insured equal to the difference between - (i) the full sum insured under the original life policy, including any bonus which may have accrued in connection therewith; and (ii) an amount which bears the same ratio to the full sum insured under the original life policy, including any bonus which may have accrued in connection therewith, as the amount paid by the registered insurer or reinsurer to such creditor or trustee bears at that time to the full realisable value of the original life policy, whereupon the original life policy will lapse. Life policies ceded or trust policies not kept up 39. (1) If a person who - (a) has effected or ceded a life policy for the benefit of his or her spouse, and additionally or alternatively of his or her child or children or of any of them; or (b) holds a life policy in trust for any other person and is obliged to pay the premiums under that policy, is or has been unable to pay the premiums, that person may, with the consent of any person who holds or has acquired any right or interest in the life policy or if the last-mentioned person is a minor, with the consent of that minor’s guardian or of the Master of the High Court, agree with the registered insurer or reinsurer liable under such policy as set out in subsection (2). (2) A person referred to in subsection (1) may agree with the registered insurer or reinsurer liable under the policy concerned - (a) to convert the life policy into a paid-up life policy of a value determined in accordance with the current tariff of the registered insurer or reinsurer payable, at the time and in the manner specified in the original policy, to the person entitled to the sum insured by the original policy; (b) to borrow from the registered insurer or reinsurer upon security of such policy sums of money as may be necessary to keep such policy in force or to revive it; or (c) to apply the value of any bonus which may have accrued in connection with the life policy to a
temporary or permanent reduction of premiums or to the payment of any premiums which have fallen due. Life policies ceded or premiums paid with intent to defraud creditors 40. (1) Nothing contained in this Part may be construed as derogating from the power of the High Court to set aside in terms of any law relating to insolvency, a cession of a life policy made with intent to benefit any person at the expense of a creditor of the cedent. (2) If a premium under a life policy was paid with intent to benefit any person at the expense of a creditor of the person making the payment, the High Court may order the person so benefiting to pay an amount equal to the aggregate of all premiums so paid, with interest on the amount of each premium so paid as from the date of its payment, to the creditor to whose detriment one or more premiums were paid or if the estate of that creditor is sequestrated, to the trustee of the insolvent estate of that creditor. (3) An order of the High Court contemplated in subsection (2) has the effect of pledging, in security for payment of the amount payable under that order, the life policy in question to the creditor entitled to the payment until the payment is made, and while the life policy is so pledged that creditor may possess the life policy. Application of provisions to funeral, disability and health policies 41. The provisions of sections 31 to 40 apply with the changes required by the context to policies of funeral, disability and health insurance.
PART 6
PROVISIONS RELATING TO LLOYD’S
Definitions for this Part
42.
In this Part, unless the context indicates otherwise - “Lloyd’s” means the association of underwriters generally known as Lloyd’s which is incorporated by the Lloyd’s Act of 1871 (34 Vict. c21), passed by the Parliament of the United Kingdom of Great Britain and Ireland; “Lloyd’s broker” means a person permitted by the Lloyd’s Council to perform any act as a broker at Lloyd’s; “Lloyd’s Council” means the council known as the Council of Lloyd’s established by the Lloyd’s Act, 1982, passed by the Parliament of the United Kingdom of Great Britain and Northern Ireland, to manage and superintend the affairs of Lloyd’s; “Lloyd’s intermediary” means a person who performs any act relating to the placing of short-term insurance business with, or the issue of policies or the collection of premiums in respect of such business or assists with claims in respect of such business for or on behalf of, a Lloyd’s broker or an underwriter at Lloyd’s, whether or not as an agent of such broker or underwriter at Lloyd’s; “Lloyd’s representative” means the person appointed in terms of section 45(1) and includes an alternate representative while acting as the Lloyd’s representative as contemplated in that section; “Lloyd’s underwriter” means an underwriting member of Lloyd’s; and “trust account” means the trust account opened pursuant to section 46(1). Authorisation of underwriters at Lloyd’s 43. (1) Subject to this Part, Lloyd’s underwriters are authorised to carry on short-term insurance business in Namibia. (2) NAMFISA may issue standards determining the provisions of this Act that are applicable to Lloyd’s underwriters and intermediaries and to the Lloyd’s representative. Change to constitution, powers, rights, obligations and bye-laws 44. (1) If there is - (a) enacted any law governing Lloyd’s whereby a material change is made to the constitution, powers, rights or obligations of Lloyd’s or of Lloyd’s underwriters; or (b) passed any bye-law by Lloyd’s whereby the rights or obligations of Lloyd’s underwriters are materially changed, the Lloyd’s representative must, within 21 days after the enactment of such law or the passing of such bye-law, notify NAMFISA accordingly. (2) If NAMFISA considers that, as a result of a law or bye-law referred to in subsection (1), Lloyd’s will no longer be able to comply with the provisions of this Act, NAMFISA may take any action referred to in section 49. Appointment of Lloyd’s representative 45. (1) The Lloyd’s Council must appoint, and at all times have, a natural person permanently resident in Namibia as its representative and another natural person so appointed as an alternate representative to act in Namibia as such representative in the event of the Lloyd’s representative for any reason not being able to act as such representative. (2) The appointment of the Lloyd’s representative or alternate representative does not take effect unless - (a) the Lloyd’s Council has notified NAMFISA of the appointment of a representative or
alternate representative who is fit and proper within the meaning of the standards; (b) NAMFISA has not sent a notice pursuant to subsection (3) to the effect that the appointee is not acceptable; and (c) Lloyd’s has, subject to such conditions as may be determined by NAMFISA in the standards, opened a trust account pursuant to section 46. (3) NAMFISA may by notice in writing within a period of 30 days after the notice to NAMFISA referred to in subsection (2)(a) indicate to the Lloyd’s Council that the representative or alternative representative appointed is not acceptable on the grounds that the appointee is considered by NAMFISA not to be a fit and proper person in accordance with the requirements of the standards. (4) The Lloyd’s representative must - (a) have a principal place of business in Namibia; (b) notify NAMFISA in writing of the physical address of that principal place of business; and (c) if that address changes, notify NAMFISA in writing not more than 30 days after the change. (5) When a process in any legal proceedings against Lloyd’s or a Lloyd’s underwriter is required to be served, such process may be served by delivering a copy of the process at the address referred to in subsection (4). (6) The Lloyd’s representative must ensure that Lloyd’s complies with this Act. (7) The Lloyd’s representative and alternate representative in office at the date of commencement of this Act is deemed to have been appointed pursuant to this section. [The verb “is” should be “are” to be grammatically correct.] Trust account to be kept by Lloyd’s representative 46. (1) The Lloyd’s representative must open and maintain in accordance with the requirements set out in the standards, a trust account in the name of Lloyd’s at a banking institution or building society into which must be deposited such amounts of money that are required to be deposited in terms of the standards. (2) On an on-going basis, the Lloyd’s Council must ensure that the value of the funds in the trust account may not be less than as required under the standards. (3) Prior to seeking exchange control approval from an authorised dealer in foreign exchange, Lloyd’s must submit to NAMFISA such particulars regarding its business in Namibia as NAMFISA may require in the standards. Returns to be submitted by Lloyd’s representative 47. (1) The Lloyd’s Council or the Lloyd’s representative must furnish NAMFISA with returns in respect of the short-term insurance business carried on by Lloyd’s underwriters in Namibia - (a) in the medium and form; (b) containing the information; and (c) by the date and within the period, set out in the standards. (2) Despite the provisions of subsection (1), the Lloyd’s representative must, if at any time so requested in writing by NAMFISA, submit to NAMFISA a return in respect of the trust account referred to in section 46(1) as at any other day specified by NAMFISA. (3) Prior to making any deposit for the purposes of section 46(2) the Lloyd’s
representative must submit to NAMFISA - (a) an audited annual return relating to the insurance business of Lloyd’s in Namibia; and (b) a return showing the calculation of the trust fund requirements for Lloyd’s in the form set out in the standards. (4) The Lloyd’s representative must continuously maintain and furnish NAMFISA with a list of the names of all Lloyd’s intermediaries and must notify NAMFISA of any change in such list within 30 days. Application of certain provisions of Chapter to Lloyd’s representative 48. The provisions of section 17 relating to the appointment of an auditor apply with the changes required by the context to the Lloyd’s representative in respect of the trust account referred to in section 46(1) as if the Lloyd’s representative were a registered insurer. Imposition of prohibition on activities of Lloyd’s underwriters 49. (1) If - (a) NAMFISA concludes that as a result of a law or bye-law referred to in section 44, Lloyd’s will no longer be able to comply with the provisions of this Act; (b) Lloyd’s or a Lloyd’s representative fails to comply with the duties referred to in section 45; or (c) a Lloyd’s underwriter fails to comply with that underwriter’s duties under this Part or in respect of the short-term insurance business carried on by Lloyd’s underwriters in Namibia, NAMFISA may, subject to subsections (2) and (3), prohibit Lloyd’s underwriters or the underwriter concerned from carrying on short-term insurance business in Namibia. (2) Before exercising the powers contemplated in subsection (1), NAMFISA must give notice in writing to the Lloyd’s Council and the Lloyd’s representative of NAMFISA’s intention to do so and the reasons for the action, and allow at least 30 days during which representations may be made in respect of the matter. (3) If NAMFISA decides to proceed with the prohibition, NAMFISA must give notice to that effect in the Gazette specifying the date from which the prohibition will take effect. Registration of Lloyd’s intermediaries 50. (1) A person may not be registered as a Lloyd’s intermediary unless that person is registered as an insurance intermediary under this Act. (2) The registration, operation and duties of a Lloyd’s intermediary in Namibia must be as required by the applicable standards. Claims against underwriters at Lloyd’s 51. (1) Any claim against an underwriter at Lloyd’s arising from a policy entered into by virtue of an act performed by a Lloyd’s intermediary is justiciable by any competent court in Namibia. (2) In any action or other proceedings instituted in terms of subsection (1) the Lloyd’s representative may be cited as nominal defendant or respondent. (3) The Lloyd’s representative may institute and conduct any proceedings in a competent court in Namibia as nominal plaintiff or applicant on behalf of any Lloyd’s underwriter in relation to a short-term insurance policy. (4) When the Lloyd’s representative is cited as a nominal party, the Lloyd’s underwriter may, at any time
before or after judgment, be substituted - (a) with leave of a court; or (b) on production to the registrar or clerk of a competent court of an affidavit setting out the true parties and their normal citation, if a copy has previously been furnished to the other party. Payment of claims against underwriters at Lloyd’s 52. (1) Any claim against a Lloyd’s underwriter arising from an insurance policy entered into by a Lloyd’s intermediary may be disbursed from moneys standing to the credit of the trust account referred to in section 46(1). (2) If the payment of a claim contemplated by subsection (1) results in the said trust account falling to a level below that determined in terms of section 46(2), the Lloyd’s representative must - (a) immediately notify NAMFISA of such fact; and (b) cause the trust account to be restored to the credit level required by the standards within 14 days from the date on which the shortfall occurred. (3) On the production to him or her of - (a) a writ of execution issued by a court against a Lloyd’s underwriter in respect of a claim contemplated in subsection (1); or (b) a certificate issued by NAMFISA that the amount stated therein is lawfully due by Lloyd’s to NAMFISA in respect of levies or fees, the Lloyd’s representative must immediately cause the amount due by Lloyd’s to be paid out from the money standing to the credit of the said trust account to the creditor concerned, and the provisions of subsection (2) apply to such payment with the changes required by the context.
PART 7
AGENTS AND BROKERS
Definitions for this Part
53.
In this Part, unless the context indicates otherwise - “insurance agent” means a person who, on behalf of an insurer, or acting on behalf of an insurer, deals directly with the public in soliciting insurance or acting or aiding in any manner in connection with the negotiation, continuance or renewal of insurance and, where applicable, includes a corporate insurance agent; “insurance broker” means a person who, on behalf of a member of the public, deals directly with an insurer or a person acting on behalf of an insurer, in arranging insurance or acting or aiding in any manner in connection with the negotiation and, continuance or renewal of insurance or provides consulting services with respect to insurance or insurance claims and, where applicable, includes a corporate insurance broker and a person whose activities include the placing of reinsurance, commonly known as a reinsurance broker; “corporate insurance agent” means an entity that is an insurance agent; “corporate insurance broker” means an entity that is an insurance broker; “registered corporate insurance broker” means a corporate insurance broker that is registered pursuant to section 59; “registered insurance agent” means an insurance agent who is registered pursuant to section 55; “registered insurance broker” means a broker that is registered pursuant to section 59, and includes a registered corporate insurance broker; “registered reinsurance broker” means a reinsurance broker that is registered pursuant to section 59 and, where applicable, includes a registered corporate reinsurance broker; “reinsurance broker” means a person who on behalf of any insurer negotiates reinsurance business with one or more reinsurers. Unregistered person may not act as agent or broker 54. (1) A person may not, for compensation, commission or any other thing of value, carry on any of the activities of an insurance agent in Namibia except, in accordance with and to the extent authorised by an insurance agent’s registration or a corporate insurance agent’s registration issued under section 55 or where the person is deemed to be registered under section 60. (2) A person may not, for compensation, commission or any other thing of value, carry on any of the activities of an insurance broker or a reinsurance broker in Namibia except, in accordance with and to the extent authorised by an insurance broker’s or a reinsurance broker’s registration or a corporate insurance broker’s registration issued under section 59 or where the person is deemed to be registered under section 60. (3) Without limiting the application of any other remedies available under this Act, NAMFISA may direct a person acting in violation of subsection (1) or (2) to cease and desist from such conduct but must give that person a period of time within which to apply for the requisite registration upon that person giving an undertaking to comply with the direction. (4) If a person referred to in subsection (3) - (a) does not obtain
registration within the period; or (b) violates the undertaking, referred to in that subsection, that person becomes ineligible to apply for registration until such time as NAMFISA may waive that ineligibility in writing. (5) Despite subsections (1) and (2), an insurance agent or broker may not charge any commission or other thing of value or receive any compensation for having rendered a service to any person except the commission determined in the standards. (6) A person who contravenes or fails to comply with subsection (1), (2) or (5) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Registration as insurance agent and renewal of registration 55. (1) A registered insurer may apply to NAMFISA for the registration of certain entities as corporate insurance agents by submitting a copy of the list maintained by that registered insurer of those entities, together with any required registration fee for each such entity (hereafter called “listed entity” in this section and section 56). (2) A registered insurer may apply to NAMFISA for the registration of certain individuals as insurance agents by submitting a copy of the list maintained by the insurer of those persons, together with any required registration fee for each such individual (hereafter called “listed individual” in this section and section 56). (3) A registered insurer must have in place a code of conduct and applicable systems relevant to listed individual insurance agents employed by it or by its corporate insurance agents in order to be reasonably satisfied with respect to each of those insurance agents that - (a) the individual is at least 18 years of age; (b) the individual has met the requirements for an insurance agent that may be included in the standards from time to time; (c) the individual is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure business; (d) the individual has not been refused registration, authorisation or acceptance or had such registration, authorisation or acceptance suspended or revoked under this Act or any other applicable financial services law; (e) the individual has not been convicted of an offence the nature of which renders him or her, in the opinion of NAMFISA, unfit to hold a registration under this Act; (f) the individual is fit and proper within the meaning of the standards; (g) there are reasonable grounds for believing that the individual will carry on with integrity and honesty the activities of an insurance agent; (h) the individual has met, and there is no reason to believe that the individual will not be able to meet, any other requirements of this Act, and any instructions and guidelines issued by NAMFISA under this Act or issued by the registered insurer concerned that apply to insurance agents; (i) there is no reason to believe that the individual
is likely to engage in conduct of a kind identified in the standards as misconduct; (j) the individual is ordinarily resident in Namibia and is in a position to comply with the law relating to his or her residency in Namibia and with any other applicable laws of Namibia; and (k) any required fee has been paid. (4) A registered insurer must have in place a code of conduct and applicable systems relevant to its individual listed insurance agents in order to be reasonably satisfied with respect to each of those insurance agents that - (a) the individual is at least 18 years of age; (b) the individual has met the requirements for an insurance agent that may be included in the standards from time to time; (c) the individual is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure business; (d) the individual has not been refused registration, authorisation or acceptance or had such registration, authorisation or acceptance suspended or revoked under this Act or any other applicable financial services law; (e) the individual has not been convicted of an offence the nature of which renders him or her, in the opinion of NAMFISA, unfit to hold a registration under this Act; (f) the individual is fit and proper within the meaning of the standards; (g) there are reasonable grounds for believing that the individual will carry on with integrity and honesty the activities of an insurance agent; (h) the individual has met, and there is no reason to believe that the individual will not be able to meet, any other requirements of this Act, and any instructions and guidelines issued by NAMFISA under this Act or issued by the registered insurer concerned that apply to insurance agents; (i) there is no reason to believe that the individual is likely to engage in conduct of a kind identified in the standards as misconduct; (j) the individual is ordinarily resident in Namibia and is in a position to comply with the law relating to his or her residency in Namibia and with any other applicable laws of Namibia; and (k) any required fee has been paid. (5) A registered insurer must, in addition to complying with subsection (3) or (4), in respect of each listed entity that is to be registered as a corporate insurance agent ensure that - (a) the entity is registered in accordance with the relevant law requiring the registration of such entities in Namibia; (b) it has in its possession the following information or documents in respect of the entity:
(i) certified copy of the memorandum and articles of association or founding statements, constitution or any other founding documents of the entity; (ii) certified copies of share certificates or members’ interest or any other documents proving ownership; and (iii) any other document that the applicant considers relevant or that NAMFISA may require; (c) the entity has met the requirements for a corporate insurance agent that may be included in the standards from time to time; (d) the individuals who will carry on activities of the kind to which the registration relates on behalf of the entity will be registered as insurance agents; (e) the entity is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure business; (f) the entity has not been refused registration, authorisation or acceptance or had such registration, authorisation or acceptance suspended or revoked under this Act or any other applicable financial services law; (g) there are reasonable grounds for believing that the entity will carry on with integrity and honesty the activities of a corporate insurance agent; (h) the entity has met, and there is no reason to believe that the entity will not be able to meet, any other requirements of this Act, and any instructions and guidelines issued by NAMFISA under this Act or issued by the registered insurer concerned that apply to corporate insurance agents; (i) there is no reason to believe that the entity is likely to engage in conduct of a kind identified in the standards as misconduct; and (j) any required fee has been paid. (6) A registered insurer must provide NAMFISA with such other information and material regarding its listed individuals as may be specified in the standards, and in the case of a listed entity, the insurer must provide NAMFISA with such other information and material regarding that entity as may be specified in the standards. (7) NAMFISA must register each entity and each individual whose name appears on the list of corporate insurance agents or insurance agents maintained by the registered insurer. (8) A registered insurer that has submitted a list to NAMFISA pursuant to subsection (1) or (2) must submit to NAMFISA an update of that list when there has been an addition or deletion, together with - (a) in the case of additional listed entities to be registered that have been added to the list referred to in subsection (1); or (b) in the case of additional listed individuals to be registered that have been added to the list referred to in subsection (2), the required fee for each additional listed entity or listed individual and the information and material referred to in subsection (5), and upon receipt by NAMFISA of an updated list containing the names of additional listed entities and listed individuals, the provisions of subsections (6) and (7) apply. (9) If a registered insurer removes an entity from the list referred to in subsection (1) or removes an
individual from the list referred to in subsection (2), it must, at the same time when submitting the update of the list as required by subsection (8), provide NAMFISA with a statement indicating the reason that the entity or individual has been removed from the list. (10) A registered insurer may not remove a listed entity or an individual from the list as referred to in subsection (9) unless the insurer has given the entity or individual concerned the reasons for the proposed removal and a reasonable opportunity to be heard. (11) The term of registration as an insurance agent or a corporate insurance agent under this section expires on March 31 of each year or on such other date as NAMFISA may specify, but if the appropriate renewal fee as determined by NAMFISA in respect of each insurance agent is paid to NAMFISA in the manner set out in the standards, the registration must, subject to compliance with any requirements that may be set out in the standards, be renewed for a period of 12 months as from the expiry date. (12) The renewal fee is payable within the period set out in the standards, and any payment received after that period bears interest at a rate determined by NAMFISA in the standards, which rate may not exceed the rate prescribed for this purpose. (13) If - (a) the renewal fee is not received within the period contemplated in subsection (12); or (b) the requirements of the standards referred to in subsection (11) have not been complied with, NAMFISA may not renew the registration of the insurance agent or corporate insurance agent and must remove or direct the registered insurer to remove the name of the insurance agent or corporate insurance agent whose renewal fee was not paid or in respect to whom the requirements of the standards have not been complied with from the list kept by NAMFISA or submitted to NAMFISA. (14) A person who continues to operate, or to engage in, the business of an insurance agent or a corporate insurance agent after the non-renewal of registration under subsection (13), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Remedial action 56. (1) NAMFISA may take any of the actions set out in subsection (2), if NAMFISA acting reasonably, finds that any of the following circumstances exist with respect to a registered corporate insurance agent or a registered insurance agent - (a) in the case of a listed individual, any of the requirements referred to in section 55(3) or (4) have not been met; (b) the copy of the list submitted under section 55 or the accompanying information and material contained information concerning the listed entity or individual that was not materially accurate or omitted information that was materially relevant; (c) the listed entity or individual no longer meets the requirements for an insurance agent; (d) the listed entity or individual has suspended
activities for a period of at least 12 months; (e) the listed entity or individual is not in compliance with a requirement of this Act; or (f) the listed entity or individual has engaged in conduct of the kind that has been identified in the standards as misconduct. (2) If NAMFISA is satisfied that any of the circumstances described in subsection (1) exist, NAMFISA may take or direct the registered insurer to take remedial action including, without limitation - (a) directing the insurer to provide further information with respect to the listed entity or individual; (b) directing the insurer to provide further training for the listed entity or individual; (c) directing the insurer to take disciplinary action against the listed entity or individual; (d) directing the insurer to make changes to the code of conduct and systems referred to in section 55(3) or (4); (e) requiring an undertaking from the listed entity or individual pursuant to section 436; (f) requiring an undertaking from the insurer pursuant to section 436; (g) directing the listed entity or individual to undertake specific actions or refrain from specific actions pursuant to section 439(4)(c); (h) directing the insurer to undertake specific actions or refrain from specific actions pursuant to section 439(4)(c); or (i) imposing on the insurer any penalty that may be specified in the standards, if the insurer has been negligent in satisfying itself with respect to the provisions of section 55(3) or (4). (3) If on receipt of evidence that the required action has been taken pursuant to subsection (2), NAMFISA acting reasonably, finds that any of the circumstances referred to in subsection (1) continue to exist, NAMFISA may direct the insurer to remove the name of the listed entity or individual from the list referred to in section 55(1), (2) or (8). (4) Before directing that the name of a listed entity or individual be removed from a list pursuant to subsection (3), NAMFISA must give both parties a reasonable opportunity to be heard. (5) If a registered insurer fails to remove the name of a listed entity or individual from the list when required to do so by NAMFISA, NAMFISA may, after giving the listed entity or individual a reasonable opportunity to be heard, itself remove the name of the entity or individual from the list. (6) If the name of a listed entity or individual is removed from a list by an insurer or NAMFISA, the registration of that entity or individual as an insurance agent or a corporate insurance agent is cancelled and the entity or individual may not act as an insurance agent or a corporate insurance agent or be included by a registered insurer on any list a copy of which is submitted under section 55 for such period as NAMFISA may determine. (7) A person who continues to operate, or to engage in, the business of an insurance agent or a corporate insurance agent after the cancellation of registration under subsection (6), commits an offence and is liable on conviction to
a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Application for registration as insurance broker 57. (1) An individual or entity may, in accordance with subsection (2), make an application for registration as an insurance broker or a reinsurance broker or a corporate insurance or reinsurance broker to NAMFISA. (2) An application for registration as an insurance broker or a reinsurance broker or a corporate insurance or reinsurance broker must be - (a) made in the manner and form required by the standards; (b) where applicable, include the information with respect to the principal office and principal officer required by the standards; [This paragraph does not fit with the structure of the introductory phrase; the word “be” does not fit together with the verb “include”.] (c) accompanied by the documents and other information required by the standards; (d) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; (e) made subject to and in accordance with any other applicable provision of this Act; and (f) accompanied by the required fee. Registration requirements 58. (1) Before approving an application and registering an individual as an insurance broker or a reinsurance broker, NAMFISA must be satisfied that the requirements of subsections (3) and (4) have been met and that, in the case of an individual applicant - (a) the individual is at least 18 years of age; (b) the individual has met the requirements for registration that may from time to time be included in the standards; (c) the individual is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure insurance business; (d) the individual has not been refused registration, authorisation or acceptance or had such registration, authorisation or acceptance suspended or revoked under this Act or any other applicable financial services law; (e) the individual has not been convicted of an offence the nature of which renders him or her, in the opinion of NAMFISA, unfit to hold a registration under this Act; (f) the individual is fit and proper within the meaning of the standards; (g) there are reasonable grounds for believing that the individual will carry on with integrity and honesty the activities of an insurance broker; (h) the individual has met, or will be able to meet, any other requirements of this Act and any instructions and guidelines issued by NAMFISA under this Act that apply to insurance brokers or reinsurance brokers; (i) the individual does not, and will not be likely to, engage in conduct of a kind identified in the standards as misconduct; (j) the individual is ordinarily resident in Namibia and is in a position to comply with the law relating to his or her residency in Namibia and with any other applicable laws of Namibia; and (k) any required fee has been paid. (2) Before approving an
application and registering an entity as a corporate insurance or reinsurance broker, NAMFISA must be satisfied that the requirements of subsections (3) and (4) have been met and that - (a) the individuals who will carry on activities of the kind to which the registration relates on behalf of the entity will be registered as insurance brokers or reinsurance brokers; (b) the entity has met, or will be able to meet, the requirements of section 72; (c) if applicable, the entity is registered in accordance with the relevant law requiring the registration of such entities in Namibia; and (d) any required fee has been paid. (3) Before approving the application and registering the applicant as an individual insurance broker or a corporate insurance or reinsurance broker, NAMFISA must be satisfied that - (a) where the applicant is an entity - (i) every shareholder or other owner that controls the applicant, and every director, the principal officer and other officers of the applicant and, where applicable, members of any board of trustees or other board are fit and proper within the meaning of the standards; (ii) the memorandum, articles and rules or other founding documents of the applicant are not inconsistent with the provisions of this Act; (iii) the direct or indirect control of the entity is not likely to be contrary to the interest of consumers of the financial services concerned; and (iv) the applicant will be in a position to ensure that its organisational or group structure will not be such as to hinder effective supervision by NAMFISA; (b) doing so is not contrary to - (i) this Act; or (ii) the public interest; (c) the applicant has the attributes reasonably necessary and adequate to - (i) provide the financial services concerned with professional integrity, prudence, proper skill and due diligence; (ii) maintain a sound financial position and not cause or further instability in the financial system of Namibia; and (iii) comply with this Act; (d) the name under which the applicant proposes to conduct business, or a translation, shortened form or derivative of that name is not in contravention of section 391; (e) the applicant has submitted all other information which, in the opinion of NAMFISA, is necessary to assess the application, and such information has been found satisfactory by NAMFISA; and (f) the applicant has complied and will continue to comply with any other requirements contained in this Act or in the standards which apply to the applicant. (4) In addition to the applicable requirements for a registration set out in subsections (1), (2) and (3) if an application for a registration is made after a date determined by the Minister by notice in the Gazette an individual or entity may not be granted a registration as an insurance broker or a reinsurance broker or a corporate insurance or reinsurance broker, unless NAMFISA is satisfied that - (a) an insurance policy is in place providing errors and omissions coverage in respect of the
activities of the individual or entity as broker, in a form approved by NAMFISA and in an amount that has been prescribed in respect of any one occurrence, with extended coverage for fraudulent acts or some other financial guarantee affording comparable protection acceptable to NAMFISA; and (b) if the individual or entity will have employees carrying on the activities of a broker, a fidelity insurance policy is in place providing coverage in respect of losses arising from dishonesty of employees, in a form approved by NAMFISA and in an amount that has been prescribed in respect of any one occurrence. Registration and renewal of registration 59. (1) If NAMFISA is satisfied that the applicant complies with the requirements of section 58, NAMFISA must register the applicant as an insurance broker or a reinsurance broker or a corporate insurance or reinsurance broker, subject to any conditions which NAMFISA may consider appropriate pursuant to subsection (4). (2) The registration referred to in subsection (1) must specify - (a) the principal office of the applicant in Namibia; (b) the places in Namibia from which the applicant may operate. (3) Upon registration of an applicant NAMFISA must issue to the applicant a certificate of registration in a form provided for in the standards. (4) NAMFISA may impose such conditions on the registration of the applicant as it considers necessary having regard, without limitation, to all the facts and information available to NAMFISA pertaining to the applicant, and any guidelines issued by NAMFISA under this Act. (5) If an application is refused by NAMFISA or is granted subject to conditions, NAMFISA must advise the applicant of the refusal or conditions by giving notice to the applicant containing the reasons for the refusal or the conditions, and must give the applicant a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the applicant may make representations in writing to NAMFISA. (6) An insurance broker or a reinsurance broker or a corporate insurance or reinsurance broker must comply with the conditions subject to which it was registered. (7) The term of registration as an insurance broker, a reinsurance broker or a corporate insurance or reinsurance broker under this section expires on March 31 of each year or on such other date as NAMFISA may specify, but if the appropriate renewal fee as determined by NAMFISA in respect of each insurance or reinsurance broker is paid to NAMFISA in the manner set out in the standards, the registration must, subject to compliance with any requirements that may be set out in the standards, be renewed for a period of 12 months as from the expiry date. (8) The renewal fee is payable within the period set out in the standards, and any payment received after that period bears interest at a rate determined by NAMFISA in the standards, which rate may not exceed the rate prescribed for this purpose. (9) If - (a) the renewal fee is not
received within the period contemplated in subsection (8); or (b) the requirements of the standards referred to in subsection (7) have not been complied with, NAMFISA may not renew the registration of an insurance broker, a reinsurance broker, corporate insurance or reinsurance broker whose renewal fee was not paid or in respect to whom the requirements of the standards have not been complied with. (10) A person who continues to operate, or to engage in, the business of an insurance broker or a reinsurance broker after the non-renewal of registration under subsection (9), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Agents, brokers previously registered 60. (1) An agent or broker who was registered under the Long-term Insurance Act or the Short-term Insurance Act on the date of commencement of this Part is deemed to be registered under this Act as an insurance agent, insurance broker, a corporate insurance broker or a reinsurance or corporate reinsurance broker, as applicable. (2) Despite subsection (1), a person or an entity referred to in that subsection must, within 12 months after the date of commencement of this Chapter, make an application to NAMFISA pursuant to section 55 or 57 for registration as an insurance agent, insurance broker, a corporate insurance broker or a reinsurance or corporate reinsurance broker, as applicable. (3) If a person or an entity referred to in subsection (1) fails to make an application to NAMFISA for registration within the period referred to in subsection (2), the deemed registration of that person or entity is cancelled. (4) A person who continues to operate, or engage in, the business of an insurance agent or an insurance broker or a reinsurance broker after the cancellation of registration under subsection (3), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Principal office and principal officer 61. (1) Every registered insurance or reinsurance broker or corporate insurance or reinsurance broker must - (a) have a principal office in Namibia where it must hold and maintain the documents referred to in the standards; and (b) where applicable, appoint to be its principal officer in Namibia, a fit and proper person within the meaning of the standards, who is - (i) a Namibian citizen or permanent resident; and (ii) resident in Namibia. (2) Despite subsection (1)(b)(i), NAMFISA may, in exceptional circumstances, grant permission that a principal officer referred to in that subsection may, subject to the Immigration Control Act, 1993 (Act No. 7 of 1993), for such period as may be determined by NAMFISA, be a person other than a Namibian citizen or permanent resident. (3) After the appointment of a principal officer pursuant to subsection (1) (b), a
registered insurance or reinsurance broker or corporate insurance or reinsurance broker must, within the period set out in the standards, in writing notify NAMFISA of the appointment. (4) NAMFISA may, on the grounds that a principal officer is not a fit and proper person within the meaning of the standards, and after giving the registered insurance or reinsurance broker or corporate insurance or reinsurance broker and the principal officer a reasonable opportunity to be heard, direct the registered insurance or reinsurance broker or corporate insurance or reinsurance broker to appoint some other person to be the principal officer of the registered insurance or reinsurance broker or corporate insurance or reinsurance broker. (5) Whenever a principal officer resigns or the appointment of a principal officer is terminated by a registered insurance or reinsurance broker or corporate insurance or reinsurance broker or by the expiry of a contract of employment, the registered insurance or reinsurance broker or corporate insurance or reinsurance broker must, within the period set out in the standards, in writing notify NAMFISA and submit to NAMFISA a written statement of the reasons for the termination or, in the opinion of the registered insurance or reinsurance broker or corporate insurance or reinsurance broker, the reasons for the resignation. (6) The principal officer of a registered insurance or reinsurance broker is authorised to act on behalf of the insurance or reinsurance broker to ensure compliance with this Act, and in any case where a person, including NAMFISA, communicates with that insurance or reinsurance broker, that person may do so by addressing the communication to the principal officer. (7) Process in any legal proceedings may be served on an insurance broker or a reinsurance or corporate broker by serving a copy of the process at its principal office. (8) A person who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Accounts 62. A registered insurance or reinsurance broker or corporate insurance or reinsurance broker must keep in Namibia proper accounts of, and financial information relating to, its insurance business that comply with the requirements of the standards. Insurance to be in place 63. Every registered insurance or reinsurance broker or corporate insurance or reinsurance broker must have in place the insurance referred to in section 58(4) to the extent applicable to it, as from a date determined by the Minister by notice in the Gazette . Only one registration 64. (1) A person may not be registered as an insurance agent and an insurance broker at the same time. (2) Subject to subsection (3), a registered insurance agent may only be registered as either an agent for short-term insurance or an agent for long-term insurance and may not act as
agent for more than one registered insurer or represent himself or herself to the public by advertisement or otherwise as the registered insurance agent of more than one registered insurer. (3) Despite subsections (1) and (2) - (a) if an insurer is registered under this Chapter for long-term insurance, and an affiliate of that registered insurer is registered under this Chapter for short-term insurance, an agent of that first insurer who has been registered for long-term insurance pursuant to section 55, may, on application by that second insurer, obtain a second registration as an agent for short-term insurance provided he or she meets all the other requirements of this Act; and (b) if an insurer is registered under this Chapter for short-term insurance, and an affiliate of that registered insurer is registered under this Chapter for long-term insurance, an agent of that first insurer who has been registered for short-term insurance pursuant to section 55, may, on application by that second insurer, obtain a second registration as an agent for long-term insurance provided he or she meets all the other requirements of this Act. Application for cancellation or variation of registration 65. (1) A registered insurance or reinsurance broker or corporate insurance or reinsurance broker may at any time, apply to NAMFISA for cancellation of a registration granted pursuant to section 59 or for a variation of the conditions subject to which that registration was granted. (2) An application made under subsection (1) must be - (a) made in the manner and form required by the standards; (b) accompanied by the documents and other information required by the standards; (c) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; and (d) accompanied by the required fee. (3) Before making an application pursuant to subsection (1), the applicant must give prior notice of the proposed application in two newspapers circulating nationally in Namibia at the expense of the applicant stating - (a) the name of the applicant; (b) either - (i) the reasons for the proposed cancellation; or (ii) the nature of the proposed variation; and (c) the period within which objections to the application may be lodged with NAMFISA. (4) Section 59 applies with the changes required by the context to an application for a variation of conditions referred to in subsection (1). (5) If, after consideration of any objection received as a result of the notice referred to in subsection (3), NAMFISA is of the opinion that it is reasonable to do so and not against the public interest, NAMFISA may, by notice to the registered insurance broker concerned - (a) cancel the registration; or (b) vary the conditions of registration, including the imposition of additional conditions. (6) NAMFISA must make public any cancellation of registration or variation of conditions of registration under subsection (5) and the reasons for the cancellation or
variation, by notice in the Gazette and by means of any other appropriate public statement. Cancellation or variation of registration 66. (1) NAMFISA may take any of the actions set out in subsection (2), if NAMFISA acting reasonably, finds that any of the following circumstances exist with respect to a registered insurance or reinsurance broker or corporate insurance or reinsurance broker:
(a) it has made a material misrepresentation or failed to provide information that was materially relevant in its application for registration; (b) it has failed to comply with this Act; (c) it no longer meets the requirements for registration; (d) it has provided financial services without professional integrity, prudence, proper skill and due diligence; (e) it is in an unsound financial position; (f) it has failed to comply with a directive, request or requirement of NAMFISA issued under this Act; (g) it has failed to give effect to a decision of the Appeal Board; (h) it has ceased to operate or has failed to commence operating within a reasonable time after being registered; (i) it is involved in a financial crime; (j) in the case of an individual, the individual no longer meets the fit and proper requirements within the meaning of the standards or has engaged in conduct identified in the standards as misconduct; or (k) in the case of a corporate insurance or reinsurance broker or corporate insurance or reinsurance broker, any director, the principal officer, other officer or member of a board no longer meets the fit and proper requirements within the meaning of the standards or has engaged in conduct identified in the standards as misconduct. (2) If NAMFISA is satisfied that any of the circumstances described in subsection (1) exist, NAMFISA may take any of the following actions with respect to the registered insurance broker or reinsurance broker or corporate insurance or reinsurance broker - (a) cancel its registration; (b) vary the conditions of its registration, including the imposition of additional conditions; or (c) take any other steps that NAMFISA may consider necessary or advisable. (3) NAMFISA must give notice to the registered insurance or reinsurance broker or corporate insurance or reinsurance broker of the intention of NAMFISA to take any action referred to in subsection (2), together with the reasons for taking the action, and must give the registered insurance or reinsurance broker or corporate insurance or reinsurance broker a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the registered insurance or reinsurance broker or corporate insurance or reinsurance broker may make representations to NAMFISA on the matter. (4) Subject to such conditions as NAMFISA may impose, NAMFISA may provisionally suspend the registration or take control of the assets of a registered insurance or reinsurance broker or corporate insurance or reinsurance broker without giving notice and an opportunity to be heard pursuant to subsection (3) if NAMFISA is satisfied on reasonable grounds that it is urgently necessary to do so in order to prevent or mitigate damage to the interests of financial institutions, financial intermediaries, their clients or the financial system of Namibia, but NAMFISA must - (a) give the registered insurance or reinsurance broker or corporate insurance or reinsurance broker the
notice and an opportunity to be heard and make representations as soon as reasonably possible; and (b) having considered any representations received, determine whether the provisional suspension should be continued until further conditions can be imposed or registration cancelled. (5) On the cancellation of the registration of an insurance or a reinsurance broker under section 60(3), section 65, subsection (2)(a) or any other applicable provision of this Act, the insurance or reinsurance broker must be wound-up in accordance with the requirements of Chapter 10, and NAMFISA must take such steps and may impose such conditions as are necessary in the circumstances, which steps may include the transfer of the business of the insurance or reinsurance broker to another insurance or reinsurance broker, as appropriate, but no distribution of the assets of the insurance or reinsurance broker may be made without the prior approval of NAMFISA. (6) NAMFISA must make public any suspension or cancellation of registration, variation of conditions of registration or any steps other taken under this section and the reasons for the suspension, cancellation, variation or steps, by notice in the Gazette and by means of any other appropriate public statement. (7) A person who - (a) continues to operate, or engage in, the business of insurance or reinsurance broker after the cancellation of registration under section 60(3), section 65(5)(a), subsection (2)(a) or any other applicable provision of this Act or after suspension of registration under subsection (4); or (b) fails to comply with a condition imposed by NAMFISA under subsection (4), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Confirmation of cover by registered brokers 67. (1) After placing a policy of insurance, every registered insurance or reinsurance broker must ensure that the policyholder concerned is, within the period specified in the standards, provided with a policy or a certificate of coverage certifying that the insurance has been placed. (2) A certificate of coverage referred to in subsection (1) must set out - (a) the name and mailing address of the policyholder; (b) a description of the coverage provided; (c) the full name of each registered insurer or reinsurer authorised to underwrite the policy; and (d) the amount of insurance placed with each registered insurer or reinsurer. (3) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Other obligations of registered brokers 68. (1) A registered corporate insurance or reinsurance broker or a registered insurance or reinsurance broker who is an employee of a registered corporate insurance or reinsurance broker may not
knowingly act or aid in soliciting, negotiating or procuring any policy with - (a) a registered insurer or reinsurer that is a shareholder that controls the registered corporate insurance or reinsurance broker; (b) a registered insurer or reinsurer of which the registered corporate insurance or reinsurance broker is a shareholder that controls the registered insurer or reinsurer; or (c) a registered insurer or reinsurer that is under common ownership, directly or indirectly, with the registered corporate insurance or reinsurance broker, unless the relationship between the registered corporate insurance or reinsurance broker and the registered insurer or reinsurer is specified in any certificate of coverage and on the face of the policy provided to the policyholder. (2) Where any other circumstances exist which, in the opinion of NAMFISA, would constitute a conflict of interest or an apprehension of bias on the part of a registered insurance or reinsurance broker, those circumstances must be disclosed to any policyholder or potential policyholder, and specified in any certificate of coverage and on the face of the policy provided to the policyholder. (3) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. No unreasonable delays 69. Every registered insurance or reinsurance broker must avoid unreasonable or repeated delays in transmitting funds to a policyholder or a claimant under a policy that are intended for such transmission. Placing insurance outside Namibia 70. (1) Subject to subsection (2), a registered insurance or reinsurance broker may not place insurance with an insurer or a reinsurer that is not registered under this Act. (2) A registered insurance or reinsurance broker may place insurance with a foreign insurer or reinsurer referred to in section 5(2). (3) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Broker liable to policyholder 71. (1) A registered insurance or reinsurance broker is liable to the policyholder on any policy issued through that registered insurance or reinsurance broker, directly or indirectly, that is underwritten by any person who is not a registered insurer or reinsurer or is not exempt from the requirement that insurers or reinsurers be registered under section 5(2) or under the NAMFISA Act in the same manner as if the registered insurance or reinsurance broker had been the insurer or reinsurer. (2) For greater certainty - (a) if the registered insurance or reinsurance broker through whom a policy of the kind referred to in subsection (1) is issued is an employee of a registered corporate insurance or reinsurance broker,
the liability imposed by subsection (1) is a joint and several liability of the two registered insurance or reinsurance brokers; and (b) no liability is imposed by subsection (1) in respect of a policy issued by an insurer or a reinsurer operating outside of Namibia referred to in section 5(2). Policies and procedures 72. (1) Every registered corporate insurance or reinsurance broker must put in place policies and procedures to screen individuals it proposes to employ as brokers for suitability prior to employing them and to monitor their activities after employing them. (2) If it comes to the attention of a registered corporate insurance or reinsurance broker that one of its employed insurance or reinsurance brokers is not complying with or has not complied with the provisions of this Act, it must immediately notify NAMFISA in writing of that fact. Obligations of registered insurance intermediaries 73. (1) When a premium is received by a registered insurance intermediary in respect of a policy, that registered insurance intermediary must provide the policyholder, within the period set out in the standards, with a receipt for that premium, including the name of the registered insurer or reinsurer with which the coverage is to be placed. (2) When a premium has been received by a registered insurance intermediary and a receipt issued pursuant to subsection (1), the premium is deemed to have been received by the registered insurer or reinsurer named in the receipt even if that insurer or reinsurer does not receive the premium as provided for under the terms of the contract or arrangement between the registered insurance intermediary and the registered insurer or reinsurer. (3) Every premium paid to a registered insurance intermediary must be deposited in a trust account with a banking institution or building society as set out in the standards. (4) Every premium paid into the trust account of a registered insurance intermediary constitutes funds held on behalf of the registered insurer or reinsurer with which the policy in question has been placed and may not be used by that intermediary for any other purpose. (5) Commissions may be withdrawn from a trust account of a registered insurance intermediary as provided for in the contractual or other arrangement governing the relationship between the intermediary and the registered insurer or reinsurer from which the commissions are due. (6) Every registered insurance intermediary must forward premiums received on behalf of a registered insurer or reinsurer to that insurer or reinsurer in accordance with the terms of the contract or other arrangement with the insurer or reinsurer, without unreasonable or repeated delays. (7) When so requested in writing by NAMFISA, a registered insurance intermediary must, within 30 days of receipt of such request, provide an accounting to NAMFISA of all premium funds received during a period no longer than 24 months before the date of the request, as may be specified by
NAMFISA. Duties of registered insurance intermediaries 74. Every registered insurance intermediary must - (a) hold in strict confidence all information concerning the business and affairs of any client of the intermediary acquired in the course of the professional relationship with that client and may not divulge any such information unless - (i) authorised in writing by the client; (ii) required by this Act or any other law or by an order of the court; or (iii) as may be necessary in order to arrange for the insurance or reinsurance required by the client; (b) observe the requirements of this Act and all other relevant rules and legislation regarding the preservation and safekeeping of the property of the client entrusted to the registered insurance intermediary and, if there are no such requirements, rules or legislation or the intermediary is in doubt, take the same care of such property as a careful and prudent person would take of the person’s own property of like description; (c) not stipulate, charge or accept any fee that is not fully disclosed or the basis for which is not fully disclosed, prior to the service being rendered, or which is so disproportionate to the service provided as to be unconscionable; (d) maintain accounts and financial records in respect of the business carried out for a period of at least five years after the period to which those accounts and records relate; (e) comply with such instructions as may be issued by NAMFISA with respect to the specific accounting, financial and other records that must be maintained for the particular type of activity in which the registered insurance intermediary is engaged; and (f) act honestly and in good faith and in the best interests of its clients. Other business or occupation 75. A registered insurance intermediary who engages in another business or occupation concurrently with the practice of the vocation of agent or broker may not allow such outside interest to jeopardise the integrity, independence or competence of the intermediary. Registration to be produced 76. (1) Every registered insurance intermediary must produce their registration certificate when requested so to do by - (a) NAMFISA or any person authorised by NAMFISA; (b) any registered insurer or reinsurer that wishes to establish or that has established any business relationship with that intermediary; and (c) an actual or a prospective client. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Powers of NAMFISA in relation to registered insurance intermediaries 77. (1) In carrying out the provisions of this Act, an inspector may visit any office or place of business of any registered insurance intermediary and may inspect the records relating to the business carried out and may request any information reasonably
required to properly investigate the situation. (2) Every registered insurance intermediary must do everything possible to facilitate any inquiries by an inspector and must make all required information available on a timely basis. (3) An inspector is entitled to question any registered insurance intermediary and any employee, officer or director of a registered insurance intermediary under oath. (4) NAMFISA may in the standards describe conduct that will constitute misconduct on the part of a registered insurance intermediary for the purposes of this Part.
CHAPTER 3
FINANCIAL MARKETS
PART 1
PRELIMINARY
Definitions for this Chapter
78.
(1) In this Chapter, unless the context indicates otherwise - “administrative service” means the provision of a clerical, technical, administrative or other similar service that does not - (a) require judgment on the part of the person providing the service; or (b) lead any person to enter into any specific transaction with respect to a security, and includes the provision of the factual information listed in paragraph (a) of the definition of “securities advice”; “authorised advisor” means a natural person employed by a registered securities advisor to give securities advice; “authorised representative” means a natural person employed by an authorised user or a securities dealer to buy or sell securities or to give securities advice; “authorised user” means a company authorised by a registered exchange to perform such securities services as the exchange rules may permit; “central securities depository” means a public company through which participants provide for the holding in custody and administration of securities or an interest in securities to facilitate the evidencing of ownership and the transferring of such securities or interests; “clear”, in relation to a transaction or group of transactions in listed securities, means - (a) to calculate and determine before each settlement process - (i) the exact number or nominal value of securities of each kind to be transferred by or on behalf of a seller; and (ii) the amount of money to be paid by or on behalf of a buyer, to enable settlement of a transaction or group of transactions; or (b) where applicable, the process by means of which - (i) the functions referred to in paragraph (a) are performed; and (ii) the due performance of the transaction is underwritten from the time of trade to the time of settlement; “depository rules” means the rules made by a central securities depository in accordance with section 126; “derivative instrument” means a financial instrument or contract that creates rights and obligations and - (a) that derives its value from the price or value of; or (b) the value of which may vary depending on a change in the price or value of, some other particular product or thing; “directive” means a directive issued by a registered exchange or registered central securities depository in accordance with its rules; “electronic exchange” means an exchange that provides for trading through electronic terminals or similar equipment without a physical trading floor; “exchange” means a public company that constitutes, maintains and provides an infrastructure - (a) for bringing together buyers and sellers of securities; (b) for matching the orders for securities of multiple buyers and sellers; and (c) whereby a matched order for securities constitutes a transaction, and includes, unless the context otherwise indicates, an electronic exchange; “exchange rules” means the rules made by a registered exchange in accordance with section 112; “foreign exchange” means a person authorised as an
exchange under the laws of a country other than Namibia; “investment manager” means a company that is in the business of investment management; “investment management” means managing for another person, the buying, handling, selling or exchanging of securities, and includes the handling of the funds of, and giving securities advice to, that other person in connection with such activity; “issuer” means an issuer of securities and, for the purposes of Part 4 of this Chapter, includes an issuer of money market instruments; “linked investment service provider” means a company whose business - (a) consists wholly or partly of implementing or capturing investment instructions given by or on behalf of clients in relation to investments on the basis that the linked investment service provider holds, purchases or sells such investments in bulk; (b) involves the implementation on behalf of another person of a decision to buy, sell or deal with investments in listed securities or investments of which listed securities form part, but does not include - (i) the giving of securities advice on the merits of such transactions without receiving funds or assets from a client; or (ii) the performance of the functions of a company or institution which is registered as trustee or custodian under this Act; “listing requirements” means the requirements, determined by a registered exchange, that must be met before a security may be traded, or may continue to be traded, on that exchange; “listed securities” means securities included in the list of securities kept by a registered exchange pursuant to section 106; “money market instruments” means money market instruments within the meaning of the regulations; “nominee” means a company that acts as the registered holder of securities or an interest in securities on behalf of other persons; “participant” means a company that holds in custody and administers securities or an interest in securities and that has been - (a) accepted by a registered central securities depository as a participant in that central securities depository under section 97(1); and (b) registered pursuant to section 97(3); “portfolio manager” means a natural person who is employed by a registered investment manager or linked investment service provider to perform investment management functions on behalf of that investment manager or linked investment service provider; “prudential and financial markets institution” means - (a) a building society; (b) a juristic person to which the Development Bank of Namibia Act, 2002 (Act No. 8 of 2002), applies; (c) the Namibia Post Limited established by section 2(1)(a) of the Posts and Telecommunications Companies Establishment Act, 1992 (Act No. 17 of 1992); (d) a juristic person to which the Agricultural Bank of Namibia Act, 2003 (Act No. 5 of 2003), applies; or (e) an entity declared by the Minister to be a prudential and financial markets institution by notice under subsection (2); “recognised foreign exchange”
means a foreign exchange that has been recognised by NAMFISA pursuant to section 101; “recognised self-regulatory organisation” means a self-regulatory organisation that has been recognised by NAMFISA pursuant to section 136; “regulated person” means any of the following persons registered under this Chapter - (a) an authorised advisor of a securities advisor; (b) an authorised representative of an authorised user; (c) an authorised representative of a securities dealer; (d) an authorised user; (e) a central securities depository; (f) an exchange; (g) an investment manager; (h) a linked investment service provider; (i) a nominee of an authorised user; (j) a nominee of a participant; (k) a participant; (l) a portfolio manager of an investment manager or of a linked investment service provider; (m) a securities advisor; (n) a securities clearing house; (o) a securities dealer; (p) a securities rating agency; and (q) a stockbroker; “securities advice” means any recommendation, guidance, projection or proposal of a financial nature furnished by any means or medium, to any person who is a client or potential client or a 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 in respect of buying, selling, handling or exchanging a security, and includes advising on investment strategy, asset allocation and giving similar advice on how a portfolio should or should not be invested to obtain an investment return, but does not include - (a) factual information given merely - (i) on the procedure for entering into a transaction in respect of a security; (ii) in relation to the description of a security; (iii) in answer to routine administrative enquiries; (iv) in the form of objective information about a particular security, including information regarding the tax treatment of a particular security; (v) by the display or distribution of promotional material; or (vi) by way of an analysis or report on a security without any express or implied recommendation, guidance or proposal that any particular transaction in respect of the security is appropriate to the particular investment objectives, financial situation or particular needs of a client; (b) advice given by a member of an professional association, including without limitation, a legal practitioner or an auditor or actuary where the advice is for tax purposes or ancillary to some other advice that is not securities advice; or [The word “an” should be “a” to be grammatically correct in the phrase “an professional association”.] (c) any other advisory activity exempted from the provisions of this Chapter by NAMFISA by notice under subsection (3)(a); “securities advisor” means a natural person or company in the business of giving securities advice to clients or potential clients; “securities clearing house” means a public company that is retained by a registered exchange to
provide securities clearing services to that exchange; “securities clearing services” means securities clearing services or securities settlement services or both securities clearing and securities settlement services provided to a registered exchange by a securities clearing house; “securities dealer” means a company, other than an authorised user, that is engaged in the business of buying and selling securities for own account or in a fiduciary capacity, whether through a broker or otherwise, but excludes a company that, for own account and not as part of its regular business, buys and sells securities; “securities rating agency” means a company that carries on the business of rating securities and issuers of securities; “security” includes - (a) a share; (b) stock; (c) a bond; (d) a debenture; (e) a note; (f) a derivative instrument and an option, warrant, certificate or other instrument acknowledging, conferring or creating a right to subscribe to, acquire, dispose of, or convert a security; (g) an investment scheme, plan, programme or contract designed to entice a client or potential client to invest, use or commit money or other property with the expectation of future payment of interest, dividends, capital appreciation or other return or monetary benefit; and (h) an instrument declared by NAMFISA by notice under subsection (3)(b) to be a security, but does not include a money market instrument, a participatory interest in a collective investment scheme as defined in section 168, a unit or other form of participation in a foreign collective investment scheme as defined in section 218 or a security declared by NAMFISA by notice under subsection (3)(c) not to be a security for the purposes of this Chapter; “self-regulatory organisation” means a public company that is organised for the purpose of regulating the operations and business conduct in capital markets of its members and their representatives with the public interest objectives of enhancing market integrity, investor protection and market efficiency and includes - (a) a registered exchange; (b) a registered central securities depository; (c) a registered securities clearing house; and (d) a recognised self-regulatory organisation; “settle” means to discharge the obligations arising from a transaction in listed securities; “stockbroker” means a person who was a stockbroker within the meaning of the Stock Exchanges Control Act at the time this Act comes into force; “Stock Exchanges Control Act” means the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985), repealed by this Act; “systemic risk” means the risk of a failure or disruption of Namibia’s financial system as a whole; and “transaction” means a contract of purchase and sale of securities. (2) The Minister may, for the purposes of paragraph (e) of the definition of “prudential and financial markets institution”, by notice in the Gazette declare any entity to be a prudential and financial markets institution for the purposes of
this Act. (3) NAMFISA may, for the purposes of - (a) paragraph (c) of the definition of “securities advice”, by notice in the Gazette exempt any advisory activity from the provisions of this Chapter; (b) paragraph (h) of the definition of “security”, by notice in the Gazette declare any instrument to be a security for the purposes of this Chapter; and (c) the definition of “security”, by notice in the Gazette declare any instrument not to be a security for the purposes of this Chapter. Objects of Chapter 79. The objects of this Chapter are to - (a) increase confidence in the Namibian financial markets by - (i) requiring that securities services be provided in a fair, efficient and transparent manner; and (ii) contributing to the maintenance of a stable financial market environment; (b) promote the supervision of regulated persons and the protection of clients; (c) reduce systemic risk; and (d) promote the international competitiveness of securities services in Namibia. Non-application of gambling laws 80. Any law relating to gambling or wagering does not apply to any activity regulated by or under this Chapter.
PART 2
PROHIBITIONS AND RESTRICTIONS
Prohibitions
81.
(1) A person may not operate or act as a regulated person, unless that person is registered or is deemed to be registered to operate or act in the applicable capacity under this Chapter.
(2) A person referred to in subsection (1) who is not registered or deemed to be registered under this Chapter may not purport to be a regulated person or behave in a manner or use a name or description which is calculated to indicate or likely to lead other persons to believe or which suggests, signifies or implies that the person is a regulated person or that there is some connection between that person and a regulated person. (3) If at the commencement of this Chapter any person was using, in connection with that person’s business, any name or description referred to in subsection (2) and that person - (a) subsequently changes that name; (b) produces any deed or document, bearing the previous name which was registered in any deeds registry or in any other office where a register or record of the ownership of or entitlement to any property is kept, to the person charged with the registration of deeds in that registry or to the officer in charge of that other office; and (c) satisfies the person so charged or officer that the name was changed as a result of the prohibition contained in subsection (2), that person so charged or officer must, without any charge, substitute the new name for the previous name on such deed or document and in all the relevant registers. (4) A person who contravenes or fails to comply with subsection (1) or commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Listed securities: exception 82. (1) A person may not carry on the business of buying or selling listed securities unless that person - (a) is a registered authorised user; (b) is the registered authorised representative of a registered authorised user; (c) effects such buying or selling through a registered authorised user or registered authorised representative; (d) is a banking institution, prudential and financial markets institution or a financial institution transacting as principal with another banking institution, prudential and financial markets institution or financial institution also transacting as principal; or (e) is a person who, subject to any conditions that may be set out in the standards, buys or sells listed securities in order to - (i) give effect to a reconstruction of a company or group of companies by the issue or reallocation of shares or a takeover by one company of another or an amalgamation of two or more companies; or (ii) effect a change in the control over management or the business of a company. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment.
PART 3
REGISTRATION OF CERTAIN REGULATED PERSONS
Application for registration
83.
(1) Only a public company may, in accordance with subsection (4), make an application for registration as - (a) a central securities depository; (b) an exchange, in respect of one or more types of securities; or (c) a securities clearing house, to NAMFISA. (2) Only a company may, in accordance with subsection (4), make an application for registration as - (a) an investment manager; (b) a linked investment service provider; (c) a securities rating agency; or (d) a securities dealer, to NAMFISA. (3) A company or an individual may, in accordance with subsection (4), make an application for registration as a securities advisor to NAMFISA. (4) An application for registration pursuant to subsection (1), (2) or (3) must - (a) be made in the manner and form required by the standards; (b) include the information with respect to the principal office and principal officer required by the standards; (c) in the case of - (i) a central securities depository or an exchange, be accompanied by the proposed rules of the central securities depository or exchange; and (ii) an exchange, be accompanied by the proposed listing requirements of the exchange; (d) be accompanied by the documents and other information required by the standards; (e) be accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; (f) be made subject to and in accordance with any other applicable provision of this Act; and (g) be accompanied by the required fee. (5) Before making an application for registration referred to in subsection (1) or (2)(c), the applicant must give notice of the proposed application in two newspapers circulating nationally in Namibia at the expense of the applicant, stating - (a) the name of the applicant; (b) the period within which, and the manner in which, objections to the application may be lodged with NAMFISA; and (c) in the case of an application referred to - (i) in subsection (1)(a) or (b), the place where the proposed rules of the exchange or central securities depository may be inspected by members of the public; (ii) in subsection (1)(b), the place where the proposed listing requirements of the exchange may be inspected by members of the public, and the manner in which, and the period within which, the members of the public may lodge objections to the proposed rules or listing requirements with NAMFISA. Registration requirements 84. (1) Before approving the application and registering the applicant pursuant to an application made under section 83(1), (2) or (3) NAMFISA must be satisfied that - (a) in relation to the applicant company - (i) every shareholder or other owner that controls the applicant, and every director, the principal officer or other officers of the applicant, and where applicable, members of any other board of an applicant, are fit and proper within the meaning of the standards; (ii) the memorandum, articles and rules or other founding documents of the applicant are not inconsistent with
the provisions of this Act; (iii) the direct or indirect control of the entity is not likely to be contrary to the interest of consumers of the financial services concerned; and (iv) the applicant will be in a position to ensure that its organisational or group structure will not be such as to hinder effective supervision by NAMFISA; (b) doing so is not contrary to - (i) this Act; or (ii) the public interest; (c) the applicant has the attributes reasonably necessary and adequate to - (i) provide the financial services in question with professional integrity, prudence, proper skill and due diligence; (ii) maintain a sound financial position and not cause or further instability in the financial system of Namibia; and (iii) comply with this Act; (d) in the case of a central securities depository or an exchange, the applicant will be in a position to ensure compliance with its rules by its participants and authorised users and its clients; (e) in the case of an exchange, the applicant will be in a position to ensure compliance with its listing requirements by its authorised users and its clients; (f) the name under which the applicant proposes to conduct business, or a translation, shortened form or derivative of that name is not in contravention of section 391; (g) the applicant has submitted all other information which, in the opinion of NAMFISA, is necessary to assess the application, and such information has been found satisfactory by NAMFISA; and (h) the applicant has complied and will continue to comply with any other requirements contained in this Act or in the standards which apply to the applicant. (2) Before approving an application and registering an individual as a security advisor pursuant to section 83(3), NAMFISA must, in addition to the requirements of subsection (1)(b), (c), (f), (g) and (h) be satisfied that - (a) the individual is at least 18 years of age; (b) the individual has met the requirements for a securities advisor that may be included in the standards from time to time; (c) the individual is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure business; (d) the individual has not been refused registration, authorisation or acceptance as a securities advisor or had such registration, authorisation or acceptance suspended or revoked under this Act or any other applicable financial services law; (e) the individual has not been convicted of an offence the nature of which renders him or her, in the opinion of NAMFISA, unfit to hold a registration under this Act; (f) the individual is fit and proper within the meaning of the standards; (g) there are reasonable grounds for believing that the individual will carry on with integrity and honesty the activities of a securities advisor; (h) the individual has met, and there is no reason to believe that the individual will not be able to meet, any other requirements of this Act, and any instructions and guidelines issued by
NAMFISA under this Act that apply to a securities advisor; (i) there is no reason to believe that the individual is likely to engage in conduct of a kind identified in the standards as misconduct; (j) the individual is ordinarily resident in Namibia and is in a position to comply with the law relating to his or her residency in Namibia and with any other applicable laws of Namibia; and (k) any required fee has been paid. Registration and renewal of registration 85. (1) If - (a) after consideration of any objection received as a result of the notice referred to in section 83(5); and (b) in any other case where a notice is not required to be given before an application referred to in that section is made, NAMFISA is satisfied that the applicant complies with the requirements of section 84, NAMFISA must register the applicant as a central securities depository, an exchange, an investment manager, a linked investment services provider, securities clearing house, securities rating agency, securities advisor or securities dealer and - (i) in the case of a central securities depository, approve its proposed depository rules; and (ii) in the case of an exchange, approve its proposed exchange rules and listing requirements. (2) The registration referred to in subsection (1) must specify - (a) the principal office of the applicant in Namibia; (b) the places in Namibia from which the applicant may operate; (c) the financial services in securities that may be provided by the applicant; (d) in the case of a securities clearing house, whether the securities clearing house may provide both securities clearing and securities settlement services or only securities clearing services or only securities settlement services; and (e) in the case of an exchange, whether the exchange may, in addition to securities, also list and provide for trading in money market instruments, participatory interests in collective investment schemes and other products or interests that are not securities. (3) Upon registration of an applicant NAMFISA must issue to the applicant a certificate of registration in a form provided by the standards. (4) NAMFISA may impose such conditions on the registration of the applicant as it considers necessary having regard, without limitation, to all the facts and information available to NAMFISA pertaining to the applicant and any guidelines issued by NAMFISA under this Act. (5) If an application is refused by NAMFISA or is granted subject to conditions, NAMFISA must advise the applicant of the refusal or conditions by giving notice to the applicant containing the reasons for the refusal or the conditions, and must give the applicant a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the applicant may make representations in writing to NAMFISA. (6) A central securities depository, an exchange, an investment manager, a linked investment service provider, securities clearing house, securities rating agency,
securities advisor or securities dealer must comply with the conditions subject to which it was registered. (7) The term of registration as a securities rating agency, securities advisor or securities dealer under this section expires on March 31 of each year or on such other date as NAMFISA may specify, but if the appropriate renewal fee as determined by NAMFISA in respect of each securities rating agency, securities advisor or securities dealer is paid to NAMFISA in the manner set out in the standards, the registration must, subject to compliance with any requirements that may be set out in the standards, be renewed for a period of 12 months as from the expiry date. (8) The renewal fee is payable within the period set out in the standards, and any payment received after that period bears interest at a rate determined by NAMFISA in the standards, which rate may not exceed the rate prescribed for this purpose. (9) If - (a) the renewal fee is not received within the period contemplated in subsection (8); or (b) the requirements of the standards referred to in subsection (7) have not been complied with, NAMFISA may not renew the registration of a securities rating agency, securities advisor or securities dealer whose renewal fee was not paid or in respect to whom the requirements of the standards have not been complied with. (10) A person who continues to operate, or to engage in, the business of a securities rating agency, securities advisor or securities dealer after the non-renewal of registration under subsection (9), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Existing exchanges 86. (1) An exchange that was licensed under the Stock Exchanges Control Act prior to, and remains licensed on, the date of commencement of this Chapter, despite that such exchange is not a public company, is deemed to be registered as an exchange under this Act, subject to subsection (3). (2) An exchange referred to in subsection (1) is, from the date on which this Chapter comes into force, a juristic person capable of suing and being sued under the name by which it is registered, of acquiring rights and duties and of acquiring, owning, burdening, hiring, letting and alienating property and, subject to this Act, of doing such things as may be necessary for or incidental to the performance of its functions under its exchange rules. (3) An exchange referred to in subsection (1) must, in accordance with section 138, be incorporated into a public company having a share capital within 12 months of the date of commencement of this Chapter and must, upon such incorporation, comply with all the requirements imposed on an applicant for registration as an exchange in terms of this Act. (4) If an exchange referred to in subsection (1) contravenes or fails to comply with subsection (3), NAMFISA may take action that NAMFISA considers appropriate
against the exchange pursuant to section 89, 412 or 439. Persons approved by Registrar 87. (1) A person that was approved by the Registrar under section 4(1)(f) of the Stock Exchanges Control Act on the date of commencement of this Chapter is, subject to subsection (2), deemed to be registered in the appropriate category of regulated person under this Act as determined by NAMFISA. (2) Despite subsection (1), a person referred to in that subsection must, within 12 months after the date of commencement of this Chapter, make an application to NAMFISA pursuant to section 83 for registration in the appropriate category of regulated person. (3) If a person referred to in subsection (1) fails to make an application to NAMFISA for registration within the period referred to in subsection (2), the deemed registration of that person is cancelled. Application for cancellation or variation of registration 88. (1) A registered central securities depository, an exchange, an investment manager, a linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer may at any time apply to NAMFISA for cancellation of a registration granted pursuant to section 85 or for a variation to the conditions subject to which that registration was granted. (2) An application made under subsection (1) must be - (a) made in the manner and form required by the standards; (b) accompanied by the documents and other information required by the standards; (c) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; and (d) accompanied by the required fee. (3) Before making an application pursuant to subsection (1), the applicant must give prior notice of the proposed application in two newspapers circulating nationally in Namibia, at the expense of the applicant, stating - (a) the name of the applicant; (b) either - (i) the reasons for the proposed cancellation; or (ii) the nature of the proposed variation; and (c) the period within which objections to the application may be lodged with NAMFISA. (4) Section 85 applies with the changes required by the context to an application for a variation of conditions referred to in subsection (1). (5) If, after consideration of any objection received as a result of the notice referred to in subsection (3), NAMFISA is of the opinion that it is reasonable to do so and not against the public interest, NAMFISA may, by notice to the applicant concerned - (a) cancel the registration; or (b) vary the conditions of registration, including the imposition of additional conditions. (6) NAMFISA must make public any cancellation of registration or variation of conditions of registration under subsection (5) and the reasons for the cancellation or variation, by notice in the Gazette or by means of any other appropriate public statement. Cancellation or variation of registration 89. (1) NAMFISA may take any of the actions set out in subsection
(3), if NAMFISA acting reasonably, finds that any of the following circumstances exist with respect to a registered central securities depository, an exchange, an investment manager, a linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer:
(a) it has made a material misrepresentation or failed to provide information that was materially relevant in its application for registration; (b) it has failed to comply with this Act; (c) it no longer meets the requirements for registration; (d) it has provided financial services without professional integrity, prudence, proper skill and due diligence; (e) it is in an unsound financial position; (f) it has failed to comply with a directive, request or requirement of NAMFISA issued under this Act; (g) it has failed to give effect to a decision of the Appeal Board; (h) it has ceased to operate or has failed to commence operating within a reasonable time after being registered; (i) it is involved in a financial crime; (j) in the case of a securities advisor that is an individual, the individual no longer meets the fit and proper requirements within the meaning of the standards or has engaged in conduct identified in the standards as misconduct; or (k) every shareholder or other owner that controls the entity, and any director, the principal officer, other officer or member of a board no longer meets the fit and proper requirements within the meaning of the entity standards or has engaged in conduct identified in the standards as misconduct. (2) In addition to the reasons set out in subsection (1), NAMFISA may take any of the actions set out in subsection (3) if, in the opinion of NAMFISA, such action is warranted because - (a) the person has failed to - (i) give effect to a decision of the Appeal Board and such failure has defeated the objects of this Chapter referred to in section 79 or is likely to defeat them; or (ii) in the case of an exchange or a central securities depository, comply with the rules of that exchange or central securities depository; or (b) after an inspection of the person’s affairs under this Act, NAMFISA is satisfied on reasonable grounds that the manner in which it is operated is - (i) not in the best interests of authorised advisors, authorised representatives, authorised users, participants or portfolio managers or their clients; or (ii) defeating the objects of this Chapter referred to in section 79. (3) If NAMFISA is satisfied that any of the circumstances described in subsection (1) or (2) exist, NAMFISA may take any of the following actions with respect to the registered central securities depository, exchange, investment manager, linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer - (a) cancel its registration; (b) vary the conditions of its registration, including the imposition of additional conditions; or (c) take any other steps that NAMFISA may consider necessary or advisable. (4) NAMFISA must give notice to the registered central securities depository, exchange, investment manager, linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer of the intention of
NAMFISA to take any action referred to in subsection (3), together with the reasons for taking the action, and must give the registered central securities depository, exchange, investment manager, linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the registered central securities depository, exchange, investment manager, linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer may make representations to NAMFISA on the matter. (5) Subject to such conditions as NAMFISA may impose, NAMFISA may provisionally suspend the registration or take control of the assets of a registered central securities depository, an exchange, an investment manager, a linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer without giving notice and an opportunity to be heard pursuant to subsection (4), if NAMFISA is satisfied on reasonable grounds that it is urgently necessary to do so in order to prevent or mitigate damage to the interests of financial institutions, financial intermediaries, their clients or the financial system of Namibia, but NAMFISA must - (a) give the registered central securities depository, exchange, investment manager, linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer the notice and an opportunity to be heard and make representations as soon as reasonably possible; and (b) having considered any representations received, determine whether the provisional suspension should be continued until further conditions can be imposed or the registration cancelled. (6) NAMFISA must make public any suspension or cancellation of registration, variation of conditions of registration or any other steps taken under this section and the reasons for the suspension, cancellation or variation, by notice in the Gazette or by means of any other appropriate public statement. (7) A person who - (a) continues to operate, or engage in, the business of a central securities depository, an exchange, an investment manager, a linked investment service provider, securities clearing house, securities rating agency, securities advisor or securities dealer after the cancellation of registration under section 87(3), 88(5)(a), subsection (3)(a) or any other applicable provision of this Act or after suspension of registration under subsection (5); or (b) fails to comply with a condition imposed by NAMFISA under subsection (5), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Transfer or winding-up 90. If the registration of any regulated person is cancelled
under section 87(3), 88(5)(a), 89(3)(a) or any other applicable provision of this Act or suspended pursuant to section 89(5), NAMFISA must take such steps and may impose such conditions as are necessary to achieve the objects of this Chapter referred to in section 79, which steps may include - (a) the transfer of the business of the regulated person to another regulated person; and (b) if the regulated person is a company, the winding-up of the company in accordance with Chapter 10. Registration as authorised user, portfolio manager, authorised advisor or authorised representative 91. (1) A registered exchange may authorise a company to be an authorised user of that exchange in accordance with the exchange rules referred to in section 112, and may apply to NAMFISA for the registration of that company as an authorised user by submitting a copy of the list maintained by that registered exchange of those companies, together with any required registration fee for each such company. (2) A registered investment manager or linked investment service provider may apply to NAMFISA for the registration of certain of its employees as portfolio managers by submitting a copy of the list maintained by the registered investment manager or linked investment service provider of those employees, together with any required registration fee for each such employee. (3) A registered securities advisor may apply to NAMFISA for the registration of certain of its employees as authorised advisors by submitting a copy of the list maintained by the registered securities advisor of those employees, together with any required registration fee for each such employee. (4) A registered securities dealer may apply to NAMFISA for the registration of certain of its employees as authorised representatives by submitting a copy of the list maintained by the registered securities dealer of those employees, together with any required registration fee for each such employee. (5) A registered investment manager, registered linked investment service provider, registered securities advisor or registered securities dealer (in this section and in section 92 referred to as “list applicants”), must have in place a code of conduct and applicable systems relevant to its portfolio managers, authorised advisors or authorised representatives (in this section referred to as “listed individuals), in order to be reasonably satisfied with respect to each of its listed individuals that - (a) the individual is at least 18 years of age; (b) the individual has met the requirements for portfolio managers, authorised advisors or authorised representatives that may be included in the standards from time to time; (c) the individual is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure business; (d) the individual has not been refused registration, authorisation or acceptance or had such registration, authorisation or acceptance suspended or revoked
under this Act or any other applicable financial services law; (e) the individual has not been convicted of an offence the nature of which renders him or her, in the opinion of NAMFISA, unfit to hold a registration under this Act; (f) the individual is fit and proper within the meaning of the standards; (g) there are reasonable grounds for believing that the individual will carry on with integrity and honesty the activities of a portfolio manager, authorised advisor or authorised representative; (h) the individual has met, and there is no reason to believe that the individual will not be able to meet, any other requirements of this Act, and any instructions and guidelines issued by NAMFISA under this Act or issued by the list applicant concerned, that apply to the individual; (i) there is no reason to believe that the individual is likely to engage in conduct of a kind identified in the standards as misconduct; (j) the individual is ordinarily resident in Namibia and is in a position to comply with the law relating to his or her residency in Namibia and with any other applicable laws of Namibia; and (k) any required fee has been paid. (6) Each list applicant must provide NAMFISA with such other information and material regarding its listed individuals as may be specified in the standards, and the registered exchange must provide NAMFISA with such other information and material regarding the companies on its list as may be specified in the standards. (7) NAMFISA must register each company, the name of which appears on a list referred to in subsection (1), as an authorised user, and each listed individual whose name appears on the lists referred to in subsection (2), (3) or (4) as a portfolio manager, authorised advisor or authorised representative. (8) A registered exchange that has submitted a list to NAMFISA pursuant to subsection (1) must submit to NAMFISA an update of that list when there has been an addition or deletion, together with additional companies to be registered that have been added to a list referred to in subsection (1), and the required fee for each additional company and the information and material referred to in subsection (6), and upon receipt by NAMFISA of an updated list containing the names of additional companies, the provisions of subsection (7) apply. (9) Each list applicant that has submitted a list to NAMFISA pursuant to subsection (2), (3) or (4), must submit to NAMFISA an update of that list when there has been an addition or deletion, together with additional listed individuals to be registered that have been added to a list referred to in subsection (2), (3) or (4), and the required fee for each additional listed individual and the information and material referred to in subsection (6), and upon receipt by NAMFISA of an updated list containing the names of additional listed individuals, the provisions of subsection (7) apply. (10) If a registered exchange removes a company from the list referred to in subsection
(1) or a list applicant removes a listed individual from a list referred to in subsection (2), (3) or (4), the registered exchange or the list applicant must, at the same time as submitting the update of the list as required by subsection (8) or (9), provide NAMFISA with a statement indicating the reason that the company or individual has been removed from the list. (11) A registered exchange may not remove a company from the list as referred to in subsection (10) unless the registered exchange has given the company concerned the reasons for the proposed removal and a reasonable opportunity to be heard. (12) A list applicant may not remove a listed individual from the list as referred to in subsection (10) unless the list applicant has given the listed individual concerned the reasons for the proposed removal and a reasonable opportunity to be heard. Remedial action 92. (1) NAMFISA may take any of the actions set out in subsection (2), if NAMFISA acting reasonably, finds that any of the following circumstances exist with respect to a person who is a registered authorised user, registered portfolio manager, registered authorised advisor or registered authorised representative - (a) in the case of individuals, any of the requirements referred to in section 91(5) have not been met; (b) the copy of the list submitted under section 91 or the accompanying information and material contained information concerning the person that was not materially accurate or omitted information that was materially relevant; (c) the person no longer meets the requirements for an authorised user, portfolio manager, authorised advisor or authorised representative, as applicable; (d) the person has suspended the activities for which the person was registered for a period of at least 12 months; (e) the person is not in compliance with a requirement of this Act; or (f) the person has engaged in conduct of a kind that has been identified in the standards as misconduct. (2) If NAMFISA is satisfied that any of the circumstances described in subsection (1) exist, NAMFISA may take or direct the registered exchange or list applicant concerned to take remedial action including, without limitation - (a) directing the registered exchange or list applicant to provide further information with respect to the person; (b) directing the registered exchange or list applicant to provide further training for the person; (c) directing the registered exchange or list applicant to take disciplinary action against the person; (d) directing the list applicant to make changes to the code of conduct and systems referred to in section 91(5); (e) requiring an undertaking from the person pursuant to section 436; (f) requiring an undertaking from the list applicant pursuant to section 436; (g) directing the person to undertake specific actions or refrain from specific actions pursuant to section 439(4)(c); (h) directing the list applicant to undertake specific actions or refrain from specific actions
pursuant to section 439(4)(c); or (i) imposing on the list applicant any penalty that may be specified in the standards, if the list applicant has been negligent in satisfying itself with respect to the provisions of section 91(5). (3) If on receipt of evidence that the required action has been taken pursuant to subsection (2), NAMFISA acting reasonably, finds that any of the circumstances referred to in subsection (1) continue to exist, NAMFISA may direct the list applicant to remove the name of the person from the list referred to in section 91(1), (2), (3), (4), (8) or (9). (4) Before directing that the name of a person be removed from a list pursuant to subsection (3), NAMFISA must give the registered exchange or list applicant and the person the reasons for the proposed removal and a reasonable opportunity to be heard. (5) If a registered exchange or list applicant fails to remove the name of a person from the list when required to do so by NAMFISA, NAMFISA may, after giving the person a reasonable opportunity to be heard, itself remove the name of the person from the list. (6) If the name of a person is removed from a list by a registered exchange or list applicant or NAMFISA, the registration of that person as an authorised user, portfolio manager, authorised advisor or authorised representative is cancelled and the person may not act as an authorised user, portfolio manager, authorised advisor or authorised representative or be included on any list a copy of which is submitted under section 91 for such period as NAMFISA may determine. (7) A person who continues to operate, or engage in, the business of an authorised user, a portfolio manager, an authorised advisor or authorised representative after the cancellation of registration under subsection (6), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Stockbrokers 93. (1) A stockbroker that was licensed under the Stock Exchanges Control Act on the date of commencement of this Chapter is, subject to subsections (2) and (3), deemed to be an authorised user or authorised representative under this Act. (2) Despite subsection (1), a stockbroker that is a company or other entity or an individual stockbroker who is not an employee of a stockbroker that is a company or entity must be included in the list submitted to NAMFISA by the registered exchange of which it is an authorised user, pursuant to section 91. (3) Despite subsection (1), a stockbroker who is an employee of a company or other entity that is a stockbroker must be included in the list of authorised representatives submitted by that company or other entity to the registered exchange of which that company or entity is an authorised user, pursuant to section 95. (4) If a stockbroker referred to in subsection (2) is not included in a list submitted to NAMFISA by a registered exchange pursuant to section 91
within 12 months from the date of commencement of this Chapter, the deemed registration of that person is cancelled. (5) If a stockbroker referred to in subsection (3) is not included in a list submitted to NAMFISA by a company or other entity concerned pursuant to section 95 within 12 months from the date of commencement of this Chapter, the deemed registration of that person is cancelled. (6) A stockbroker may continue to use the designation “stockbroker”, “stockbroker (Namibia)” or “stockbroker (Nam)”. (7) Where the business of a person to whom the rules of a foreign exchange apply is substantially similar to that of a stockbroker, that person may use the designation “stockbroker” if the law under which the foreign exchange is regulated or the rules of that foreign exchange authorise that designation. (8) An authorised user who was not licensed under the Stock Exchanges Control Act on the date of commencement of this Chapter, but whose business as an authorised user is substantially similar to that of a stockbroker, may use the designation “stockbroker”. (9) A person who is not mentioned in any of the provisions of subsections (1), (2) (3), (7) and (8) may not - (a) purport to be a stockbroker; or (b) use any designation referred to in subsection (6), (7) or (8) or any other name, title, description or symbol or perform any act implying or tending to induce the belief that such person is a stockbroker. (10) A person who contravenes or fails to comply with subsection (9) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. (11) A person who continues to operate, or engage in, the business of an authorised user, authorised representative or a stockbroker after the cancellation of registration under subsection (4) or (5), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Existing portfolio managers 94. (1) A portfolio manager who is approved by the Registrar under section 4(1)(f) of the Stock Exchanges Control Act on the date of commencement of this Chapter is deemed to be registered as a portfolio manager under this Act. (2) Despite subsection (1), a registered investment manager or a registered linked investment service provider that employs a portfolio manager referred to in that subsection must, within six months of the date of commencement of this Chapter, include the portfolio manager in a list submitted to NAMFISA by the investment manager or linked investment service provider pursuant to section 91(2). (3) If a portfolio manager referred to in subsection (1) is not included in a list submitted to NAMFISA by a registered investment manager or registered linked investment service provider pursuant to section 91(2) within the period referred to in subsection (2), the deemed
registration of that person is cancelled. (4) A person who continues to operate, or engage in, the business of a portfolio manager after the cancellation of registration under subsection (3), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Registration as authorised representative of authorised user 95. (1) An authorised user must submit to the registered exchange of which it is an authorised user, a copy of the list maintained by the authorised user of its employees that are its authorised representatives. (2) An authorised user must have in place a code of conduct and applicable systems relevant to authorised representatives in order to be reasonably satisfied with respect to each authorised representative that - (a) the individual is at least 18 years of age; (b) the individual has met the requirements for authorised representatives that may be included in the standards or the exchange rules from time to time; (c) the individual is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure business; (d) the individual has not been refused registration, authorisation or acceptance or had such registration, authorisation or acceptance suspended or revoked under this Act or any other applicable financial services law; (e) the individual has not been convicted of an offence the nature of which renders him or her, in the opinion of NAMFISA, unfit to hold a registration under this Act. (f) the individual is fit and proper within the meaning of the standards; (g) there are reasonable grounds for believing that the individual will carry on with integrity and honesty the activities of an authorised representative; (h) the individual has met, and there is no reason to believe that the individual will not be able to meet, any other requirements of this Act, the rules of the registered exchange and any instructions and guidelines issued by NAMFISA under this this Act or issued by the exchange that apply to authorised representatives; [The word “this” is repeated in the Government Gazette in the phrase “issued by NAMFISA under this Act”, as reproduced above.] (i) there is no reason to believe that the individual is likely to engage in conduct of a kind identified in the standards as misconduct; (j) the individual is ordinarily resident in Namibia and is in a position to comply with the law relating to his or her residency in Namibia and with any other applicable laws of Namibia; and (k) any required fee has been paid. (3) An authorised user must provide the exchange with such other information and material regarding its authorised representatives as the exchange rules may require. (4) The registered exchange must forward the copy of the list to NAMFISA together with any required fee and NAMFISA must register each person whose name appears on the list as an authorised
representative. (5) An authorised user that has submitted a list to the registered exchange pursuant to subsection (1) must submit to the registered exchange an update of that list when there has been an addition or deletion, together, in the case of additional authorised representatives, with the required fee for each additional authorised representative and the information and material referred to in subsection (3). (6) An authorised user may not remove an individual from the list referred to in subsection (1) unless the authorised user has given the individual concerned the reasons for the proposed removal and a reasonable opportunity to be heard. (7) If an authorised user removes an individual from the list, it must, at the same time as submitting the update of the list as required by subsection (5), provide the registered exchange with a statement indicating the reason that the individual has been removed from the list. (8) The registered exchange must forward any updated list received pursuant to subsection (5) to NAMFISA, together with any statement referred to in subsection (7), and in the case of any addition, the provisions of subsection (4) apply. Remedial action 96. (1) A registered exchange may take any of the actions set out in subsection (2), if the exchange acting reasonably, finds that any of the following circumstances exist with respect to an authorised representative - (a) any of the requirements referred to in section 95(2) have not been met; (b) the copy of the list submitted under section 95 or the accompanying information and material contained information concerning the individual that was not materially accurate or omitted information that was materially relevant; (c) the individual no longer meets the requirements for an authorised representative; (d) the individual has suspended the activities for which the individual was registered for a period of at least 12 months; (e) the individual is not in compliance with a requirement of this Act; or (f) the individual has engaged in conduct of a kind that has been identified in the standards as misconduct. (2) If the registered exchange is satisfied that any of the circumstances described in subsection (1) exist, the registered exchange may take or direct the authorised user of which the individual is the authorised representative to take remedial action including, without limitation - (a) directing the authorised user to provide further information with respect to the individual; (b) directing the authorised user to provide further training for the individual; (c) directing the authorised user to take disciplinary action against the individual; (d) directing the authorised user to make changes to the code of conduct and systems referred to in section 95(2); (e) requiring an undertaking from the authorised user or from the authorised representative or from both pursuant to section 436; (f) directing the authorised user or the authorised representative or both to take specific
actions or refrain from specific actions; or (g) referring the matter to NAMFISA. (3) If on receipt of evidence that the required action has been taken pursuant to subsection (2), the registered exchange acting reasonably, finds that any of the circumstances referred to in subsection (1) continue to exist, the registered exchange may direct the authorised user to remove the name of the individual from the list referred to in section 95(1) or (5). (4) Before directing that the name of a person be removed from a list pursuant to subsection (3), the registered exchange must give the authorised user and the authorised representative the reasons for the proposed removal and a reasonable opportunity to be heard. (5) If an authorised user fails to remove the name of an authorised representative from the list when required to do so by the registered exchange, the registered exchange may, after giving the authorised representative a reasonable opportunity to be heard, itself remove the name of the person from the list. (6) The registered exchange must inform NAMFISA forthwith of any direction to an authorised user to remove the name of an authorised representative from the list pursuant to subsection (3) or of the removal of the name of an authorised representative from the list by the exchange pursuant to subsection (5) and in that event or in the event that the registered exchange refers the matter to NAMFISA pursuant to subsection (2)(g), the provisions of section 92 apply with any changes made necessary by the context. (7) If the name of a person is removed from a list by a registered exchange, an authorised user or NAMFISA, the registration of that person as an authorised representative is cancelled and the person may not act as an authorised representative or be included on any list a copy of which is submitted under section 95 for such period as NAMFISA may determine. (8) A person who continues to operate, or engage in, the business of an authorised representative after the cancellation of registration under subsection (7), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Registration as participant 97. (1) A registered central securities depository may accept a company that holds securities or an interest in securities as a participant in that central securities depository in accordance with its depository rules, and must apply to NAMFISA for the registration of that participant by submitting a copy of the list of such participants maintained by the central securities depository, together with any required fee for each such participant. (2) The registered central securities depository must provide NAMFISA with such other information and material regarding the companies on its list as may be specified in the standards. (3) NAMFISA must register each company, the name of which appears on a list referred to in
subsection (1). (4) A registered central securities depository must submit to NAMFISA an update of the list referred to in subsection (1) when there has been an addition or deletion of a participant together, in the case of additional participants to be registered, with the required fee for each such additional participant. (5) On receipt of a list referred to in subsection (4) and the required fee, NAMFISA must register those companies as participants. (6) If a registered central securities depository removes a company from the list referred to in subsection (1), the registered central securities depository must, at the same time as submitting the update of the list as required by subsection (4), provide NAMFISA with a statement indicating the reason that the company has been removed from the list. (7) A registered central securities depository may not remove a company from the list as referred to in subsection (6) unless the registered central securities depository has given the company concerned the reasons for the proposed removal and a reasonable opportunity to be heard. Remedial action 98. (1) NAMFISA may take any of the actions set out in subsection (2), if NAMFISA acting reasonably, finds that any of the following circumstances exist with respect to the company that is registered as a participant - (a) the copy of the list submitted under section 97 or the accompanying information and material contained information concerning the company that was not materially accurate or omitted information that was materially relevant; (b) the company no longer meets the requirements for a participant; (c) the company has suspended the activities for which the company was registered for a period of at least 12 months; (d) the company is not in compliance with a requirement of this Act; or (e) the company has engaged in conduct of a kind that has been identified in the standards as misconduct. (2) If NAMFISA is satisfied that any of the circumstances described in subsection (1) exist, NAMFISA may take or direct the registered central securities depository concerned to take remedial action including without limitation - (a) directing the registered central securities depository to provide further information with respect to the company; (b) directing the registered central securities depository to provide further training for the company; (c) directing the registered central securities depository to take disciplinary action against the company; (d) requiring an undertaking from the company pursuant to section 436; (e) requiring an undertaking from the central securities depository pursuant to section 436; (f) directing the company to undertake specific actions or refrain from specific actions pursuant to section 439(4)(c); (g) directing the central securities depository to undertake specific actions or refrain from specific actions pursuant to section 439(4)(c). (3) If on receipt of evidence that the required action has been taken pursuant to subsection
(2), NAMFISA acting reasonably, finds that any of the circumstances referred to in subsection (1) continue to exist, NAMFISA may direct the central securities depository to remove the name of the company from the list referred to in section 97(1) or (4). (4) Before directing that the name of a company be removed from a list pursuant to subsection (3), NAMFISA must give the registered central securities depository and the company the reasons for the proposed removal and a reasonable opportunity to be heard. (5) If a registered central securities depository fails to remove the name of a company from the list when required to do so by NAMFISA, NAMFISA may, after giving the company a reasonable opportunity to be heard, itself remove the name of the company from the list. (6) If the name of a company is removed from a list by a registered central securities depository or NAMFISA, the registration of that company as a participant is cancelled and the company may not act as a participant or be included on any list a copy of which is submitted under section 97 for such period as NAMFISA may determine. (7) A person who continues to operate, or engage in, the business of a participant after the cancellation of registration under subsection (6), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Nominees 99. (1) An authorised user must - (a) maintain a list of approved nominees; (b) submit a copy of such list to the registered exchange of which it is an authorised user; and (c) submit to the registered exchange an update of the list at the end of each month in which there has been an addition or deletion of a nominee. (2) A participant must - (a) maintain a list of approved nominees; (b) submit a copy of such list to the registered central securities depository of which it is a participant; and (c) submit to the registered central securities depository an update of the list at the end of each month in which there has been an addition or deletion of a nominee. (3) A registered exchange or registered central securities depository must submit a copy of the list referred to in subsection (1) or (2), as applicable, to NAMFISA. (4) NAMFISA must maintain a list of all nominees approved under the exchange rules or depository rules and sent to NAMFISA pursuant to subsection (3). Remedial action 100. (1) A registered exchange or registered central securities depository may take any of the actions set out in subsection (2), if the exchange or central securities depository acting reasonably, finds that any of the following circumstances exist with respect to a nominee - (a) any of the requirements set out in the rules of the exchange or of the central securities depository have not been met; (b) the copy of the list submitted under section 99(1)(b) or (2)(b) respectively or the accompanying information and material contained information
concerning the nominee company that was not materially accurate or omitted information that was materially relevant; (c) the nominee company no longer meets the requirements for an approved nominee; (d) the nominee company has suspended the activities for which it was registered for a period of at least 12 months; (e) the nominee company is not in compliance with a requirement of this Act; or (f) the nominee company has engaged in conduct of a kind that has been identified in the standards as misconduct. (2) If the registered exchange or registered central securities depository is satisfied that any of the circumstances described in subsection (1) exist, the registered exchange or registered central securities depository may take or direct the authorised user or participant of which the nominee company is an approved nominee to take remedial action including, without limitation - (a) directing the authorised user or participant to provide further information with respect to the nominee company; (b) directing the authorised user or participant to provide further training for the nominee company; (c) directing the authorised user or participant to take disciplinary action against the nominee company; (d) directing the authorised user or participant to make changes to the code of conduct and systems as provided for the exchange or depository rules; (e) requiring an undertaking from the authorised user or participant or from the approved nominee or from both pursuant to section 436; (f) directing the authorised user or participant or the approved nominee or both to take specific actions or refrain from specific actions pursuant to section 439(4)(c); or (g) referring the matter to NAMFISA. (3) If on receipt of evidence that the required action has been taken pursuant to subsection (2), the registered exchange or registered central securities depository acting reasonably, finds that any of the circumstances referred to in subsection (1) continue to exist, the registered exchange or registered central securities depository may direct the authorised user or participant to remove the name of the nominee company from the list referred to in section 99(1) or (2). (4) Before directing that the name of a nominee company be removed from a list pursuant to subsection (3), the registered exchange or registered central securities depository must give the authorised user or participant, and the approved nominee the reasons for the proposed removal and a reasonable opportunity to be heard. (5) If an authorised user or a participant fails to remove the name of an approved nominee from the list when required to do so by the registered exchange or registered central securities depository, the registered exchange or registered central securities depository may, after giving the approved nominee a reasonable opportunity to be heard, itself remove the name of the nominee company from the list. (6) The registered exchange or registered central securities depository must
inform NAMFISA forthwith of any direction to an authorised user or a participant to remove the name of an approved nominee from the list pursuant to subsection (3) or of the removal of the name of an approved nominee from the list by the exchange or central securities depository or pursuant to subsection (5) and in that event, or in the event that the registered exchange or registered central securities depository refers the matter to NAMFISA pursuant to subsection (2)(g), the provisions of section 98 apply with any changes made necessary by the context. (7) If the name of a person is removed from a list by a registered exchange, registered central securities depository, authorised user, participant or NAMFISA, the registration of that person as a participant is cancelled and the person may not act as a nominee company, or be included on any list a copy of which is submitted under section 99 for such period as NAMFISA may determine. (8) A person who continues to operate, or engage in, the business of a nominee company after the cancellation of registration under subsection (7), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Foreign exchange and electronic exchange 101. (1) NAMFISA may, by notice in the Gazette , recognise a foreign exchange. (2) If a recognised foreign exchange operates an electronic exchange through one or more terminals located in Namibia through which trade can be entered on that foreign exchange, that electronic exchange is deemed not to be located in Namibia provided that the terminals located in Namibia are operated by a person or persons who are registered as an exchange or as an authorised user under this Chapter. Principal office and principal officer 102. (1) Every registered regulated person that is a company and an exchange referred to in section 86 must - (a) have a principal office in Namibia where it must hold and maintain the documents referred to in the standards; and (b) appoint to be its principal officer in Namibia, a fit and proper person within the meaning of the standards who is - (i) a Namibian citizen or permanent resident; and (ii) resident in Namibia. (2) Despite subsection (1)(b)(i), NAMFISA may, in exceptional circumstances, grant permission that a principal officer referred to in that subsection may, subject to the Immigration Control Act, 1993 (Act No. 7 of 1993), for such period as may be determined by NAMFISA, be a person other than a Namibian citizen or permanent resident. (3) After the appointment of a principal officer pursuant to subsection (1)(b), the regulated person or exchange referred to in subsection (1) must, within the period set out in the standards, in writing notify NAMFISA of the appointment. (4) NAMFISA may, on the grounds that a principal officer is not a fit and proper person within the meaning of the standards, and after giving the regulated
person or exchange referred to in subsection (1) and the principal officer a reasonable opportunity to be heard, direct the regulated person or exchange referred to in subsection (1) to appoint some other person to be the principal officer of the regulated person or exchange referred to in subsection (1). (5) Whenever a principal officer resigns or the appointment of a principal officer is terminated by a regulated person or exchange referred to in subsection (1) or by the expiry of a contract of employment, the regulated person or exchange referred to in subsection (1) must, within the period set out in the standards, in writing notify NAMFISA and submit to NAMFISA a written statement of the reasons for the termination or, in the opinion of the regulated person or exchange referred to in subsection (1), the reasons for the resignation. (6) The principal officer referred to in subsection (1)(b) must be an ex officio member of the board of the regulated person or of the exchange, but the principal officer may not serve as chairperson of the board. (7) The principal officer of a regulated person is authorised to act on behalf of the regulated person or the exchange to ensure compliance with this Act, and in any case where a person, including NAMFISA, communicates with that regulated person or the exchange, that person may do so by addressing the communication to the principal officer. (8) Process in any legal proceedings may be served on the regulated person or the exchange by serving a copy of the process at its principal office. (9) A person who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Appointment of auditor 103. (1) Every regulated person that is a company and an exchange referred to in section 86 must, in accordance with section 401, appoint, and at all times have an auditor or firm of auditors to be the auditor for its business in Namibia. (2) A regulated person that is a company or exchange referred to in section 86 may not appoint as its auditor - (a) an auditor who is; or (b) a firm of auditors, any member of which is, a director, officer, employee or shareholder or other owner of that regulated person or that exchange or who has any financial interest in that regulated person or that exchange. (3) NAMFISA may direct a regulated person that is a company or an exchange referred to in section 86 to change its auditor, if NAMFISA is satisfied that the auditor or any member of the firm of auditors appointed as auditor is an employee, officer, director or shareholder of that regulated person or that exchange. (4) An auditor appointed under subsection (1) - (a) must perform the functions and duties assigned to; (b) must exercise the powers conferred on; and (c) is subject to the obligations imposed on, an auditor by section 401.
PART 4
EXCHANGES
Interpretation
104.
For the purposes of this Part, “securities” include - (a) money market instruments; (b) a participatory interest in a collective investment scheme as defined in section 168; (c) a unit or other form of participation in a foreign collective investment scheme as defined in section 168; and (d) other products or interests that the registered exchange may list and provide for trading pursuant to section 85(2)(e). Functions of exchange and power of NAMFISA 105 . (1) A registered exchange - (a) must issue and enforce the exchange rules and listing requirements; (b) must supervise compliance by authorised users with this Act and the exchange rules; (c) may issue directives; (d) after consultation with NAMFISA, may amend or suspend the exchange rules under section 147(4) and may amend its listing requirements; (e) must make provision for the clearing and settlement of transactions in listed securities effected through the exchange; (f) may retain one or more securities clearing houses to perform securities clearing services for the exchange in accordance with the exchange rules; (g) must consult with its retained securities clearing houses when making or amending exchange rules pertaining to securities clearing and settlement; (h) must supervise compliance by issuers of listed securities with the listing requirements, the exchange rules and this Act; and (i) may do all other things that are necessary for, or incidental or conducive to, the proper operation of a registered exchange and that are not inconsistent with this Act. (2) NAMFISA may assume responsibility for one or more of the functions of a registered exchange referred to in subsection (1) if NAMFISA considers it necessary in order to achieve the objects of this Chapter referred to in section 79. (3) NAMFISA must, before assuming responsibility under subsection (2) - (a) inform the registered exchange of NAMFISA’s intention to assume responsibility; (b) give the registered exchange the reasons for the intended assumption; and (c) call upon the registered exchange to show cause within a period specified by NAMFISA why responsibility should not be assumed by NAMFISA. Listing of securities 106. (1) A registered exchange must issue listing requirements which set out - (a) the manner in which securities may be listed or removed from the list or the manner in which the trading in listed securities may be suspended; (b) the requirements with which issuers of listed securities and of securities which are intended to be listed, must comply; (c) the standards of conduct that issuers of listed securities and their directors, officers and agents must meet; (d) the standards of disclosure and corporate governance that issuers of listed securities must meet; (e) such details relating to the listed securities as may be necessary; (f) the steps that must be taken by the exchange or a person to whom the exchange has delegated its investigative and disciplinary functions, for the investigation and discipline of
an issuer, or a person who controls an issuer or a director, officer or employee of an issuer that contravenes or fails to comply with the listing requirements, including a requirement that adequate notice of the date of any contemplated hearing be given to the parties to the hearing and the procedures to be followed before or during a disciplinary hearing; (g) any one or more of the following penalties that may be imposed by the exchange or by a person to whom the exchange has delegated its investigative and disciplinary functions for any contravention of or failure to comply with the listing requirements - (i) a reprimand; (ii) a fine not exceeding the amount prescribed by the Minister; (iii) disqualification, in the case of a natural person, from holding the office of a director or officer of a listed company for a specified period of time; (iv) the payment of compensation to any person prejudiced by the contravention or failure; and (h) any other matter determined in the standards. (2) The listing requirements of a registered exchange may require that - (a) full particulars regarding the imposition of a penalty may be published in the Gazette , in newspapers circulating nationally in Namibia or through the news service of the exchange; (b) any person who contravenes or fails to comply with the listing requirements may be ordered to pay the costs incurred in an investigation or hearing; and (c) the exchange may take into account at a hearing, information obtained by NAMFISA in the course of an inspection conducted under this Act or obtained by NAMFISA in an investigation under section 164. (3) If a person fails to pay a fine or compensation referred to in subsection (1)(g), the registered exchange may take such steps as are necessary, including the institution of legal action, to recover the fine or compensation. (4) The listing requirements of a registered exchange must set out the purpose for which a fine referred to in subsection (1)(g) must be appropriated. (5) The listing requirements of a registered exchange and any other conditions of listing are binding on an issuer and an authorised user and on any person who controls an issuer or an authorised user that is a company, and on their directors, officers, employees and agents. (6) A registered exchange - (a) must keep a list of the securities which may be traded on that exchange; (b) must receive and consider, and may grant, defer or refuse, subject to its listing requirements and any other conditions that it may determine, applications for the inclusion of securities in the list; (c) may include securities issued by it in its own list subject to the approval of NAMFISA and the conditions set out in the standards; and (d) may, despite any arrangement entered into before or after the commencement of this Chapter according to which listed securities may be bought and sold on the exchange, charge the fees provided for in the listing requirements or the exchange rules. (7) A registered
exchange must, before refusing an application to include securities in the list under subsection (6)(b) - (a) inform the issuer of the exchange’s intention to refuse the application; (b) give the issuer the reasons for the intended refusal; and (c) call upon the issuer to show cause within a period specified by the exchange why the application should not be refused. Removal of listing and suspension of trading 107. (1) A registered exchange may, subject to this section, the exchange rules and the listing requirements, remove securities from the list, even to the extent that a removal may have the effect that an entire trading board or substantial portion of the trading board of the exchange is closed or suspend the trading in listed securities, if the removal or suspension will further one or more of the objects of this Chapter referred to in section 79. (2) A registered exchange must, subject to subsection (3) and before a removal or suspension - (a) inform the issuer of the intended removal or suspension; (b) give the issuer the reasons for the intended removal or suspension; and (c) call upon the issuer to show cause, within a period specified by the exchange, why the removal or suspension should not be effected. (3) If - (a) the listing requirements, the conditions determined by a registered exchange in respect of the listing of securities or the exchange rules are not complied with; or (b) a circumstance arises which is envisaged by the exchange rules or the listing requirements as a circumstance justifying the immediate suspension of trading, a registered exchange may order an immediate suspension of trading for a period not exceeding 30 days, which period may be extended for one or more further periods of 30 days. (4) If the trading of listed securities has been suspended under this section, a registered exchange may, despite subsections (1) and (3), permit authorised users to buy and sell those securities for the sole purpose of fulfilling obligations entered into in relation to those securities before the suspension. (5) If an issuer requests a registered exchange to remove the issuer’s securities from the list, the exchange must be satisfied on reasonable grounds that the interests of minority holders of the securities have been considered and the applicable provisions of the Companies Act have been complied with. (6) An issuer must provide reasons for a request referred to in subsection (5). (7) If a registered exchange - (a) refuses an application for the inclusion of securities in the list under section 106(6)(b); or (b) removes securities from the list pursuant to subsection (1), the exchange must immediately notify every other exchange, including a foreign exchange, on which the issuer is listed, if any, of the reasons for and date of the refusal or removal. (8) If - (a) the refusal to list securities was due to any fraud or other crime committed by the issuer or any material misstatement of its financial position or non-disclosure
of any material fact; or (b) the removal of securities was due to a failure to comply with the listing requirements of the registered exchange, any other registered exchange may not, for a period of six months from the date referred to in subsection (7), grant an application for the inclusion of the securities concerned in the list kept by it or allow trading in such securities, unless the refusal or removal is withdrawn by the first exchange or set aside on appeal by NAMFISA. (9) If a registered exchange withdraws a refusal referred to in section 106(6)(b) or a removal referred to in this section before the expiry of six months, it must notify the issuer and every other exchange on which the issuer is listed. Application of new listing requirements 108. (1) A registered exchange may, by notice in writing to the issuer of listed securities, apply the new listing requirements or conditions determined by that exchange in respect of the listing of securities to securities listed before the coming into force of the new listing requirements or conditions. (2) Listing requirements or conditions referred to in subsection (1) take effect from a date determined by the registered exchange which date - (a) must not be earlier than one month after the date on which the exchange notifies the issuer; or (b) may be an earlier date than that date, when special circumstances justify, but the exchange may postpone the date referred to in paragraph (a) on written request by the issuer. (3) If a registered exchange refuses a request for a postponement referred to in subsection (2), the issuer concerned may make representations in writing to NAMFISA, and if the request for a postponement is reasonable, NAMFISA may, after consultation with the registered exchange, postpone the date on which the new listing requirements or conditions take effect by not more than three months and must inform the exchange accordingly. Disclosure of information by issuers 109. (1) A registered exchange may require an issuer of listed securities to disclose to the exchange any information about those securities which is at the issuer’s disposal or about the affairs of the issuer, if such disclosure is necessary to achieve one or more of the objects of this Chapter referred to in section 79. (2) A registered exchange must require the issuer to disclose the information referred to in subsection (1) to the registered holders of the securities, within a period specified by the exchange, if the objects of this Chapter referred to in section 79 are not being met. (3) If an issuer refuses to disclose the information referred to in subsection (1) or (2) to the registered exchange or the registered holders of the securities, the exchange may, unless the issuer obtains an order of the High Court excusing it from such disclosure, suspend trading in those securities until such time as the required disclosure has been made to the satisfaction of the exchange. (4) If the information disclosed by an
issuer under this section to the registered holders of securities may influence the price of those securities, the issuer must at the same time make the information available to the public. Imposition of levy 110. A registered exchange may impose a levy on any person involved in a transaction in listed securities effected through that exchange for the purpose of maintaining insurance, a guarantee, a compensation fund or other warranty for those using the services of the exchange. Funds of registered exchange 111. (1) A registered exchange may, in compliance with the standards, require its authorised users and their clients to contribute towards the funds of the exchange for the purpose of carrying on its business. (2) If a registered exchange has assets which are surplus to its requirements it may distribute such assets to any person - (a) after providing for any liabilities of the exchange; (b) in accordance with its founding documents; and (c) with the prior approval of NAMFISA. (3) If a registered exchange is a non-proprietary exchange, the distribution referred to in subsection (2) may be made despite any contrary provisions of any law or the common law and without affecting the non-proprietary status of the exchange. Requirements for exchange rules 112. (1) The exchange rules of a registered exchange must be consistent with this Act. (2) The exchange rules of a registered exchange must provide - (a) for the criteria for authorisation and exclusion of authorised users and, in particular, that no company may be admitted as an authorised user or allowed to continue as an authorised user unless that company is owned and managed by persons who are - (i) fit and proper persons within the meaning of the standards; and (ii) of high business integrity and comply with the requirements for training, experience and other qualifications of the exchange rules; (b) for the capital adequacy, guarantee and risk management requirements with which an authorised user must comply, and that such requirements must be prudent although they may differ in respect of different categories of authorised users or different activities of an authorised user’s business; (c) if there are different categories of authorised users, for the restriction of the activities of such categories subject to different conditions; (d) for an efficient, honest, transparent and fair manner in which and terms and conditions subject to which transactions in listed securities must be effected by authorised users, whether for own account or on behalf of other persons; (e) for the manner in which transactions in listed securities must be cleared and settled; (f) for the clearing and settlement of transactions if the registered exchange has not retained a registered securities clearing house; (g) for the circumstances in which a buyer or seller of listed securities may repudiate the transaction; (h) for the regulation of transactions in listed securities entered into as a result of any first
communication made to a person without an express or tacit invitation from such person; (i) for the circumstances in which a transaction in listed securities may be declared void by the registered exchange; (j) for the conditions subject to which an authorised user may undertake management of listed securities for remuneration or benefit in any form; (k) that no authorised user may effect a transaction in securities with a person whom the authorised user believes or suspects requires approval to undertake management of securities under this Act without having taken reasonable measures to ascertain that such person has the necessary approval; (l) for the approval by the registered exchange of a nominee of an authorised user which nominee holds securities in a securities repository or central securities repository as defined in section 121; (m) for surveillance of any matter relevant for the purposes of this Act, the exchange rules and any directives issued by the registered exchange; (n) for the conditions subject to which an authorised representative of an authorised user may, in relation to the buying and selling of listed securities, advise on or conclude any transaction on behalf of the authorised user in the course of that authorised user’s business and for the circumstances in which such authorised representative may be denied access to the registered exchange; (o) for the circumstances in which trading in any listed security may be suspended or stopped; (p) generally for the manner in which an authorised user is required to conduct the business of buying and selling listed securities; (q) for the operation by the registered exchange or an authorised user of a trust account referred to in section 119; (r) for - (i) recording transactions effected through the registered exchange; (ii) monitoring compliance by authorised users with this Act and the exchange rules and directives of the registered exchange; and (iii) surveillance of any matter relevant for the purposes of this Act and the exchange rules and directives referred to in subparagraph (ii); (s) for the circumstances and manner in which an authorised user may advertise or canvass for business; (t) for the equitable and expeditious settlement of disputes between authorised users; (u) for the manner in which complaints against an authorised user or an authorised representative of an authorised user must be investigated; (v) for the referral of a complaint by a client against an authorised user or an authorised representative of an authorised user to the Adjudicator; (w) for the steps to be taken by the registered exchange or a person to whom the registered exchange has delegated its investigative and disciplinary functions, to investigate and discipline an authorised user or an authorised representative of an authorised user who contravenes or fails to comply with this Act or the exchange rules, interim exchange rules or directives of the registered exchange, and for a report on the
disciplinary proceedings to be furnished to NAMFISA within 30 days after the completion of such proceedings and the procedures to be followed before or during a disciplinary hearing; (x) for the manner in which an authorised user or an authorised representative of an authorised user who is believed to be - (i) in possession of any information relevant to an investigation referred to in paragraph (u) or (w); or (ii) in possession or have under their control any document which has a bearing on an investigation referred to in paragraph (u) or (w), may be required to appear before the registered exchange or a person conducting an investigation, to be questioned on such information or to produce such document; (y) with respect to the insurance, guarantee, compensation fund or other warranty referred to in section 110, for - (i) the persons who must contribute in order to maintain such insurance, guarantee, compensation fund or other warranty; (ii) the amount of the levy imposed by the registered exchange for this purpose; (iii) different categories of claims that may be brought against the insurance, guarantee, compensation fund or other warranty; (iv) restrictions on the amount of any claim; (v) the control and administration of the insurance, guarantee, compensation fund or other warranty; and (vi) the ownership of the insurance, guarantee, compensation fund or other warranty; (z) for the disclosure by authorised users to clients of the fees for their services; (aa) for authorised users to charge a fee for different categories of transactions; (bb) for the purposes for which the registered exchange may issue directives; (cc) for the supervision by the registered exchange of compliance with the duties imposed on it and its authorised users by this Act, any other applicable financial services law and the exchange rules; and (dd) for such other matters as may be set out in the standards. (3) A registered exchange may, with the approval of NAMFISA, make exchange rules on matters additional to those listed in subsection (2). (4) An exchange rule made under this section is binding on the registered exchange, its authorised users and their authorised representatives, issuers and their officers and employees, and on clients. Reporting transactions in listed securities 113. (1) A person, whether that person carries on the business of buying or selling listed securities or not, must report to NAMFISA in accordance with the standards, any transaction in listed securities resulting in a change of control of beneficial ownership of those securities and concluded by that person outside a registered exchange and simultaneously must report that transaction to the registered exchange on which the securities are listed. (2) NAMFISA must, in respect of a report referred to in subsection (1), specify in the standards - (a) the information required in respect of any transaction; and (b) the manner in which and time within which reports are to be rendered. (3) A person
referred to in subsection (1) that is a registered exchange may publish any information disclosed to it under that subsection. (4) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Undesirable advertising or canvassing 114. (1) A person, other than an authorised user or an authorised representative of an authorised user who is so permitted under the exchange rules, may not in any manner, directly or indirectly, advertise or canvass for the business of that authorised user. (2) Despite any other law to the contrary, NAMFISA may, if it is of the opinion that an advertisement, brochure or other document relating to securities is misleading or for any other reason objectionable, issue a directive to the effect that the advertisement, brochure or other document not be published or that its publication be stopped or that such amendments as NAMFISA considers necessary be effected. (3) A person who contravenes or fails to comply with subsection (1) or contravenes or fails to comply with a directive issued under subsection (2) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Identity and source to be disclosed 115. (1) A person may not publish or circulate any written comment which relates to the trading results of a public company or which may influence the value of the listed securities of a public company unless such comment is accompanied by - (a) the name of the person or persons who compiled the comment or the name of the person or persons on the editorial staff of a newspaper or periodical who, in the opinion of the editor, compiled the comment; or (b) disclosure of the source from which the comment was obtained. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Restriction on borrowing and re-pledging 116. (1) An authorised user may not - (a) borrow against pledged listed securities an amount in excess of the outstanding balance of any amount which the authorised user may have lent the pledgor against the pledged securities; or (b) re-pledge listed securities without the written consent of the pledgor. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Marking or recording securities 117. When a document of title relating to a listed security comes into the possession of an authorised user, the authorised user must as soon as
possible - (a) mark it; or (b) record and store the necessary details, in a manner which will render it possible at any time thereafter to readily establish the identity of the owner of those securities. Restriction on alienation of securities 118. Subject to the exchange rules of a registered exchange, an authorised user may only alienate listed securities deposited with the authorised user if the person who deposited them has authorised such alienation in writing. Segregation of funds of authorised users and other persons 119. (1) Every authorised user - (a) must open and maintain at a banking institution, a trust account designated for client funds; or (b) may use a trust account opened and maintained by the registered exchange of which it is an authorised user, into which any instruments of payment or cash received from a client must be deposited on the day of receipt, except that any deposit that is made by a client directly into an authorised user’s own account or any deposit that is received after banking hours must be transferred into such trust account by the start of business on the following business day. (2) A trust account referred to in subsection (1) must contain only the funds of clients and not those of the registered exchange or authorised user. (3) Funds received from a client need not be deposited into a trust account pursuant to subsection (1) if payment - (a) is made to the authorised user by a buyer of listed securities - (i) against delivery of such securities to the buyer; or (ii) against such securities being marked or recorded as the property of the buyer; (b) is preceded by a payment made by the authorised user to the seller of listed securities against delivery of such securities to the authorised user; (c) is made to pay a debt due to the authorised user, but a debt arising from the purchase of listed securities which have not been marked or recorded as the property of the buyer of the securities may not be regarded as a debt due for this purpose; or (d) is made under any other law or exchange rule which specifically provides for such payment to be deposited into some other account. (4) Subject to subsection (8), funds held in a trust account and any funds which have not been deposited into a trust account as required by subsection (1) but which are identifiable as belonging to a specific person are considered to be trust property. (5) Funds deposited into a trust account may only be withdrawn by an authorised user for the purpose of making payment - (a) to the person entitled to the payment; or (b) under any other law or exchange rule, but, if after any such withdrawal, any deposited draft or other instrument of payment against which the withdrawal was made is not subsequently honoured, the authorised user must pay the shortfall arising from the default into the trust account immediately. (6) All charges made by the banking institution concerned accruing in respect of a trust account referred to in this section are
for the account of the authorised user, except that any such charges specifically relating to a deposit or withdrawal of the funds of a particular client are for that client’s own account. (7) Any interest accruing to the funds in a trust account referred to in this section is payable to the owner of the funds after deduction of any fees owing to the authorised user or registered exchange. (8) Despite subsection (4), any excess remaining in a trust account after payment of, or provision for, all claims of persons whose funds have or should have been deposited in the trust account, may not be considered to be trust property. (9) The High Court may, on the application of a registered exchange, NAMFISA or any other person having a claim against a trust account of an authorised user, on good cause shown, prohibit the authorised user from operating the trust account, and may retain a person to control and administer the trust account with such rights, powers and duties in relation to the trust account as the court may consider necessary. Appeal from decision of exchange 120. (1) A person aggrieved by a decision of a registered exchange may appeal that decision to NAMFISA in the manner provided for in the standards. (2) An appeal referred to in subsection (1) must be heard on a date and at a time and place determined by NAMFISA, upon notification to the person concerned and the registered exchange. (3) NAMFISA may - (a) confirm, set aside or vary the decision of the registered exchange; or (b) remit the matter to the registered exchange for reconsideration in accordance with such directions, if any, as NAMFISA may determine. (4) A person or a registered exchange may, in the manner prescribed appeal against a decision of NAMFISA pursuant to subsection (3) to the Appeal Board.
PART 5
CUSTODY AND ADMINISTRATION OF SECURITIES
Definitions for this Part
121.
In this Part, unless the context indicates otherwise - “central securities account” means an account kept by a registered central securities depository for a participant that reflects the number or nominal value of securities of each kind deposited and all entries made in respect of such securities; “central securities repository” means a collection of securities of the same kind held by a registered central securities depository; “certificated securities” means securities evidenced by a certificate or written instrument; “deposit” means a deposit of securities and includes a deposit by means of an entry in a securities account or a central securities account; “entry” includes an electronic recording of any deposit, withdrawal, transfer, attachment, pledge, cession to secure a debt or other transaction in respect of securities; “securities” include certificated securities and uncertificated securities, money market instruments and other products or interests included as securities pursuant to section 104; “securities account” means an account kept by or on behalf of a participant for a client that reflects the number or nominal value of securities of each kind deposited and all entries made in respect of such securities; “securities of the same kind” means securities issued by the same issuer and of the same class; “securities repository” means a collection of securities of the same kind held by a participant; “subregister” means the record of uncertificated securities administered and maintained by a participant, which forms part of the register of members of the company concerned; and “uncertificated securities” means securities that are not evidenced by a certificate or written instrument and are transferable by book-entry without a certificate or a written instrument, resulting in the original certificate or other written instrument evidencing ownership or title no longer being recognised as prima facie evidence of ownership or title. Functions of central securities depository 122. (1) A registered central securities depository - (a) must issue and enforce the depository rules; (b) must supervise compliance by participants with this Act and the depository rules; (c) may issue directives; (d) may amend or suspend the depository rules under section 147(4); (e) may hold all securities of the same kind deposited with it by a participant collectively in a separate central securities repository; (f) must maintain a central securities account with due regard to the interests of participants and their clients; (g) must notify a participant in writing or as otherwise agreed to by the participant of an entry made in the participant’s central securities account; (h) must balance and reconcile the aggregate of the central securities accounts with the records of the relevant issuer - (i) in respect of each kind of certificated security, at least once every six months; (ii) in respect of each kind of uncertificated security - (aa) if that aggregate has not
changed, at least once every month; (bb) if that aggregate has changed, on the business day after such change; (i) must administer and maintain a record of uncertificated securities deposited with it; (j) is entitled to access the records of uncertificated securities administered and maintained by its participants; (k) may be retained as a securities clearing house by a registered exchange, if the central securities depository is also registered as a securities clearing house under section 85; (l) must disclose to participants and issuers the fees and charges required by it for its services; (m) must on request disclose - (i) to NAMFISA information about the securities held by a participant in a central securities account; (ii) to an issuer information about the securities issued by that issuer and held by participants in central securities accounts; (n) must, if a participant ceases to be a participant, notify NAMFISA immediately pursuant to section 97(4); (o) must conduct its business in a prudent manner and with due regard to the rights of participants, clients and issuers; and (p) must perform such other functions as NAMFISA may set out in the standards. (2) NAMFISA may assume responsibility for one or more of the functions of a registered central securities depository referred to in subsection (1), if NAMFISA considers it necessary in order to achieve the objects of this Chapter referred to in section 79. (3) NAMFISA must, before assuming responsibility under subsection (2) - (a) inform the registered central securities depository of NAMFISA’s intention to assume responsibility; (b) give the registered central securities depository the reasons for the intended assumption; and (c) call upon the registered central securities depository to show cause within a period specified by NAMFISA why responsibility should not be assumed by NAMFISA. Functions of participant 123. A participant must - (a) deposit securities that are deposited with it with a central securities depository, unless the client expressly directs otherwise in writing; (b) maintain a securities account for a client in respect of deposited securities; (c) reflect the number or nominal value of each kind of securities deposited in a securities account; (d) administer and maintain a record of all securities deposited with it in accordance with the depository rules; (e) record all securities of the same kind deposited with it in a subregister if so required by the depository rules; (f) disclose to clients and issuers the fees and charges required by it for its services; (g) notify a client in writing or as otherwise agreed to by the client, of an entry made in the client’s securities account; (h) on request disclose - (i) to NAMFISA, information about the securities recorded in a securities account; and (ii) to an issuer, information about the securities issued by that issuer and recorded in a securities account; (i) maintain a central securities account with a central securities
depository, and may - (i) deposit securities with, or withdraw securities from, that central securities depository; or (ii) transfer, pledge or cede an interest in securities through that central securities depository, and in case of securities held on behalf of clients, transfer, pledge or cede interests in those securities in accordance with the instructions of the clients; (j) exercise the rights in respect of securities deposited by it with a central securities depository in its own name on behalf of a client when so instructed by the client; (k) balance and reconcile the aggregate of the securities accounts with the central securities account on a daily basis; and (l) perform such other functions as NAMFISA may require in the standards. Uncertificated securities 124. (1) Certificated securities may be converted to uncertificated securities and an issuer may issue uncertificated securities despite any contrary provision in - (a) any other law; (b) the common law; (c) an agreement; (d) the articles of association of the issuer; (e) a prospectus; or (f) any other conditions applicable to the issuing of securities. (2) An issuer or a central securities depository and its participants must make arrangements in accordance with depository rules for uncertificated securities to be evidenced by way of an entry. (3) An issuer has the same obligations in respect of uncertificated securities as it has in respect of certificated securities except that no certificate or written instrument is issued in respect of uncertificated securities Responsibilities of issuer of uncertificated securities 125. An issuer of uncertificated securities must - (a) record in its register the number or nominal value of each kind of uncertificated securities issued by it; (b) maintain separate records for each central securities depository holding uncertificated securities, unless all those securities are held by one central securities depository; (c) if required by section 127(1), record the name of that central securities depository or its wholly owned subsidiary as the registered holder of the uncertificated securities; (d) balance and reconcile with a central securities depository the record referred to in paragraph (a) in respect of each kind of uncertificated security - (i) if that record has not changed, at least once every month; and (ii) if the record has changed, on the next business day after such change; and (e) comply with any other requirements set out in the standards. Depository rules 126. (1) The depository rules of a registered central securities depository must be consistent with this Act. (2) The depository rules - (a) must provide for equitable criteria for the acceptance and expulsion of a participant and for such acceptance and expulsion to be in the interests of issuers and clients; (b) if applicable, must provide for arrangements for certificated securities to be converted to uncertificated securities and for issuers to issue uncertificated
securities; (c) must provide for adequate steps to be taken by the central securities depository or a person to whom the central securities depository has delegated its investigative and disciplinary functions, to investigate and discipline a participant or an officer or employee of a participant who contravenes or fails to comply with this Act, the depository rules, the interim depository rules or the directives of the central securities depository and must require a report on the disciplinary proceedings to be furnished to NAMFISA within 30 days after the completion of such proceedings and make provision for the procedure to be followed before or during any disciplinary proceedings; (d) must provide for the manner in which a participant who is believed to - (i) be able to furnish any information on the subject of any investigation; or (ii) have in that participant’s possession or under that participant’s control, any document which has a bearing upon that subject, may be required to appear before a person conducting an investigation, to be questioned or to produce such document; (e) must provide for requirements in respect of a participant’s financial soundness and valid financial cover that the participant must hold in respect of - (i) the participant’s actual and potential liabilities; (ii) the participant’s conditional and contingent liabilities to the central securities depository; and (iii) liabilities which existed before or accrue after a person has ceased to be a participant; (f) must require that - (i) dividends paid and other payments owing by issuers in respect of securities are paid by such issuers to participants or clients and, if applicable, by participants to clients; (ii) all notices regarding rights and other benefits accruing to the owners of securities deposited with the central securities depository are conveyed to participants and clients; (iii) the rights of participants or clients are not in any way diminished by the fact that securities held by them or on their behalf are held collectively in a central securities repository as provided for by this Part; and (iv) securities belonging to or held on behalf of clients must be dealt with only in accordance with the instructions of the clients; (g) must require that where a participant agrees or is otherwise required to - (i) receive monies in respect of securities on behalf of clients from a central securities depository or issuer, that such monies are in fact paid to the clients concerned; (ii) convey to clients all information regarding rights and other benefits accruing to the securities held on behalf of such clients, that such information is in fact conveyed; and (iii) give effect to the lawful instructions of clients with regard to voting rights and other matters, and that the necessary action is taken; (h) must require that a participant, on written request from a client to withdraw securities or an interest in securities held in a securities repository or central
securities repository, delivers a certificate or written instrument evidencing the same number of securities or securities of the same nominal value and of the same kind, as the securities held on behalf of that client in the securities repository or central securities repository, as long as the client has a sufficient unencumbered credit balance of those securities with the participant; (i) must require that a participant’s central securities account must not show a debit balance; (j) may provide that a central securities depository may refuse to accept securities issued by any particular issuer with due regard to the clearing and settlement arrangements of a registered exchange for transactions in those securities; (k) must provide for - (i) the duty of a client to disclose to a participant, and the duty of a participant to disclose to a central securities depository, information about a beneficial, limited or other interest in securities deposited by a client with a participant or by a participant with a central securities depository; and (ii) the manner, form and frequency of the disclosure referred to in subparagraph (i); (l) must provide for the manner in which a central securities depository or a participant must keep records of clients or owners or beneficial owners of securities and limited or other interests in securities; (m) must provide for the manner in which participants must give instructions to a central securities depository; (n) if the central securities depository is retained as a securities clearing house by a registered exchange, may regulate, consistent with the exchange rules, the securities clearing and settlement functions to be performed by participants in the securities clearing and settlement process; (o) must provide for the purposes for which a central securities depository may issue directives; (p) must provide for the manner in which a participant must hold and administer securities; (q) must provide for the approval by the central securities depository of a nominee of a participant or any other nominee who has an account with a participant, which nominee holds securities in a securities repository or central securities repository; and (r) must include such other matters as may be required by the standards. (3) A central securities depository may, with the approval of NAMFISA, make depository rules on matters additional to those listed in subsection (2). (4) A depository rule made under this section is binding on the central securities depository, a participant, a nominee, an issuer of securities deposited with the central securities depository and their officers and employees, and on clients. Registration of securities 127. (1) NAMFISA may direct that any securities held by a central securities depository must, unless they are bearer instruments, money market instruments or recorded in a subregister, with due consideration of the depository rules, be registered in the name of that central securities depository or
its wholly owned subsidiary that has been approved by NAMFISA. (2) A central securities depository or participant does not become the owner, co-owner, holder, pledgee or cessionary for the purpose of securing a debt, of securities merely because of - (a) a deposit of securities; or (b) the registration in its name of - (i) securities; (ii) limited rights in securities; (iii) other rights in securities; (iv) benefits in respect of securities; or (v) benefits accruing to securities. (3) Subsection (2) also applies to a wholly owned subsidiary of a central securities depository or participant. Ownership of securities 128. (1) Where securities of any kind - (a) are deposited with - (i) a participant; or (ii) a registered central securities depository; or (b) accrue to the owner of securities held by - (i) a participant in a securities repository; or (ii) a registered central securities depository, the person who was the owner of the securities at the time of deposit or accrual becomes entitled to an interest as co-owner of all the securities of the same kind comprised in the securities repository or central securities repository. (2) In so far as any limited right exists in respect of any securities at the time of a deposit or accrual referred to in subsection (1), such limited right extends to the interest of such co-owner and to any securities delivered to that co-owner. (3) The interest of a co-owner, client or participant in all the securities in a securities repository or central securities repository must be calculated by reference to the proportion that the number or nominal value of securities deposited by or on behalf of that co-owner, client or participant and accruing to such securities bears to the total number or nominal value of all securities of that kind held in the securities repository or central securities repository. (4) A written statement issued by or on behalf of - (a) a participant in respect of an owner of securities or of a client; or (b) a registered central securities depository in respect of a participant, and specifying the interest of that owner, client or participant is prima facie evidence of the title or interest of that person in such securities. Transfer of securities 129. Transfer of an interest in securities held by a registered central securities depository or participant must be effected by entry in the central securities account or securities account of the transferor and of the transferee kept by the central securities depository or the participant. Pledge or cession of securities to secure debt 130. (1) A pledge or cession to secure a debt in respect of an interest in securities held by a registered central securities depository or participant or in a securities account held on behalf of a participant, must be effected by entry in the central securities account or the securities account of - (a) the pledgor in favour of the pledgee specifying the name of the pledgee, the interest in the securities pledged
and the date of entry; or (b) the cedent in favour of the cessionary specifying the name of the cessionary, the interest in the securities ceded and the date of entry. (2) An interest in securities referred to in subsection (1) may not be transferred except with the written consent of the pledgee or cessionary. (3) The pledgee or cessionary of an interest in securities referred to in subsection (1) is entitled to all the rights of a pledgee of movable property or cessionary of a right in movable property pledged or ceded to secure a debt, as applicable. (4) Subsections (1), (2) and (3) also apply, with the changes required by the context, to the pledge and cession to secure a debt by one participant to another of an interest in securities held by a registered central securities depository in a central securities account. Delivery of securities 131. Subject to sections 128 and 130, the owner of an interest in securities held by a participant in a securities repository or a participant holding an interest in securities in a central securities repository is at all times entitled, on written request for withdrawal, to delivery, within a reasonable time, by the participant or central securities depository concerned, of a certificate or written instrument evidencing the same number of securities or securities of the same nominal value and of the same kind as the interest in securities held on behalf of such owner or participant, as long as such owner or participant has a sufficient unencumbered credit balance of those securities in that owner’s securities account or in that participant’s central securities account. Records 132. If the records of a registered central securities depository are inconsistent with those of a participant regarding securities deposited with the central securities depository by that participant, the records of the central securities depository are considered to be correct until the contrary is proved. Warranty 133. (1) Every person, whether a client or participant, who deposits securities with a participant or registered central securities depository is deemed to warrant that such person is entitled to deposit such securities and that any document or instruction relating to such securities lodged or given by that person is genuine and correct in all respects and that person is deemed to have agreed to indemnify the participant or the central securities depository against any claim made upon the participant or central securities depository and against any loss suffered by the participant or central securities depository arising out of such deposit or breach of warranty. (2) A registered central securities depository is not deemed to have given a warranty or indemnity referred to in subsection (1). Recognition of trust 134. A registered central securities depository is not obliged to recognise any relationship of trust or agency of its participants in respect of securities. Attachment 135. (1) The attachment of an interest in
securities deposited with a participant and held in a securities repository or central securities repository is only complete when - (a) notice of the attachment has been given in writing by the sheriff or the messenger of court to the participant; (b) the sheriff or the messenger of court has taken possession of any securities account as evidenced by a written acknowledgement issued by the participant or the sheriff or the messenger of court has certified that the sheriff or the messenger of court has been unable, despite diligent search, to obtain possession of such written acknowledgement; and (c) the sheriff or the messenger of court has made an entry of the attachment on such securities account or caused it to be made by such participant. (2) The sheriff or the messenger of court may upon exhibiting the original of the warrant of execution to the participant enter the premises where such account is kept and make an inventory and valuation of the interest attached. (3) For the purposes of this section, “sheriff” means the sheriff, deputy sheriff or other officer appointed under section 30 of the High Court Act, 1990 (Act No. 16 of 1990), the sheriff, deputy sheriff or other officer appointed under section 26 of the Supreme Court Act, 1990 (Act No. 15 of 1990) or the messenger of the court appointed in terms of section 14 of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944).
PART 6
SELF-REGULATORY ORGANISATIONS
Recognised self-regulatory organisations
136.
(1) A public company may, in accordance subsection (2), apply to NAMFISA to be recognised as a self-regulatory organisation.
[The word “with” seems to be missing between the words “accordance” and “subsection (2)”.]
(2) An application for recognition as a self-regulatory organisation must - (a) be made in the manner and form required by the standards; (b) include the information with respect to members of its governing body as may be required by the standards; (c) be accompanied by the documents and other information required by the standards; (d) be accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; (e) be made subject to and in accordance with any other applicable provision of this Act; and (f) be accompanied by the required fee. (3) NAMFISA may require an applicant to furnish such additional information or require such information to be verified as NAMFISA may consider necessary - (a) including taking into consideration any other information regarding the applicant derived from whatever source or from any other supervisory authority; and (b) if such information is disclosed to the applicant, the applicant is given a reasonable opportunity to respond thereto. (4) Before recognising an applicant as a self-regulatory organisation NAMFISA must be satisfied that the applicant - (a) has assets and resources in Namibia, which resources include financial, management and human resources with appropriate experience to perform its functions as set out in this Act; (b) has governance arrangements that are clear and transparent, promote the safety and efficiency of its infrastructure, and support the stability of the broader financial system, other relevant public interest considerations, and the objectives of relevant stakeholders; (c) demonstrates that the fit and proper requirements as set out in the standards are met by the applicant, its directors and senior management; (d) has made arrangements for the efficient and effective surveillance of all transactions effected through its infrastructure and for the supervision of its members so as to identify possible market inefficiencies and discrepancies and ensure compliance with the requirements, relevant rules and directives and this Act; (e) has made arrangements for the efficient and effective monitoring of compliance by members and other stakeholders with its requirements; (f) has made arrangements to efficiently and effectively manage the material risks associated with its operations; (g) has made arrangements for efficient and effective security and back-up procedures to ensure the integrity of the records of transactions effected through its infrastructure; (h) has insurance, a guarantee, compensation fund or other warranty in place to enable it to provide compensation to clients, subject to the requirements of the standards and its rules; (i) has made arrangements for the efficient and effective supervision of its members so as to ensure compliance with this Act and any other applicable financial services law; and (j) demonstrates that it has effective and reliable infrastructure necessary to facilitate smooth conduct of its operations. (5) If
NAMFISA is satisfied that the applicant meets the requirements of subsection (4) and other relevant provisions of this Act, and that it is not contrary to the public interest to do so, NAMFISA must recognise the applicant public company as a self-regulatory organisation. (6) A recognition under this section must be in writing and is subject to such terms and conditions as NAMFISA may impose. (7) Upon recognition of an applicant NAMFISA must issue to the applicant a certificate of recognition in a form provided by the standards. (8) NAMFISA may impose such conditions on the recognition of the applicant as it considers necessary having regard, without limitation, to all the facts and information available to NAMFISA pertaining to the applicant, and any guidelines issued by NAMFISA under this Act. (9) If an application is refused by NAMFISA or is granted subject to conditions, NAMFISA must advise the applicant of the refusal or conditions by giving notice to the applicant containing the reasons for the refusal or the conditions, and must give the applicant a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the applicant may make representations in writing to NAMFISA. (10) A recognised self-regulatory organisation must - (a) regulate the operations and the standards of practice and business conduct of its members and their representatives in accordance with its bye-laws, rules, regulations, policies, procedures, interpretations and practices; (b) have the capacity to carry out the purposes of its governing laws, regulations and rules consistent with the responsibility of the self-regulatory organisation, and to enforce compliance by its members and associated persons subject to its bye-laws, rules, regulations, policies, procedures, interpretations and practices; (c) treat all members of the self-regulatory organisation, applicants for membership and similarly situated market participants subject to its rules in a fair and consistent manner; (d) develop rules that are designed to set standards for its members and to promote investor protection; (e) submit to NAMFISA, its rules and any amendments thereto, for approval and ensure that the rules are consistent with the directives issued by NAMFISA under this Act; (f) co-operate with NAMFISA and other domestic self-regulatory organisations to investigate and enforce applicable financial services laws; (g) ensure a fair representation of members in selection of its directors and administration of its affairs; (h) avoid rules that may create anti-competitive situations; (i) avoid using its oversight role to allow any market participant to unfairly gain advantage in the market; (j) provide information to NAMFISA that allows matters requiring regulatory intervention to be identified at an early stage; (k) have procedures in place to address potential conflicts of interest and, where applicable, take necessary steps to avoid, eliminate, disclose and otherwise
manage possible conflicts of interest between its regulatory functions and its commercial services, which steps must include - (i) the implementation of appropriate arrangements, which arrangements must comply with the requirements of the standards, be documented and be publicly available; and (ii) an annual assessment, in the manner set out in the standards, of the arrangements referred to in subparagraph (i), the results of which must be published; and (l) adopt standards of confidentiality for its staff and standards of procedural fairness applicable to its members. (11) NAMFISA may, if it considers that it is in the public interest to do so, make any decision with respect to the bye-laws, rules, regulations, policies, procedures, interpretations and practices of a recognised self-regulatory organisation. (12) NAMFISA may, if it considers that there are good reasons to do so, and after giving the recognised self-regulatory organisation a reasonable opportunity to make representations to NAMFISA on the matter, suspend, revoke or withdraw the recognition of a recognised self-regulatory organisation. (13) NAMFISA may issue standards regarding the recognition of self-regulatory organisations and the operations and other matters relating to recognised self-regulatory organisations. Carrying on additional business 137. If a self-regulatory organisation carries on business in addition to that regulated by or under this Chapter NAMFISA may, for the purpose of minimising systemic risk, issue directives in respect of the carrying on of such business. Incorporation of self-regulatory organisation as public company 138. (1) With the prior approval of NAMFISA, and upon written application made in the form and manner provided for in the standards, and subject to the standards and to such conditions as NAMFISA may impose, a self-regulatory organisation that is an exchange, a central securities depository or a securities clearing house, which is not incorporated as a company having a share capital under the Companies Act, must be incorporated as a public company with a share capital. (2) Upon the incorporation of a self-regulatory organisation referred to in subsection (1) - (a) the self-regulatory organisation is deemed to be a public company incorporated in terms of the Companies Act from a date determined by NAMFISA in consultation with the self-regulatory organisation; (b) the Registrar of Companies appointed in terms of section 6 of the Companies Act must register the memorandum and articles of association of the self-regulatory organisation in terms of section 68(1) of that Act on the date referred to in paragraph (a); (c) the continued corporate existence of the self-regulatory organisation from the date on which it was first registered by NAMFISA is unaffected and any actions of the self-regulatory organisation before its incorporation remain effectual; (d) all the assets and liabilities of the self-regulatory organisation, including any insurance,
guarantee, compensation fund or other warranty owned or maintained by the self-regulatory organisation to cover any liabilities to clients of authorised users or participants remain vested in, and binding upon, the company into which the self-regulatory organisation has been incorporated or upon such other entity acceptable to NAMFISA as the self-regulatory organisation may designate; (e) the self-regulatory organisation has the same rights and is subject to the same obligations as it had immediately before its incorporation into a company; (f) all agreements, appointments, transactions and documents entered into, made, executed or drawn up by, with or in favour of the self-regulatory organisation and in force immediately before the incorporation of the self-regulatory organisation, remain in full force and effect, and must be construed for all purposes as if they had been entered into, made, executed or drawn up by, with or in favour of the company into which the self-regulatory organisation has been incorporated; (g) any bond, pledge, guarantee or other instrument to secure future advances, facilities or services made by the self-regulatory organisation which was in force immediately before the incorporation of the self-regulatory organisation, remains in full force and effect, and must be construed for all purposes as a bond, pledge, guarantee or instrument given to or in favour of the company into which the self-regulatory organisation has been incorporated; (h) any claim, right, debt, obligation or duty accruing to any person against the self-regulatory organisation or owing by any person to the self-regulatory organisation is enforceable against or owing to the company into which the self-regulatory organisation has been incorporated, subject to any law governing prescription; (i) any legal proceedings that were pending or could have been instituted against the self-regulatory organisation before the incorporation may be continued or instituted against the company into which the self-regulatory organisation has been incorporated, subject to any law governing prescription; and (j) the registration of the self-regulatory organisation remains vested in the company into which the self-regulatory organisation has been incorporated, as long as the company complies with all the requirements of this Act. Amalgamation and mergers 139. (1) Two or more - (a) registered exchanges; (b) registered central securities depositories; or (c) recognised self-regulatory organisations, that have similar objects or that perform similar functions may, with the approval of NAMFISA and subject to the standards and to such conditions as NAMFISA may impose, amalgamate or merge. (2) An exchange referred to in section 86 must be incorporated as a public company with a share capital pursuant to section 138 prior to any amalgamation or merger under this section. (3) If an amalgamation or merger referred to in subsection (1) takes place - (a) all the assets and liabilities
of the amalgamating or merging companies, including any insurance, guarantee, compensation fund or other warranty owned or maintained by the amalgamating or merging companies to cover any liabilities to clients of authorised users or participants vest in and become binding upon the amalgamated or merged company or upon such other entity acceptable to NAMFISA as the parties to the amalgamation or merger may designate; [It appears that there should be a comma before the phrase “vest in” to offset the preceding phrase properly.] (b) the amalgamated or merged company has the same rights and is subject to the same obligations as each of the amalgamating or merging companies had immediately before the amalgamation or merger; (c) all agreements, appointments, transactions and documents entered into, made, executed or drawn up by, with or in favour of the amalgamating or merging companies and in force immediately before the amalgamation or merger remain in full force and effect and must be construed for all purposes as if they had been entered into, made, executed or drawn up by, with or in favour of the amalgamated or merged company; (d) any bond, pledge, guarantee or other instrument to secure future advances, facilities or services made by any of the amalgamating or merging companies and which was in force immediately prior to the amalgamation or merger, remains in full force and effect and must be construed as a bond, pledge, guarantee or instrument given to or in favour of the amalgamated or merged company; (e) any claim, right, debt, obligation or duty accruing to any person against any of the amalgamating or merging companies or owing by any person to any of the amalgamating or merging companies, is enforceable against or owing to the amalgamated or merged company; (f) any legal proceedings that were pending or could have been instituted against any of the amalgamating or merging companies before the amalgamation or merger may be continued or instituted against the amalgamated or merged company, subject to any law governing prescription; and (g) the registration of the amalgamating or merging companies remains vested in the amalgamated or merged company, as long as the amalgamated or merged company complies with all the requirements of this Act. Transfer of assets and liabilities 140. (1) A - (a) registered exchange may, with the approval of NAMFISA and subject to the standards and to such conditions as NAMFISA may impose, transfer any of its assets and liabilities to any other registered exchange; (b) registered central securities depository may, with the approval of NAMFISA and subject to the standards and to such conditions as NAMFISA may impose, transfer any of its assets and liabilities to any other registered central securities depository; and (c) recognised self-regulatory organisation may, with the approval of NAMFISA and subject to the standards and to such conditions as NAMFISA may impose, transfer any of its assets and liabilities to
any other registered recognised self-regulatory organisation or registered self-regulatory organisation, that has similar objects or that performs similar functions as the registered exchange, central securities depository, recognised self-regulatory organisation or registered self-regulatory organisation that is transferring the assets and liabilities. (2) If a transfer of assets and liabilities referred to in subsection (1) takes place, section 139(3) applies with any changes required by the context. Duty of shareholders of controlling entity 141. Each shareholder or other owner of any entity that controls a self-regulatory organisation and each member of the board of directors of a self-regulatory organisation owes a fiduciary duty and a duty of care and skill to that self-regulatory organisation. Appointment as officer of self-regulatory organisation 142. (1) A person may not be appointed as an officer of a self-regulatory organisation if that person - (a) may not be appointed or act as a director under section 225 of the Companies Act; or (b) has been penalised in disciplinary proceedings for a contravention of the rules of any professional organisation, including a self-regulatory organisation, which involved dishonesty. (2) A person who accepts an appointment in contravention of subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. (3) If a self-regulatory organisation makes an appointment in contravention of subsection (1) - (a) without making reasonable enquiry as to whether the person appointed is disqualified under subsection (1); or (b) knowing that the person appointed is so disqualified, NAMFISA may impose a penalty upon the self-regulatory organisation not exceeding the amount that the Minister may prescribe. (4) A self-regulatory organisation must, within 14 days of the appointment of a new officer, inform NAMFISA of the appointment together with such information on the matter as NAMFISA may require. (5) The provisions of subsection (4) may not be construed so as to render the appointment of an officer of a self-regulatory organisation subject to the approval of NAMFISA. (6) If it appears to NAMFISA that an officer of a self-regulatory organisation is disqualified under subsection (1), NAMFISA may, subject to subsection (7) and in accordance with section 412, direct that self-regulatory organisation to take all necessary steps to have that person removed as an officer. (7) NAMFISA must, before giving a directive under subsection (6) - (a) inform the self-regulatory organisation and the person concerned of NAMFISA’s intention to give such a directive; (b) give the self-regulatory organisation and the person reasons for the intended directive; and (c) call upon the self-regulatory organisation and the person to show cause within a period of 14 days why the directive should not be given.
(8) If NAMFISA directs the self-regulatory organisation to have an officer removed, the self-regulatory organisation must have the person removed within a period of 14 days and must ensure that the person in question does not in any way, whether directly or indirectly, concern himself or herself with or take part in the management of the self-regulatory organisation. (9) If a self-regulatory organisation fails to comply with subsection (8), NAMFISA may, in respect of such non-compliance, take any action against that self-regulatory organisation which NAMFISA is empowered to take under section 412 or 439 and the provisions of those sections apply to such non-compliance. (10) NAMFISA must afford the self-regulatory organisation the right to be heard before imposing any penalty under this section. Limitation on control of self-regulatory organisations 143. (1) A person may not, without the prior approval of NAMFISA, acquire or hold shares or any other interest in a self-regulatory organisation which is a company, if the acquisition or holding results in that person, directly or indirectly, alone or with one or more associates, acquiring or holding control of the self-regulatory organisation. (2) If NAMFISA is satisfied on reasonable grounds that the retention of a particular shareholding in a self-regulatory organisation by a particular person will be prejudicial to the self-regulatory organisation, NAMFISA may apply to the High Court for an order - (a) compelling the person to reduce, within a period determined by the High Court, that shareholding to a shareholding with a total nominal value not exceeding 20 per cent of the total nominal value of all the issued shares of the self-regulatory organisation; and (b) limiting, with immediate effect, the voting rights that may be exercised by that person by virtue of that shareholding to 20 per cent of the voting rights attached to all the issued shares of the self-regulatory organisation. (3) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Delegation of functions 144. (1) A self-regulatory organisation may delegate or assign any function entrusted to it by this Chapter or its rules to any person or persons approved by the entity that controls the self-regulatory organisation, subject to the conditions that the self-regulatory organisation may determine. (2) A self-regulatory organisation is not divested or relieved of a function delegated or assigned under subsection (1) and may, if necessary, withdraw the delegation or assignment at any time on reasonable notice. Report to NAMFISA 145. Within 90 days after the end of its financial year, a self-regulatory organisation must submit to NAMFISA an annual report containing the details required by the standards and audited annual financial statements that fairly
present the financial affairs and status of the self-regulatory organisation. Right of NAMFISA to attend meetings and obtain documents 146. (1) NAMFISA may attend any meeting of the entity that controls a self-regulatory organisation or a committee of that entity, and may take part, but may not vote, in all the proceedings at such meeting. (2) The entity that controls a self-regulatory organisation must furnish NAMFISA with all notices, minutes and documents which are furnished to shareholders or other owners of the entity that controls the self-regulatory organisation or a committee of that entity. Rules of self-regulatory organisations 147. (1) In this section “rules” means rules of a self-regulatory organisation. (2) NAMFISA must as soon as possible after registering a regulated person that is a self-regulatory organisation under section 85(1) or recognising a self-regulatory organisation under section 136(5), cause the rules made by that organisation to be published in the Gazette . (3) The costs of a notice published in the Gazette pursuant to subsection (2), (7), (8), (9), (10), (11) or (12) or in newspapers circulating nationally in Namibia pursuant to subsection (15)(a) must be at the expense of the self-regulatory organisation concerned. (4) A self-regulatory organisation may, subject to this section, amend or suspend its rules. (5) A proposed amendment of the rules, other than a suspension, must be submitted to NAMFISA for approval and must be accompanied by an explanation of the reasons for the proposed amendment. (6) If NAMFISA acting reasonably, finds that any amendment to the rules is not satisfactory, NAMFISA must by notice to the self-regulatory organisation concerned containing the reasons why the amendment is not satisfactory, give the self-regulatory organisation an opportunity to be heard including a period of at least 30 days within which to make representations. (7) NAMFISA must as soon as possible - (a) after the receipt of a proposed amendment; or (b) in the event that subsection (6) applies, after representations have been made by the self-regulatory organisation that satisfy NAMFISA with respect to the amendment, cause to be published in the Gazette , a notice of the proposed amendment calling upon all interested persons who have any objections to the proposed amendment to lodge their objections with NAMFISA within a period of 21 days from the date of publication or such other period as NAMFISA may direct. (8) If no objections have been lodged with NAMFISA pursuant to subsection (7) or if objections have been lodged and NAMFISA has considered such objections and after consultation with the self-regulatory organisation, has decided to approve the proposed amendment in the form published in the Gazette under subsection (7), the amendment comes into operation on a date determined by NAMFISA and published by a further notice in the Gazette . (9) If as a result of objections lodged with NAMFISA pursuant to subsection (7)
NAMFISA decides, after consultation with the self-regulatory organisation, to amend the proposed rules as published in the Gazette , the proposed rules as amended must be published by NAMFISA by further notice in the Gazette and come into operation on a date determined by NAMFISA in that notice. (10) NAMFISA may - (a) if there exists an urgent situation under exceptional circumstances; (b) if it is necessary to achieve the objects of this Chapter referred to in section 79; and (c) after consultation with the self-regulatory organisation concerned, by notice in the Gazette amend the rules of that self-regulatory organisation. (11) Subject to the prior approval of NAMFISA, a self-regulatory organisation may suspend any of its rules for a period not exceeding 30 days after giving reasonable notice of the proposed suspension by notice in the Gazette . (12) NAMFISA may, for the period of such suspension, issue an interim rule to regulate the matter covered by the rule suspended under subsection (11) by notice in the Gazette . (13) Any contravention of, or failure to comply with, an interim rule has the same legal effect as a contravention of, or failure to comply with, a rule. (14) The rules may provide that the self-regulatory organisation concerned or a person to whom the self-regulatory organisation has delegated its investigative and disciplinary functions, may impose any one or more of the following penalties for any contravention of, or failure to comply with, the rules or this Act - (a) a reprimand; (b) a penalty not exceeding the amount provided in the rules; (c) suspension or cancellation of the authorisation to act as an authorised user, a participant or person or an entity that is subject to the rules; (d) a restriction on the manner in which an authorised user or participant, and an authorised representative of the authorised user or an officer or employee of the participant or person or entity that is subject to the rules may conduct business; and (e) the payment of compensation to clients prejudiced by the contravention or failure. (15) The rules must provide that - (a) full particulars regarding the imposition of a penalty must be published in the Gazette , newspapers circulating nationally in Namibia or through the news service, if any, of the self-regulatory organisation; (b) any person who has contravened or failed to comply with the rules or this Act may be ordered to pay the costs incurred in an investigation or hearing conducted in accordance with the rules; (c) the self-regulatory organisation may take into account at a disciplinary hearing any information obtained by NAMFISA in the course of an inspection or investigation under sections 418 to 429; and (d) the self-regulatory organisation or a person to whom a self-regulatory organisation has delegated its investigative and disciplinary functions, may, upon good cause shown and subject to the conditions it may impose, vary or modify any penalty which it may previously have
imposed, but that in varying or modifying such penalty the penalty may not be increased. (16) If a person fails to pay a fine or compensation referred to in subsection (14)(b) or (e), the self-regulatory organisation may take such steps as are necessary, including the institution of legal action, to recover the fine or compensation. (17) This section does not prejudice the common law rights of a person aggrieved by a contravention of, or failure to comply with, a rule or this Act to claim any amount, except to the extent that any portion of such amount has been recovered under subsection (14). (18) The rules must set out the purpose for which a penalty referred to in subsection (14) must be appropriated. Limitation of liability 148. (1) A person referred to in subsection (2) may not be held liable for any loss sustained or damage suffered by any other person in respect of anything done or omitted to be done by that person or by an authorised user, a participant or person or an entity that is subject to the rules of a self-regulatory organisation in the performance in good faith of any function under this Act, the rules or directives of the self-regulatory organisation or the listing requirements of an exchange. (2) The persons to whom subsection (1) applies are - (a) a self-regulatory organisation; (b) a member of the board, the principal officer, other officer, an employee or a representative of a self-regulatory organisation; and (c) a shareholder or any other owner, director or officer of an entity that controls the self-regulatory organisation or a member of a committee of such entity. Disclosure of information 149. Despite sections 166 and 426, a self-regulatory organisation may disclose information relating to or arising from its responsibilities for regulating, investigating or prosecuting financial institutions or financial intermediaries, to any other self-regulatory organisation or supervisory authority, whether domestic or foreign, that is also responsible for regulating, investigating or prosecuting financial institutions or financial intermediaries.
PART 7
SECURITIES CLEARING HOUSE
Limitation of liability
150.
Section 148 applies to a securities clearing house with the changes required by the context.
Amalgamation and merging
151.
(1) Two or more securities clearing houses that have similar objects or perform similar functions may, with the approval of NAMFISA and subject to the standards and to such conditions as NAMFISA may impose, amalgamate or merge with one another or with any self-regulatory organisation that has similar objects or performs similar functions as those of the securities clearing house that it proposes to amalgamate or merge with. (2) Section 139(3) applies with any changes made necessary by the context to an amalgamation or merger referred to in subsection (1). Transfer of assets and liabilities 152. (1) A securities clearing house may, with the approval of NAMFISA and subject to the standards and to such conditions as NAMFISA may impose, transfer any of its assets and liabilities to any other securities clearing house or to a self-regulatory organisation that has similar objects or performs similar functions as those of the securities clearing house that it proposes to effect the transfer of assets and liabilities with. (2) Section 139(3) applies with any changes made necessary by the context to a transfer referred to in subsection (1).
PART 8
CODE OF CONDUCT FOR REGULATED PERSONS
Codes of conduct
153.
(1) NAMFISA may provide in the standards a code of conduct for one or more categories of regulated persons.
(2) The code of conduct referred to in subsection (1) for a category of regulated persons is binding on those regulated persons, their directors, officers and other employees and on their clients.
Principles of code of conduct
154.
(1) A code of conduct referred to in section 153 must be based on the following principles:
(a) the regulated person must act honestly and fairly and with due care, skill and diligence, in the interests of clients; (b) the regulated person must uphold the integrity of the securities industry; (c) the regulated person must have and effectively employ the resources, procedures and technological systems necessary for the conduct of its business; (d) the regulated person must seek information from a client regarding the financial position, investment experience and objectives of the client, in connection with the service required; and (e) the regulated person must act fairly in any situation of conflicting interests. (2) The code of conduct must in particular and as appropriate, provide for - (a) the disclosure to a client of relevant material information, including the disclosure of actual or potential interests of the regulated person; (b) proper record-keeping; (c) avoidance of fraudulent and misleading advertising, canvassing and marketing; (d) proper safekeeping, separation and protection of funds and transaction documents of clients; (e) suitable guarantees or professional indemnity or fidelity insurance cover; and (f) any other matter which it is necessary or expedient to regulate in the code of conduct for the achievement of the objects of this Chapter.
PART 9
MARKET ABUSE
Definitions for this Part
155.
In this Part, unless the context indicates otherwise - “affected transaction” means any transaction, including a transaction which forms part of a series of transactions or a scheme, whatever form it may take which - (a) together with any securities held by a person immediately before such transaction or scheme takes place has or will have the effect of - (i) vesting control of any entity in that person or in that person and one or more associates and persons acting in concert with that person, in whom control did not vest prior to such transaction or scheme; or (ii) that person or that person and one or more associates and persons acting in concert with that person, acquiring or becoming the sole holder or holders of all the securities, or all the securities of a particular class, of any entity; (b) involves the acquisition by a person or that person and one or more associates and persons acting in concert with that person, in whom control of any entity had already vested, of further securities of that entity in excess of the limits set out in the standards; or (c) is a disposal pursuant to section 236 of the Companies Act; “claims officer” means the person appointed by NAMFISA to be responsible for considering and determining claims pursuant to section 161(1); “deal” means any manner in which securities are acquired or disposed of, and includes conveying or giving an instruction to deal; “inside information” means specific or precise information which has not been made public and which - (a) is obtained or learned as an insider; and (b) if it were made public would be likely to have a material effect on the price or value of any security listed on a regulated market; “insider” means a person who has inside information - (a) through - (i) being a director, employee or shareholder of an issuer of securities listed on a regulated market to which the inside information relates; or (ii) having access to such information by virtue of employment, office or profession; or (b) knowing that the direct or indirect source of the information was a person referred to in paragraph (a); “made public”, in relation to inside information, means making the inside information public as described in section 157; “market abuse rules” means the rules made under section 164(2)(d); “market corner” means any arrangement, agreement, commitment or understanding involving the purchasing, selling or issuing of securities listed on a regulated market - (a) by which a person or two or more associates or two or more persons acting in concert acquire direct or indirect beneficial ownership of, or exercise control over, or are able to influence the price of, securities listed on that regulated market; and (b) where the effect of the arrangement, agreement, commitment or understanding is or is likely to be that the trading price of those securities, as reflected through the facilities of that regulated market, is or is likely to be abnormally influenced or arbitrarily dictated by
such person or persons in that the trading price deviates or is likely to deviate materially from the trading price which would otherwise likely have been reflected through the facilities of that regulated market on which those securities are traded; “public sector body” means - (a) all spheres of the government of Namibia or of any other country or territory; (b) the Bank of Namibia; and (c) the central bank of any country or territory outside Namibia; “regulated market” means any market, including an exchange, whether domestic or foreign, which is regulated under the laws of the country in which the market conducts business as a market for dealing in securities traded on that market; and “securities” include participatory interests in collective investment schemes as defined in section 168, and money market instruments and other products or interests included as securities pursuant to section 104. Insider trading offences 156. (1) An insider who knows that he or she has inside information may not deal directly or indirectly or through an agent for his or her own account in securities traded on a regulated market to which the inside information relates or which are likely to be affected by the inside information. (2) Despite subsection (1), an insider does not commit an offence under that subsection if such insider proves on a balance of probabilities that he or she - (a) was acting in pursuit of the completion of an affected transaction; or (b) only became an insider after he or she had given the instruction to deal to a registered authorised user or a registered securities dealer and the instruction was not changed in any manner after he or she became an insider. (3) An insider who knows that he or she has inside information may not, directly or indirectly or through an agent or any other person, deal for another person in the securities traded on a regulated market to which the inside information relates or which are likely to be affected by the inside information. (4) Despite subsection (3), an insider does not commit an offence under that subsection if such insider proves on a balance of probabilities that he or she - (a) is a registered authorised representative of a registered authorised user or of a registered securities dealer and was acting on specific instructions from a client, except where the inside information was disclosed to him or her by that client; (b) was acting on behalf of a public sector body in pursuance of monetary policy, policies in respect of exchange rates, the management of public debt or external exchange reserves; (c) was acting in pursuit of the completion of an affected transaction; or (d) only became an insider after he or she had given the instruction to deal to an authorised user or securities dealer and the instruction was not changed in any manner after he or she became an insider. (5) An insider who knows that he or she has inside information may not disclose that inside information to another person.
(6) Despite subsection (5), an insider does not commit an offence under that subsection if such insider proves on a balance of probabilities that he or she disclosed the inside information because it was necessary to do so for the purpose of the proper performance of the functions of his or her employment, office or profession in circumstances unrelated to dealing in any security listed on a regulated market and that at the same time he or she disclosed that the information was inside information. (7) An insider who knows that he or she has inside information may not encourage or cause another person to deal or discourage or stop another person from dealing in the securities traded on a regulated market to which the inside information relates or which are likely to be affected by the inside information. (8) A person who contravenes or fails to comply with subsection (1), (3), (5)or (7) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Publication 157. (1) Inside information is regarded as having been made public in circumstances which include, but are not limited to the following:
(a) the information is published in accordance with the rules of the relevant regulated market for the purpose of informing clients and their professional advisers; (b) the information is contained in records which by virtue of any law are open to inspection by the public; (c) the information can be readily acquired by those likely to deal in any listed securities - (i) to which the information relates; or (ii) of an issuer to which the information relates; or (d) the information is derived from other information which has been made public. (2) Inside information which would otherwise be regarded as having been made public must continue to be regarded as having been made public even though - (a) it can be acquired lawfully only by persons exercising diligence or observation or having expertise; (b) it is communicated lawfully only on payment of a fee; or (c) it is only published outside Namibia. Prohibited trading practices 158. (1) A person may not - (a) either for such person’s own account or on behalf of another person, directly or indirectly, use or knowingly participate in the use of any manipulative, improper, false or deceptive practice of trading in a security traded on a regulated market, which practice creates or might create - (i) a false or deceptive appearance of the trading activity in connection with the security; or (ii) an artificial price for the security; or (b) place an order to buy or sell traded securities which to his or her knowledge will, if executed, have an effect described in paragraph (a). (2) Without limiting the generality of subsection (1), the following are considered to be manipulative, improper, false or deceptive trading practices:
(a) approving or entering on a regulated market an order to buy or sell a security traded on that market which involves no change in the beneficial ownership of that security; (b) approving or entering on a regulated market an order to buy or sell a security traded on that market with the knowledge that an opposite order or orders of substantially the same size at substantially the same time and at substantially the same price, have been or will be entered by or for the same or different persons with the intention of creating - (i) a false or deceptive appearance of active public trading in connection with that security; or (ii) an artificial market price for that security; (c) approving or entering on a regulated market orders to buy a security traded on that market at successively higher prices or orders to sell a security listed on that market at successively lower prices for the purpose of unduly or improperly influencing the market price of such security; (d) approving or entering on a regulated market an order at or near the close of the market, the primary purpose of which is to change or maintain the closing price of a security traded on that market; (e) approving or entering on a regulated market an order to buy or sell a security traded on that market during any auctioning process or pre-opening session and cancelling such order immediately prior to the market opening for the purpose of creating or inducing a false or deceptive appearance of demand for or supply of such security; (f) effecting or assisting in effecting a market corner; (g) maintaining at a level that is artificial, the price for dealing in securities traded on a regulated market; (h) employing any device, scheme or artifice to defraud any other person as a result of a transaction effected through the facilities of a regulated market; or (i) engaging in any act, practice or course of business in respect of dealing in securities traded on a regulated market which is deceptive or which is likely to have such effect. (3) Subsection (2)(a) does not apply to a purchase, sale or transfer made for legitimate estate planning purposes. (4) For the purposes of subsection (2)(a), a purchase or sale of securities listed on a regulated market does not involve a change in the beneficial ownership if - (a) a person who has a beneficial interest in those securities before the purchase or sale; or (b) one or more associates of the person referred to in paragraph (a) in relation to those securities, directly or indirectly holds a beneficial interest in those securities after the purchase or sale. (5) The employment of price-stabilising mechanisms that are regulated under the rules or listing requirements of an exchange does not constitute a manipulative, improper, false or deceptive trading practice for the purposes of this section or insider trading for the purposes of sections 156 and 160. (6) A person who contravenes or fails to comply with subsection (1) commits an offence and is
liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. False, misleading or deceptive statements, promises and forecasts 159. (1) A person may not, directly or indirectly, make or publish in respect of securities or in respect of the past or future performance of an entity - (a) any statement, promise or forecast which, at the time and in the light of the circumstances in which it is made, is false, misleading or deceptive in respect of any material fact and which the person knows or ought reasonably to know is false, misleading or deceptive; or (b) any statement, promise or forecast which is, by reason of the omission of a material fact, rendered false, misleading or deceptive and which the person knows or ought reasonably to know is rendered false, misleading or deceptive by reason of the omission of that fact. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Civil liability resulting from insider trading 160. (1) An insider who knows that he or she has inside information and who - (a) deals directly or indirectly or through an agent, for his or her own account in the securities traded on a regulated market to which the inside information relates or in securities which are likely to be affected by such information; (b) makes a profit or would have made a profit if he or she had sold the securities at any stage or avoids a loss through such dealing; and (c) fails to prove, on a balance of probabilities, any one of the defences set out in section 156(2), is liable, at the instance of NAMFISA by way of proceedings in the High Court, to pay to NAMFISA the amounts set out in subsection (2). (2) The amounts referred to in subsection (1) are - (a) the equivalent of the profit or loss referred to in subsection (1)(b); (b) a penalty for compensatory purposes, in a sum determined in the discretion of the High Court; (c) a penalty for punitive purposes, in a sum determined in the discretion of the High Court; (d) interest from the date of the illegal transaction as may be prescribed; and (e) costs of the proceedings on such scale as may be determined by the High Court. (3) An insider who knows that he or she has inside information and who - (a) deals, directly or indirectly, for any other person in the securities listed on a regulated market to which the inside information relates or in securities which are likely to be affected by such information; (b) makes a profit for that other person or would have made a profit if the securities had been sold at any stage or avoids a loss for that other person through such dealing; and (c) fails to prove any one of the defences set out in section 156(4) on a balance of probabilities, is, subject to subsection (8),
liable, at the instance of NAMFISA by way of proceedings in the High Court, to pay to NAMFISA the amounts set out in subsection (4). (4) The amounts referred to in subsection (3) are - (a) the equivalent of the profit or loss referred to in subsection (3)(b); (b) a penalty for compensatory purposes, in a sum determined in the discretion of the High Court; (c) a penalty for punitive purposes, in a sum determined in the discretion of the High Court; (d) interest from the date of the illegal transaction as may be prescribed; (e) the commission or consideration received for such dealing; and (f) costs of the proceedings on such scale as may be determined by the High Court. (5) An insider who knows that he or she has inside information and who - (a) discloses the inside information to any other person; and (b) fails to prove on a balance of probabilities the defence set out in section 156(6); is, subject to subsection (8), liable, at the instance of NAMFISA by way of proceedings in the High Court, to pay to NAMFISA the amounts set out in subsection (6). (6) The amounts referred to in subsection (5) are - (a) if the other person dealt in the securities listed on a regulated market to which the inside information relates or which are likely to be affected by the inside information, the equivalent of the profit which that person made or would have made if the securities had been sold at any stage or the equivalent of the loss avoided, as a result of such dealing; (b) a penalty for compensatory purposes, in a sum determined in the discretion of the High Court; (c) a penalty for punitive purposes, in a sum determined in the discretion of the High Court; (d) interest from the date of the illegal transaction as may be prescribed; (e) the commission or consideration received for such disclosure; and (f) costs of the proceedings on such scale as may be determined by the High Court. (7) An insider who knows that he or she has inside information and who encourages or causes any other person to deal in the securities traded on a regulated market to which the inside information relates or which are likely to be affected by the inside information is, subject to subsection (8), liable, at the instance of NAMFISA by way of proceedings in the High Court, to pay to NAMFISA - (a) if that other person dealt in such securities, the equivalent of the profit which that person made or would have made if the securities had been sold at any stage or the equivalent of the loss avoided, as a result of such dealing; (b) a penalty for compensatory purposes, in a sum determined in the discretion of the High Court; (c) a penalty for punitive purposes in a sum determined in the discretion of the High Court; (d) interest from the date of the illegal transaction as may be prescribed; (e) the commission or consideration received for such encouragement; and (f) costs of the proceedings on such scale as may be determined by the High Court. (8) If the other person referred to in subsection
(3), (5) or (7) is liable as an insider under subsection (1), the insider referred to in subsection (3), (5) or (7) is jointly and severally liable together with that other person to pay the amounts set out in subsection (4)(a), (d), (e) and (f), (6)(a), (d), (e) and (f) or (7)(a), (d), (e) and (f). (9) The profit made or the profit that would have been made if the listed securities had been sold at any stage or the loss avoided is determined in the discretion of the High Court, which must have regard to factors such as the consideration for the dealings referred to in subsections (3), (5) and (7), the time between the relevant dealing and the publication of the inside information and any other relevant factors. Disbursement of proceeds from civil claim 161. (1) For the purposes of this section, NAMFISA must appoint a person to be the claims officer. (2) NAMFISA must deposit directly into a specially designated trust account any amount recovered by NAMFISA as a result of the proceedings contemplated in section 160 or as a result of an agreement of settlement and - (a) NAMFISA, as a first charge against the trust account, is entitled to - (i) reimbursement of all expenses reasonably incurred by it in bringing such proceedings and in administering the distributions made to claimants under subsection (3); and (ii) any additional amount that may be prescribed, less any amount of costs actually recovered from the other party prior to the finalisation of the distribution account; (b) the balance, if any, must be distributed by the claims officer to the claimants referred to in subsection (3) in accordance with subsection (4); and (c) any amount not paid out under paragraph (b) accrues to NAMFISA. (3) The balance referred to in subsection (2)(b) must be distributed to all claimants who - (a) submit claims to NAMFISA within 90 days from the date of publication by NAMFISA of a notice in two newspapers circulating nationally in Namibia inviting persons who are affected by the dealings referred to in section 160(1), (3), (5) or (7) to submit their claims; and (b) prove to the reasonable satisfaction of the claims officer that they were affected by the dealings referred to in section 160(1), (3), (5) or (7), and - (i) in the case where the inside information was made public within five trading days from the time the insider referred to in section 160(1) or (3) or the other person referred to in section 160(5) or (7) dealt, that they dealt in the same securities or a derivative, linked instrument or connected instrument to the securities, at the same time or any time after the insider or other person so dealt and before the inside information was made public; or (ii) in every other case, they dealt in the same securities at the same time or any time thereafter on the same day, as the insider or other person referred to in subparagraph (i). (4) Subject to subsection (5), a claimant is entitled to receive an amount - (a) equal to the difference between the
price at which the claimant dealt and the price, determined by the court or a settlement, at which the claimant would have dealt if the inside information had been published at the time of dealing; or (b) equal to the pro rata portion of the balance referred to in subsection (2)(b), calculated according to the relationship which the amount contemplated in paragraph (a) bears to all amounts proved under subsection (3) by all claimants, whichever is the lesser, unless the claims officer in his or her discretion determines that the claimant must receive a lesser or no amount. (5) An amount awarded to any particular claimant in any proceedings referred to in section 165 must be deducted from any amount claimed under this section. (6) The common law principles of vicarious liability apply to the civil liability established by this section. Powers of NAMFISA in civil proceedings 162. (1) NAMFISA may withdraw, abandon or compromise any civil proceedings instituted under section 160, but any agreement of compromise entered into by NAMFISA and any other party or parties must be made an order of the High Court and the amount of any payment pursuant to such compromise must be made public. (2) In the situation where civil proceedings have not been instituted NAMFISA may, in accordance with the rules of the relevant court, file with the clerk or registrar of a competent court any agreement of compromise entered into by NAMFISA and any other party or parties, and thereupon such agreement has all the effects of a civil judgment lawfully given in that court against the other party or parties in favour of NAMFISA for a liquid debt in the amount specified in the agreement and may be enforced as such, and the parties to the agreement and the amount of any payment made in terms of such agreement must be made public. Assessment of fines and penalties 163. (1) In the assessment of any fine imposed pursuant to section 156, 158, 159 or 166, the High Court must consider any award previously made under section 160 which arises from the same cause. (2) In the assessment of any award under section 160, the High Court must consider any penalty which arises from the same cause and which has previously been imposed under section 156, 158, 159 or 166. Powers and duties of NAMFISA 164. (1) NAMFISA is responsible for the supervision of compliance with this Part. (2) In addition to its other powers under this Act, NAMFISA may - (a) investigate or instruct that an investigation take place regarding any alleged market abuse or matter relating to an offence referred to in section 156, 158, 159 or 166; (b) institute any proceedings referred to in this Part; (c) administer the proof of claims and distribution of payments under section 161; (d) make market abuse rules - (i) concerning the administration of this Part by NAMFISA; (ii) concerning the manner in which investigations under this Chapter are to be conducted; (iii) concerning the notification of amounts received under sections
160 and 161, the procedure for the lodging and proof of claims, the administration of trust accounts and the distribution of payments in respect of claims; (iv) dealing with the manner in which inside information should be disclosed and, generally with the conduct expected of persons with regard to such information; and (v) generally designed to ensure that NAMFISA is able to perform its functions under this Part; and (e) after consultation with the relevant regulated markets in Namibia, require such markets to implement such systems as are necessary for the effective monitoring and identification of possible contraventions of this Chapter. (3) NAMFISA must publish in the Gazette of a notice of any proposed market abuse rule or amendment of such a rule, calling upon all interested persons who have any objections to the proposed rule or amendment to lodge their objections with NAMFISA within a period specified in the notice which may not be less than 21 days from the date of publication of the notice. [The word “of” after the word “ Gazette ” is superfluous.] (4) If there are no such objections or if NAMFISA has considered any objections that have been received, and has decided to introduce the proposed rule or amendment in the form published in the Gazette under subsection (3), the rule or amendment comes into operation on a date determined by NAMFISA by further notice published in the Gazette . (5) If NAMFISA, after considering any objections received, decides to amend the proposed rule or amendment as published in the Gazette under subsection (3), the proposed rule or amendment as amended by NAMFISA must be published by NAMFISA by notice in the Gazette and comes into operation on the date determined by NAMFISA and included in that notice. (6) A rule made under subsection (2) is binding on all regulated persons and members of the public. (7) The provisions of sections 418 to 429 apply with the changes required by the context to an investigation referred to in subsection (2)(a). Protection of existing rights 165. Nothing in this Part prejudices the rights of any person aggrieved by any dealing or offence contemplated in this Chapter under any other law to claim any amount, save to the extent that any portion of such amount has been recovered by such person under sections 160 and 161. Confidentiality and sharing of information 166. (1) Subject to section 149 and to subsections (2) and (4), a person may not disclose to any other person any information acquired in the performance of functions under this Chapter. (2) Disclosure of the information referred to in subsection (1) does not constitute a contravention of that subsection if made by - (a) a person for the purpose of performing functions under this Chapter; (b) a person for the purpose of any legal proceedings under this Part; (c) a person who is required to do so by a court or under this Act or any other law; (d) NAMFISA, if it is necessary to achieve one or more of the objects of this
Chapter referred to in section 79; (e) NAMFISA, if it is in the public interest; or (f) NAMFISA, by publishing the status and outcome of investigations under this Part. (3) NAMFISA may share information concerning any matter dealt with under this Part with the Bank of Namibia, the Public Accountants’ and Auditors’ Board constituted under the Public Accountants’ and Auditors’ Act, self-regulatory organisations, the Ministry responsible for the administration of finance, the Minister and with all other persons, whether inside Namibia or elsewhere, responsible for regulating, investigating or prosecuting insider trading, prohibited trading practices and other market abuses. (4) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 5000 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. [The amount of the fine is written as it appears in the Government Gazette ; it is not clear what amount was intended.]
PART 10
GENERAL PROVISION
Exemption from Act No. 34 of 1934
167.
The Trust Moneys Protection Act does not apply to this Chapter.
[The Trust Moneys Protection Act 34 of 1934 has been replaced by the Trust Administration Act 11 of 2023.]
CHAPTER 4
COLLECTIVE INVESTMENT SCHEMES
PART 1
PRELIMINARY
Definitions for this Chapter
168.
In this Chapter, unless the context indicates otherwise - “administration” means any function performed in connection with a collective investment scheme including - (a) the management of a collective investment scheme; (b) the receipt, payment or investment of money or other assets, including income accruals; (c) the sale, repurchase, issue or cancellation of a participatory interest and giving financial advice or making disclosure of information on any of those matters to investors or potential investors; and (d) the buying and selling of assets or the handing over the assets to a trustee or custodian for safe custody; “administrative service” has the meaning given to it in section 78; “assets” means the investments comprising or constituting a portfolio of a collective investment scheme and includes any income accruals derived or resulting from the investments in the portfolio which are held on behalf of, or are due to, the investors in that portfolio; “authorised representative” means a company or natural person that is registered under section 180 and authorised by a manager to solicit investments in a portfolio from members of the public or to give financial advice or make disclosure of information to investors or potential investors concerning the sale, repurchase, issue or cancellation of a participatory interest; “collective investment scheme” means a scheme, in whatever form, including an open-ended investment company, pursuant to which members of the public are invited or permitted to invest money or other assets in a portfolio, and under the terms of which - (a) two or more investors contribute money or other assets to and hold a participatory interest in a portfolio of the scheme through shares, units or any other form of participatory interest; and (b) the investors share the risk and the benefit of investment in proportion to their participatory interest in that portfolio or on any other basis determined in the deed, and includes a collective investment scheme in securities, a collective investment scheme in property, a collective investment scheme in participation bonds, a collective investment scheme in unlisted securities, a collective investment scheme in money market instruments, a declared collective investment scheme and a foreign collective investment scheme, as defined respectively in Parts 4, 5, 6, 7, 8, 9 and 10 of this Chapter; “custodian” means a custodian appointed under section 189; “deed” means the agreement between a manager and a trustee or custodian or the document of incorporation whereby a collective investment scheme is established and under the terms of which it is administered, and includes the trust deed of a management company which immediately prior to the commencement of this Chapter was a management company pursuant to the Unit Trusts Control Act; “designated representative” means a natural person employed by an authorised representative to solicit investments in a portfolio from members of the public
or to give financial advice or make disclosure of information to investors or potential investors concerning the sale, repurchase, issue or cancellation of a participatory interest; “exchange” means an exchange registered under section 85 or deemed to be registered under section 86 or a foreign exchange referred to in section 197; “income accruals” means any dividends or interest or any other income for distribution received or accrued by the trustee, custodian or manager on behalf of investors in a portfolio in the course of any income distribution period or carried forward from any previous income distribution period or due to such investors in respect of dividends or interest or any other income declarations made but not yet distributed or any payment in lieu of income accruals, provided that the deed may determine that a portfolio is a non-distributing fund and that income accruals are not distributed; “investment manager” means an investment manager registered under section 85; “investor” means the holder of a participatory interest in a portfolio of a collective investment scheme in Namibia; “listed securities” has the meaning given to it in section 78; “manager” means a public company which is registered under section 176 to operate a collective investment scheme; “members of the public” include - (a) members of any section of the public, whether selected as clients, members, shareholders, employees or ex-employees of the person issuing an invitation to acquire a participatory interest in a portfolio; and (b) a banking institution, prudential and financial markets institution or financial institution, but excludes persons confined to a restricted circle of individuals with a common interest who receive an invitation referred to in paragraph (a) in circumstances which can properly be regarded as a domestic or private business venture between those persons and the person issuing the invitation; “money market instruments” has the meaning given to it in section 78; “nominee company” means a company which has been approved by NAMFISA as a nominee company pursuant to section 184; “open-ended investment company” means a company with an authorised share capital, which is structured in such a manner that it provides for the issue of different classes of shares to investors, each class of share representing a separate portfolio with a distinct investment policy; “participatory interest” means any interest, unit, undivided share or share - (a) by whatever name called; and (b) regardless of whether its value remains constant or varies from time to time, which may be acquired by an investor in a portfolio; “payment in lieu of income accruals” means, on the creation of new units in a unit portfolio, the amount which the manager must record in a notional income accrual account, in order to acquire for those new units equal participation in the income accruals and notional income accruals accounts, including such amounts carried forward from any previous
income distribution period, and the amount per unit is calculated by dividing the total number of issued units in the unit portfolio immediately prior to the issue of the new units, into the total amount of the income accruals and notional income accruals accounts; “portfolio” means a group of assets including any amount in cash in which, pursuant to a collective investment scheme, members of the public are invited or permitted by a manager to acquire a participatory interest or a participatory interest of a specific class which as a result of its specific characteristics differs from another class of participatory interests; “prudential and financial markets institution” has the meaning given to it in section 78; “sell” or “repurchase” includes an exchange of a participatory interest in a collective investment scheme; “solicit” means any act to promote investment by members of the public in a collective investment scheme; “trustee” means a trustee appointed under section 189; and “Unit Trusts Control Act” means the Unit Trusts Control Act, 1981 (Act No. 54 of 1981), repealed by this Act. Principles for operation of collective investment scheme 169. (1) A manager must operate a collective investment scheme honestly and fairly, with skill, care, prudence and diligence and in the interest of investors and the collective investment scheme industry. (2) The assets of an investor must be properly protected by application of the principle of segregation and identification. (3) For purposes of subsection (2), the principle of segregation and identification requires that assets of an investor must be distinct and identifiable to that specific investor and must be separate and distinguishable from those of the manager or any other person. Duties of manager 170. (1) A manager must avoid conflict between the interests of the manager and the interests of an investor. (2) A manager must disclose to investors any interests of its directors or management that could conflict with the interests of investors. (3) A manager must maintain adequate financial resources to meet its commitments and to manage the risks to which the collective investment scheme managed by the manager is exposed. (4) A manager must - (a) organise and control the collective investment scheme in a responsible manner; (b) keep proper records; (c) employ adequately trained staff and ensure that they are properly supervised; (d) have well-defined compliance procedures; (e) maintain an open and cooperative relationship with NAMFISA and must promptly inform NAMFISA about anything that might reasonably be expected to be disclosed; and (f) promote investor education, either directly or indirectly, through initiatives undertaken by industry associations or others. Appointment of investment manager 171. A manager may appoint an investment manager to assist in the investment of the assets of a collective investment scheme or of one or more portfolios of the collective scheme. Disclosure of information
172. (1) Before entering into a transaction with an investor, a manager, an authorised representative or designated representative must - (a) disclose to the investor information about the investment objectives of the collective investment scheme, the calculation of the net asset value and dealing prices, charges, risk factors and distribution of income accruals; and (b) give to the investor in a timely fashion and comprehensible manner, information that is necessary to enable the investor to make an informed decision, including any information specified for this purpose in the standards. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Limitations 173. (1) With the exception of a manager or an operator of a foreign collective investment scheme approved under section 219, a person, other than a public company which has been registered or is deemed to be registered as a manager by NAMFISA under this Chapter and in accordance with the requirements of Part 2, may not operate a collective investment scheme. (2) A person other than - (a) a registered manager; (b) a registered investment manager; (c) a registered linked investment service provider; (d) a registered authorised representative; (e) a registered designated representative; (f) a registered trustee or custodian; or (g) a person performing only administrative services for a person referred to in paragraphs (a) to (f), may not carry on any aspect of the business of administering a collective investment scheme or perform any act or enter into any agreement or transaction for that purpose. (3) Only a public company which has capital and reserves available for employment in its collective investment scheme, as determined in accordance with the standards, may be or may remain registered as a manager. (4) A registered investment manager or registered linked investment service provider may only operate a collective investment scheme described in Parts 4 to 9. (5) A manager must carry on the business of the collective investment scheme in accordance with this Act. (6) Only a registered manager, registered authorised representative, registered designated representative, registered investment manager, registered linked investment service provider or a manager or an operator of a foreign collective investment scheme approved under section 219 may solicit investments in a portfolio from members of the public or give financial advice or make disclosure of information to investors or potential investors concerning the sale, repurchase, issue or cancellation of a participatory interest. (7) A person who contravenes or fails to comply with subsection (1), (2), (4) or (6) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or
to both such fine and such imprisonment.
PART 2
REGISTRATION
Application for registration as manager
174.
(1) Only a public company may, in accordance with subsection (2), make an application to NAMFISA for registration as the manager of a collective investment scheme.
(2) An application for registration pursuant to subsection (1) must be - (a) made in the manner and form required by the standards; (b) include the information with respect to the principal office and principal officer required by the standards; [This paragraph does not fit with the structure of the introductory phrase; the word “be” does not fit together with the verb “include”.] (c) accompanied by the documents and other information required by the standards; (d) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; (e) made subject to and in accordance with any other applicable provision of this Act; and (f) accompanied by the required fee. Registration requirements 175. Before approving an application and registering the applicant as a manager of a collective investment scheme, NAMFISA must be satisfied on reasonable grounds that - (a) in relation to the applicant public company - (i) every shareholder or other owner that controls the applicant and every director, the principal officer and other officers of the applicant, and where applicable, members of the board, are fit and proper within the meaning of the standards; (ii) the memorandum, articles or other founding documents of the applicant are not inconsistent with the provisions of this Act; (iii) the direct or indirect control of the company is not likely to be contrary to the interest of consumers of the financial services concerned; (iv) the applicant will be in a position to ensure that its organisational or group structure will not be such as to hinder effective supervision by NAMFISA; (b) doing so is not contrary to - (i) this Act; or (ii) the public interest; (c) the applicant has the attributes reasonably necessary and adequate to - (i) provide the financial services concerned with professional integrity, prudence, proper skill and due diligence; (ii) maintain a sound financial position and not cause or further instability in the financial system of Namibia; and (iii) comply with this Act; (d) the name under which the applicant proposes to conduct business, or a translation, shortened form or derivative of that name is not in contravention of section 391; (e) the applicant has submitted all other information which, in the opinion of NAMFISA, is necessary to assess the application, and such information has been found satisfactory by NAMFISA; and (f) the applicant has complied and will continue to comply with any other requirements contained in this Act or in the standards which apply to the applicant. Registration 176. (1) If NAMFISA is satisfied that the applicant complies with the requirements of section 175, NAMFISA must register the applicant as a manager of a collective investment scheme, subject to any conditions which NAMFISA may consider appropriate pursuant to subsection (4), and must issue a certificate of registration pursuant to subsection (3). (2) The registration referred to in subsection (1) must specify -
(a) the principal office of the applicant in Namibia; and (b) the places in Namibia from which the applicant may operate. (3) Upon registration of an applicant NAMFISA must issue to the applicant a certificate of registration in a form provided by the standards. (4) NAMFISA may impose such conditions on the registration of the applicant as it considers necessary having regard, without limitation, to all the facts and information available to NAMFISA pertaining to the applicant and any guidelines issued by NAMFISA under this Act. (5) If an application is refused by NAMFISA or is granted subject to conditions, NAMFISA must advise the applicant of the refusal or conditions by giving notice to the applicant containing the reasons for the refusal or the conditions, and must give the applicant a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the applicant may make representations in writing to NAMFISA. (6) A manager must comply with the conditions subject to which it was registered. Existing management companies 177. (1) A person that was registered under section 4(3) or 30(3) of the Unit Trusts Control Act on the date of commencement of this Chapter is, subject to subsection (2), deemed to be registered as a management company under section 176(1). (2) Despite subsection (1), a person referred to in that subsection must, within 12 months after the date of commencement of this Chapter, make an application to NAMFISA pursuant to section 174 for registration as a manager. (3) If a person referred to in subsection (1) fails to make an application to NAMFISA for registration within the period referred to in subsection (2), the deemed registration of that person is cancelled. Application for cancellation or variation of registration 178. (1) A manager may at any time apply to NAMFISA for cancellation of a registration granted pursuant to section 176 or for a variation to the conditions subject to which that registration was granted. (2) An application made under subsection (1) must be - (a) made in the manner and form required by the standards; (b) accompanied by the documents and other information required by the standards; (c) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; and (d) accompanied by the required fee. (3) Before making an application pursuant to subsection (1), the applicant must give prior notice of the proposed application in two newspapers circulating nationally in Namibia, at the expense of the applicant, stating - (a) the name of the applicant; (b) either - (i) the reasons for the proposed cancellation; or (iii) the nature of the proposed variation; and [The lettering of the subparagraphs is incorrect in the Government Gazette , as reproduced above; there is no subparagraph (ii).] (c) the period within which objections to the application may be lodged with NAMFISA. (4) Section 176 applies with the changes required by the
context to an application for a variation of conditions referred to in subsection (1). (5) If, after consideration of any objection received as a result of the notice referred to in subsection (3), NAMFISA is of the opinion that it is reasonable to do so and not against the public interest, NAMFISA may, by notice to the manager concerned - (a) cancel the registration; or (b) vary the conditions of registration, including the imposition of additional conditions. (6) NAMFISA must make public any cancellation of registration or variation of conditions of registration under subsection (5) and the reasons for the cancellation or variation, by notice in the Gazette or by means of any other appropriate public statement. Cancellation or variation of registration 179. (1) NAMFISA may take any of the actions set out in subsection (3), if NAMFISA acting reasonably, finds that any of the following circumstances with respect to a manager:
[The word “exist” appears to have been omitted before the phrase “with respect to a manager”, based on the wording of similar provisions elsewhere in the Act (such as subsections 96(1), 98(1) and 100(1)).]
(a) it has made a material misrepresentation or failed to provide information that was materially relevant in its application for registration; (b) it has failed to comply with this Act; (c) it no longer meets the requirements for registration; (d) it has provided financial services without professional integrity, prudence, proper skill and due diligence; (e) it is in an unsound financial position; (f) it has failed to comply with a directive, request or requirement of NAMFISA issued under this Act; (g) it has failed to give effect to a decision of the Appeal Board; (h) it has ceased to operate or has failed to commence operating within a reasonable time after being registered; (i) it is involved in a financial crime; or (j) any shareholder or director, the principal officer or other officer or member of a board of the manager no longer meets the fit and proper requirements within the meaning of the standards or has engaged in conduct identified in the standards as misconduct. (2) In addition to the reasons set out in subsection (1), NAMFISA may take any of the actions set out in subsection (3) if, in the opinion of NAMFISA, such action is warranted because - (a) the manager has failed to give effect to a decision of the Appeal Board, and such failure has defeated the objects of this Chapter or is likely to defeat them; or (b) after an inspection or investigation of the manager’s affairs under this Act, NAMFISA is satisfied on reasonable grounds that the manner in which it is operating is - (i) not in the best interests of the collective investment scheme or investors in that scheme; or (ii) defeating the objects of this Chapter. (3) If NAMFISA is satisfied that any of the circumstances described in subsection (1) or (2) exist, NAMFISA may take any of the following actions with respect to the manager - (a) cancel its registration; (b) vary the conditions of its registration, including the imposition of additional conditions; or (c) take any other steps that NAMFISA may considers necessary or advisable. [The verb “may considers” should be “may consider” to be grammatically correct. Alternatively, it is possible that the word “may” appears in error and should be omitted.] (4) NAMFISA must give notice to the manager of the intention of NAMFISA to take any action referred to in subsection (3), together with the reasons for taking the action, and must give the manager a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the manager may make representations to NAMFISA on the matter. (5) Subject to such conditions as NAMFISA may impose, NAMFISA may provisionally suspend the registration or take control of the assets of a manager without giving notice and an opportunity to be heard pursuant to subsection (4), if NAMFISA is satisfied on reasonable grounds that it is urgently necessary to do so in order to prevent or mitigate damage to the interests of financial institutions, financial intermediaries, their
clients or the financial system of Namibia, but NAMFISA must - (a) give the manager the notice and an opportunity to be heard and make representations as soon as reasonably possible; and (b) having considered any representations received, determine whether the provisional suspension should be continued until further conditions can be imposed or registration cancelled. (6) On the cancellation of the registration of a manager under section 177(3), 178(5)(a), subsection (3)(a) or any other applicable provision of this Act, the manager must be wound-up in accordance with the requirements of Chapter 10, and NAMFISA must take such steps and may impose such conditions as are necessary in the circumstances, which steps may include the transfer of the business of the manager to another registered manager, but no distribution of the assets of the manager may be made without the prior approval of NAMFISA. (7) NAMFISA must make public any suspension or cancellation of registration, variation of conditions of registration or any other steps taken under this section and the reasons for the suspension, cancellation or variation, by notice in the Gazette or by means of any other appropriate public statement. (8) A person who - (a) continues to operate, or engage in, the business of a manager after the cancellation of registration under section 177(3), section 178(5)(a), subsection (3)(a) or any other applicable provision of this Act or after suspension of registration under subsection (5); or (b) fails to comply with a condition imposed by NAMFISA under subsection (5), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Registration as authorised representative of manager and renewal of registration 180. (1) A manager registered under this Chapter may authorise a company or an individual to act as an authorised representative of that manager, and may apply to NAMFISA for the registration of such company or individual as an authorised representative by submitting a copy of the list maintained by the manager of those companies or individuals, together with any required registration fee for each such company or individual. (2) A manager must have in place a code of conduct and applicable systems relevant to its authorised representatives who are individuals in order to be reasonably satisfied with respect to each such authorised representative that - (a) the individual is at least 18 years of age; (b) the individual has met the requirements for authorised representatives that may be included in the standards from time to time; (c) the individual is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure business; (d) the individual has not been refused registration, authorisation or acceptance or had such registration, authorisation or acceptance suspended or revoked under this Act
or any other applicable financial services law; (e) the individual has not been convicted of an offence the nature of which renders him or her, in the opinion of NAMFISA, unfit to hold a registration under this Act; (f) the individual is fit and proper within the meaning of the standards; (g) there are reasonable grounds for believing that the individual will carry on with integrity and honesty the activities of an authorised representative; (h) the individual has met, and there is no reason to believe that the individual will not be able to meet, any other requirements of this Chapter, and any instructions and guidelines issued by NAMFISA under this Chapter or issued by the manager concerned that apply to authorised representatives; (i) there is no reason to believe that the individual is likely to engage in conduct of a kind identified in the standards as misconduct; (j) the individual is ordinarily resident in Namibia and is in a position to comply with the law relating to his or her residency in Namibia and with any other applicable laws of Namibia; and (k) any required fee has been paid. (3) If the list submitted to NAMFISA pursuant to subsection (1) is in respect of an authorised representative that is a company, the manager must ensure that the authorised representative has a code of conduct and applicable systems in place with respect to the designated representatives of that authorised representative. (4) A manager must provide NAMFISA with such other information and material regarding its authorised representatives as may be specified in the standards. (5) NAMFISA must register each person whose name appears on the list of authorised representatives maintained by the manager. (6) A manager that has submitted a list to NAMFISA pursuant to subsection (1), must submit to NAMFISA an update of that list when there has been an addition or deletion, together, in the case of additional persons to be registered as authorised representatives, with the required fee for each additional person and the information and material referred to in subsection (4), and upon receipt by NAMFISA of an updated list containing the names of additional persons, the provisions of subsection (5) do apply. [The word “do” in the phrase “do apply” is superfluous.] (7) If a manager removes a company or an individual from the list referred to in subsection (1), it must, at the same time as submitting the update of the list as required by subsection (6), provide NAMFISA with a statement indicating the reason that the company or individual has been removed from the list. (8) A manager may not remove a company or an individual from the list as described to in subsection (7) unless the manager has given the company or individual concerned the reasons for the proposed removal and a reasonable opportunity to be heard. (9) The term of registration as an authorised representative under this section expires on March 31 of each year or on such other date as NAMFISA may specify, but
if the appropriate renewal fee as determined by NAMFISA in respect of each authorised representative is paid to NAMFISA in the manner set out in the standards, the registration must, subject to compliance with any requirements that may be set out in the standards, be renewed for a period of 12 months as from the expiry date. (10) The renewal fee is payable within the period set out in the standards, and any payment received after that period bears interest at a rate determined by NAMFISA in the standards, which rate may not exceed the rate prescribed for this purpose. (11) If - (a) the renewal fee is not received within the period contemplated in subsection (10); or (b) the requirements of the standards referred to in subsection (9) have not been complied with, NAMFISA may not renew the registration of the authorised representative and must remove or direct the registered manager to remove the name of the authorised representative whose renewal fee was not paid or in respect to whom the requirements of the standards have not been complied with from the list kept by NAMFISA or submitted to NAMFISA. (12) A person who continues to operate, or to engage in, the business of an authorised representative after the non-renewal of registration under subsection (11), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Remedial action 181. (1) NAMFISA may take any of the actions set out in subsection (2), if NAMFISA acting reasonably, finds that any of the following circumstances exist with respect to registered authorised representative:
[The word “a” appears to have been omitted before the phrase “registered authorised representative”.]
(a) any of the requirements referred to in section 180(2) have not been met; (b) the copy of the list submitted under section 180 or the accompanying information and material contained information concerning the person that was not materially accurate or omitted information that was materially relevant; (c) the person no longer meets the requirements for an authorised representative; (d) the person has suspended the activities for which he, she or it was registered for a period of at least 12 months; (e) the person is not in compliance with a requirement of this Act; or (f) the person has engaged in conduct of a kind that has been identified in the standards as misconduct. (2) If NAMFISA is satisfied that any of the circumstances described in subsection (1) exist, NAMFISA may take or direct the manager to take remedial action including, without limitation - (a) directing the manager to provide further information with respect to the person; (b) directing the manager to provide further training for the person; (c) directing the manager to take disciplinary action against the person; (d) directing the manager to make changes to the code of conduct and systems referred to in section 180(2) or (3); (e) requiring an undertaking from the person pursuant to section 436; (f) requiring an undertaking from the manager pursuant to section 436; (g) directing the person to undertake specific actions or refrain from specific actions pursuant to section 439(4)(c); (h) directing the manager to undertake specific actions or refrain from specific actions pursuant to section 439(4)(c); or (i) imposing on the manager any penalty that may be specified in the standards, if the manager has been negligent in satisfying itself with respect to the provisions of section 180(2) or (3). (3) If on receipt of evidence that the required action has been taken pursuant to subsection (2), NAMFISA acting reasonably, finds that any of the circumstances referred to in subsection (1) continue to exist, NAMFISA may direct the manager to remove the name of the person from the list referred to in section 180(1) or (6). (4) Before directing that the name of a person be removed from a list pursuant to subsection (3), NAMFISA must give both parties the reasons for the proposed removal and a reasonable opportunity to be heard. (5) If a manager fails to remove the name of a person from the list when required to do so by NAMFISA, NAMFISA may, after giving the authorised representative a reasonable opportunity to be heard, itself remove the name of the person from the list. (6) If the name of a person is removed from a list by a manager or by NAMFISA, the registration of that person as an authorised representative is cancelled, and that person may not act as an authorised representative or be included on any list a copy of which is submitted under section 180 for such period as NAMFISA may determine. (7) A person who continues to operate, or to engage in, the business of an authorised
representative after the cancellation of registration under subsection (6) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Registration as designated representative of authorised representative and renewal of registration 182. (1) An authorised representative that is a company must submit to the manager of which it is an authorised representative a copy of the list maintained by that authorised representative of its employees who are its designated representatives. (2) An authorised representative that is a company must have in place a code of conduct and applicable systems relevant to designated representatives in order to be reasonably satisfied with respect to each of its designated representatives that - (a) the individual is at least 18 years of age; (b) the individual has met the requirements for designated representatives that may be included in the standards or the requirements of the manager from time to time; (c) the individual is not in a position to offer inducement or use coercion or undue influence in order to control, direct or secure business; (d) the individual has not been refused registration, authorisation or acceptance or had such registration, authorisation or acceptance suspended or revoked under this Act or any other applicable financial services law; (e) the individual has not been convicted of an offence the nature of which renders him or her, in the opinion of NAMFISA, unfit to hold a registration under this Act; (f) the individual is fit and proper within the meaning of the standards; (g) there are reasonable grounds for believing that the individual will carry on with integrity and honesty the activities of a designated representative; (h) the individual has met, and there is no reason to believe that the individual will not be able to meet, any other requirements of this Act and any instructions and guidelines issued by NAMFISA under this Act or issued by the manager that apply to designated representatives; (i) there is no reason to believe that the individual is likely to engage in conduct of a kind identified in the standards as misconduct; (j) the individual is ordinarily resident in Namibia and is in a position to comply with the law relating to his or her residency in Namibia and with any other applicable laws of Namibia; and (k) any required fee has been paid. (3) An authorised representative that is a company must provide the manager with such other information and material regarding its designated representatives as the manager may require. (4) The manager must forward the copy of the list to NAMFISA together with any required fee and NAMFISA must register each person whose name appears on the list as a designated representative. (5) An authorised representative that is a company and that has submitted a list to the manager pursuant to subsection (1) must submit to the manager
an update of that list when there has been an addition or deletion, together, in the case of additional designated representatives, with the required fee for each additional designated representative and the information and material referred to in subsection (3). (6) An authorised representative that is a company may not remove an individual from the list referred to in subsection (1) unless the authorised representative has given the individual concerned the reasons for the proposed removal and a reasonable opportunity to be heard. (7) If an authorised representative that is a company removes an individual from the list, it must, at the same time as submitting the update of the list as required by subsection (5), provide the manager with a statement indicating the reason that the individual has been removed from the list. (8) The manager must forward any updated list received pursuant to subsection (5) to NAMFISA, together with any statement referred to in subsection (7), and in the case of any addition, the provisions of subsection (4) do apply. [The word “do” in the phrase “do apply” is superfluous.] (9) The term of registration as a designated representative under this section expires on March 31 of each year or on such other date as NAMFISA may specify, but if the appropriate renewal fee as determined by NAMFISA in respect of each designated representative is paid to NAMFISA in the manner set out in the standards, the registration must, subject to compliance with any requirements that may be set out in the standards, be renewed for a period of 12 months as from the expiry date. (10) The renewal fee is payable within the period set out in the standards, and any payment received after that period bears interest at a rate determined by NAMFISA in the standards, which rate may not exceed the rate prescribed for this purpose. (11) If - (a) the renewal fee is not received within the period contemplated in subsection (10); or (b) the requirements of the standards referred to in subsection (9) have not been complied with, NAMFISA may not renew the registration of the designated representative and must remove or direct the manager to remove the name of the designated representative whose renewal fee was not paid or in respect to whom the requirements of the standards have not been complied with from the list kept by NAMFISA or submitted to NAMFISA. (12) A person who continues to operate, or engage in, the business of a designated representative after the non-renewal of registration under subsection (11), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Remedial action 183. (1) A manager may take any of the actions set out in subsection (2), if the manager acting reasonably, finds that any of the following circumstances exist with respect to a designated representative - (a) any of the requirements referred to in section
182(2) have not been met; (b) the copy of the list submitted under section 182 or the accompanying information and material contained information concerning the individual that was not materially accurate or omitted information that was materially relevant; (c) the individual no longer meets the requirements for a designated representative; (d) the individual has suspended activities for which the individual was registered for a period of at least 12 months; (e) the individual is not in compliance with a requirement of this Act; or (f) the individual has engaged in conduct of a kind that has been identified in the standards as misconduct. (2) If the manager is satisfied that any of the circumstances described in subsection (1) exist, the manager may take or direct the authorised representative that is a company to take remedial action including, without limitation - (a) directing the authorised representative that is a company to provide further information with respect to the designated representative; (b) directing the authorised representative that is a company to provide further training for the designated representative; (c) directing the authorised representative that is a company to take disciplinary action against the designated representative; (d) directing the authorised representative to make changes to the code of conduct and systems referred to in section 182(2); (e) requiring an undertaking from the authorised representative or from the designated representative or from both; (f) directing the authorised representative or the designated representative or both to take specific actions or refrain from specific actions; or (g) refer the matter to NAMFISA. [The word “refer” should be “referring” to fit the introductory phrase, as in sections 96(2)(g) and 100(2)(g).] (3) If on receipt of evidence that the required action has been taken pursuant to subsection (2), the manager acting reasonably, finds that any of the circumstances referred to in subsection (1) continue to exist, the manager may direct the authorised representative to remove the name of the designated representative from the list referred to in section 182(1) or (5). (4) Before directing that the name of a person be removed from a list pursuant to subsection (3), the manager must give the authorised representative and the designated representative the reasons for the proposed removal and a reasonable opportunity to be heard. (5) If an authorised representative fails to remove the name of a designated representative from the list when required to do so by the manager, the manager may, after giving the designated representative a reasonable opportunity to be heard, itself remove the name of the person from the list. (6) The manager must inform NAMFISA forthwith of any direction to an authorised representative to remove the name of a designated representative from the list pursuant to subsection (3) or of the removal of the name of a designated representative from the list by
the manager pursuant to subsection (5) and in that case, or in the case that the manager refers a matter to NAMFISA pursuant to subsection (2)(g), the provisions of section 181 do apply with any changes made required by the context. [The word “do” in the phrase “do apply” is superfluous.] (7) If the name of a person is removed from a list by a manager or by the authorised representative, the registration of that person as a designated representative is cancelled, and that person may not act as a designated representative or be included on any list a copy of which is submitted under section 182 for such period as NAMFISA may determine. (8) A person who continues to operate, or engage in, the business of a designated representative after the cancellation of registration under subsection (7), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Approval of nominee company 184. (1) NAMFISA may, on application made to it, approve a company as a nominee company if that company - (a) has as its principal object to act as nominee for or representative of any person in the holding of any property in trust for such person; (b) is precluded by its memorandum, articles or rules from incurring any liabilities except for those persons on whose behalf it holds property to the extent of their respective rights to and interests in such property; and (c) has entered into an irrevocable agreement with a manager pursuant to which such manager has undertaken to pay all the expenses of and incidental to its formation, operations, management and liquidation and has appointed directors responsible for the management and control of the nominee company of whom more than 50 per cent are independent, within the meaning of the standards, from - (i) the manager; (ii) any holding company of the manager; (iii) any subsidiary of such holding company; and (iv) any other affiliate of the manager. (2) An application for approval pursuant to subsection (1) must be made in the manner and form required by the standards. (3) NAMFISA may set out additional requirements for an application for approval as a nominee company and the granting of such approval by NAMFISA in the standards. (4) A person that was approved as a nominee company pursuant to section 37(2)(a) of the Unit Trusts Control Act on the date of commencement of this Chapter is, subject to subsection (5), deemed to be approved as a nominee company under this section. (5) Despite subsection (4), a person referred to in that subsection must, within 12 months after the date of commencement of this Chapter, make an application to NAMFISA pursuant to this section for approval as a nominee company. (6) If a person referred to in subsection (4) fails to make an application to NAMFISA for approval within the period referred to in subsection (5), the deemed approval of that person is cancelled. (7) A person
who continues to operate, or engage in, the business of a nominee company after the cancellation of registration under subsection (6), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Principal office and principal officer 185. (1) Every manager of a collective investment scheme and every authorised representative that is a company must - (a) have a principal office in Namibia where it must hold and maintain the documents referred to in the standards; and (b) appoint to be its principal officer in Namibia, a fit and proper person within the meaning of the standards, who is - (i) a Namibian citizen or permanent resident; and (ii) resident in Namibia. (2) Despite subsection (1)(b)(i), NAMFISA may, in exceptional circumstances, grant permission that a principal officer referred to in that subsection may, subject to the Immigration Control Act, 1993 (Act No. 7 of 1993), for such period as may be determined by NAMFISA, be a person other than a Namibian citizen or permanent resident. (3) After the appointment of a principal officer pursuant to subsection (1)(b), the registered manager or authorised representative referred to in subsection (1) must, within the period set out in the standards, in writing NAMFISA notify of the appointment. (4) NAMFISA may, on the grounds that a principal officer is not a fit and proper person within the meaning of the standards, and after giving the registered manager or authorised representative referred to in subsection (1) and the principal officer a reasonable opportunity to be heard, direct the registered manager or authorised representative to appoint some other person to be the principal officer of that registered manager or authorised representative. (5) Whenever a principal officer resigns or the appointment of a principal officer is terminated by a registered manager or authorised representative referred to in subsection (1) or by the expiry of a contract of employment, the registered manager or authorised representative must, within the period set out in the standards, in writing notify NAMFISA and submit to NAMFISA a written statement of the reasons for the termination or, in the opinion of the registered manager or authorised representative, the reasons for the resignation. (6) The principal officer referred to in subsection (1)(b) must be an ex officio member of the board of the manager of a collective investment scheme or authorised representative referred to in subsection (1), but the principal officer may not serve as chairperson of the board. (7) The principal officer of the manager of a collective investment scheme or authorised representative referred to in subsection (1) is authorised to act on behalf of the manager of the collective investment scheme or authorised representative referred to in subsection (1) to ensure compliance with this Act, and in any case where a
person, including NAMFISA, communicates with that manager of a collective investment scheme or authorised representative referred to in subsection (1), that person may do so by addressing the communication to the principal officer. (8) Process in any legal proceedings may be served on the manager of a collective investment scheme or authorised representative referred to in subsection (1) by serving a copy of the process at its principal office. (9) A person who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Appointment of auditor 186. (1) A manager must, in accordance with section 401, appoint and at all times have an auditor or firm of auditors to be the auditor for the collective investment scheme operated by the manager. (2) The manager may not appoint as auditor of a collective investment scheme - (a) an auditor who is; or (b) a firm of auditors any member of which is, a director, an officer or employee or a shareholder of the manager or of a trustee or custodian of the collective investment scheme. (3) NAMFISA may direct the manager of a collective investment scheme to change the auditor of the collective investment scheme if NAMFISA is satisfied that the auditor or any member of the firm of auditors appointed as auditor is a director, an officer, an employee or a shareholder of the manager or of a trustee or custodian of the collective investment scheme. (4) An auditor appointed under subsection (1) - (a) must perform the functions and duties assigned to; (b) must exercise the powers conferred on; and (c) is subject to the obligations imposed on, an auditor by section 401. Limitation on investments 187. (1) NAMFISA may provide in the standards the manner in which and the limits and conditions subject to which investments may be included in a portfolio of a collective investment scheme. (2) NAMFISA may provide in the standards different manners, limits and conditions for different types or classes of investments or different portfolios of a collective investment scheme. (3) Without limiting the generality of subsections (1) and (2), NAMFISA may provide in the standards for - (a) the minimum size of portfolios; (b) the mandatory purchase of units by managers; and (c) restrictions and conditions on the use of leverage and derivatives in or in connection with a portfolio. Rules 188. NAMFISA may make rules in the standards for the operation and administration of collective investment schemes under one or more of Parts 4 to 9, and for the solicitation of investments in a foreign collective investment scheme under Part 10.
PART 3
TRUSTEES AND CUSTODIANS
Appointment and termination of trustee or custodian 189.
(1) A manager must appoint either a trustee or a custodian for its collective investment scheme depending on the structure of the collective investment scheme.
(2) A person may not become or act as a trustee or custodian unless that person is registered under section 190 or deemed to be registered under section 191.
(3) When the appointment of a trustee or custodian is terminated, otherwise than pursuant to section 190(5), that trustee or custodian must as soon as possible submit a report to NAMFISA stating - (a) whether any irregularity or undesirable practice is being considered, has taken place or is taking place in the conduct of the affairs of the collective investment scheme which has caused or is likely to cause financial loss to investors in a portfolio of the collective investment scheme; (b) particulars of any such irregularity or undesirable practice; and (c) the reason, if known, for the termination of the appointment. (4) A trustee or custodian intending to resign from an appointment made under this section must give the manager and NAMFISA not less than six months’ notice of such intention, and during the said period of six months the manager must take steps to appoint as trustee or custodian some other person competent to act as such pursuant to section 190. (5) If a manager fails to take the steps referred to in subsection (4) within the said period of six months NAMFISA may, after consultation with the manager, direct the manager to appoint a competent person as trustee or custodian. (6) When it is impracticable for a trustee or custodian to perform any or all its duties under section 192, the trustee or custodian may appoint a representative who is independent, within the meaning of the standards, from the manager and any of its authorised representatives, to perform such duties. (7) A trustee or custodian of a collective investment scheme who has appointed a representative under subsection (6) is not divested of the functions referred to in this Part. (8) A person who contravenes or fails to comply with subsection (2) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Registration 190. (1) A person may not become or act as a trustee or as a custodian unless that person is - (a) a public company; (b) any other entity or institution, which is not a close corporation, established by or incorporated under any legislation in Namibia; (c) a banking institution; (d) a foreign entity or a branch of a foreign entity which is entitled to carry on the business of a banking institution; or (e) an insurer registered for long term insurance under section 11. (2) NAMFISA, on application made to it, may register an entity referred to in subsection (1) as a trustee or custodian as long as that entity complies with the requirements of the standards including, but not limited to - (a) capital and reserves requirements; (b) requirements relating to the general financial and commercial standing of the entity; and (c) the experience, independence and operational ability of each person who manages the entity that makes that person fit and proper within the meaning of the standards. (3) An application for registration pursuant to
subsection (2) must be made in the manner and form required by the standards. (4) NAMFISA may not register an entity referred to in subsection (1) pursuant to subsection (2), if the entity is an affiliate of the manager. (5) NAMFISA may cancel or, subject to such conditions as NAMFISA may impose, suspend the registration of a trustee or custodian if at any time NAMFISA is satisfied that the trustee or custodian no longer meets the requirements contained in subsection (1), (2) or (4). (6) NAMFISA must, before cancelling or suspending a registration pursuant to subsection (5), notify the trustee or custodian and the manager of the grounds upon which such action is contemplated, and must give it a reasonable opportunity to be heard and to show cause why the proposed action should not be taken. (7) NAMFISA may, subject to such conditions as NAMFISA may impose, suspend a registration pursuant to subsection (5) without complying with subsection (6), if NAMFISA is satisfied that it is necessary to act expeditiously in order to protect the interests of clients of the manager or the interests of the Namibian financial system, but must give notice to the trustee or custodian and the manager as soon as practicable thereafter and consider any representations made by them on the matter. (8) The trustee or custodian has the right to present its case to NAMFISA and in doing so, to be represented by any other person. (9) A person who - (a) continues to operate, or engage in, the business of trustee or custodian after the cancellation of registration under subsection (5) or any other applicable provision of this Act or after suspension of registration under subsection (5) or (7); or (b) fails to comply with a condition imposed by NAMFISA under subsection (5) or (7), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Existing trustees 191. (1) A person that was registered as a trustee under section 20(2)(b) of the Unit Trusts Control Act on the date of commencement of this Chapter is, subject to subsection (2), deemed to be registered as a trustee or custodian under section 190(2). (2) Despite subsection (1), a person referred to in that subsection must, within 12 months after the date of commencement of this Chapter, make an application to NAMFISA pursuant to section 190 for registration as a trustee or custodian. (3) If a person referred to in subsection (1) fails to make an application to NAMFISA for registration within the period referred to in subsection (2), the deemed registration of that person is cancelled. (4) A person who continues to operate, or engage in, the business of trustee or custodian after the cancellation of registration under subsection (3), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such
imprisonment. Duties of trustee or custodian 192. (1) A trustee or custodian must - (a) ensure that the basis on which the sale, issue, repurchase or cancellation of participatory interests effected by or on behalf of a collective investment scheme is carried out in accordance with this Act and the deed; (b) ensure that the selling or repurchase price of participatory interests is calculated in accordance with this Act and the deed; (c) carry out the instructions of the manager unless they are inconsistent with this Act or the deed; (d) verify that in transactions involving the assets of a collective investment scheme any consideration is remitted to the collective investment scheme within time limits which are acceptable market practice in the context of a particular transaction; (e) verify that the income accruals of a portfolio are applied in accordance with this Act and the deed; (f) enquire into and prepare a report on the operation of the collective investment scheme by the manager during each annual accounting period, in which it must be stated whether the collective investment scheme has been operated in accordance with - (i) the limitations imposed on the investment and borrowing powers of the manager by this Chapter; and (ii) the provisions of this Act and the deed; (g) if the manager does not comply with the limitations and provisions referred to in paragraph (f), state the reason for the non-compliance and outline the steps taken by the manager to rectify the situation; (h) send the report referred to in paragraph (f) to NAMFISA and to the manager in good time to enable the manager to include a copy of the report in its annual report; and (i) ensure that - (i) there is a legal separation of assets held under custody and that the legal entitlement of investors to such assets is assured; and (ii) appropriate internal control systems are maintained and that records clearly identify the nature and value of all assets under custody, the ownership of each asset and the place where documents of title pertaining to each asset are kept. (2) A trustee or custodian must report to the manager any irregularity or undesirable practice concerning the collective investment scheme, whether or not such practice has been declared as irregular or undesirable under this Act, of which it is aware and if steps to rectify the irregularity or practice in question are not taken to the satisfaction of the trustee or custodian, it must as soon as possible report such irregularity or undesirable practice to NAMFISA. (3) The trustee or custodian must satisfy itself that every financial statement, balance sheet or other return prepared by the manager pursuant to this Act fairly represents the assets and liabilities, as well as the income and distribution of income, of every portfolio of the collective investment scheme operated by the manager. (4) At the request of the trustee or custodian, every director, officer and employee of the manager must submit to the
trustee or custodian any book or document or other information relating to the operation by the manager of its collective investment scheme which is in the possession or at the disposal of that person, and which the trustee or custodian may consider necessary to perform its functions. (5) A person who interferes with the performance by a trustee or custodian of its functions commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. (6) A trustee or custodian of a collective investment scheme which fails to perform any of its duties referred to in this section commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Status of assets 193. For purposes of this Chapter - (a) money or other assets received from an investor; and (b) assets of a portfolio, are regarded as being trust property and a manager, its authorised representative, a designated representative of that authorised representative and a trustee or custodian must deal with such money or other assets in conformity with this Act and the deed in the best interests of investors and in accordance with the instructions, if any, of such investors. Liability for loss of assets 194. A trustee or custodian must indemnify the manager and investors against any loss or damage suffered in respect of money or other assets in the custody of the trustee or custodian, which is caused by a wilful or negligent act or omission by the trustee or custodian.
PART 4
COLLECTIVE INVESTMENT SCHEMES IN SECURITIES
Definitions for this Part
195.
In this Part, unless the context otherwise indicates - “collective investment scheme in securities” means a scheme the portfolio of which consists mainly of listed securities or units of a collective investment scheme in listed securities. Determination of fair value 196. A security must be valued at its fair value, calculated in accordance with the standards. Foreign securities 197. (1) A manager may, subject to this Act, invest assets of a portfolio of a collective investment scheme in securities in foreign equity securities if such foreign equity securities - (a) are traded on a foreign exchange approved by NAMFISA pursuant to the standards; and (b) are listed on a foreign exchange to which the manager has applied the due diligence requirements provided for in the standards. (2) A manager may, subject to this Act, invest assets of a portfolio of a collective investment scheme in securities in foreign non-equity securities if such foreign non-equity securities - (a) are securities permitted for collective investment schemes in securities by the standards; and (b) are securities to which the manager has applied the due diligence requirements for issuers provided for in the standards.
PART 5
COLLECTIVE INVESTMENT SCHEMES IN PROPERTY
Definitions for this Part
198.
(1) In this Part unless the context indicates otherwise - “collective investment scheme in property” includes a scheme the portfolio of which consists of property shares, immovable property, assets determined under subsection (2) or any investment permitted under section 199; “fixed property company” means a company all the issued shares of which are included in a portfolio, and the principal business of which consists in the acquisition and holding of - (a) immovable property or any undivided share or interest therein or leasehold in respect of the property; (b) a participatory interest in any collective investment scheme where the portfolio consists predominantly of property shares, immovable property or other assets determined by the standards referred to in subsection (2); or (c) such other immovable property or any undivided share or interest therein or leasehold in respect of the property as NAMFISA has approved; “property shares” means shares in and of - (a) a fixed property company; or (b) a holding company which has no subsidiaries other than fixed property companies which are its wholly owned subsidiaries; “immovable property” means any piece of land registered as an erf, lot or stand in a deeds registry, which erf, lot or stand is situated in a township as defined in section 1 of the Townships and Division of Land Ordinance, 1963 (Ordinance No. 11 of 1963), and, for the purposes of section 199, any piece of land registered as an erf, lot or stand in a foreign deeds registry. (2) For the purposes of this Part, NAMFISA may provide for, in the standards, assets in addition to those referred to in the definition of “collective investment scheme in property” which may be included in a portfolio of a collective investment scheme in property. Foreign country in which collective investment scheme in property may invest 199. A manager may, subject to this Act, invest assets of a portfolio of a collective investment scheme in property in - (a) immovable property in a foreign country; and (b) property shares or participatory interests in a collective investment scheme in property in a foreign country, if such foreign country has a foreign currency sovereign rating by a securities rating agency as defined in section 78, which rating and rating agency must be acceptable pursuant to the standards, and if the country has been rated by more than one agency the lower of the ratings must apply. Listing of participatory interests by exchange 200. (1) The manager of a collective investment scheme in property may apply to NAMFISA for permission for the participatory interests in a collective investment scheme in property to be dealt in on an exchange. (2) Chapter 5 of the Companies Act applies to the repurchase of a participatory interest by a collective investment scheme in property and for the purposes of this section, “shares” as referred to in that Chapter must be regarded as including participatory interests in a collective investment scheme in
property.
PART 6
COLLECTIVE INVESTMENT SCHEMES IN PARTICIPATION BONDS Definitions for this Part 201.
In this Part, unless the context indicates otherwise - “collective investment scheme in participation bonds” means, subject to the provisions of this Part, a scheme of which the portfolio consists predominantly of - (a) assets in the form of participation bonds pursuant to which members of the public are invited or permitted to acquire a participatory interest in all the participation bonds included in the scheme; or (b) a participatory interest in a collective investment scheme of which the portfolio consists predominantly of assets referred to in paragraph (a); “participation bond” means a mortgage bond over immovable property - (a) which is described as a participation bond and is registered as such in the name of a nominee company and is included in a collective investment scheme in participation bonds; and (b) which is a first mortgage bond or which ranks equally with another first participation bond and has the same mortgagor; and “principal debt” means the cash amount in money actually received by or on behalf of the mortgagor in terms of the money-lending transaction secured by a participation bond. Transitional provisions 202. (1) From the date of the commencement of this Part, a person carrying on or managing a scheme or arrangement permitting of participation in specified mortgage bonds who was exempted by NAMFISA under section 37(2)(a) of the Unit Trusts Control Act is deemed to be registered under this Chapter as a manager of a collective investment scheme in participation bonds and a nominee company approved by NAMFISA under that subsection is deemed to be approved under section 184(1). (2) NAMFISA must issue a certificate of registration in a form provided by the standards to a person referred to in subsection (1). (3) Within 90 days after the commencement of this Part, a person referred to in subsection (1) must exchange participations in a participation bond registered under the Participation Bonds Act, 1981 (Act No. 55 of 1981) for a participatory interest of equal value in a collective investment scheme in participation bonds under this Part. Capacity of manager 203. (1) The manager of a collective investment scheme in participation bonds may in respect of any business conducted by such manager act as principal or as agent. (2) When acting as a principal in respect of a credit transaction which is subject to the provisions of the Credit Agreements Act, 1980 (Act No. 75 of 1980) the manager is entitled to charge such charges as may be charged in terms of that Act in connection with such credit transaction. Registration of participation bonds in name of nominee company 204. (1) Despite any law to the contrary, a participation bond clearly described as such must be registered in a deeds registry in the name of a nominee company as nominee for or representative of the investors. (2) The names of the investors need not be listed in a participation bond. Rights of investor 205. The debt secured by a participation bond, to the extent
of the participatory interest granted to any investor, is a debt owing by the mortgagor to such investor and not to the nominee company, and the rights conferred by the registration of any such bond are deemed to be held by the investor despite the registration of the bond in the name of the nominee company. Minimum investment period 206. An agreement pursuant to the terms of which a manager accepts money for investment in a collective investment scheme in participation bonds must ensure that such money is invested in such scheme for a period of not less than the period specified in the standards. Participatory interests rank in preference concurrently 207. All participatory interests granted in any participation bond, whenever granted, rank in preference concurrently with one another as from the date of registration of the bond. Restrictions on rights of nominee company 208. A nominee company may not transfer, cede or in any way encumber any of its own rights under a participation bond without the prior consent of NAMFISA. Collateral security in respect of participation bonds 209. (1) Any collateral security, including a surety mortgage bond, collateral mortgage bond, notarial bond, suretyship, guarantee, cession, pledge or lien accepted by a manager in addition to a participation bond in order to secure - (a) the debt secured by a participation bond; (b) the due performance by a mortgagor of the obligations under a participation bond; or (c) the due performance by a surety of the obligations under a contract of suretyship relating to such debt or to the obligations of the mortgagor, must be registered in the name of the nominee company as nominee for or representative of the investors, and any contract relating to such security must be drawn and executed in favour of that nominee company. (2) Despite any law to the contrary, a contract of suretyship relating to a debt secured by a participation bond and accepted by a manager pursuant to subsection (1), is enforceable by the nominee company in its own name against the surety on behalf of the investors. (3) Sections 204(2), 205, 206 and 207 apply with the changes required by the context in respect of collateral security accepted by a manager for the purposes referred to in subsection (1), and a reference to a participation bond in those provisions must be construed to include a reference to a participation bond and collateral security, and a reference to a mortgagor must be construed to include a reference to a mortgagor and the grantor of collateral security.
PART 7
COLLECTIVE INVESTMENT SCHEMES IN UNLISTED SECURITIES Definitions for this Part 210.
In this Part, unless the context indicates otherwise - “collective investment scheme in unlisted securities” means, subject to the provisions of this Part, a scheme of which the portfolio consists predominantly of - (a) assets, in the form of unlisted investments in Namibia or which qualify as such under the regulations, pursuant to which members of the public are invited or permitted to acquire a participatory interest in all the unlisted investments included in the scheme; or (b) a participatory interest in a collective investment scheme of which the portfolio consists predominantly of assets referred to in paragraph (a). Minimum investment period 211. An agreement in terms of which a manager accepts money for investment in a collective investment scheme in unlisted securities must provide that such money is invested in such scheme for a period of not less than the period specified in the standards. Listing by exchange 212. (1) At any time when no investor in a particular collective investment scheme in unlisted securities has money invested which is still subject to a minimum investment period pursuant to section 211, the manager of the collective investment scheme in unlisted securities may apply to NAMFISA for approval to allow the participatory interests in the scheme to be dealt with on a registered exchange. (2) Chapter 5 of the Companies Act applies to the repurchase of a participatory interest by a collective investment scheme in unlisted securities, and for the purposes of this section, “shares” referred to in that Chapter must be regarded as including participatory interests in a collective investment scheme in listed securities.
PART 8
COLLECTIVE INVESTMENT SCHEMES IN MONEY MARKET INSTRUMENTS Definitions for this Part 213.
In this Part, unless the context indicates otherwise - “collective investment scheme in money market instruments” means a scheme the portfolio of which consists mainly of money market instruments.
Determination of fair value
214.
A money market instrument must be valued at its fair value, calculated in accordance with the standards.
Foreign money market instruments
215.
A manager may, subject to this Act, invest assets of a portfolio of a collective investment scheme in money market instruments in foreign money market instruments if such foreign money market instruments are money market instruments - (a) permitted for collective investment schemes in money market instruments by the standards; and (b) to which the manager has applied the due diligence requirements for issuers provided for in the standards.
PART 9
DECLARED COLLECTIVE INVESTMENT SCHEMES
Definitions for this Part
216.
In this Part, unless the context indicates otherwise - “declared collective investment scheme” means a collective investment scheme which has been declared to be a collective investment scheme under section 217. Declaration of specific type of business as collective investment scheme 217. (1) The Minister, after consultation with NAMFISA, may by notice in the Gazette declare a collective investment scheme or type of collective investment scheme carrying on a specific business or investment programme or type of business or investment programme to be a collective investment scheme to which this Chapter or any Part or provision of this Chapter applies. (2) In a notice issued under subsection (1), the Minister may, without limitation on other matters specified in the notice - (a) define the business activity or investment programme of a declared collective investment scheme; and (b) specify the matters that must be included in the deed of a declared collective investment scheme. (3) The Minister may under subsection (1) issue different notices for different types of declared collective investment schemes. (4) NAMFISA may issue standards to give effect to a collective investment scheme declared under this section.
PART 10
FOREIGN COLLECTIVE INVESTMENT SCHEMES
Definitions for this Part
218.
In this Part, unless the context indicates otherwise - “foreign collective investment scheme” means a scheme, in whatever form, carried on in a country other than Namibia, in pursuance of which members of the public - (a) are invited or permitted to invest money or other assets in one or more groups of assets, whether called a portfolio or by any other name, of such scheme; (b) acquire an interest or undivided share, whether called a unit or by any other name, in such group of assets upon such investment; and (c) participate proportionately in the income or profits and the risk derived from such investment. Restrictions on foreign collective investment scheme 219. (1) NAMFISA may approve, subject to terms and conditions set out in the standards, an application by the manager or operator of a foreign collective investment scheme to solicit investments in such scheme from members of the public in Namibia if - (a) the application is in the form required by, and the applicant complies with the requirements set out in, the standards; (b) a copy of the approval or registration by the relevant foreign authority authorising the manager or operator and the foreign collective investment scheme to act as such is submitted with the application; and (c) the application is accompanied by the required fee set out in the standards. (2) A scheme approved under subsection (1) must, for the purposes of section 443, be regarded as a financial institution and the provisions of that section apply to such a scheme with any changes made necessary by the context. (3) A person who solicits investments in a foreign collective investment scheme when he or she or it is not approved under subsection (1) or who does not comply with the terms and conditions of an approval pursuant to that subsection, commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Reciprocity 220. (1) If pursuant to any - (a) law of a foreign country; or (b) regulatory or supervisory action taken by any authority or body in a foreign country, a manager connected with Namibia is suspended, disqualified or restricted from operating a collective investment scheme in that country although meeting the same requirements under which persons connected with that country are able to operate such a scheme, NAMFISA may, by notice served on a person connected with that country who is operating or intends to operate a collective investment scheme in Namibia, take such action as may be set out in the standards. (2) For the purposes of subsection (1) a manager or person is connected with Namibia or a foreign country if - (a) in the case of an individual, he or she is a national of, or resident in Namibia or in that country and operates a collective investment scheme from a principal place of business in Namibia or in that country; (b) in the case of a corporate body, it is incorporated or has a
principal place of business in Namibia or in that country or is controlled by a person or persons connected with Namibia or that country; (c) in the case of a partnership, it has a principal place of business in Namibia or in that country or any partner is connected with Namibia or that country; or (d) in the case of an unincorporated entity which is not a partnership, it is formed under the law of Namibia or of that country, has a principal place of business in Namibia or in that country or is controlled by a person connected with Namibia or with that country. Withdrawal of approval 221. (1) NAMFISA may at any time withdraw an approval granted under section 219 if - (a) it is in the interest of investors or potential investors; (b) the manager or operator has submitted inaccurate or misleading information in its application; or (c) any of the requirements set out in the standards or referred to in section 219(1) are no longer met. (2) A person affected by a decision of NAMFISA under subsection (1) has the right to appeal against the decision to the Appeal Board. (3) NAMFISA must give notice to the manager or operator of a foreign collective investment scheme of the intention of NAMFISA to take any action referred to in subsection (1), together with the reasons for taking the action, and must give the manager or operator of a foreign collective investment scheme a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the manager or operator may make representations to NAMFISA about the matter.
PART 11
CONVERSION OF COLLECTIVE INVESTMENT SCHEME
Definitions for this Part
222.
(1) In this Part, unless the context indicates otherwise - “collective investment scheme” includes one or more portfolios under such scheme and may, depending on the structure of the scheme, include a manager; “conversion” means a conversion of a collective investment scheme to any other format of a collective investment scheme permissible under this Chapter; “conversion scheme” means a scheme regulating a conversion and governing the reciprocal rights and obligations of the parties to the conversion; and “qualifying interest”, in relation to a collective investment scheme which is converted, means any participatory interest in such scheme which was issued before the conversion. (2) A conversion scheme must - (a) specify the basis, terms, conditions and cost of the conversion; (b) provide for the issue of participatory interests in a collective investment scheme established by the conversion; (c) provide for an offer, to persons who immediately before the conversion date were investors with a qualifying interest in the collective investment scheme and to members of the public, to take up participatory interests in the collective investment scheme established by the conversion, except that participatory interests may be offered to members of the public only to the extent to which they are not taken up by persons holding a qualifying interest in the collective investment scheme concerned immediately before the conversion date; and (d) provide for payment of the value of the participatory interest of any investor who chooses not to take up a participatory interest in the collective investment scheme established by the conversion or who holds a qualifying interest of a lesser value than the value determined in the conversion scheme as the minimum for a qualifying interest. Limitations on conversion of collective investment scheme 223. A manager may not convert a collective investment scheme unless - (a) the prior approval of NAMFISA to the conversion has been obtained; and (b) the conversion has been authorised by a resolution of the investors adopted in accordance with, and in the manner described by the standards. Application for approval of NAMFISA 224. (1) A manager must apply to NAMFISA in the manner and form provided by the standards, for approval of a conversion before a resolution on the matter is passed by investors. (2) An application referred to in subsection (1) must be accompanied by the documents required by the standards. (3) A manager must furnish any additional particulars in connection with the conversion that NAMFISA may require. Consideration of application 225. (1) NAMFISA may approve an application for a conversion made under section 224, if NAMFISA is satisfied that the application complies with the requirements of subsection (2). (2) NAMFISA may not approve a conversion if - (a) any of the documents referred to in section 224(2) are inconsistent with this Act or contain a provision which, in the opinion of NAMFISA, is
undesirable; (b) the basis or conditions on which a participatory interest in the proposed collective investment scheme is offered only to investors or to investors and members of the public referred to in section 222(2)(c) are not reasonable or fair or might have the effect that a participatory interest in the proposed scheme may be acquired contrary to this Act or any other law; or (c) the application does not comply with a requirement of this Act or any other law. (3) For the purposes of considering the basis or conditions on which a participatory interest in any proposed collective investment scheme is offered to investors or to investors and members of the public, NAMFISA may, after consultation with the manager, designate a person to investigate and advise NAMFISA on the reasonableness and fairness of the proposed basis and conditions. (4) The costs of an investigation under subsection (3) must be borne by the manager. (5) NAMFISA may not refuse an application made under section 224 without having afforded the manager a reasonable opportunity to amend the relevant documents in accordance with NAMFISA’s requirements. Resolution by investors 226. (1) As soon as NAMFISA has approved a conversion, the manager must obtain a resolution passed by investors authorising the conversion. (2) If the investors pass a resolution authorising the conversion, NAMFISA must, at the request of the manager, issue a certificate to the manager confirming NAMFISA’s approval of the conversion. (3) For the purposes of subsection (1) it must be presumed that holders of a majority in value of participatory interest certificates in an original scheme or portfolio have given their consent to the proposed conversion, unless the holders of a majority in value of participatory interest certificates in such scheme or portfolio have notified the manager in writing on or before a date determined by NAMFISA that they refuse their consent to the proposed conversion and such refusal has been disclosed by the manager to all investors. Registration of memorandum and articles by Registrar of Companies 227. (1) If a collective investment scheme that is not a company is to be converted into a collective investment scheme that is a company, that new company must be incorporated under the Companies Act with its memorandum and articles complying with that Act, and subject to the requirements of that Act and any requirement of NAMFISA, the conversion is deemed to have taken place upon the registration of the memorandum and articles under that Act. (2) The Registrar of Companies may not register the memorandum and articles of a company pursuant to subsection (1) unless the application for registration is accompanied by a certificate issued under section 226(2). (3) For the purposes of the registration of the memorandum and articles, the persons designated to act as the first directors of the company after the conversion must, if they accept their appointment as the first directors, sign
the memorandum and articles as if they were the subscribers of such company under section 61(2) of the Companies Act. Certificate of registration of conversion and notification 228. (1) Within 14 days after the conversion date, the manager must forward four certified copies of its deed to NAMFISA and NAMFISA must issue the manager with a certificate of registration as a manager of the converted collective investment scheme upon payment of the registration fee set out in the standards. (2) NAMFISA must at the expense of the manager, give notice in the Gazette of any conversion and the conversion date under this Part. Effects of conversion 229. (1) The business of a converted collective investment scheme which existed before the conversion continues thereafter but in the converted format and from and after the conversion date - (a) a reference in any document to the former collective investment scheme must be construed, unless inconsistent with the context or otherwise clearly inappropriate, as a reference to the collective investment scheme in its converted format; (b) if applicable, the persons who immediately before the conversion were directors of the manager must vacate their offices and the persons referred to in section 227(3) become the directors of the manager of the converted collective investment scheme; (c) the investors holding a qualifying interest become investors in the converted collective investment scheme; and (d) all participatory interests issued by the former collective investment scheme and which were not repurchased or cancelled before the conversion become participatory interests in the converted collective investment scheme. (2) Except in so far as this section provides otherwise, a conversion does not derogate from the obligations of the collective investment scheme or the rights of any creditor of the collective investment scheme before the conversion. Issue of participatory interests to former investors 230. (1) An offer to investors holding a qualifying interest to take up a participatory interest in a collective investment scheme established by a conversion under this Part must be made in writing to each individual investor, and such offer must be accompanied by a statement issued by the manager and must contain particulars in connection with - (a) the offer, the conversion and the converted collective investment scheme’s potential profit; (b) the scheme’s business prospects; (c) the scheme’s general state of affairs; and (d) such other affairs of the scheme as NAMFISA may require. (2) The provisions of the Companies Act with respect to the issue of a prospectus or an offer of shares do not apply to an offer referred to in subsection (1). (3) On a request by an investor holding a qualifying interest made in writing to a manager, other than a manager of a collective investment scheme in property, to apply the proceeds of such interest for the payment of a participatory interest in a converted collective investment
scheme - (a) such qualifying interest may be redeemed immediately despite the conditions attached to it; and (b) such proceeds may be applied for the payment of such participatory interest.
PART 12
GENERAL
Change of name of scheme or portfolio
231.
(1) A manager may not, without the prior approval of NAMFISA, change the name of its collective investment scheme or a portfolio.
(2) The provisions of section 391 do apply to a change of name of a collective investment scheme or a portfolio by a manager with such changes as may be made necessary by the context.
[The word “do” in the phrase “do apply” is superfluous.]
(3) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Prohibition of misleading names and acts 232. (1) Subject to subsection (2) a person may not - (a) use or include in or have, as part of the name of his or her business or any description of his or her business, any reference to a collective investment scheme, open-ended investment company, participatory interest, portfolio, unit, unit trust or mutual fund or any derivative that description, unless registered as a manager under this Chapter or approved as a manager or operator of a foreign collective investment scheme under section 219; and (b) perform any act calculated to lead the public to believe that any business carried on by such person consists of or is connected with the operation or administration of a collective investment scheme, unless registered as a manager, trustee or custodian, an authorised representative or a designated representative under this Chapter or approved under section 219. (2) NAMFISA may, on application by a person who is required to change his or her name by virtue of subsection (1), allow such person to effect such change on the conditions and within the period, not exceeding six months, determined by NAMFISA. (3) If at the commencement of this Chapter any person was using, in connection with that person’s business, any name or description referred to in subsection (1) and that person - (a) subsequently changes that name; (b) produces any deed or document, bearing the previous name which was registered in any deeds registry or in any other office where a register or record of the ownership of, or entitlement to, any property is kept, to the person charged with the registration of deeds in that registry or to the officer in charge of that other office; and (c) satisfies that person or officer that the name was changed as a result of the prohibition contained in subsection (1), that person or officer must, without any charge, substitute the new name for the previous name on such deed or document and in all the relevant registers. (4) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Restrictions on sale or lending of assets 233. (1) A manager may not sell or offer for sale any participatory interest in a portfolio of a collective investment scheme unless at the time of such offer the portfolio includes assets in the manner, within the limits and on the conditions set out in the standards. (2) A manager may, subject to section 237, lend or offer to lend assets included in a portfolio in the manner, within the limits and on the conditions determined in the standards and
the deed. (3) Different manners, limits and conditions for different assets or portfolios may be determined or provided for in any standards issued under subsection (1) or (2). (4) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Other business of manager 234. (1) A manager may conduct business other than the operation of a collective investment scheme subject to the prior approval of NAMFISA. (2) NAMFISA may on such conditions as NAMFISA may determine approve the application of a manager to conduct other business, if the investors in the collective investment scheme operated by the manager are not likely to be prejudiced. (3) Any person who carries on business without approval contrary to subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Exercise of voting power by manager 235. A manager or its nominee exercising the voting power conferred on it by the assets held in a portfolio must, in accordance with the requirements of the standards, exercise such power in the best interest of the investors. Unauthorised gain 236. (1) A person who controls a manager or a director, officer or employee of a manager may not, directly or indirectly, have a personal interest in or derive any pecuniary advantage from the acquisition or sale by that manager or director, officer or employee of a manager of any assets of a portfolio except if such advantage accrues in the ordinary course of business by virtue of - (a) any difference between the price at which a participatory interest is acquired and the price at which it is subsequently sold; or (b) any underwriting of participatory interests undertaken by the manager, or a director, officer or employee of that manager. (2) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Permissible deductions 237. The amounts which may be deducted from a portfolio must be as set out in the standards. Calculation of price 238. (1) Subject to subsection (2), a manager may not sell any participatory interest at a price which exceeds or is less than the net asset value, within the meaning of the standards, of that participatory interest. (2) Where participatory interests in a new portfolio are offered to the public for the first time, the manager may make an initial offer - (a) on a specified date; (b) for a specified period; and (c) of a specific number of participatory interests at a fixed price based on the price of the participatory interests on a previous date not more than 28 days prior to
the closing date of the offer. (3) In making payment to the investors in a portfolio of a distribution of income accruals on the participatory interests belonging to them, a manager must round off to the nearest fourth decimal, any amount so paid in respect of such number of participatory interests as represents the minimum number which, in terms of the portfolio’s deed, must be purchased at any one time, but any amount which, by virtue of such rounding-off, is left in the portfolio must be carried forward to the credit of investors in the next ensuing distribution. (4) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Payment of full purchase price 239. (1) A manager may not - (a) sell or offer for sale any participatory interest except on terms requiring payment of the full selling price to be made upon the acceptance of an investor’s or prospective investor’s offer for the purchase of the participatory interest by the manager, an authorised representative or designated representative; or (b) lend or otherwise advance any money to the investor or prospective investor with respect to the selling price. (2) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Power of manager to borrow 240. (1) A manager, other than a manager of a collective investment scheme in securities, may for the account of a portfolio borrow money for the purposes and subject to the limits and conditions determined in the deed. (2) The manager of a collective investment scheme in securities may, in the case where insufficient liquidity exists in a portfolio or where assets cannot be realised to repurchase or cancel participatory interests, borrow the necessary funds for such repurchase or cancellation on security of the assets and for the account of the portfolio in question from a banking institution, prudential and financial markets institution or financial institution at the best commercial terms available and until assets can be realised to repay such a loan. (3) The maximum amount that may be borrowed under subsection (2) must not exceed 10 per cent of the market value of the portfolio at the time of borrowing. (4) Any person who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Matters to be provided in deed 241. (1) Every deed must set out the requirements for the operation and administration of a portfolio and must contain provisions to regulate the matters detailed in the standards. (2) NAMFISA
may by notice in the Gazette exempt a particular type or category of collective investment scheme from the provisions of subsection (1) and determine the matters to be complied with or to be provided for in a deed governing such type or category of collective investment scheme. (3) NAMFISA may by notice in the Gazette suspend a provision of any deed and may determine matters in respect of which any deed must be amended. Void provisions and amendment 242. (1) A provision in a deed which is inconsistent with this Act is void. (2) The parties to a deed may by supplemental deed amend the deed, but such amendment of a deed is not valid unless the consent of a majority in value of investors has been obtained in the manner determined in the deed. (3) If NAMFISA is satisfied that any amendment referred to in subsection (2) - (a) is required only to enable the provisions of this Chapter or of the deed to be given effect more conveniently or economically; (b) will benefit the investors; (c) will not prejudice the interests of investors; (d) does not amend the fundamental provisions or objects of the deed; and (e) does not release the trustee, custodian or the manager from any responsibility to the investors, NAMFISA may direct that such consent be dispensed with. (4) Subject to subsection (3), the parties to a deed which immediately prior to the date of commencement of this Chapter was a deed pursuant to any law repealed by this Act, must within 12 months from the date of commencement of this Chapter amend, supplement or replace the deed in order to comply fully with the requirements of this Chapter. Postponement of realisation of assets on winding-up 243. (1) If it appears to NAMFISA that it would be in the interests of investors to continue a collective investment scheme for a period of time, NAMFISA may, with the approval of the court which has issued an order for the winding-up of the collective investment scheme under Part 7 of Chapter 10, issue a directive to the manager and trustee or custodian of the collective investment scheme or to the manager or operator of a foreign collective investment scheme referred to in section 219 - (a) to postpone the realisation of any assets for one or more periods, each period not to exceed five years, as NAMFISA may determine; and (b) pending such realisation, to carry on the scheme in accordance with the directives of NAMFISA and to collect and deal with all income accruals, bonuses and other distributions in accordance with the provisions of Part 7 of Chapter 10. (2) A manager, trustee or custodian or a manager or operator referred to in section 219 acting in accordance with a directive of NAMFISA under subsection (1) may, on six month’s written notice to NAMFISA, terminate the appointment of the manager, trustee or custodian or of the manager or operator under section 219 and NAMFISA must thereupon appoint some other fit and proper person within the meaning of the standards to take over the functions of such
person, subject to any conditions that NAMFISA may stipulate. (3) As remuneration for any services rendered under this section, a manager, trustee or custodian, a manager or operator referred to in section 219 or a person appointed by NAMFISA to take over the functions of such person pursuant to subsection (2), is entitled to a fee, calculated at such rate as NAMFISA may determine, on all moneys received in carrying out duties under this section, and NAMFISA may authorise the amount of such fee to be deducted, in such proportions as NAMFISA may determine, from income accruals or any moneys realised by the sale of assets pursuant to a winding-up order issued under Part 7 of Chapter 10. Separation of assets 244. For the purposes of a claim against a manager, trustee or custodian by a person who has the legal right to make that claim, there must be excluded from the assets of the manager, trustee or custodian - (a) any money or other assets handed to that manager, trustee or custodian or to an authorised representative of that manager or to a designated representative of that authorised representative by an investor for the sale or repurchase of a participatory interest; and (b) the assets of a portfolio. Segregation of funds 245. (1) A manager must - (a) open and maintain at a banking institution a separate operational trust account controlled by the trustee or custodian for each or for all the portfolios administered under the collective investment scheme; and (b) on the date of receipt of any payment, whether in cash or by draft or other instrument of payment from or on behalf of an investor or on the first business day thereafter, deposit in such account either the cash, draft or other instrument of payment or deposit for same day value in such account funds equal to the amount of such payment. (2) Funds deposited into an operational trust account referred to in subsection (1) may only be withdrawn for the purposes of making payment - (a) to the investor, person or manager entitled to such payment; or (b) pursuant to this Act, any other law and the deed, except that if subsequent to such withdrawal any deposited draft or other instrument of payment against which such withdrawal was made is not honoured, the manager must immediately pay the shortfall arising from such default into the operational trust account or cancel any participatory interest issued in respect of such defaulting payment. (3) Any excess remaining in the operational trust account after payment of or provision for all claims of investors whose funds have or should have been deposited in such account is not trust property as determined in section 193. (4) The court may on application by NAMFISA or by any other person having a financial interest in or claim against an operational trust account, on good cause shown, prohibit the manager from operating the account in any way and may appoint a person to control and administer such account with such duties and powers in relation to
the account as the court may consider fit. Identity and source to be disclosed 246. (1) A person may not publish or issue to the public or circulate any written comment which may influence the value of any participatory interest unless such comment is accompanied by - (a) the name of the person who compiled the comment or the name of the person on the editorial staff of a newspaper or periodical whom the editor regards as having compiled the comment; and (b) disclosure of the source from which the comment was obtained or the information on which it was based. (2) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Application of Companies Act to manager 247. (1) Except where this Chapter expressly provides otherwise, the application of the Companies Act to a manager is not affected by this Chapter. (2) Despite subsection (1), no provision of the Companies Act precludes the establishment and operation of an open-ended investment company under this Chapter. Exemption from Act No. 34 of 1934 248. The Trust Moneys Protection Act does not apply to a collective investment scheme operated and administered under this Act. [The Trust Moneys Protection Act 34 of 1934 has been replaced by the Trust Administration Act 11 of 2023.]
CHAPTER 5
RETIREMENT FUNDS
PART 1
PRELIMINARY
Definitions for this Chapter
249.
(1) In this Chapter, unless the context indicates otherwise - “active member”, in relation to a fund, means a member who at any relevant time is accruing benefits in the fund as a result of continuing employment or service; “beneficiary fund” means any association of persons or any business carried on under a scheme or arrangement established with the object of receiving, administering, investing and paying, on behalf of beneficiaries, benefits as contemplated in, or in accordance with, section 276(2)(c) or payable on the death of one or more member or members of one or more funds; “board” means the board of trustees of a fund or, where applicable, the trustees of a fund; “defined benefit fund” means a retirement fund in which each member receives a benefit that is determined in accordance with a pre-determined formula that incorporates the member’s salary as provided in the rules of the fund, pensionable service and a defined accrual rate on the date of the retirement, death, disability, withdrawal or termination of employment of that member; “defined contribution fund” means a retirement fund in which - (a) each member receives a benefit the amount of which is determined by the balance in that member’s individual account on the date of the retirement, death, disability, withdrawal or termination of employment of that member; (b) any benefit payable on retirement must be fully secured through an annuity policy owned by the fund or purchased in the name of the member or paid to the member in accordance with such other form of payment that is permitted under the standards; (c) no reserves for guarantees in respect of capital, investment income or rates of return, longevity or other contingency affecting the amount or duration of benefits or of annuity purchase rates or adequacy of expense charges or amounts held in such respect are required to be held by the fund; and (d) only an expense reserve required by the terms of the fund is held or is required to be held as stipulated in the standards or by generally acceptable actuarial practice; “dependant”, in relation to a member, means - (a) a person in respect of whom the member is legally liable for maintenance; (b) a person in respect of whom the member is not legally liable for maintenance, if that person - (i) was, in the opinion of the board, at the death of the member in fact dependent on the member for maintenance; (ii) is the spouse of the member; or (iii) is a child, who has not attained the age of of 18 years, of the member, including a posthumous child, an adopted child and a child born out of marriage; and [The word “of” is repeated in the Government Gazette , as reproduced above.] (c) a person for whom the member would have become legally liable to maintain had the member not died; “employer”, in relation to a fund, means an employer who is either - (a) contributing to the fund; or (b) participating in the fund; “fair value”, in relation to an asset of a fund, means the fair value of
that asset determined in accordance with generally accepted accounting practice; “fund” means a retirement fund or a beneficiary fund, and includes any other fund or class of funds as may be prescribed; “fund administrator” means a fund administrator as defined in section 363 and appointed pursuant to section 265(3); “Maintenance Act” means the Maintenance Act, 2003 (Act No. 9 of 2003); “member”, in relation to a fund, means an individual with a right to future benefits payable from the fund, and includes an active member and a retired member; “member’s individual account” means the account operated for the member as defined in the rules of the fund, where the account is - (a) credited with - (i) fixed-rate contributions paid, or amounts transferred, into the fund by or on behalf of the member and where the fixed-rate contributions are defined in the rules; (ii) amounts allocated by the board for the benefit of the member; (iii) additional contributions paid voluntarily by the member or the employer on the member’s behalf; and (iv) investment income and capital gains, as determined by the board; and (b) debited with expenses and capital losses, as determined by the board; “nominee”, in relation to a member, means a person whom the member has designated to the fund, by means of a beneficiary nomination form, to receive all or a portion of any benefit payable by that fund on the death of that member as specified on the beneficiary nomination form; “prescribed fund” means a fund as may be prescribed; “retired member”, in relation to a retirement fund, means a member who at any relevant time is in receipt of retirement benefits from the fund; “retirement” means the period commencing on the member’s retirement date; “retirement benefits” means benefits payable to individuals on or after their retirement or on their disability, death or termination of employment prior to retirement or on separation from a retirement fund or to their survivors, dependants or nominees; “retirement date” means the date on which a member becomes entitled to retirement benefits pursuant to the rules of a fund; “retirement fund” means an association of persons established with the objects of receiving, holding and investing contributions of individuals and their employers for the purpose of providing retirement benefits in accordance with the rules of the fund adopted for such purposes and includes such other funds as the Minister may prescribe; “rules” means the rules of a fund referred to in section 271; and “sponsor” means the person who established a fund or who proposes to establish a fund. Prohibitions 250. (1) A person may not carry on the business of a fund in Namibia unless the fund is registered pursuant to section 254 or deemed to be registered under section 255 or, in the case of a beneficiary fund, where section 256 applies. (2) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not
exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Restriction on use of designation “retirement fund” or “beneficiary fund” 251. (1) A person may not, in connection with a business, use a name which includes the words “retirement fund”, “beneficiary fund” or any other name which is intended to indicate or is likely to lead other persons to believe that the person carries on the business of a retirement fund or beneficiary fund, unless that business is registered or is deemed to be registered as a retirement fund or beneficiary fund under this Chapter or, in the case of a beneficiary fund, where section 256 applies. (2) If at the commencement of this Chapter any person was using, in connection with that person’s business, any name or description referred to in subsection (1) and that person - (a) subsequently changes that name; (b) produces any deed or document, bearing the previous name which was registered in any deeds registry or in any other office where a register or record of the ownership of, or entitlement to, any property is kept, to the person charged with the registration of deeds in that registry or to the officer in charge of that other office; and (c) satisfies the person so charged or officer that the name was changed as a result of the prohibition contained in subsection (1), that person so charged or officer must, without any charge, substitute the new name for the previous name on such deed or document and in all the relevant registers. (3) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment.
PART 2
REGISTRATION
Application for registration
252.
(1) An application for registration as a fund must be made to NAMFISA in accordance with subsection (2).
(2) An application for registration as a fund must be - (a) made in the manner and form required by the standards; (b) include the information with respect to the principal office and principal officer required by the standards; [This paragraph does not fit with the structure of the introductory phrase; the word “be” does not fit together with the verb “include”.] (c) accompanied by the proposed rules of the fund; (d) accompanied by the documents and other information required by the standards; (e) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; (f) made subject to and in accordance with any other applicable provision of this Act; and (g) accompanied by the required fee. Registration requirements 253. (1) Before approving the application and registering the fund, NAMFISA must be satisfied on reasonable grounds that the requirements of subsection (2) have been met and that - (a) the board complies with the requirements of section 261 or 262; (b) the rules of the fund are not inconsistent with this Act and are based on sound financial principles; and (c) the fund does not and will not unfairly discriminate directly or indirectly against any person. (2) Before approving an application referred to in subsection (1) and registering a fund NAMFISA must be satisfied that - (a) in relation to the proposed fund - (i) every member of the board of trustees, the principal officer and other officers of the proposed fund are fit and proper within the meaning of the standards; (ii) the rules or act, charter, deed of settlement, memorandum of association or other founding documents of the proposed fund are not inconsistent with the provisions of this Act; (iii) the direct or indirect control of the proposed fund is not likely to be contrary to the interest of consumers of the financial services concerned; and (iv) the proposed fund will be in a position to ensure that its organisational or group structure will not be such as to hinder effective supervision by NAMFISA; (b) doing so is not contrary to - (i) this Act; or (ii) the public interest; (c) the proposed fund has the attributes reasonably necessary and adequate to - (i) provide the financial services in question with professional integrity, prudence, proper skill and due diligence; (ii) maintain a sound financial position and not cause or further instability in the financial system of Namibia; and (iii) comply with this Act; (d) the name under which the proposed fund proposes to conduct business, or a translation, shortened form or derivative of that name is not in contravention of section 391; (e) the applicant has submitted all other information which, in the opinion of NAMFISA, is necessary to assess the application and such information has been found satisfactory by NAMFISA; and (f) the applicant has complied and will continue to comply with any other requirements contained in this Act or in the standards which apply to the proposed fund.
Registration 254. (1) If NAMFISA is satisfied that the proposed fund complies with the requirements of section 253, NAMFISA must register the fund, subject to any conditions which NAMFISA may consider appropriate pursuant to subsection (4), and must issue a certificate of registration pursuant to subsection (3). (2) The registration referred to in subsection (1) must specify - (a) the principal office of the applicant in Namibia; and (b) the places in Namibia from which the applicant may operate. (3) Upon registration of an applicant NAMFISA must issue to the applicant a certificate of registration in a form provided by the standards. (4) NAMFISA may impose such conditions on the registration of the applicant as it considers necessary having regard, without limitation, to all the facts and information available to NAMFISA pertaining to the applicant and any guidelines issued by NAMFISA under this Act. (5) If an application is refused by NAMFISA or is granted subject to conditions, NAMFISA must advise the applicant of the refusal or conditions by giving notice to the applicant containing the reasons for the refusal or the conditions and must give the applicant a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the applicant may make representations in writing to NAMFISA. (6) A fund must comply with the conditions subject to which it was registered. Existing pension funds 255. (1) A pension fund that was registered under the Pension Funds Act, 1956 (No. 24 of 1956) is deemed to be a retirement fund registered under this Act. (2) Despite subsection (1), a pension fund referred to in that subsection must, within 12 months after the date of commencement of this Chapter, make an application to NAMFISA pursuant to section 252 for registration as a retirement fund. (3) If a pension fund referred to in subsection (1) fails to make an application to NAMFISA for registration within the period referred to in subsection (2), NAMFISA may take action that NAMFISA considers appropriate against the pension fund pursuant to section 259, 412 or 439. Existing beneficiary funds 256. (1) An association or business that is operating as a beneficiary fund on the date of commencement of this Chapter may continue to transact business for a period of 12 months from that date, but before the end of that period, it must make an application for registration as a beneficiary fund pursuant to section 252. (2) If a beneficiary fund fails to make an application to NAMFISA for registration before the end of the period referred to in subsection (1), then that association or business must cease operating as a beneficiary fund. (3) A person who continues to carry on or operate the business of a beneficiary fund in contravention of subsection (2) or fails to comply with that subsection commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such
fine and such imprisonment. Effect of registration 257. (1) On registration of a fund under section 254, in so far as is applicable - (a) it has the powers of a juristic person to the extent that it is capable of suing and being sued under the name by which it is registered and of doing all such things as may be necessary for or incidental to the exercise of its powers or the performance of its functions pursuant to its rules; (b) despite anything to the contrary contained in any law or the act, charter, deed of settlement, memorandum of association, rules or other founding documents or the articles or rules of the fund or of any corporate body or unincorporated entity that controls the business of that fund - (i) all the assets, rights, liabilities and obligations pertaining to the business of the fund will be assets, rights, liabilities and obligations of that registered fund to the exclusion of any other person; and (ii) no person will have any claim on the assets or rights or be responsible for any liabilities or obligations of the fund, except in so far as the claim has arisen or the responsibility has been incurred in connection with transactions relating to the business of that fund; and (c) any assets, rights, liabilities and obligations, which are held by any person in trust for the fund as it existed immediately prior to its registration will vest in and devolve upon the registered fund without any formal transfer or cession. (2) The person in charge of the deeds registry or any other officer in charge of any other office where a register or record of the ownership of, or entitlement to, any property is kept in which is registered a deed or other document relating to an asset or right which under subsection (1) vests in or devolves upon a fund, must, on production by the fund of its certificate of registration and of the deed or other document, without payment of transfer duty, stamp duty, registration fees or other charges, make the endorsements upon that deed or other document and the alterations in the registers in order to reflect that vesting or devolution. Application for cancellation or variation of registration 258. (1) A registered fund may at any time make an application to NAMFISA for cancellation of the registration granted pursuant to this Act or a variation of the conditions subject to which that registration was granted. (2) An application made under subsection (1) must be - (a) made in the manner and form required by the standards; (b) accompanied by the documents and other information required by the standards; (c) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; and (d) accompanied by the required fee. (3) Before making an application for the cancellation of a registration or a variation of its conditions, the applicant must give prior notice of the proposed application in two newspapers circulating nationally in Namibia, at the expense of the applicant,
stating - (a) the name of the applicant; (b) either - (i) the reasons for the proposed cancellation; or (ii) the nature of the proposed variation; and (c) the period within which objections to the application may be lodged with NAMFISA. (4) Section 254 applies with the changes required by the context to an application for a variation of conditions referred to in subsection (1). (5) If after consideration of any objection received as a result of the notice referred to in subsection (3), NAMFISA is of the opinion that it is reasonable to do so and not against the public interest, NAMFISA may, by notice to the registered fund concerned - (a) cancel the registration; or (b) vary the conditions of registration, including the imposition of additional conditions. (6) NAMFISA must make public any cancellation of registration or variation of conditions of registration under subsection (5) and the reasons for the cancellation or variation, by notice in the Gazette or by means of any other appropriate public statement. Cancellation or variation of registration 259. (1) NAMFISA may take any of the actions set out in subsection (2), in the event that NAMFISA acting reasonably, finds that any of the following circumstances exist with respect to a registered fund:
(a) it has made a material misrepresentation or failed to provide information that was materially relevant in its application for registration; (b) it has failed to comply with this Act; (c) it no longer meets the requirements for registration; (d) it has provided financial services without professional integrity, prudence, proper skill and due diligence; (e) it is in an unsound financial position; (f) it has failed to comply with a directive, request or requirement of NAMFISA issued under this Act; (g) it has failed to give effect to a decision of the Appeal Board; (h) it has ceased to operate or has failed to commence operating within a reasonable time after being registered; (i) it is involved in a financial crime; or (j) a member of the board of trustees, the principal officer or other officer of the registered fund no longer meets the fit and proper requirements within the meaning of the standards or has engaged in conduct identified in the standards as misconduct. (2) If NAMFISA is satisfied that any of the circumstances described in subsection (1) exist, NAMFISA may take any of the following actions with respect to the registered fund:
(a) cancel its registration;
(b) vary the conditions of its registration, including the imposition of additional conditions; or (c) take any other steps that NAMFISA may consider necessary or advisable.
(3) NAMFISA must give notice to the registered fund of the intention of NAMFISA to take any action referred to in subsection (2), together with the reasons for taking the action, and must give the registered fund a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the registered fund may in writing make representations to NAMFISA on the matter. (4) Subject to such conditions as NAMFISA may impose, NAMFISA may provisionally suspend the registration or take control of the assets of a registered fund. (5) On the cancellation of the registration of a fund under section 258(5)(a), subsection (2)(a) or any other applicable provision of this Act - (a) the fund must, be dissolved in accordance with the requirements of section 278 or wound-up in accordance with the requirements of section 279, as applicable, and the rules of the fund; and (b) NAMFISA must take such steps and may impose such conditions as are necessary in the circumstances, which steps may include the transfer of the business of the fund to another fund, as appropriate, but no distribution of the assets of the fund may be made without the prior approval of NAMFISA. (6) NAMFISA must make public any suspension or cancellation of registration, variation of conditions of registration or any other steps taken under this section and the reasons for the suspension, cancellation, variation or steps, by notice in the Gazette or by means of any other appropriate public statement. (7) A person who - (a) continues to operate, or carry on, the business of a fund after the cancellation of registration under section 258(5)(a), subsection (2)(a) or any other applicable provision of this Act or after suspension of registration under subsection (4); or (b) fails to comply with a condition imposed by NAMFISA under subsection (4), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment.
PART 3
ADMINISTRATION AND POWERS
Principal office and principal officer
260.
(1) Every registered fund must -
(a) have a principal office in Namibia where it must hold and maintain the documents referred to in the standards; and (b) appoint to be its principal officer in Namibia, a fit and proper person within the meaning of the standards who - (i) is a Namibian citizen or permanent resident; (ii) is resident in Namibia; and (iii) must be an ex officio member of the board of the fund, but the principal officer may not serve as chairperson of the board. (2) Despite subsection (1)(b)(i), NAMFISA may, in exceptional circumstances, grant permission that a principal officer referred to in that subsection may, subject to the Immigration Control Act, 1993 (Act No. 7 of 1993), for such period as may be determined by NAMFISA, be a person other than a Namibian citizen or permanent resident. (3) After the appointment of a principal officer pursuant to subsection (1)(b), the registered fund must, within the period set out in the standards, in writing notify NAMFISA of the appointment. (4) NAMFISA may, on the grounds that a principal officer is not a fit and proper person within the meaning of the standards, and after giving the registered fund and the principal officer a reasonable opportunity to be heard, direct the registered fund to appoint some other person to be the principal officer of that registered fund. (5) Whenever a principal officer resigns or the appointment of a principal officer is terminated by a registered fund or by the expiry of a contract of employment, the registered fund must, within the period set out in the standards, in writing notify NAMFISA and submit to NAMFISA a written statement of the reasons for the termination or, in the opinion of the registered fund, the reasons for the resignation. (6) The principal officer of a registered fund is authorised to act on behalf of the fund to ensure compliance with this Act, and in any case where a person, including NAMFISA, communicates with that fund, that person may do so by addressing the communication to the principal officer. (7) Process in any legal proceedings may be served on a registered fund by serving a copy of the process at its principal office. (8) A person who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Board of fund 261. (1) A registered fund must have a board consisting of persons who are fit and proper within the meaning of the standards. (2) Despite any rule to the contrary in the rules of the fund but subject to section 262, the board of a registered fund must consist of a minimum of four members. (3) The active and the retired members of the registered fund have the right to elect, whether directly or indirectly, at least half of the number of board members of the registered fund. (4) Subsections (1), (2) and (3) come into force on the date which is 90 days after the date of commencement of
this Chapter. (5) A person may not be a member of the board of trustees of a registered fund if that person is - (a) a director or an officer or employee of the fund administrator of the registered fund or of the holding company, subsidiary, joint venture or associate of the fund administrator; (b) a consultant to, or contractor under, an agreement with the fund administrator; or (c) a financial institution or financial intermediary that renders financial services to the registered fund or its board of trustees. (6) Subject to subsections (1), (2) and (3), the rules of a fund must - (a) set out the constitution of the board, the election and appointment procedure for its members, the terms of office of the members, the procedures at meetings, the voting rights of members, the quorum for a meeting and the breaking of deadlocks; (b) provide a code of conduct for the members of the board; (c) require that the board meets at least four times a year; and (d) provide that all meetings of the board are held in Namibia. (7) The rules of a registered fund must be amended in accordance with section 272 to comply with subsections (1), (2), (3), (5) and (6) within 90 days after the date of coming into force referred to in subsection (4). (8) Where a board consists of four members or pursuant to section 262 less than four members, all the members of the board constitute a quorum for a meeting of that board. (9) If a board member is removed from office for reasons other than the expiration of that member’s term of appointment or voluntary resignation - (a) that board member must within 21 days of the removal submit a written statement to NAMFISA of the reasons, in the opinion of the board member, for the termination and must in addition comply with subsection (10); (b) the board must within 21 days of the removal submit a written statement to NAMFISA of the reasons, in the opinion of the board, for the termination. (10) A board member must at any time inform NAMFISA in writing on becoming aware of any material matter relating to the affairs of the fund which, in the opinion of the board member, may seriously prejudice the financial viability of the fund or the benefits or rights of its members. (11) A person who contravenes or fails to comply with subsection (10) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Exemptions 262. (1) NAMFISA may on written application by the board of a registered fund and subject to such conditions as may be determined by NAMFISA - (a) authorise a fund to have a board consisting of less than four members if that number is impractical or unreasonably expensive, provided that the active and retired members of the fund have the right to elect at least 50 percent of the board members; or (b) exempt a fund that is a prescribed fund or a beneficiary fund from the requirement that the active and retired
members of the fund have the right to elect members of the board. (2) NAMFISA may withdraw an exemption granted under subsection (1) if a fund no longer qualifies for such exemption or if NAMFISA regards such exemption no longer to be in the public interest. Replacement of member of board 263. (1) On the termination of office for any reason of a member of the board of a registered fund a person to replace such member must, subject to section 261(1) and (2), be elected or appointed in the manner set out in the rules of the fund and the board must notify NAMFISA forthwith of the termination and replacement. (2) A person who is elected or appointed as a member of the board of the fund pursuant to subsection (1) or (3) must be a fit and proper person within the meaning of the standards and such election or appointment must comply with the provisions of section 261 or 262. (3) NAMFISA may at any time, on the grounds that any member of the board of a registered fund is not a fit and proper person within the meaning of this Act, the regulations and the standards and after giving the board and the member of the board in question a reasonable opportunity to be heard, direct - (a) that such member of the board be removed from office; and (b) in case the remaining number of members is less than the number required by section 261 or 262 or by the rules of the fund, that some other person who complies with the provisions of subsection (2) be elected or appointed to the board of the fund. Objects of board 264. (1) The objects of the board of a registered fund are to direct, control and oversee the operations of the fund in accordance with this Act and the rules of the fund. (2) In pursuing its objects the board must - (a) take all reasonable steps to ensure that the interests of members under the rules of the fund are protected and that the fund complies with the provisions of this Act and the rules; (b) act with due care, diligence, prudence and good faith; (c) avoid conflicts of interest wherever possible and, if not possible, manage the conflicts; (d) disclose any conflict of interest of a member of the board; and (e) act with impartiality in respect of all members and beneficiaries. (3) The members of the board of trustees must, within 30 days of the end of each financial year, disclose in writing to NAMFISA any payments or other considerations made, whether directly or indirectly, to them in that particular year by the fund or by a contractor with the fund. (4) A member of the board of trustees who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Duties of board 265. (1) In addition to the duties of a board of a registered fund set out in the rules of the fund and in section 395, the board of a registered fund must - (a) ensure that proper registers, books and records of
the operations of the fund are kept, including proper minutes of all resolutions passed by the board; (b) ensure that membership records, contributions and benefit payments are administered in accordance with the rules; (c) ensure that the assets of the fund are invested in accordance with the investment policy established by the board which is appropriate to the nature and financial circumstances of the fund, and which the board implements and regularly reviews after taking expert advice; (d) ensure that the risks of the fund are appropriately managed, including ensuring that proper control systems and functional separation of duties are employed by or on behalf of the fund; (e) ensure that adequate and appropriate information is communicated to members of the fund, employers and sponsors pursuant to a communication strategy consistent with the standards issued by NAMFISA; (f) take all necessary steps to ensure that contributions are paid in a timely manner to the fund in accordance with this Chapter; (g) obtain expert advice on matters where board members lack sufficient expertise; (h) ensure that the rules and the operation and administration of the fund comply with this Act and other applicable laws; (i) ensure that the board meets at least four times each year; (j) continuously monitor the compliance of the members of the board with the requirement that they be fit and proper within the meaning of the standards as required by sections 261 and 263; (k) prepare an annual report, which must be submitted to NAMFISA, that summarises - (i) the financial position of the fund; (ii) the investment policy of the fund; (iii) the activities of the board during the year; and (iv) any other matters required by the standards; and (l) comply with such other duties as NAMFISA may require in the standards. (2) If, despite the steps taken by the board of a registered fund pursuant to subsection (1)(f), contributions to the fund remain outstanding for such period as is specified by NAMFISA in the standards the board must, within the period specified in the standards, notify all active and retired members of the fund and NAMFISA of this fact. (3) The board of a fund may, in accordance with a system of delegation set out in the rules of the fund, which system must maximise administrative and operational efficiency and provide adequate checks and balances, appoint a fund administrator to exercise any of its powers of administration or to perform any of its administrative duties or functions as long as - (a) the fund administrator is registered by NAMFISA as a fund administrator pursuant to section 368; (b) the board has determined, after taking expert advice, that the fund administrator has qualifications and experience relevant to the administration of the fund in question; and (c) the board has entered into a contract with the fund administrator that complies with the rules of the fund and the policies of the board. (4) The board is not divested or relieved of
any power or duty or function delegated or assigned under subsection (3) and may, if necessary, withdraw the delegation or assignment at any time on reasonable notice. (5) As soon as possible after a contract referred to in subsection (3)(c) has been entered into the board must file a copy of the contract with NAMFISA. (6) A fund administrator that enters into a contract with the board of a fund pursuant to subsection (3)(c) has a fiduciary duty and responsibility to the fund and must exercise the powers delegated or perform the duty or function assigned to it with the standard expected of an expert. (7) Where a board delegates a power or assigns a duty or function pursuant to this section, the board must monitor the performance of the fund administrator with respect to the standards described in the contract and take remedial action if that performance fails to achieve those standards. (8) Administration in respect of a fund means the rendering of any form of administration service, as defined in section 363, to the fund. (9) A fund administrator must, in relation to a fund, perform the functions and duties entrusted to the fund administrator by section 374. Appointment of auditor 266. (1) Except where the accounts of a fund are to be audited by the Auditor-General pursuant to another law of Namibia, the board of a registered fund must, in accordance with section 401 and in the manner set out in the rules of the fund, appoint and at all times have an auditor or firm of auditors to be the auditor of the fund. (2) The board of a fund may not appoint as the auditor of the fund - (a) an auditor who is; or (b) a firm of auditors, any member of which is, an employee or officer of the fund or of an administrator of the fund, a member of the board of the fund or of a fund administrator of the fund or an employee, or officer of the board, of a participating employer or an employee, or officer of the board, of the sponsor of the fund. (3) NAMFISA may direct the board of a fund to change the auditor of the fund if NAMFISA is satisfied that the auditor or any member of the firm of auditors appointed as auditor is an employee or officer of the fund or of a fund administrator of the fund, a member of the board of the fund or of a fund administrator of the fund or an employee, or officer of the board, of a participating employer or an employee, or officer of the board, of the sponsor of the fund. (4) An auditor appointed under subsection (1) - (a) must perform the functions and duties assigned to; (b) must exercise the powers conferred on; and (c) is subject to the obligations imposed on, an auditor by section 401. Appointment of valuator 267. (1) The board of a registered fund must, in accordance with section 402 and in the manner set out in the rules of the fund, appoint and at all times have a valuator. (2) Each board of a fund referred to in section 255 or 256 must, if the fund concerned does not have a valuator on the date of commencement of this Part,
appoint a valuator within 90 days of that date. (3) The board of a fund may not appoint as the valuator of the fund an employee or officer of the fund or of a fund administrator of the fund, a member of the board of the fund or of a fund administrator of the fund, an employee, or officer of the board, of a participating employer or an employee, or officer of the board, of the sponsor of the fund. (4) NAMFISA may direct the board of a fund to change the valuator of the fund if NAMFISA is satisfied that the person appointed as valuator is an employee or officer of the fund or of a fund administrator of the fund, a member of the board of the fund or of a fund administrator of the fund or an employee, officer of the board, of a participating employer or an employee, or officer of the board, of the sponsor of the fund. (5) A valuator appointed under subsection (1) or (2) - (a) must perform the functions and duties assigned to; (b) must exercise the powers conferred on; and (c) is subject to the obligations imposed on, a valuator by section 402. Investigations by valuator 268. (1) The board of a registered fund must in accordance with the provisions of the standards - (a) at least once in every three years, cause the financial position of the fund to be investigated by the valuator of the fund and a valuation report thereon to be prepared by the valuator as at the end of the third financial year; and (b) in the case of a defined benefit fund, once every year, cause the financial position of the fund to be investigated by the valuator of the fund, and a valuation report thereon to be prepared by the valuator as at the end of each financial year. (2) Despite subsection (1), if NAMFISA has reason to believe that an investigation would show that the fund is not in a sound financial position NAMFISA may, after not less than 30 daysʼ notice in writing to the board of a fund, require the board to cause the financial position of the fund to be investigated by the valuator of the fund as at the end of any financial year as specified by NAMFISA and a valuation and report thereon to be prepared by the valuator. (3) The report of the valuator referred to in subsection (1) or (2) must include any particulars set out in the standards. (4) The board of a fund must, within 180 days from the end of the valuation period and subject to section 402(10)(b), deposit a copy of the valuation and report referred to in subsection (1) or (2) with NAMFISA and the board must send a copy of such report or a summary of the report prepared by the valuator in the form required by the standards, to every employer who contributes to that fund. (5) Whenever the board of a fund deposits with NAMFISA a copy of a report made by a valuator under this section it must also deposit with NAMFISA a certificate of the board and of the principal officer of the fund that to the best of their knowledge and belief the information furnished to the valuator for the purposes of the report was correct and
complete in every material respect and, where applicable, that a copy of the report or a summary of the report referred to in subsection (4) was sent to every employer contributing to the fund. (6) If the rules of a fund provide that the benefits which may become payable to members are subject to the discretion of the board of the fund, the board must determine and inform NAMFISA what amount or scale of benefits were taken into consideration for the purpose of the valuation. [The verb “were” should be “was” to be grammatically correct (“scale….was”).] (7) Despite the provisions of this section, NAMFISA may, on such conditions as are set out in the standards, exempt a defined contribution fund from requiring regular investigations by a valuator, but a valuator must, at least once in every three years certify that - (a) the fund fulfils the conditions of exemption set out in the standards; and (b) the assumptions that will be used to project the benefits that the fund will pay to a member at normal retirement date are appropriate. (8) The board of a fund may, subject to such terms and conditions as may be prescribed, after it receives a report of the valuator and the report reveals an actuarial surplus as provided for in the standards, distribute some or all of that actuarial surplus. (9) Any person who contravenes or fails to comply with subsection (4) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment.
PART 4
CONDUCT OF BUSINESS AND MEMBER CONTRIBUTIONS
Business which may be carried on
269.
(1) A registered fund or the board of the fund may not carry on any business other than the business of a fund.
(2) Despite subsection (1) NAMFISA may, on written application by the board of a fund, approve and allow the board and the fund to carry on such other business on such conditions and for such period as NAMFISA may determine, if NAMFISA is satisfied that it is necessary in order to safeguard an investment made by the fund. (3) Any person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Payment of contributions 270. (1) Despite any provision in the rules of a registered fund, the employer of any member of that fund must pay in full the following to the fund:
(a) any contribution which, under the rules of the fund, must be deducted from the member’s remuneration; and (b) any contribution for which the employer is liable under those rules.
(2) NAMFISA must set out in the standards the minimum information to be furnished to the fund by an employer with respect to the payment of contributions made by that employer, and if that information does not accompany the payment of a contribution, the employer must transmit that information to the fund not more than 15 days after the end of the month in respect of which the payment was made. (3) Any contribution to a fund under its rules, whether a contribution referred to in subsection (1), a contribution for the payment of which a member of the fund is responsible personally or a contribution to be paid on a member’s behalf - (a) must be deposited directly into the fund’s account with a banking institution not more than seven days after the end of the month for which such contribution is payable; (b) must be forwarded directly to the fund in such a manner that the fund receives the contribution not more than seven days after the end of the month; or (c) in the case of a fund the assets of which consist exclusively of one or more policies of insurance with a registered insurer carrying on long-term insurance business under Chapter 2, must be forwarded to the registered insurer concerned in such manner that the insurer receives the contribution not more than seven days after the end of the month. (4) The board of a fund must deposit or cause to be deposited into the bank account of the fund any contribution forwarded to and received by the fund in the circumstances described in subsection (3)(b) on the first business day following the day of receipt. (5) An amendment to the rules of a fund relating to the reduction of contributions or the suspension or discontinuation of the payment of contributions does not affect any liability to pay any contribution which became payable at any time before the date on which the amendment takes effect under section 272. (6) When a person who for any reason, other than the occurrence of an event referred to in section 278, 279 or 441 - (a) has ceased to be a member of a fund (in this subsection and subsection (9)(c) called the “first fund”); and (b) is, under the rules of another fund, admitted as a member of that other fund and allowed to transfer to that other fund any benefit or any right to any benefit to which such person had become entitled under the rules of the first fund, that first fund must, not more than 60 days from the date that the person so requests in writing, or, if applicable, within any longer period determined by NAMFISA on application by the first fund, transfer that benefit or right to that other fund in full, which transfer is subject to the rules of the first fund as at the date of transfer and to the deductions referred to in section 277. (7) For the purpose of monitoring and ensuring compliance with this section, the principal officer of the fund or any other person authorised pursuant to subsection (8) must submit reports to the categories of persons having an interest in such
compliance, as specified in the standards, at the times and in the manner and format required by the standards. (8) For the purposes of subsection (7), the board of a fund may authorise a person to perform the functions described in that subsection, and the board must, within the period set out in the standards, notify NAMFISA in writing of any such authorisation. (9) Interest at a rate as prescribed by the Minister is payable to the fund - (a) by the employer, member of the fund or any other person who is responsible for transmission of the contributions to the fund on the amount of any contribution not transmitted into the bank account of a fund before the expiration of the period referred to in subsection (3)(a); (b) by the employer, member of the fund or any other person who is responsible for transmission of the contributions to the fund on the amount of any contribution not received - (i) by a fund before the expiration of the period determined under subsection (3)(b); or (ii) by the registered insurer concerned in the circumstances referred to in subsection (3)(c) before the expiration of the period determined under that subsection; and (c) by the first fund on the value of any benefit, or right to any benefit, not transferred by the first fund to the other fund referred to in subsection (6) before the expiration of the period of 60 days referred to in that subsection or any longer period determined by NAMFISA. (10) For the purposes of this section, the following persons are personally liable for compliance with this section and for the payment of any contributions referred to in subsection (1):
(a) where an employer is a corporate body, every director of that corporate body, including the principal officer, who is regularly involved in the management of the overall financial affairs of the corporate body; and (b) where an employer is not a corporate body, every person including, without limitation, every trustee or partner, who directs or instructs the governing body of the employer or who controls or is regularly involved in the management of the overall financial affairs of that employer. (11) Despite any provision of the Companies Act, the Insolvency Act or any other law, if a contribution by an employer or on behalf of the employer and any employee or employees is not received by the due date and the employer becomes insolvent or any claim is made against, or a statutory manager, judicial manager, liquidator or trustee is appointed, for the employer, an amount equal to the unpaid contribution must be set aside from the assets or estate of the employer, and constitutes a first charge against such assets or estate and takes precedence over - [There is a misplaced comma in subsection (11); the comma after the word “appointed” should appear after the following word “for”.] (a) any claim of or payment to any creditor, other than a creditor holding security on specific and identified moveable or immoveable property to the extent of that property, including any special mortgage, legal hypothec, pledge or right of retention; and (b) any payment to shareholders or other owners, including, without limitation, those claims and payments referred to in sections 95 to 104 of the Insolvency Act. (12) The Minister may make regulations and NAMFISA may issue standards with respect to the protection of unpaid contributions referred to in subsection (11). (13) Any person who contravenes or fails to comply with subsection (1) or (3) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment.
PART 5
RULES OF RETIREMENT FUND
Rules
271.
(1) The rules of a registered fund must comply with the requirements of this Act and must contain matters that may be set out in the regulations or in the standards.
(2) Where the rules of a fund are inconsistent with any provision of this Act, those rules are invalid to the extent of the inconsistency.
(3) Where the rules of a fund are inconsistent with any provision of this Act and have not been amended, NAMFISA must direct the board of the fund to amend the rules of the fund and the board must comply with the direction forthwith. (4) Despite subsections (2) and (3), the board of a fund has a period of 12 months within which to amend any rules of the fund which are inconsistent with this Act which period commences, as applicable, on the date - (a) of commencement of this Act; (b) on which a regulation relating to the rules comes into effect; or (c) on which a standard relating to the rules comes into effect. (5) A registered fund must provide any person who becomes a member or beneficiary of the fund with a copy of the rules of the fund, free of charge, at the time that the person becomes a member. (6) Any person who contravenes or fails to comply with subsection (5) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Amendment of rules 272. (1) The board of a registered fund may, in the manner directed by the rules of the fund, amend or rescind any rule or make any additional rule, but no such amendment, rescission or addition will be valid if it purports to affect any right of a creditor of the fund, other than as a member of the fund. (2) The board of the fund must send a copy of any amended, rescinded or additional rule to NAMFISA not less than 30 days before its implementation, together with the particulars set out in the standards. (3) If any such amendment, rescission or addition affects the financial position of the fund the board must also send to NAMFISA a report by - (a) the valuator of the fund; or (b) a valuator retained by the fund for this purpose, if no valuator has been appointed, as to the soundness of the financial position of the fund, determined in accordance with the standards, having regard to the rate of contributions by the employer and members and, if the fund is not in a sound financial position, what arrangements will be made to bring the fund into a sound financial position. (4) In the case of any amended, rescinded or additional rule of a fund that is a defined contribution fund or a beneficiary fund, the board must also send to NAMFISA a report confirming that the amended, rescinded or additional rule has no effect on the current or prospective financial position of the fund. (5) If NAMFISA is not satisfied with a report referred to in subsection (3) or (4), NAMFISA may, at the cost of the fund, require a report by an independent valuator that complies with the conditions set out in the standards and as may be specified by NAMFISA. (6) The board of a fund may at any time consolidate the rules of the fund, and in that case the board must forward to NAMFISA, a copy of the consolidated rules, but if the consolidated rules differ from the original rules, NAMFISA must direct the board to
amend the consolidated rules so that they do not differ from the original rules. (7) With respect to the rules of a fund, NAMFISA may request additional information regarding any amendment, rescission, addition or consolidation submitted to NAMFISA, as NAMFISA may consider necessary, and any such amendment, rescission, addition or consolidation is void if the fund fails to furnish the information requested by NAMFISA under this subsection within 30 days from the date of that request. (8) If at any time NAMFISA is of the opinion that the rules of a fund do not comply with the requirements of this Act, NAMFISA may direct the board of the fund to amend the rules. (9) The registered fund must send or cause to be send a copy of any amendment to, rescission of, or addition to, the rules of a fund to every member of the fund free of charge. [The phrase “cause to be send” should be “cause to be sent”.] (10) Any person who contravenes or fails to comply with subsection (9) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Binding force of rules 273. Subject to the provisions of this Chapter, the rules of a registered fund are binding on the fund, the employer or employers who subscribe to the fund, the sponsor, the board, officers of the fund, members of the fund and on any person who claims any benefit under the rules or whose claim is derived from a person so claiming.
PART 6
SPECIAL PROVISIONS RELATING TO BENEFITS
Benefits not reducible, transferable or executable 274.
(1) Except where permitted by this Chapter, the Income Tax Act or the Maintenance Act, a benefit which is provided for in the rules of a registered fund, including an annuity purchased or to be purchased by the fund in the name of the fund, the member or a beneficiary from a registered financial institution authorised by NAMFISA for the purpose of providing income benefits payable in respect of funds originating from a registered fund or a right to such benefit or a right in respect of contributions made by or on behalf of a member, despite anything to the contrary contained in the rules of the fund - (a) is not capable of being reduced, transferred or otherwise ceded; (b) is not capable of being pledged or hypothecated; (c) is not liable to be attached or subjected to any form of execution under a judgment or order of a court; or (d) may not be taken into account in a determination of a debtor’s financial position under section 65 of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944). (2) If a member or beneficiary attempts to transfer or otherwise cede, pledge or hypothecate a benefit or a right referred to in subsection (1), the board of the fund may withhold or suspend payment of the benefit. (3) Subsections (1) and (2) do not apply to a transfer, other cession, pledge or hypothecation to secure a housing loan made to the member or beneficiary or to an attachment or execution referred to in paragraph (c) of subsection (1) or a determination referred to in paragraph (d) of that subsection in connection with such loan. (4) Subsection (1) does not apply to anything done towards reducing or obtaining settlement of a debt which - (a) in the case of a fund to which the Financial Institutions Amendment Act, 1976 (Act No. 101 of 1976) applies, arose before the commencement of that Act; (b) in the case of a fund to which the Financial Institutions Amendment Act, 1976 (Act No. 101 of 1976) does not apply, arose before the commencement of the Financial Institutions Amendment Act, 1977 (Act No. 94 of 1977); (c) the board of a fund may reduce or settle under section 277; or (d) is owed to a fund by a member in respect of contributions in arrears, but excluding amounts which are in arrears due to the failure of the employer to pay the member’s contributions to the fund after deduction of the contribution from the member’s remuneration. Disposition of benefits upon insolvency 275. If the estate of any person entitled to a benefit payable under the rules of a registered fund, including an annuity purchased by the fund for that person from a registered financial institution authorised by NAMFISA for the purpose of providing income benefits payable in respect of funds originating from a registered fund, is sequestrated or surrendered such benefit or any part of it which became payable after the commencement of the Financial Institutions Amendment Act, 1976 (Act No. 101 of 1976) - (a) is, subject to the provisions of section 274(4) and section 277, deemed
not to form part of the assets of the insolvent estate of that person; and (b) may not in any way be attached or appropriated by the trustee in the insolvent estate or by the creditors of that person, despite anything to the contrary in any law relating to insolvency. Disposition of benefits upon death 276. (1) Despite anything to the contrary contained in any law or in the rules of a registered fund, any benefit payable by that fund upon the death of a member does not, subject to the provisions of section 274(4) and section 277, form part of the assets of the estate of that member, but must be dealt with as follows:
(a) the board of a fund must, after being notified of the death of the member, pay not more than such percentage of the benefit as the board considers prudent to the dependants or nominees designated on the beneficiary nomination form in the proportions specified by the member on that form, but if the member had not, on the beneficiary nomination form, apportioned the benefit among the dependants or nominees, the benefit must be paid to the member’s dependants or nominees in the proportion that the board of the fund considers equitable; (b) if the board of the fund within 12 months of the notification of the death of the member becomes aware of or traces one or more dependants or one or more nominees of the member, the remaining portion of the benefit after the payment referred to in paragraph (a), must be paid to such dependants or nominees in the proportion that the board of the fund considers equitable, taking into account the amounts that may already have been paid to dependants or nominees under paragraph (a); (c) if the board of the fund does not become aware of or cannot trace any more dependants or nominees of the member within 12 months of the notification of the death of the member, the board must pay the remaining portion of the benefit referred to in paragraph (b) to the dependants or nominee or nominees referred to in paragraph (a) in such proportions as the board considers equitable; (d) if a member has a dependant and the member has also designated in writing to the fund a nominee to receive the benefit or such portion of the benefit as is specified by the member, the board of the fund must within 12 months of the notification of the death of such member pay the benefit or such portion of the benefit to that dependant or nominee in such proportion as the board may consider equitable, except that this paragraph does not prohibit a fund from paying the benefit either to a dependant or to a nominee referred to in this paragraph or, if there is more than one such dependant or nominee, proportionately to any or all of those dependants and nominees; or (e) if the board of the fund does not become aware of or cannot trace any dependant of the member within 12 months of the notification of the death of the member and if the member has not designated a nominee or in a case where the beneficiary nomination form is not completed and returned to the board or if the form is illegible or incomprehensible, or mutilated beyond repair or otherwise invalid, the automatic beneficiaries, in order of preference are - (i) children of the member who have attained the age of 18 years in equal shares; and if none exist (ii) parents of the member in equal shares; and if none exist (iii) siblings of the member in equal shares; and if none exist (iv) the estate of the member, and if no inventory relating to the estate of the member has been received by the Master of the High Court under the Administration of Estates Act, 1965 (Act No. 66 of 1965), into the
Guardian’s Fund. (2) For the purpose of this section, payment by the board of a fund for the benefit of a dependant or nominee will be considered to be a payment to such dependant or nominee, if payment is made to - (a) a trustee under the Trust Moneys Protection Act, nominated by - (i) the member; (ii) subject to paragraph (iii), a major dependant or nominee; or (iii) a person recognised in law or appointed by the court as a curator responsible for managing the affairs of a minor dependant or nominee or a major dependant or nominee not able to manage his or her own affairs; [The Trust Moneys Protection Act 34 of 1934 has been replaced by the Trust Administration Act 11 of 2023.] (b) a person recognised in law or appointed by the court as the person responsible for managing the affairs of a dependant or a nominee; or (c) a registered beneficiary fund. (3) Any benefit dealt with under this section that is payable to a minor dependant or minor nominee may be paid in more than one payment in such amounts as the board of the fund may from time to time consider appropriate and in the best interests of such dependant or nominee, except that - (a) interest at a reasonable rate, having regard to the investment return earned by the fund in respect of the outstanding balance, must be added to the balance at such times as the board may determine; and (b) any balance owing to the dependant or nominee at the date on which he or she attains majority or dies, whichever occurs first, must be paid in full. (4) A benefit referred to in this section, which must be paid to a major dependant or major nominee, may be paid in more than one payment if the dependant or nominee has consented to that in writing, except that - (a) the amount of the payments, intervals of payment, interest to be added and other terms and conditions are disclosed in a written agreement; and (b) the agreement may be cancelled by either party on written notice not exceeding 90 days. (5) If the agreement referred to in subsection (4) is cancelled the balance of the benefit must be paid to the dependant or nominee in full. (6) The provisions of subsections (3) and (4) do not apply to a registered beneficiary fund and any remaining assets held for the benefit of the deceased beneficiary in such a fund must be paid - (a) into the estate of such beneficiary; or (b) if no inventory relating to the estate of the beneficiary has been received by the Master of the High Court pursuant to section 9 of the Administration of Estates Act, 1965 (Act No. 66 of 1965), into the Guardian’s Fund. Deductions from benefits 277. (1) The board of a registered fund may deduct from a benefit to which a member or a beneficiary becomes entitled under the rules of the fund any amount - (a) due and payable by the member as tax in accordance with the Income Tax Act; (b) due on the benefit in question by the member in respect of - (i) a prescribed loan granted to the member; or (ii) any amount for which the fund becomes
liable under a guarantee furnished in respect of a member for such a loan granted by some other person to the member not exceeding the amount which, under the Income Tax Act may be taken by a member or beneficiary as a lump sum benefit; (c) due by the member to his or her employer on the date of his or her retirement or on which the member ceases to be a member of the fund, in respect of - (i) a loan granted by the employer to the member for any purpose referred to in the regulations; or (ii) any amount for which the employer is liable under a guarantee furnished in respect of a loan by some other person to the member for any purpose referred to in the regulations not exceeding the amount which, under the Income Tax Act, may be taken by a member or beneficiary as a lump sum benefit; or (d) which the fund has paid or will pay by arrangement with, and on behalf of, a member or beneficiary in respect of - (i) that member’s or beneficiary’s subscription to a medical aid fund registered under Chapter 7; (ii) funeral expenses associated with the death of the member; or (iii) any insurance premium payable by such member or beneficiary to an insurer registered under Chapter 2; and that amount must be paid to the medical aid fund, insurer or person concerned. (2) The board of a fund may deduct from a benefit or interest of a member or from the capital value of the retirement benefit of a former member any amount - (a) payable pursuant to a maintenance order as defined in section 1 of the Maintenance Act; or (b) required to be deducted or withheld as employee’s tax under the Fourth Schedule to the Income Tax Act as a result of a deduction referred to in this subsection or subsection (1). (3) The board of a fund may reduce a member’s individual account in a defined contribution fund or the member’s benefit in any other fund with an actuarial equivalent reduction in the benefits payable by such a fund in future in order to pay such amount to the relevant person in respect of - (a) a loan granted to a member pursuant to the regulations; (b) an amount for which the fund becomes liable under a guarantee furnished in respect of a member for a loan granted by some other person to the member; or (c) an amount payable pursuant to a maintenance order as defined in section 1 of the Maintenance Act, if the - (i) member is transferring to another fund and the board of the fund is satisfied that it is not otherwise reasonably possible to negotiate repayment or to transfer the loan guarantee to the transferee fund; (ii) member has defaulted on the repayment of the loan granted to the member by the fund pursuant to the regulations or in respect of which the fund has provided a guarantee pursuant to the regulations in circumstances where his or her membership of the fund is not terminated, and such reduction is only effected as a last resort after the board of the fund is satisfied that no other arrangement for the repayment can be made; or (iii) board is ordered by a
court to make such a deduction. (4) For the purposes of subsection (3)(a) and (b), the amounts so deducted will be considered to be a benefit to which the member becomes entitled on termination of his or her membership of the fund for reasons other than as a result of retirement or death arising at the date of the transfer, default or court order. (5) Any amount that may be deducted pursuant to subsection (2)(a) or (3)(c) may only be deducted after the amount of any benefit available has been reduced by any loan amount or guarantee amount referred to in subsection (1)(b), (3)(a) or (3)(b) where the loan or guarantee was provided prior to the granting of the maintenance order, irrespective of whether or not that amount is due and payable, provided that the aggregate of all amounts deducted under this subsection must not exceed the member’s benefit available at any given time.
PART 7
GENERAL
Voluntary dissolution of fund
278.
Subject to the requirements of any regulations made by the Minister and standards issued by NAMFISA under this Act, a registered fund may be terminated or dissolved wholly or in part in such circumstances, if any, as may be specified for that purpose in its rules and in the manner provided by such rules, and subject to the prior approval of NAMFISA, the assets of the fund must in that case be distributed in the manner provided by the rules. Winding-up by court 279. (1) If - (a) NAMFISA is satisfied that a fund is in such an unsound financial condition that any scheme as contemplated by Part 7 of Chapter 10 would be ineffective, impracticable or unsatisfactory; or (b) a fund is required under any provision of this Act to be wound-up under this section, NAMFISA or a person acting with the approval of NAMFISA may, if the fund has assets and liabilities equal to or exceeding the values that are set out in the standards, apply to the High Court for an order that the whole or any part of the business of the fund be wound-up. (2) An application for the winding-up, and the winding-up, of a fund pursuant to subsection (1) must be done accordance with the regulations made by the Minister and standards issued by NAMFISA under this Act. [The word “in” appears to have been omitted before the phrase “accordance with”.] Special provisions relating to liquidation of funds 280. When applying the provisions of the Companies Act in a voluntary dissolution or winding-up of a registered fund, the members of the fund must be treated as preferred creditors, and their claims against the fund in their capacity as members must be settled before the debts owed to ordinary creditors of the fund. Right to obtain and inspect documents 281. (1) The board of a registered fund must on request by a member or a person authorised by a member provide that member or authorised person on payment of such fee as may be determined by the standards and reflected in the rules of the fund - (a) with a copy, additional to the one provided under section 271(5), of the rules of the fund; (b) with a copy of the most recent financial statements of the fund; and (c) with a copy of the most recent report by a valuator prepared pursuant to section 268. (2) A member or a person authorised by a member may without charge, at the principal office of a fund, inspect a copy of any of the following documents and make extracts there from - [The phrase “there from” should be the single word “therefrom”.] (a) the documents referred to in subsection (1); (b) any scheme which is being carried out by the fund in accordance with the provisions of this Act; (c) such other documents as NAMFISA may direct. (3) NAMFISA may issue standards with respect to any reports and other information that the board of a registered fund must provide to members of the fund free of charge. (4) Any person who contravenes or fails to comply with subsection (1) or (2) commits an offence and is liable on conviction to a fine not
exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Investments 282. (1) Subject to the provisions of this section and the regulations made by the Minister and standards issued by NAMFISA, a fund may invest its funds in any manner provided by its rules and investment policy. (2) A fund may, where its rules so provide, by way of investment of its funds, grant loans secured by first mortgages of immovable property to any of its members, if the mortgaged property is property on which a dwelling house has been or is to be erected, but the loans may not exceed the percentage of the fair value of the immovable property concerned as provided in the standards. (3) NAMFISA may, under exceptional circumstances, and on such conditions and for such periods as NAMFISA may determine, temporarily exempt a fund from compliance with the provisions of subsection (2). (4) Despite subsection (1), a registered fund may not invest any of its assets in the business of an employer who participates in the scheme or arrangement whereby the fund has been established or in any subsidiary of that employer’s business or lend any of its assets to the employer or subsidiary, but - (a) the Minister may, in accordance with the regulations, exempt wholly or in part any fund established or conducted by the State, by a public enterprise as defined in section 1 of the Public Enterprises Governance Act, 2019 (Act No. 1 of 2019) or by any statutory body or utility undertaking established by or under any law from complying with the provisions of this subsection; and (b) NAMFISA may, subject to such conditions that may be set in the standards, on application made to it in accordance with the standards, exempt a fund from complying with the provisions of this subsection. (5) The Minister may make regulations and NAMFISA may issue standards in respect of the investments by, or of, a fund. (6) Any person who contravenes or fails to comply with any condition on which an exemption has been granted pursuant to subsection (4) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Exemption from Act No. 34 of 1934 283. With the exception of section 276(2)(a), the Trust Moneys Protection Act does not apply to a fund registered under this Chapter. [The Trust Moneys Protection Act 34 of 1934 has been replaced by the Trust Administration Act 11 of 2023.]
CHAPTER 6
FRIENDLY SOCIETIES
PART 1 PRELIMINARY
Definitions for this Chapter
284.
(1) In this Chapter, unless the context indicates otherwise - “assets”, in relation to a friendly society, means the assets of that society as they would be reflected in any statement of its assets prepared in accordance with the requirements of the standards; “board of trustees” or “board” means the board of trustees charged with managing the affairs of a friendly society, which has been elected or appointed under its rules; “fair value”, in relation to an asset of a friendly society, means the fair value of that asset determined in accordance with generally accepted accounting practice; “friendly society” means - (a) an association of individuals established for any of the objects referred to in section 285; or (b) a business carried on under a scheme or arrangement for any of the objects referred to in section 285; “liabilities”, in relation to a friendly society, means the liabilities of that society as they would be reflected in any statement of its liabilities prepared in accordance with the requirements of the standards; “member” means a person who contributes to a friendly society in order to obtain any benefit referred to in section 285 either for that person or for any other person referred to in that section; “rules” means the rules of a society referred to in section 307; “society” means a friendly society; “society administrator” means a society administrator as defined in section 363 and appointed pursuant to section 301(3); and “sponsor” means the person who established a society or who proposes to establish a society. (2) Any reference in this Chapter to a friendly society referred to in paragraph (b) of the definition of “friendly society” must be construed as a reference to that friendly society or to the individual or entity that controls the affairs of that friendly society. Objects of friendly society 285. (1) Subject to subsection (2), a friendly society may be established for one or more of the following objects:
(a) the relief or maintenance during minority, old age or widowhood, or sickness or other infirmity, whether physical or mental, of members or their spouses, widows, widowers, children or other relatives or dependants; (b) the granting of annuities, whether immediate or deferred, to members or their nominees or the endowment of members or their nominees; (c) the payment of a sum of money or other benefit to be paid or provided - (i) on the birth of a child of a member; (ii) on the death of a member or any person referred to in paragraph (a), which may be in the form of an endowment insurance on the life of the member or that person; (iii) towards the expenses incurred in connection with the death or funeral of a member or any person referred to in paragraph (a); or (iv) during a period of mourning by a member or any person referred to in paragraph (a); (d) the insurance against fire or other contingencies of the implements of trade or calling of members; (e) the payment of a sum of money when a member leaves the service of his or her employer due to dismissal, resignation or otherwise, unless the principal object is the payment of a sum of money on a member leaving such service because of marriage or intended marriage; (f) the relief or maintenance of members or any group of members, when unemployed or in distressed circumstances otherwise than in consequence of the existence of a strike or lockout as defined in the Labour Act, 2007 (Act No. 11 of 2007); (g) the payment of sums of money for the advancement of the education or training of members or of the children of members; and (h) such other objects as the Minister may by notice under subsection (3) declare to be objects in respect of which a friendly society may be established. (2) An association or business is not a friendly society if - (a) the persons entitled to the benefits referred to in subsection (1) do not contribute to that association or business; (b) any of the activities of the association or business are those of a retirement fund governed by Chapter 5; (c) under the rules of the association or business, each member is entitled at all times to withdraw the full amount of the member’s contributions, on such notice as may be required in those rules; or (d) the benefits referred to in subsection (1) are provided exclusively by way of loans which under the rules of the association or business must be repaid. (3) The Minister may for the purposes of subsection (1)(h) by notice in the Gazette declare other objects in respect of which a friendly society may be established. (4) The Minister may, by notice in the Gazette , declare that any monetary benefit paid under subsection (1) may not exceed such amounts as the Minister determines in that notice. Application of Chapter 286. (1) This Chapter does not apply to a friendly society if the aggregate value of the income of that society does not exceed the amount prescribed by the Minister, but that society must nevertheless comply with the
provisions of any standard that may be made by NAMFISA in relation to such societies. (2) NAMFISA may in its discretion and subject to any conditions provided by the standards exempt a friendly society from the operation of any or all of the provisions of this Chapter. (3) NAMFISA may at any time by notice to a society referred to in subsection (2), withdraw, wholly or in part and on any grounds which NAMFISA considers sufficient, any exemption granted under subsection (2). (4) Any person who contravenes or fails to comply with any condition on which an exemption has been granted pursuant to subsection (2) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Prohibitions 287. (1) A person may not carry on the business of a friendly society in Namibia unless that person is registered as a society pursuant to section 291 or deemed to be registered under section 292 or section 286(1) or (2) applies. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment. Restriction on use of designation “friendly society” 288. (1) A person may not use, in connection with a business, a name which includes the words “friendly society” or any other name which is intended to indicate or is likely to lead other persons to believe that the person carries on the business of a friendly society, unless that business is registered or deemed to be registered as a friendly society under this Chapter or section 286(1) or (2) applies. (2) If at the commencement of this Chapter any person was using, in connection with that person’s business, any name or description referred to in subsection (1) and that person - (a) subsequently changes that name; (b) produces any deed or document, bearing the previous name which was registered in any deeds registry or in any other office where a register or record of the ownership of, or entitlement to, any property is kept, to the person charged with the registration of deeds in that registry or to the officer in charge of that other office; and (c) satisfies the person so charged or officer that the name was changed as a result of the prohibition contained in subsection (1), that person or officer must, without any charge, substitute the new name for the previous name on such deed or document and in all the relevant registers. (3) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment.
PART 2
REGISTRATION
Application for registration
289.
(1) An application for registration as a friendly society must be made to NAMFISA in accordance with subsection (2).
(2) An application for registration as a friendly society must be - (a) made in the manner and form required by the standards; (b) include the information with respect to the principal office and principal officer required by the standards; [This paragraph does not fit with the structure of the introductory phrase; the word “be” does not fit together with the verb “include”.] (c) accompanied by the documents and other information required by the standards; (d) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; (e) made subject to and in accordance with any other applicable provision of this Act; and (f) accompanied by the required fee. (3) In addition to the requirements of subsection (2), an application for registration referred to in subsection (1) must include - (a) the rules of the friendly society; and (b) such financial guarantees as may be set out in the standards and that NAMFISA may demand from the person who will manage the business of the society, to ensure the future financial stability of the friendly society. Registration requirements 290. (1) Before approving the application and registering the applicant as a friendly society, NAMFISA must be satisfied on reasonable grounds that the requirements of subsection (2) have been met and that - (a) the rules of the society are not inconsistent with this Act and are based on sound financial principles; (b) the society has a sufficient number of members who will contribute to the society, as required by the standards; (c) the society does not and will not unfairly discriminate directly or indirectly against any person; and (d) the guarantee referred to in section 289(3)(b) is satisfactory. (2) Before approving an application referred to in subsection (1) and registering a society NAMFISA must be satisfied that - (a) in relation to the proposed society - (i) every member of the board of trustees, the principal officer and other officers of the proposed society, are fit and proper within the meaning of the standards; (ii) the constitution and rules or other founding documents of the proposed society are not inconsistent with the provisions of this Act; (iii) the direct or indirect control of the proposed society is not likely to be contrary to the interest of consumers of the financial services concerned; and (iv) the proposed society will be in a position to ensure that its organisational or group structure will not be such as to hinder effective supervision by NAMFISA; (b) doing so is not contrary to - (i) this Act; or (ii) the public interest; (c) the proposed society has the attributes reasonably necessary and adequate to - (i) provide the financial services in question with professional integrity, prudence, proper skill and due diligence; (ii) maintain a sound financial position and not cause or further instability in the financial system of Namibia; and (iii) comply with this Act; (d) the name under which the proposed society
proposes to conduct business, or a translation, shortened form or derivative of that name is not in contravention of section 391; (e) the applicant has submitted all other information which, in the opinion of NAMFISA, is necessary to assess the application, and such information has been found satisfactory by NAMFISA; and (f) the applicant has complied and will continue to comply with any other requirements contained in this Act or in the standards which apply to the proposed society. Registration 291. (1) If NAMFISA is satisfied that the applicant complies with the requirements of section 290, NAMFISA must register the applicant as a friendly society, subject to any conditions which NAMFISA may consider appropriate pursuant to subsection (4), and must issue a certificate of registration pursuant to subsection (3). (2) The registration referred to in subsection (1) must specify - (a) the principal office of the applicant in Namibia; (b) the places in Namibia from which the applicant may operate. (3) Upon registration of an applicant NAMFISA must issue to the applicant a certificate of registration in a form provided by the standards. (4) NAMFISA may impose such conditions on the registration of the applicant as it considers necessary, having regard, without limitation, to all the facts and information available to NAMFISA pertaining to the applicant and any guidelines issued by NAMFISA under this Act. (5) If an application is refused by NAMFISA or is granted subject to conditions, NAMFISA must advise the applicant of the refusal or conditions by giving notice to the applicant containing the reasons for the refusal or the conditions, and must give the applicant a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the applicant may make representations in writing to NAMFISA. (6) A friendly society must comply with the conditions subject to which it was registered. Existing friendly societies 292. (1) A friendly society that was registered in Namibia prior to the commencement of this Chapter under any law repealed by this Act is deemed to be a society registered under this Act. (2) Despite subsection (1), a friendly society referred to in that subsection must, within 12 months after the date of commencement of this Chapter, make an application to NAMFISA pursuant to section 289 for registration as a friendly society. (3) If a friendly society referred to in subsection (1) fails to make an application to NAMFISA for registration within the period referred to in subsection (2), NAMFISA may take action that NAMFISA considers appropriate against the friendly society pursuant to section 295, 412 or 439. Effect of registration 293. (1) On registration of a friendly society under section 291, in so far as is applicable - (a) it has the powers of a juristic person to the extent that it is capable of suing and being sued under the name by which it is registered, and of doing all such things as may be necessary for
or incidental to the exercise of its powers or the performance of its functions pursuant to its rules; (b) despite anything to the contrary contained in any law or in the constitution, rules or other founding documents or of any corporate body or unincorporated entity that controls the business of the society - (i) all the assets, rights, liabilities and obligations pertaining to the business of the society will be assets, rights, liabilities and obligations of that registered society to the exclusion of any other person; and (ii) no person will have any claim on the assets or rights or be responsible for any liabilities or obligations of the society, except in so far as the claim has arisen or the responsibility has been incurred in connection with transactions relating to the business of the society; and (c) any assets, rights, liabilities and obligations, which are held by any person in trust for the society as it existed immediately prior to its registration will vest in and devolve upon the registered society without any formal transfer or cession. (2) The person in charge of the deeds registry or any other officer in charge of any other office where a register or record of the ownership of, or entitlement to, any property is kept in which is registered a deed or other document relating to an asset or right which under subsection (1) vests in or devolves upon a friendly society must, on production by the fund of its certificate of registration and of the deed or other document, without payment of transfer duty, stamp duty, registration fees or other charges, make the endorsements upon that deed or other document and the alterations in the registers in order to reflect that vesting or devolution. Application for cancellation or variation of registration 294. (1) A registered society may at any time make an application to NAMFISA for cancellation of the registration granted pursuant to this Act or a variation of the conditions subject to which that registration was granted. (2) An application made under subsection (1) must be - (a) made in the manner and form required by the standards; (b) accompanied by the documents and other information required by the standards; (c) accompanied by such further information that NAMFISA on reasonable grounds may require in any particular case; and (d) accompanied by the required fee. (3) Before making an application for the cancellation of a registration or a variation of its conditions, the applicant must give prior notice of the proposed application in two newspapers circulating nationally in Namibia, at the expense of the applicant, stating - (a) the name of the applicant; (b) either the - (i) reasons for the proposed cancellation; or (ii) nature of the proposed variation; and (c) the period within which objections to the application may be lodged with NAMFISA. (4) Section 291 applies with the changes required by the context to an application for a variation of conditions referred to in subsection (1).
(5) If after consideration of any objection received as a result of the notice referred to in subsection (3), NAMFISA is of the opinion that it is reasonable to do so and not against the public interest, NAMFISA may, by notice to the registered fund concerned - (a) cancel the registration; or (b) vary the conditions of registration, including the imposition of additional conditions. (6) NAMFISA must make public any cancellation of registration or variation of conditions of registration under subsection (5) and the reasons for the cancellation or variation, by notice in the Gazette or by means of any other appropriate public statement. Cancellation or variation of registration 295. (1) NAMFISA may take any of the actions set out in subsection (2), if NAMFISA acting reasonably, finds that any of the following circumstances exist with respect to a registered friendly society:
(a) it has made a material misrepresentation or failed to provide information that was materially relevant in its application for registration; (b) it has failed to comply with this Act; (c) it no longer meets the requirements for registration; (d) it has provided financial services without professional integrity, prudence, proper skill and due diligence; (e) it is in an unsound financial position; (f) it has failed to comply with a directive, request or requirement of NAMFISA issued under this Act; (g) it has failed to give effect to a decision of the Appeal Board; (h) it has ceased to operate or has failed to commence operating within a reasonable time after being registered; (i) it is involved in a financial crime; or (j) a member of the board of trustees, the principal officer, other officer of the society no longer meets the fit and proper requirements within the meaning of the standards or has engaged in conduct identified in the standards as misconduct. (2) If NAMFISA is satisfied that any of the circumstances described in subsection (1) exist, NAMFISA may take any of the following actions with respect to the registered fund:
(a) cancel its registration;
(b) vary the conditions of its registration, including the imposition of additional conditions; or (c) take any other steps that NAMFISA may consider necessary or advisable.
(3) NAMFISA must give notice to the registered friendly society of the intention of NAMFISA to take any action referred to in subsection (2), together with the reasons for taking the action, and must give the registered friendly society a reasonable opportunity to be heard by specifying a period of not less than 21 days during which the registered friendly society may make representations to NAMFISA on the matter. (4) Subject to such conditions as NAMFISA may impose, NAMFISA may provisionally suspend the registration or take control of the assets of a registered friendly society. (5) On the cancellation of the registration of a friendly society under section 294(5)(a), subsection (2)(a) or any other applicable provision of this Act - (a) the friendly society must be dissolved in accordance with the requirements of section 316 or wound-up in accordance with the requirements of section 317, as applicable, and the rules of the fund; and (b) NAMFISA must take such steps and may impose such conditions as are necessary in the circumstances, which steps may include the transfer of the business of the friendly society to another friendly society, as appropriate, but no distribution of the assets of the friendly society may be made without the prior approval of NAMFISA. (6) NAMFISA must make public any suspension or cancellation of registration, variation of conditions of registration or any other steps taken under this section and the reasons for the suspension, cancellation, variation or steps, by notice in the Gazette or by means of any other appropriate public statement. (7) A person who - (a) continues to operate, or carry on, the business of a friendly society after the cancellation of registration under section 294(5)(a), subsection (2)(a) or any other applicable provision of this Act or after suspension of registration under subsection (4); or (b) fails to comply with a condition imposed by NAMFISA under subsection (4), commits an offence and is liable on conviction to a fine not exceeding N$5 000 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment.
PART 3
ADMINISTRATION AND POWERS
Principal office and principal officer
296.
(1) Every registered friendly society must -
(a) have a principal office in Namibia where it must hold and maintain the documents referred to in the standards; and (b) appoint to be its principal officer in Namibia, a fit and proper person within the meaning of the standards who - (i) is a Namibian citizen or permanent resident; (ii) is resident in Namibia; and (iii) must be an ex officio member of the board of the friendly society, but the principal officer may not serve as chairperson of the board. (2) Despite subsection (1)(b)(i), NAMFISA may, in exceptional circumstances, grant permission that a principal officer referred to in that subsection may, subject to the Immigration Control Act, 1993 (Act No. 7 of 1993), for such period as may be determined by NAMFISA, be a person other than a Namibian citizen or permanent resident. (3) After the appointment of a principal officer pursuant to subsection (1)(b), the registered fund must, within the period set out in the standards, in writing notify NAMFISA of the appointment. (4) NAMFISA may, on the grounds that a principal officer is not a fit and proper person within the meaning of the standards, and after giving the registered society and the principal officer a reasonable opportunity to be heard, direct the registered society to appoint some other person to be the principal officer of the registered society. (5) Whenever a principal officer resigns or the appointment of a principal officer is terminated by a registered society or by the expiry of a contract of employment, the registered society must, within the period set out in the standards, in writing notify NAMFISA and submit to NAMFISA a written statement of the reasons for the termination or, in the opinion of the registered society, the reasons for the resignation. (6) The principal officer of registered friendly society is authorised to act on behalf of the friendly society to ensure compliance with this Act, and in any case where a person, including NAMFISA, communicates with that friendly society, that person may do so by addressing the communication to the principal officer. (7) Process in any legal proceedings may be served on a registered friendly society by serving a copy of the process at its principal office. (8) A person who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$1 000 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Board of friendly society 297. (1) A registered friendly society must have a board consisting of persons who are fit and proper within the meaning of the standards. (2) Despite any rule of the friendly society, but subject to section 298, the board of a registered friendly society must consist of a minimum of three members all of whom are elected or appointed, whether directly or indirectly, by the members of the friendly society in accordance with the rules of that society. (3) Subsections (1) and (2) come into force on the
date which is 90 days after the date of commencement of this Chapter. (4) A person may not be a member of the board of a registered friendly society, if that person is - (a) a director or an officer or employee of the friendly society or an administrator of the friendly society or of the holding company, subsidiary, joint venture or associate of the friendly society or of the society administrator; (b) a consultant to or contractor under an agreement with the society administrator; or (c) a financial institution or financial intermediary that renders financial services to the registered friendly society or its board of trustees. (5) Subject to subsection (1), the rules of a friendly society must - (a) set out the constitution of the board, the election and appointment procedure for its members, the terms of office of the members, the procedures at meetings, the voting rights of members, the quorum for a meeting and the breaking of deadlocks; (b) provide a code of conduct for the members of the board; (c) require that the board meet at least four times a year; and (d) provide that all meetings of the board are held in Namibia. (6) The rules of a registered friendly society must be amended in accordance with section 308 to comply with subsections (1), (2), (4) and (5) within 90 days after the date of coming into force referred to in subsection (3). (7) Where a board consists of three members or pursuant to section 298, less than three members, all the members of the board constitute a quorum for a meeting of that board. (8) If a board member is removed from office for reasons other than the expiration of that member’s term of appointment or voluntary resignation - (a) that board member must within 21 days of the removal submit a written statement to NAMFISA of the reasons, in the opinion of the board member, for the termination; (b) the board must within 21 days of the removal submit a written statement to NAMFISA of the reasons, in the opinion of the board, for the termination. (9) A board member must at any time inform NAMFISA in writing on becoming aware of any material matter relating to the affairs of the friendly society which, in the opinion of the board member, may seriously prejudice the financial viability of the friendly society or the benefits or rights of its members. (10) A person who contravenes or fails to comply with subsection (9) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Exemptions 298. (1) NAMFISA may on written application by the board of a registered friendly society and subject to such conditions as may be determined by NAMFISA authorise the friendly society to have a board consisting of less than three members if that number is impractical or unreasonably expensive. (2) NAMFISA may withdraw an exemption granted under subsection (1) if a friendly society no longer qualifies for such
exemption or if NAMFISA regards such exemption no longer to be in the public interest. Replacement of member of board 299. (1) On the termination of office for any reason of a member of the board of a registered friendly society a person to replace such member must, subject to section 297(1) and (2), be elected or appointed in the manner set out in the rules of the friendly society and the board must notify NAMFISA forthwith of the termination and replacement. (2) A person who is elected or appointed as a member of the board of the friendly society pursuant to subsection (1) or (3) must be a fit and proper person within the meaning of the standards and such election or appointment must comply with the provisions of section 297 or 298. (3) NAMFISA may at any time, on the grounds that any member of the board of a registered friendly society is not a fit and proper person within the meaning of the standards and after giving the board and the member of the board in question a reasonable opportunity to be heard, direct - (a) that such member of the board be removed from office; and (b) in case the remaining number of members is less than the number required by section 297 or 298, as applicable, or by the rules of the friendly society, that some other person who complies with the provisions of subsection (2) be elected or appointed to the board of the friendly society. Objects of board 300. (1) The objects of the board of a registered friendly society are to direct, control and oversee the operations of the friendly society in accordance with this Act and the rules of the society. (2) In pursuing its objects the board must - (a) take all reasonable steps to ensure that the interests of members under the rules of the friendly society are protected and that the friendly society complies with the provisions of this Act and the rules; (b) act with due care, diligence, prudence and good faith; (c) avoid conflicts of interest wherever possible and, if not possible, manage the conflicts; (d) disclose any conflict of interest of a member of the board; and (e) act with impartiality in respect of all members and beneficiaries. (3) The members of the board of the friendly society must, within 30 days of the end of each financial year, disclose in writing to NAMFISA any payments or other considerations made, whether directly or indirectly, to them in that particular year by the friendly society or by a contractor with the friendly society. (4) A member of the board of trustees who contravenes or fails to comply with subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Duties of board 301. (1) In addition to the duties of a board of a registered friendly society set out in the rules of the friendly society and in section 395, the board of a registered friendly society must - (a) ensure that proper registers, books and
records of the operations of the friendly society are kept, including proper minutes of all resolutions passed by the board; (b) ensure that membership records, contributions and benefit payments are administered in accordance with the rules; (c) ensure that the assets of the friendly society are invested in accordance with the investment policy established by the board which is appropriate to the nature and financial circumstances of the friendly society, and which the board implements and regularly reviews after taking expert advice; (d) ensure that the risks of the friendly society are appropriately managed including ensuring that proper control systems and functional separation of duties are employed by or on behalf of the friendly society; (e) ensure that adequate and appropriate information is communicated to members of the friendly society, employers and sponsors pursuant to a communication strategy consistent with the standards issued by NAMFISA; (f) take all necessary steps to ensure that contributions are paid in a timely manner to the friendly society in accordance with this Chapter; (g) obtain expert advice on matters where board members lack sufficient expertise; (h) ensure that the rules and the operation and administration of the friendly society comply with this Act and other applicable laws; (i) ensure that the board meets at least four times each year; (j) continuously monitor the compliance of the members of the board with the requirement that they be fit and proper within the meaning of the standards as required by sections 297 and 299; (k) prepare an annual report, which must be submitted to NAMFISA, that summarises - (i) the financial position of the friendly society; (ii) the investment policy of the friendly society; (iii) the activities of the board during the year; and (iv) any other matters required by the standards; and (l) comply with such other duties as NAMFISA may require in the standards. (2) If, despite the steps taken by the board of a registered friendly society pursuant to subsection (1)(f), contributions to the friendly society remain outstanding for such period as is specified by NAMFISA in the standards the board must, within the period specified in the standards, notify all active and retired members of the friendly society and NAMFISA of this fact. (3) The board of a friendly society may, in accordance with a system of delegation set out in the rules of the friendly society, which system must maximise administrative and operational efficiency and provide adequate checks and balances, appoint a society administrator to exercise any of its powers of administration or to perform any of its administrative duties or functions as long as - (a) the society administrator is registered by NAMFISA as a society administrator pursuant to section 368; (b) the board has determined, after taking expert advice, that the society administrator has qualifications and experience relevant to the administration of the friendly
society in question; and (c) the board has entered into a contract with the society administrator that complies with the rules of the friendly society and the policies of the board. (4) The board is not divested or relieved of any power or duty or function delegated or assigned under subsection (3), and may, if necessary, withdraw the delegation or assignment at any time on reasonable notice. (5) As soon as possible after a contract referred to in subsection (3)(c) has been entered into, the board must file a copy of the contract with NAMFISA. (6) A society administrator that enters into a contract with the board of a friendly society pursuant to subsection (3)(c) has a fiduciary duty and responsibility to the friendly society and must exercise the powers delegated or perform the duty or function assigned to it with the standard expected of an expert. (7) Where a board delegates a power or assigns a duty or function pursuant to this section, the board must monitor the performance of the society administrator with respect to the standards described in the contract and take remedial action if that performance fails to achieve those standards. (8) Administration in respect of a friendly society means the rendering of any form of administration service, as defined in section 363, to the society. (9) A society administrator must, in relation to a friendly society, perform the functions and duties entrusted to the society administrator by section 374. Appointment of auditor 302. (1) Except where the accounts of a friendly society are to be audited by the Auditor-General pursuant to another law of Namibia, a registered friendly society must, in accordance with section 401 and in the manner set out in the rules of the society, appoint and at all times have an auditor or firm of auditors to be the auditor of the society. (2) The friendly society may not appoint as the auditor of the society - (a) an auditor who is; or (b) a firm of auditors, any member of which is, an - (i) employee or officer of the society, an individual who controls the affairs of the society or an employee, officer or member of the board of an entity that controls the affairs of the society; or (ii) employee or officer of a society administrator of the society or a member of the board of a society administrator of the society. (3) NAMFISA may direct a friendly society to change the auditor of the society if NAMFISA is satisfied that the auditor or any member of the firm of auditors appointed as auditor is an - (a) employee or officer of the society, an individual who controls the affairs of the society or an employee, officer or member of the board of an entity that controls the affairs of the society; or (b) employee or officer of a society administrator of the society or a member of the board of a society administrator of the society. (4) An auditor appointed under subsection (1) - (a) must perform the functions and duties assigned to; (b) must exercise the powers conferred on; and
(c) is subject to the obligations imposed on, an auditor by section 401. Appointment of valuator 303. (1) A friendly society which, pursuant to section 304, is required to have its financial position investigated and reported upon by a valuator must, in accordance with section 402 and in the manner set out in the rules of the fund, appoint and at all times have a valuator. (2) A board of a society referred to in section 292 must, if that society does not have a valuator on the date of commencement of this Part, appoint a valuator within 90 days of that date. (3) A friendly society may not appoint as the valuator of the society an - (a) employee or officer of the society, an individual who controls the affairs of the society or an employee, officer or member of the board of an entity that controls the affairs of the society; or (b) employee or officer of a society administrator of the society or a member of the board of a society administrator of the society. (4) NAMFISA may direct a friendly society to change the valuator of the society if NAMFISA is satisfied that the person appointed as valuator is an - (a) employee or officer of the society, an individual who controls the affairs of the society or an employee, officer or member of the board of an entity that controls the affairs of the society; or (b) employee or officer of a society administrator of the society or a member of the board of a society administrator of the society. (5) A valuator appointed under subsection (1) - (a) must perform the functions and duties assigned to; (b) must exercise the powers conferred on; and (c) is subject to the obligations imposed on, a valuator by section 402. Investigations by valuator 304. (1) A registered society carrying on any business which under its rules is subject to actuarial scrutiny must in accordance with the provisions of the standards, at least once in every three years, cause - (a) a valuation of the liabilities of the society in respect of that business to be made; and (b) the assets of the society to be valuated, monitored and assessed, and to be reported on by the valuator of the society as at the end of the third financial year. (2) Despite subsection (1), if NAMFISA has reason to believe that an investigation would show that the society is not in a sound financial position, NAMFISA may, after not less than 30 daysʼ notice in writing to the board of a society, require the board to cause the financial position of the society to be investigated by the valuator of the society as at the end of any financial year as specified by NAMFISA and a valuation report thereon to be prepared by the valuator. (3) The report of the valuator referred to in subsection (1) or (2) must include any particulars set out in the standards. (4) The board of a society must, within 180 days from the end of the valuation period, and subject to section 402(10)(c), deposit a copy of the valuation report referred to in subsection (1) or (2) with NAMFISA. (5) Whenever
the board of a fund deposits with NAMFISA a copy of a report made by a valuator under this section, it must also deposit with NAMFISA a certificate of the board and of the principal officer of the society that to the best of their knowledge and belief the information furnished to the valuator for the purposes of the report was correct and complete in every material respect. (6) If the rules of a society provide that the benefits which may become payable to members are subject to the discretion of the board of the society, the board must determine and inform NAMFISA what amount or scale of benefits were taken into consideration for the purpose of the valuation. [The verb “were” should be “was” to be grammatically correct (“scale….was”).] (7) The board of a friendly society may, subject to such terms and conditions as may be prescribed, after it receives a report of the valuator and the report reveals an actuarial surplus as provided for in the standards, distribute some or all of that actuarial surplus. (8) Any person who contravenes or fails to comply with subsection (4) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Business which may be carried on 305. (1) A registered society may not carry on any business other than the business connected with the objects for which a friendly society may be established as set out in section 285, but NAMFISA may, on written application by a society, approve and allow the society to carry on such other business on such conditions and for such period as NAMFISA may determine, if NAMFISA is satisfied that it is necessary in order to safeguard an investment made by the society. (2) A person who contravenes or fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Investments 306. (1) Subject to the provisions of this section and the regulations, a friendly society may invest its funds in any manner provided by its rules. (2) A society may, where its rules so provide, by way of investment of its funds, grant loans secured by first mortgages of immovable property to any of its members, if the mortgaged property is property on which a dwelling house has been or is to be erected, but the loans may not exceed the percentage of the fair value of the immovable property concerned as provided in the standards. (3) NAMFISA may, under exceptional circumstances, and on such conditions and for such periods as NAMFISA may determine, temporarily exempt a society from compliance with the provisions of subsection (2). (4) The Minister may make regulations and NAMFISA may issue standards in respect of the investments by, or of, a friendly society. (5) Any person who contravenes or fails to comply with subsection (2) or any condition on
which an exemption has been granted pursuant to subsection (3) commits an offence and is liable on conviction to a fine not exceeding N$2 500 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment.
PART 4
RULES OF FRIENDLY SOCIETY
Rules
307.
(1) The rules of a friendly society must comply with the requirements of this Act and must contain matters that may be set out in the regulations or in the standards.
(2) Where the rules of a society are inconsistent with any provision of this Act the rules are invalid to the extent of the inconsistency.

Financial Institutions and Markets Act 2 of 2021

Lineage: In force

Timeline