Financial Services (Risk and Governance Requirements for Banks and Bank Holding Companies) (Amendment) Directive, 2024

GOVERNMENT NOTICE NO. 31
FINANCIAL SERVICES ACT
(CAP 44:05)
FINANCIAL SERVICES (RISK AND GOVERNANCE REQUIREMENTS FOR BANKS AND BANK HOLDING COMPANIES) (AMENDMENT) DIRECTIVE, 2024 IN EXERCISE of the powers conferred by section 34 (2) (b) of the Financial Services Act, I, DR. WILSON TONINGA BANDA, Registrar of Financial Institutions, issue the following Directive__

1. This Directive may be cited as Financial Services (Risk and
   Governance Requirements for Banks and Bank Holding Companies) (Amendment) Directive, 2024.
2. The Financial Services (Risk and Governance Requirements for
   Banks and Bank Holding Companies) Directive (hereinafter referred to as the “principal Directive”) is amended, by deleting paragraph 5 and substituting therefor a new paragraph as follows__ 5. __(1) A significant shareholder of an institution shall not, directly or indirectly, be a chairperson of a Board or member of a Board Audit Committee or Board Risk Committee of the institution.

(2) A person affiliated to a shareholder of an institution shall not be a member of the Board Audit Committee or Board Risk Committee of the institution.”.
3. Paragraph 7 of the principal Directive is amended by deleting
subparagraph (2) and substituting therefor a new subparagraph as follows__ “(2) The Board shall review the charter at least once every two years.”.

Citation
Substitution of para. 5 to
Cap. 44:05,
Sub. leg. GN.
51/2018
Amendment of para. 7 of the principal Directive “Restrictions on shareholders and persons affiliated to shareholders

4. The principal Directive is amended by deleting paragraph 9 and
   substituting therefor a new paragraph as follows__
5. An institution shall have a Company Secretary who
   shall, among other duties, be responsible for__ (a) orientation of new directors on the business and governance practices of the institution; (b) facilitation of annual self-assessment of directors; and (c) provision of advice and guidance on ethics and governance to the Board.”.
6. Paragraph 13 of the principal Directive is amended by deleting clause
   (a) and substituting therefor a new clause as follows__ “(a) comprise a minimum of eleven directors and the majority of the directors shall be independent directors; and”.
7. Paragraph 16 of the principal Directive is amended by__
   (a) deleting subparagraph (6) and substituting therefor a new subparagraph as follows__ “(6) A director of a bank or bank holding company shall not serve on the Board of another financial institution unless__ (a) the director obtains prior written approval of the Registrar; or (b) the other financial institution is part of the group or is affiliated to the bank through shareholding.”. (b) inserting, immediately after subparagraph (7), a new subparagraph (8) as follows__ “(8) A person who ceases to be a director of a bank or bank holding company shall not be appointed as a director of another bank or bank holding company until after expiry of a cooling off period of six months from the date he ceases to be a director of the bank or bank holding company.”.
8. Paragraph 18 of the principal Directive is amended by__
   (a) renumbering subparagraphs (4), (5), (6), (7), (8) and (9) as subparagraphs (5), (6), (9), (10), (11) and (12), respectively; (b) inserting a new subparagraph (4) as follows__ “(4) A committee of the Board shall have a minimum of three members.”. (c) deleting subparagraph (6) and substituting therefor a new subparagraph as follows__ “(6) A chairperson of a committee of the Board shall be an independent director.”.

Substitution of para. 9 of the principal Directive Amendment of para. 13 of the principal Directive Amendment of para. 16 of the principal Directive Amendment of para. 18 of the principal Directive “Company Secretary

(d) by inserting, immediately after subparagraph (6), new subparagraphs (7) and (8) as follows__ “(7) A director shall not be a chairperson of more than one committee of the Board except with prior written approval of the Registrar. (8) Where a director serves as chairperson of an additional committee of the Board as prescribed under subparagraph (7), the director shall serve as a chairperson of the additional committee for a period not exceeding six months.”. Issued this 1st day of May, 2024. DR. W. T. BANDA (REF. NO. FIN/PFSPD/02/12) Registrar of Financial Institutions

130 24th May, 2024