Central Bank of Samoa Act 2015

CENTRAL BANK OF SAMOA ACT 2015

SAMOA

Establishment of Provisions

PART 1 INTRODUCTION

1. Short title and commencement
2. Interpretation of terms

PART 2 ESTABLISHMENT AND GOVERNANCE

Division 1 - Central Bank Central Bank of Samoa

3. Continuation of the establishment of the Bank
4. Independence
5. Objectives of the Bank
6. Functions of the Bank
7. Offices, branches, agents and representatives

Division 2 - Establishment of the Executive Committee and the Management Committee

8. Executive Committee of Directors
9. Disclosure of financial interests and convictions
10. Meetings of the Executive Committee
11. Standing summons
12. Management Committee

Division 3 - Duties and powers of the Executive Committee, Management Committee and Governor

13. Duties and powers of the Executive Committee
14. Duties and powers of the Management Committee
15. Duties of the Governor

Division 4 - Appointment of the Governor and Non-Executive Directors

16. Appointment of the Governor and non-executive directors
17. Selection panel for the appointment of the Governor
18. Selection panel for the appointment of non-executive directors
19. Term of office and remuneration
20. Disqualifications
21. Resignation
22. Removal of the Governor
23. Removal and vacancies of non-executive directors
24. Special provisions regarding office

Division 5 - Officers, Auditors and the Audit Committee

25. Officers and staff of the Bank

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26. External Auditor
27. Audit Committee

Division 6 - Miscellaneous Provisions

28. Conflicts of interest and gifts
29. Confidential information
30. Confidentiality
31. Legal protection and indemnity

PART 3 CAPITAL, RESERVES, CURRENCY AND MONETARY POLICY

32. Capital
33. Reserve fund
34. Retained earnings
35. Distributable profits
36. Establishment of distributable profits
37. Monetary policy

PART 4 CURRENCY

38. Exclusive right to issue currency
39. Defacement of banknotes
40. Currency units and legal tender
41. Production and appearance of currency
42. Powers to recall
43. Recovery of lost, stolen, damaged or defaced currency
44. Counterfeiting

PART 5 FOREIGN EXCHANGE RESERVES AND EXTERNAL EXCHANGE CONTROL

45. Official foreign exchange reserves

46. Investment of reserve assets

47. Limitations

48. Management and framework for exchange rates

49. Regulations concerning foreign exchange control

PART 6 FUNDS AND FINANCIAL STABILITY

50. Opening balances
51. Financial operations
52. Planning of indemnities to ensure and measure
53. Minimum reserve requirements
54. Other documents certifying fund management
55. Loans and liabilities
56. Provision of information
57. Liquidation, as a final effort
58. National Payment System

PART 7 RELATIONSHIPS WITH THE GOVERNMENT

59. Bank to act as fiscal agent of the Government
60. Cooperation with the Government
61. Loans to the Government
62. Loans to Government entities
63. Acquisition of legal instruments regarding debts issued by the Government and Government entities
64. Maximum limit of loans to the Government and Government entities
65. Limitations

PART 8 AUDIT AND LIABILITY

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66. Audit by an external auditor
67. Preparation of reports and financial information

PART 9 MISCELLANEOUS PROVISIONS

68. Powers to bring legal charges
69. Collection and publication of statistical data
70. Safe premises
71. Fees
72. Local branches and international cooperation with organizations
73. Tax exemption
74. Prohibited activities
75. Judicial proceedings
76. Most important rights
77. Immunity from prior legal judgment
78. Prohibited names
79. Regulatory rules
80. Repeal and amendment
81. Transitional provisions and savings

2015, No. 31

AN ACT to provide for the establishment of the Central Bank of Samoa and for related purposes.

IT IS ENACTED by the Legislative Assembly of Samoa in Parliament assembled as follows:

PART 1 INTRODUCTION

1. Short title and commencement - This Act may be cited as the Central Bank of Samoa Act 2015, and shall come into force on the date on which it receives the assent of the Head of State.

2. Interpretation of terms -(1) In this Act, unless the context requires a different meaning: “audit committee” means the committee appointed under section 27; “Bank” means the Central Bank of Samoa continued under section 3(1); “Executive Committee” means the Executive Committee of Directors of the Bank established under section 8; “Chairman” means the Chairman of the Executive Committee;

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“currency” means banknotes of the Bank or banknotes or silver coins other than commemorative silver coins; “Management Committee” means the Management Committee of the Bank established under section 12; “external auditor” means a person appointed under section 66; “financial sector” means the sector providing financial services or the sector depositing funds in banks within Samoa; “financial year” means the period of 12 months ending on 30 June each year, or any other period determined by the Executive Committee; “Governor” means a person appointed under section 16 to be the Governor of the Bank; “International Standards for Financial Reporting” means any International Standards for Financial Reporting currently issued by the Executive Committee of the International Accounting Standards Board; “International Standards on Auditing” means International Standards on Auditing issued by the International Organization of Supreme Audit Institutions; “insurance persons” has the meaning given in the Insurance Act 2007; “Minister” means the Minister responsible for Finance; “financial obligations” means the issuance of funds, protection of liabilities issued by the Bank, and funds deposited with the Bank by persons other than the Government and non-residents; “non-executive director” means a director of the Executive Committee appointed under section 8(1)(b); “objectives” means the objectives of the Bank set out in section 5; “officers” includes the Governor or an employee of the Bank; “Government entities” means an organization or organizations, a majority of which are owned by the Government or managed by the Government.

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(2) In this Act, the terms “bank”, “financial institution”, “financial organization”, “financial services”, “financial market participants”, and “financial markets” have the same meanings as in the Financial Institutions Act 1996; (3) In this Act, the terms “payment system”, “National Payment System”, “payment system”, and “resolution” have the same meanings within the National Payment Systems Act 2014.

PART 2 ESTABLISHMENT AND GOVERNANCE

Division 1 - Central Bank of Samoa

3. Continuation of the establishment of the Bank -(1) The Central Bank of Samoa established under the Central Bank of Samoa Act 1984 shall continue and operate in accordance with this Act. (2) The Bank is a body corporate with perpetual succession and a common seal, and may in its name: (a) enter into contracts and incur liabilities; (b) sue and be sued in its own name; (c) subject to the provisions of this Act, acquire, hold, convey and transfer real and personal property; and (d) do all things and incur expenditures appropriate for the proper performance of its functions.

4. Independence -(1) In exercising its objectives, functions, duties and powers, the Bank shall be independent and shall be accountable as provided under this Act. (2) The Bank, a member of the Executive Committee or the Management Committee, or an officer, shall not, in exercising their functions, accept instructions from any person, including a Government entity. (3) The independence of the Bank shall be respected at all times. (4) No person shall:

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(a) influence a member of the Executive Committee or the Management Committee, or an officer or employee of the Bank in the exercise of their functions, duties or powers; or (b) interfere with the work of the Bank.

5. Objectives of the Bank - The Bank has the following objectives: (a) the primary objective is to establish and implement monetary policies aimed at the economic goal of achieving and maintaining stability in the country at a high general level of prices; (b) the second objective is to promote and maintain a stable financial system without compromising the achievement of the primary objective; (c) the third objective is to support the general economic policies of the Government without compromising the primary and secondary objectives.

6. Functions of the Bank - The Bank has the following functions: (a) to formulate and implement monetary policies; (b) to advise the Government on the foreign exchange rate system; (c) to formulate and implement foreign exchange rate policies; (d) to hold and manage all official foreign exchange reserves of Samoa; (e) to regulate international exchange of currency; (f) to issue and manage Samoa’s currency; (g) to oversee the maintenance of the stability of the financial system as a whole; (h) to license and supervise banks, financial market participants, other financial institutions, insurance persons, and any other organization to ensure compliance with their applicable laws; (i) to act as a lender of last resort for banks;

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(j) to promote and oversee the safety and efficiency of the National Payment System; (k) to promote issues related to the integrity and literacy of currency; (l) to collect and compile statistical data related to its functions; (m) to act as the official fiscal agent of the Government and Government entities; (n) to advise the Government on the deposit of funds and financial matters; (o) to cooperate with, participate in international financial organizations, and other international organizations, and cooperate with the country and international organizations, regarding matters related to its functions and work; (p) to undertake any additional activities that may arise from its functions, duties and powers.

7. Offices, branches, agents and representatives - The Bank: (a) shall have its principal place of business in Apia; (b) may establish branches and appoint agents and representatives within Samoa and abroad; and (c) may require an agent within Samoa to hold assets in excess of the reserve requirements specified in section 53.

Division 2 - Establishment of the Executive Committee and the Management Committee

8. Executive Committee of Directors - The Executive Committee of Directors of the Bank is established to include the following members: (a) the Governor as Chairman; (b) four (4) non-executive directors appointed from the private sector.

9. Disclosure of financial interests and convictions -(1) A director shall, within one (1) month: (a) upon appointment; and

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(b) if there is a change in the interest or a new conviction. submit a clear disclosure of financial interests and convictions in a form certified by the Governor. (2) A non-executive director who fails to comply with subsection (1) shall cease to be a director upon the expiration of one (1) month. (3) If the Governor fails to comply with subsection (1), the failure shall be grounds for removal under section 22.

10. Meetings of the Executive Committee -(1) The following shall apply to a meeting of the Executive Committee: (a) the Executive Committee shall - (i) meet at any time and place as determined by the Executive Committee or as directed by the Governor; and (ii) meet at least once every two (2) months; and (iii) meet if a meeting is deemed appropriate by the Governor or requested in writing by at least two (2) directors; (b) three (3) members, including one (1) being the Governor, shall constitute a quorum; (c) the Governor shall preside at all meetings; (d) any question arising at a meeting shall be decided by a majority vote of the members present and voting, unless otherwise provided under this Act; (e) the Governor shall have a casting vote and a deliberative vote; (f) the minutes of each meeting of the Executive Committee shall be recorded and signed by the Governor presiding over the meeting. (2) Subject to the express provisions of this Act, the Executive Committee may regulate its own procedure. (3) No act of the Executive Committee shall be invalid on the ground of a vacancy among its members.

11. Standing summons - The Chief Executive Officer or another officer of the Ministry of Finance may attend any meeting of the Executive Committee without voting rights and provide submissions to the Executive Committee.

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12. Management Committee - The Management Committee of the Bank is established to include the following members: (a) the Governor as Chairman; and (b) three (3) management officers appointed by the Governor.

Division 3 - Duties and powers of the Executive Committee, Management Committee and Governor

13. Duties and powers of the Executive Committee -(1) The Executive Committee shall oversee the implementation of the Bank’s policies, powers and operations. (2) In performing its duties under subsection (1), the Executive Committee has the powers: (a) to oversee the implementation of the Bank’s functions and the implementation of its policies; (b) to make decisions regarding the Bank’s borrowings and their terms and conditions; (c) to determine the allocation of assets based on official foreign exchange reserves under section 45; (d) to apply regulatory rules issued by the Bank; (e) to make decisions regarding the opening and closing of the Bank’s branches and to appoint and act as agents and representatives of the Bank; (f) to approve the Bank’s annual accounts; (g) to make decisions regarding the purchase of buildings and real estate of the Bank and any development property of the Bank; (h) to approve reports and financial information to be submitted to the Minister under section 67(1)(b); (i) to make decisions regarding the roles and instructions for the Executive Committee and the Management Committee, without prejudice to the provisions of this Act or any other law; and (j) to perform any other functions or powers under this Act or any other law. (3) The Executive Committee may issue instructions and advice to the Governor regarding any matter related to the functions, duties and powers of the Bank under this Act and any other law.

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14. Duties and powers of the Management Committee -(1) The Management Committee shall establish the Bank’s policies. (2) In performing its duties under subsection (1), the Management Committee has the powers: (a) to establish the Bank’s monetary policies, including, as appropriate, decisions regarding the timing, key interest rates, and the provision of reserves; (b) to advise the Government on the management of foreign exchange rates; (c) to establish foreign exchange rate policies; (d) to establish other Bank policies regarding the implementation of its functions; (e) to apply by-laws, internal regulations for the management and operation of the Bank; (f) to determine the structure of the Bank; (g) to perform any other functions regarding a decision of the Executive Committee or under this Act or any other law. (3) The Management Committee may appoint sub-committees of the Management Committee and determine their composition and functions.

15. Duties of the Governor -(1) The Governor is the Chief Executive Officer of the Bank. (2) The Governor has the following duties: (a) to be responsible for the day-to-day management of the Bank; (b) to advise the Executive Committee on monetary policies and other Bank policies and report to the Executive Committee on financial and economic conditions within Samoa; (c) to report to the Executive Committee on the implementation of policies and the performance of the Bank’s functions, duties and powers; (d) to be accountable to the Executive Committee for the implementation of the Bank’s policies and the proper management of the Bank; (e) in exercising its functions, duties and powers, to issue general or specific instructions issued by the Executive Committee;

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(f) to issue orders, impose administrative fines on, and take other measures to enforce against a bank, financial market participant, financial market participant, other financial institutions, companies included in the National Payment System, and other organizations under the supervision of the Bank under this Act, the Financial Institutions Act 1996, the Financial Institutions Act 1996, the Financial Institutions Act 1996, the National Payment Systems Act 2014, or any other law; (g) to perform the functions, duties or powers of the Financial Intelligence Unit under section 4(2) of the Anti-Money Laundering Act 2007; (h) to perform the functions of the Insurance Commissioner as directed under section 4 of the Insurance Act 2007; (i) to act as the representative of the Bank and sign contracts on behalf of the Bank; and (j) to perform any other functions, duties or powers of the Bank under this Act or any other law, except for the functions, duties and powers of the Executive Committee or the Management Committee. (3) The Governor may, in writing, delegate its functions, duties and powers under this Act to any officer, except for the power under this subsection.

Division 4 - Appointment of the Governor and Non-Executive Directors

16. Appointment of the Governor and non-executive directors -(1) The office of Governor of the Bank is established. (2) The Head of State, on the advice of the Cabinet, may appoint the following persons: (a) the Governor; and (b) non-executive directors. (3) Persons appointed under subsection (1) shall: (a) be citizens of Samoa; and (b) have general experience in economic, financial, accounting, auditing, banking, or legal matters.

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(4) Before advising the Head of State under subsection (1), the Cabinet shall: (a) act on the advice of the independent selection panel under section 17 for the appointment of the Governor; and (b) the advice of the committee to make selections and make selections under sections 18, for the appointment of non-executive directors.

17. Selection panel for the appointment of the Governor -(1) The Cabinet may appoint an independent selection panel consisting of two (2) members of the Audit Committee and an independent member. (2) A person is eligible for appointment under subsection (1) if that person: (a) has qualifications and experience in economic, accounting, auditing, legal, banking or law matters; and (b) is not disqualified under section 20(1) or (2). (3) A person is not eligible for appointment under subsection (1) if the person is a member or has been a member of the Executive Committee or the Management Committee or an officer within 12 months prior to the appointment to the selection panel. (4) Subsection (3) shall not apply to a non-executive director who is not a member of the Audit Committee.

18. Selection panel for the appointment of non-executive directors -(1) The Cabinet may appoint a special committee of the independent selection panel (“the Committee”) which is not permanent, consisting of three (3) members, subject to the discretion of the Cabinet. (2) A person is not eligible for appointment under subsection (1) unless that person has qualifications and experience in economic, accounting, auditing, legal, banking, or law matters.

19. Term of office and remuneration -(1) The Governor: (a) shall hold office for six (6) years; and (b) shall be eligible for reappointment for only one (1) further term of six (6) years; and

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(i) reduced as the term progresses; or (ii) based on profits or revenues of the Bank. (2) The Governor: (a) shall devote the full time of his professional work to the Bank; and (b) shall not hold any other office, whether paid or unpaid, without the written permission of the Committee. (3) Non-executive directors are eligible for remuneration and additional allowances determined by the Cabinet.

20. Disqualifications -(1) A person shall not be appointed or continue to be eligible if the person: (a) has been convicted of an offense punishable by imprisonment; (b) has become bankrupt or insolvent; (c) has, on grounds of misconduct, been disqualified or removed by a competent authority from the performance of an office or been banned from being a director or officer of any public or business organization; (d) has been found guilty of serious misconduct in office; or (e) is the spouse, child, parent, son, daughter, brother, or sister of the person nominated. (2) A person shall not be appointed or continue to be eligible if the person is: (a) a Member of Parliament; (b) a Minister of the Cabinet; (c) an officer or employee of the Government; (d) a director, chief executive officer or employee of a Government entity; or

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National Payment Systems Act 2014 or any other organization under the supervision of the Bank. (3) An officer or employee of a university is not prevented by subsection (2) from being appointed as a non-executive director. (4) Subject to subsection (5), in this Division, “person required” means the Governor or a non-executive director. (5) Subsection (2)(e) shall not apply to a non-executive director.

21. Resignation - A person required may, in writing to the Head of State, resign from office: (a) for the Governor by giving at least three (3) months’ notice prior to

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