Fit and Proper Requirements for Banks and Bank Holding Companies (Amendment) Directive, 2024

GOVERNMENT NOTICE NO. 32
FINANCIAL

SERVICES

ACT
(CAP 44:05)
FINANCIAL

SERVICES

(FIT

AND

PROPER

REQUIREMENTS

FOR
SHAREHOLDERS,

DIRECTORS

AND

SENIOR

MANAGEMENT

OFFICIALS

OF
BANKS

AND

BANK

HOLDING

COMPANIES)

(AMENDMENT)

DIRECTIVE,

2024
IN EXERCISE of the powers conferred by section 34 (2) (a) 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 the Financial Services (Fit and Proper
   Requirements for Shareholders, Directors and Senior Management Officials of Banks and Bank Holding Companies) (Amendment) Directive, 2024.
2. The Financial Services (Fit and Proper Requirements for
   Shareholders, Directors and Senior Management Officials of Banks and Bank Holding Companies) Directive (hereinafter referred to as the “principal Directive”) is amended in paragraph 2 by__ (a) inserting, in the correct alphabetical order, a new definition as follows— “Government” means the three arms of Government established under the Constitution of Malawi;”; (b) deleting the definition of “politically exposed person”; and (c) in the definition of “senior management official”— (i) deleting clause (b); and

(ii) renumbering clauses (c), (d) and (e) as clauses (b), (c) and (d), respectively. Citation Amendment of para. 2 to Cap. 44:05, Sub. leg. GN. 21/2018

3. Paragraph 6 of the principal Directive is amended by—
   (a) deleting subparagraph (4);
   (b) renumbering subparagraph (3) as subparagraph (4); (c) inserting a new subparagraph (3) as follows— “(3) The Registrar shall not grant approval to appoint a foreign national as a senior management official of a bank or bank holding company, unless the bank or bank holding company demonstrates that it has failed to identify a suitably qualified person for the position from the local market.”. (d) in subparagraph (4), inserting the words “or bank holding company” immediately after the word “bank”; (e) in subparagraph (5), inserting the words “or bank holding company” immediately after the word “bank”; and (f) in subparagraph (7), inserting the words “or bank holding company” immediately after the word “bank”.
4. Paragraph 8 of the principal Directive is amended—
   (a) by deleting subparagraph (1) and substituting therefor a new subparagraph as follows— “(1) A chairperson of a board of directors of a bank or bank holding company shall be an independent director of the bank or bank holding company:
   Provided that a person who is affiliated to a shareholder of a bank or bank holding company may be appointed chairperson of the board of directors of the bank or bank holding company upon prior written approval of the Registrar.”; (b) by deleting subparagraph (2) and substituting therefor a new subparagraph as follows— “(2) A director of a bank or bank holding company shall not serve on the Board of another financial institution— (a) except upon prior written approval of the Registrar; or (b) unless the other financial institution is part of the group or is affiliated to the bank or bank holding company through shareholding.”; (c) in subparagraph (5), by inserting the words— (i) “or statutory body” immediately after the word “Government”, wherever it appears; and (ii) “or bank holding company” immediately after the word “bank”, wherever it appears; (d) by deleting subparagraph (6) and substituting therefor a new subparagraph as follows— 24th May, 2024 131 Amendment of para. 6 of the principal Directive Amendment of para. 8 of the principal Directive

“(6) A salaried employee of the Government appointed as a director of a bank or bank holding company, as prescribed under subparagraph (5), shall not serve as a chairperson of the Board of the bank or bank holding company.”; (e) by deleting subparagraph (7) and substituting therefor a new subparagraph as follows— “(7) A director of a bank or bank holding company appointed in accordance with subparagraph (5) shall not serve on a Board of another bank or bank holding company.”; (f) in subparagraph (8), by inserting the words “or bank holding company” immediately after the word “bank”, wherever it appears; (g) by deleting subparagraph (9) and substituting therefor a new subparagraph as follows— “(9) A person who ceases to hold the office of Registrar or other senior management position in the Reserve Bank of Malawi shall not be appointed as a director or senior management official of a bank or bank holding company until after expiry of the cooling off period stipulated in his employment contract with the Reserve Bank.”; and (h) by inserting a new subparagraph (10) as follows— “(10) For purposes of this paragraph “employee of a statutory body” does not include an academic member of staff of a public university and tertiary education institution.”.
5. Paragraph 9 of the of the principal Directive is amended—
(a) by deleting subparagraph (1) and substituting therefor a new subparagraph as follows— “(1) A person shall not be appointed as head of the accounting or finance functions of a bank or bank holding company unless the person is an accredited member of the Institute of Chartered Accountants in Malawi and Malawi Accountants Board.”; (b) in subparagraph (2), by inserting the words “or bank holding company” immediately after the word “bank”; and (c) in subparagraph (3), by inserting the words “or bank holding company” immediately after the word “bank”, wherever it appears.
6. Paragraph 10 of the principal Directive is amended, in subparagraph
(2), by inserting the words “or bank holding company” immediately after the word “bank”.
7. Paragraph 11 of the principal Directive is amended by deleting the
word “shall” and substituting therefor the word “may”. 132 24th May, 2024 Amendment of para. 9 of the principal Directive Amendment of para. 10 of the principal Directive Amendment of para. 11 of the principal Directive

8. Paragraph 13 of the principal Directive is amended in subparagraph
   (1)—
   (a) by deleting clause (b) and substituting therefor a new clause as follows— “(b) a person who has been convicted of an offence involving dishonesty, fraud, forgery, perjury, money laundering, corruption, or any offence under the Financial Crimes Act or a financial service law.”; (b) by deleting clause (i) and substituting therefor a new clause as follows— “(i) a person who holds or has held, in Malawi or another country, the office of head of state, deputy head of state, Cabinet Minister or Member of Parliament;”; (c) by renumbering clauses (j), (k), (l), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w) and (x) as clauses (k), (l), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w), (x) and (aa), respectively; (d) inserting a new clause (j) as follows— “(j) a person who holds or has held, in Malawi or another country, the position of ward councilor or member of a governing body of a political party, any organ of a political party or organization whose objectives or activities are political in nature:
   Provided that the person may be eligible to be appointed or to serve as shareholder, director or senior management official of a bank or bank holding company upon the expiry of seven years from the time the person ceases to be a ward councilor or member of a political party or organization whose objectives or activities are political in nature;”; (e) in clause (w), by deleting the word “or” immediately after the words “institution;”; (f) inserting new clauses (y) and (z) immediately after clause (x) as follows— “(y) a person who holds or has held, in Malawi or another country, a position of director or senior management official in a local or international organization which is in a position to influence government policy or decision; (z) a child and spouse of a person disqualified under clause (i);or”; (g) renumbering subparagraphs (2) and (3) as subparagraphs (3) and (4), respectively; and (h) inserting a new subparagraph (2) as follows— 24th May, 2024 133 Amendment of para. 13 of the principal Directive

“(2) In addition to the requirements prescribed under this Directive, a shareholder, including an ultimate beneficial owner, shall satisfy the fit and proper requirements prescribed in the Financial Services (Licensing of Banks) Directive.” Issued this 1st day of May, 2024. DR. W. T. BANDA (REF. NO. FIN/PFSPD/02/12) Registrar of Financial Institutions

134 24th May, 2024
GN. 22/2018