Pension (Corporate Governance Requirements for Pension Entities) Directive 2025

GOVERNMENT NOTICE NO. 60
PENSION ACT
(NO. 6 OF 2023)
PENSION (CORPORATE GOVERNANCE REQUIREMENTS FOR PENSION ENTITIES) DIRECTIVE, 2025 ARRANGEMENT OF PARAGRAPHS PARAGRAPH
PART I__PRELIMINARY

1. Citation
2. Interpretation
3. Objectives
   PART II__SPECIFIC REQUIREMENTS FOR ADMINISTRATORS, PENSION
   SERVICES COMPANIES, CORPORATE TRUSTEES AND PROVIDERS OF PROGRAMMED WITHDRAWALS
4. Shareholders responsibilities
5. Restriction on shareholders
6. Shareholder loans
7. Composition of board
8. Chairperson of board
9. Restrictions on directors
10. Residency of directors
11. Restrictions on independent directors
12. Functions of the board
13. Powers of the board
14. Board charter
15. Meetings of the board
16. Attendance of board meetings
17. Committees of a board
18. Audit committee
19. Risk management committee
20. Annual self-assessments for the board
21. Directors of a corporate trustee to comply with Trustee Code of
    Practice
22. False or misleading information
23. Succession plan for chief executive officers
24. Announcement of appointment of a chief executive officer or director
25. Company secretary
26. Internal audit
27. External auditor
    374 4th July, 2025

PARAGRAPH
PART III__SPECIFIC REQUIREMENTS FOR PENSION FUNDS AND PROVIDENT
FUNDS
28. Composition of board
29. Chairperson of board
30. Restriction on trusteeship
31. Restrictions on tenure of trusteeship
32. Trustee Code of Practice
33. Functions of trustees
34. Powers of the board of trustees
35. Board of trustees charter
36. Residency of trustees
37. Meetings of board of trustees
38. Attendance of board meetings
39. Committees of the board
40. Annual self-assessments for the board of trustees
41. Delegation of functions
42. Internal audit
43. External auditor
PART IV__ENFORCEMENT
44. Monetary penalties
IN EXERCISE of powers conferred by section 68 (1) of the Pension Act, 2023, I, DR. MACDONALD MAFUTA MWALE, Registrar of Financial Institutions, issue this Directive__
PART I__PRELIMINARY

1. This Directive may be cited as the Pension (Corporate Governance
   Requirements for Pension Entities) Directive, 2024.
2. In this Directive, unless the context otherwise requires__
   “chief executive officer” means a person occupying the highest management position in a pension entity by whatever name designated; “independent director” means a director that__ (a) is not a significant owner of a pension entity, either directly or indirectly; (b) is not related or affiliated to a significant owner; (c) has not been employed by the pension entity in an executive position in the last two years; (d) is not a professional advisor to the pension entity other than as a director; (e) has no significant contractual relationship with the pension entity; or 4th July, 2025 375 Citation Interpretation

(f) is free from any business or relationship which could be seen to materially interfere with the individual’s capacity to act in an independent manner; and “senior management official” includes__ (a) chief executive officer; (b) an official who reports either directly to the board of directors, a committee of the board of directors or to a chief executive officer; or (c) an officer of a pension entity that the Registrar declares as a senior management official.
3. The objective of this Directive is to set minimum corporate
governance requirements for a pension entity.
PART II__SPECIFIC REQUIREMENTS FOR ADMINISTRATORS, PENSION
SERVICES COMPANIES, CORPORATE TRUSTEES, AND PROVIDERS OF PROGRAMMED WITHDRAWAL
4. A shareholder of a pension entity shall__
(a) hold the board accountable and responsible for the efficient and effective governance of the pension entity; (b) appoint competent and reliable persons with appropriate knowledge, skills and experience, to the board; (c) replace the chairperson or member of the board that does not perform in accordance with the mandate of the pension entity; and (d) comply with all relevant laws, regulations and directives. 5.(1) A significant owner of a pension entity shall not be (a) a chairperson of the board; (b) a member of the audit committee; or (c) a member of the risk management committee. (2) A related party of a significant owner shall not be a chairperson of a board. (3) For purposes of this paragraph, “related party” means a person who— (a) directly or indirectly owns or controls any class of voting securities of any company that controls the significant owner; (b) is a director or officer of the pension entity that controls the significant owner; (c) is a director or officer of an entity owned or controlled by the significant owner; (d) is a director or officer of the significant owner where the significant owner is a body corporate; or (e) is a close relation of the person in (a) or (b) or (c) above. 376 4th July, 2025 Objective Shareholders responsibili￾ties Restriction on shareholders

6. A pension entity shall not grant a loan to its shareholder.
   7.(1) The board of a pension entity shall have a minimum of seven directors, at all times. (2) The majority of board of directors of a pension entity shall be independent and shall reside in Malawi. (3) The board of a pension entity shall have an appropriate balance of skills, knowledge and experience. (4) For purposes of subparagraph (2), “independent” in relation to a corporate trustee shall be as defined in section 37 (5) of the Act. 8.(1) The chairperson of a board of a pension entity shall be an independent director. (2) The chairperson of a board of a pension entity shall be ordinarily resident in Malawi and be available to meet the Registrar, upon request. 9.__(1) A director of a pension entity shall not simultaneously hold the roles of board chairperson and chief executive officer for the pension entity. (2) A director of a pension entity shall not hold more than six other board appointments. (3) A director of a pension entity shall not concurrently serve on the board of another pension entity. (4) A director of a pension entity shall not serve as director of another financial institution where conflict of interest may arise.
7. A majority of directors of a pension entity shall be ordinarily
   resident in Malawi.
   11.(1) An independent director of a board of pension entity shall cease to be independent after serving on the board for a cumulative period of ten years. (2) A pension entity shall notify the Registrar of the dismissal or removal of an independent director within fifteen days of the dismissal or removal. (3) The notification in subparagraph (2) shall be accompanied by reasons for the dismissal or removal. 12.(1) The board of a pension entity shall have following functions__ (a) formulate appropriate policies and processes to ensure integrity of risk management practices, internal controls and communication of the pension entity; (b) monitor the implementation of approved policies, plans and strategies; (c) provide strategic direction to a pension entity; (d) approve organisational structure of the pension entity; (e) develop and monitor implementation of a succession plan; 4th July, 2025 377 Shareholder loans Composition of the board Chairperson of the board Restrictions on directors Residency of directors Restrictions on independent directors Functions of the board

(f) set the risk appetite of the pension entity and monitor the identification and management of principal risks; and (g) subject the internal audit function to an external quality assurance review every five years. (2) The non-executive directors of a board shall meet, annually with the heads of internal audit, compliance, legal and actuarial functions, of the pension entity, in the absence of management.
13. The board of a pension entity shall have the power to__
(a) appoint and remove senior management officials of the pension entity; (b) access all information, records, documents and property of the pension entity; and (c) oversee the affairs of the pension entity. 14.(1) The board of a pension entity shall have a charter which shall, at a minimum (a) outline the responsibility of the board to formulate and adopt strategic plans; (b) provide requirements relating to how decisions and actions are taken, including documentation of significant or material decisions, along with their rationale; (c) provide for the responsibility of the board to set the risk appetite of the pension entity and monitor the identification and management of principal risks; (d) provide for monitoring of the operational performance of management; (e) document procedures for selection, orientation and evaluation of directors; (f) provide criteria for management of conflicts of interest; (g) provide procedures and policies for delegation of authority to management; (h) provide mechanisms for monitoring delegated authority; and (i) provide for corrective actions to be taken for non-compliance or weak oversight, controls or management. (2) The board shall review the charter every two years and when necessary. 15.__(1) The board shall meet at least four times a year and shall keep minutes of the proceedings. (2) The audit committee, risk management committee and other committees established by the board shall meet at least four times in a year and shall keep minutes of the proceedings. 378 4th July, 2025 Powers of the board Board charter Meetings of the board

16.(1) A director shall attend at least seventy-five percent of board meetings in a year. (2) Where a director has attended less than seventy-five percent of the meetings in a year, the board shall inform the Registrar by 31st March of the following year, providing reasons for lack of attendance and justification, if any, for the director to continue as such. 17.(1) A board of a pension entity shall have committees which shall include audit committee and risk management committee. (2) A chairperson of the board and the chief executive officer shall not be members of audit and risk management committees. (3) A board shall ensure that proceedings of committee meetings are properly recorded, filed and availed to the Registrar and relevant stakeholders, on request. 18.(1) An audit committee shall have a minimum of three members, a majority of whom, including the chairperson, shall be independent directors. (2) An audit committee shall have a charter clearly stipulating roles and responsibilities of the committee. (3) The responsibilities of an audit committee shall include (a) establishing, and ensuring compliance with, accounting standards and internal controls of the pension entity; (b) assisting the Board in evaluating the adequacy and efficiency of the internal control systems, accounting practices, information systems, and auditing processes of the pension entity; (c) facilitating and promoting communication regarding the internal control systems, accounting practices, information systems, auditing processes, risk management, or any other related matters between the board, senior management officials, internal auditor and external auditors of the pension entity; (d) approving the appointment and dismissal of internal auditors; (e) recommending appointment and dismissal of external auditors; (f) providing oversight of the internal and external auditors and taking measures to enhance their independence by ensuring among other things that the auditors report directly to the audit committee; (g) reviewing and approving the internal audit plans, scope and frequency; (h) receiving and reviewing internal and external audit reports including management letters; (i) monitoring the propriety and timeliness of action taken by senior management officials to correct weaknesses in internal control, non￾compliance with policies, laws, regulations and directions, and other problems disclosed by both external and internal auditors; 4th July, 2025 379 Attendance of board meetings Committees of a board Audit committee

(j) introducing necessary measures to enhance the credibility and objectivity of financial statements and reports of the pension entity; (k) delivering opinions on any matters submitted to it by the board or that it wishes to address; and (l) assess the performance of the internal audit function. 19.(1) The risk management committee shall have a minimum of three members, a majority of whom shall be independent directors. (2) A risk management committee shall have a charter clearly stipulating roles and responsibilities of the committee. (3) The responsibilities of a risk management committee shall include (a) setting the risk appetite and determining the risk profile of the pension entity; (b) advising the board on risk strategies as well as reviewing and recommending, for board approval, the risk management policy and framework; and (c) oversight of risk management strategy of the pension entity.
20. A board shall conduct formal annual self-assessments, in the form
as prescribed in the First Schedule and submit the consolidated report to the Registrar by 30th April of each year.
21. A director of a corporate trustee shall comply with the Trustee Code
of Practice prescribed in the Second Schedule.
22. A director or senior management official shall not provide false or
misleading information to the board, the Registrar or other stakeholders. 23.(1) A board shall implement a succession plan for the chief executive officer which shall designate a senior management official as second in command. (2) A pension entity shall inform the Registrar of the identity of the person designated as second in command.
24. A board shall not announce the appointment of a chief executive
officer or director to the public before the Registrar approves the appointment. 25.(1) A pension entity shall have a company secretary whose duties shall include__ 380 4th July, 2025 Risk management committee Annual self￾assessments for the board Directors of a corporate trustee to comply with Trustee Code of Practice False or misleading information Succession plan for chief executive officers Announce￾ment of appointment of a chief executive officer or director Company secretary

(a) facilitation of orientation of new directors on the business and governance practices of the pension entity; (b) maintenance of records of meetings of the board; (c) facilitation of annual self-assessments for the directors; and (d) advising and guiding the board on matters of ethics and governance. (2) The chief executive officer shall not serve as company secretary. 26.(1) A pension entity shall have an independent and adequately resourced internal audit function. (2) The head of internal audit shall functionally report to the audit committee. (3) The head of internal audit shall have unrestricted access to the audit committee, employees, facilities and records of the pension entity. (4) A pension entity that deems it unnecessary to have a dedicated internal audit function, may apply to the Registrar for approval of an alternative arrangement. (5) The Registrar may approve the alternative arrangement in subparagraph (4), where he is satisfied that the alternative arrangement will achieve the same objectives. (6) The internal auditor shall not have responsibilities or duties other than those under the internal audit function.
27. A pension entity shall rotate the external auditor every five years.
PART III__SPECIFIC REQUIREMENTS FOR PENSION FUNDS AND PROVIDENT
FUNDS
28. A pension fund or a provident fund shall appoint a board of trustees
with an appropriate balance of skills, knowledge and experience.
29. A board of trustees shall appoint one of the trustees from among
their number to act as chairperson.
30. A chief executive officer of an employer that is participating in a
restricted pension fund or provident fund, shall not be a trustee of the restricted pension fund or provident fund. 31.(1) A trustee shall serve a maximum period of ten years cumulatively, in one pension fund or provident fund. (2) A board of trustees shall notify the Registrar of the lapse of the period in subparagraph (1) or the removal of a trustee, within fifteen days of the lapse of time or removal.
32. A trustee shall comply with the Trustee Code of Practice prescribed
in the Second Schedule.
4th July, 2025 381
Internal audit
External auditor
Composition of board
Chairperson of board
Restriction on trusteeship
Restriction on tenure of trusteeship
Trustee Code of Practice

33.(1) A trustee of a pension fund or provident fund shall have the following functions (a) formulate appropriate policies and processes to ensure integrity of risk management practices, internal controls and communication of the pension fund or provident fund; (b) monitor the implementation of approved policies, plans and strategies; (c) provide strategic direction to the pension fund or provident fund; (d) set the risk appetite of the pension fund or provident fund and monitor the identification and management of principal risks; (e) develop, and enforce compliance with, the fund rules; (f) ensure proper governance of the pension fund or provident fund through clear separation of responsibilities between trustees, the employer and service providers; (g) manage expenses, investments and performance of the pension fund or provident fund; (h) conduct an annual general meeting of the pension fund or provident fund where members, at a minimum, shall be provided with the following information__ (i) any changes to the trust deed and rules of the fund; (j) report on any changes to benefits and contribution structure; (k) disclosure on payments to trustees and costs of service providers; (l) report on audited financial statements of the fund; (m) report on investments of the fund; and (n) put in place an effective management information system. (2) A board of trustees shall formulate policies on the following areas__ (a) management of expenses; (b) risk management; (c) outsourcing; (d) operations; (e) appointment of external auditors; (f) remuneration of independent trustees; (g) investments; (h) management and distribution of investment income and surpluses; (i) payment of benefits; and (j) disclosure of information. (3) A board of trustees shall review the policies every two years and when necessary. 382 4th July, 2025 Functions of trustees

34. A board of trustees shall have the power to__
    (a) appoint and remove an external auditor, an investment manager, a custodian, an administrator, and where applicable, an actuary; (b) access all information, records, documents and property of the pension entity; and (c) oversee the affairs of the pension fund or provident fund. 35.(1) A board of trustees shall have a charter that shall, at a minimum (a) outline the responsibility of the board of trustees to formulate and adopt strategic plans; (b) provide requirements relating to how decisions and actions are taken including documentation of significant or material decisions, along with their rationale; (c) provide for the responsibility of the board of trustees to set the risk appetite of the pension entity and monitor the identification and management of principal risks; (d) provide for monitoring of the operational performance of service providers; (e) document procedures for the orientation of trustees; (f) provide criteria for management of conflict of interest; (g) provide procedures and policies for delegation of authority to management; and (h) provide for corrective actions to be taken for non-compliance or weak oversight, controls or management. (2) A board of trustees shall review the charter when necessary and no later than once every two years.
35. An individual trustee of a restricted pension fund or provident fund
    shall be ordinarily resident in Malawi.
    37.(1) A board of trustees of a pension fund shall meet at least four times in a year and shall keep minutes of the proceedings. (2) A board of trustees of a provident fund shall meet at least two times in a year and shall keep minutes of the proceedings. 38.(1) A trustee shall attend at least seventy-five percent of board meetings in a year. (2) Where a trustee has attended less than seventy-five percent of the meetings in a year, the board shall inform the Registrar by 31st March of the following year, providing reasons for the failure to attend and justification, if any, for the trustee to continue as such. 4th July, 2025 383 Powers of the board of trustees Board of trustees charter Residency of trustees Meetings of board of trustees Attendance of board meetings

39.(1) A board of trustees shall have committees which shall include an audit committee and investment committee. (2) A board of trustees shall specify, in writing, the terms of reference for the committees. (3) The committees established by the board of trustees shall meet at least four times in a year and shall keep minutes of the proceedings.
40. A board of trustees shall conduct formal annual self-assessments, in
the form as prescribed in the Third Schedule and submit the consolidated report to the Registrar by 30th April of each year. 41.(1) A board of trustees may delegate, in writing, any of its functions to a service provider or an officer of the pension fund or provident fund. (3) The Delegation of functions by the board of trustees shall not be deemed to have relieved the trustees of their duties and responsibilities. 42.(1) The internal auditor of a pension fund or provident fund shall be independent, and report functionally to the board of trustees. (2) A pension fund or provident fund that deems it unnecessary to have a dedicated internal audit function, may apply to the Registrar for approval of an alternative arrangement. (3) The Registrar may approve the alternative arrangement in subparagraph (2), where he is satisfied that the alternative arrangement will achieve the same objectives.
43. A board of trustees shall
(a) establish and implement processes for the appointment, reappointment, removal and remuneration of an external auditor; and (b) monitor and assess the effectiveness of the external audit process.
PART IV__ENFORCEMENT
44.(1) Where the Registrar determines that a pension entity has not met the requirements of this Directive, the Registrar may impose the following (a) for an administrator, pension services company, corporate trustee, provider of programmed withdrawal, pension fund or provident fund, a monetary penalty of up to K50, 000, 000; and (b) for natural persons who are members of the board of directors, trustees or a senior management official, a monetary penalty of up to K10, 000, 000. (2) The monetary penalties in subparagraph (1) shall be paid through an electronic bank transfer in favor of the Reserve Bank of Malawi, within ten working days after being notified of the violation. 384 4th July, 2025 Committees of the board Annual self￾assessments for board of trustees Delegation of functions Internal audit External auditor Monetary penalties

FIRST SCHEDULE
BOARD EVALUATION FORM
SUBMISSION TO THE REGISTRAR OF FINANCIAL INSTITUTIONS Name of Administrator, Pension Services Company or Corporate Trustee
Date:.............................. Address:........................................................................................
A. DETAILS OF EACH DIRECTOR’S DURATION ON THE BOARD AS AT ..../..../20... Date of Name Position Appointment Duration B. OTHER BOARD APPOINTMENTS IN THE FINANCIAL INDUSTRY Name Other Board Appointments Date of Appointment
C. ANNUAL GENERAL MEETING
Annual general meeting was held on ...............................; attendance was as shown below__ Name Comment 4th July, 2025 385 para. 20

Name Comment
D. CHANGES IN MANAGEMENT
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
E. ATTENDANCE TO MAIN BOARD MEETING
NAME OF
DIRECTOR BOARD ATTENDANCE COMMENT
...../...../20..... ....../...../20..... ...../...../20..... ...../...../20.....
F. CORPORATE GOVERNANCE QUESTIONNAIRE
BOARD EVALUATION Response (explain your response) 1 Have any performance objectives been set for the board? 2 How well has the board performed against any performance objectives that have been set? 386 4th July, 2025

BOARD EVALUATION Response (explain your response 3 What has been the board’s contribution to the development, determination, testing and monitoring of the institution’s strategy? 4 Is the composition of the Board and its committees appropriate, with the right mix of knowledge and skills to maximize performance in light of current and future strategy? 5 How do you describe the working relationship among the directors? 6 Are there any external interferences on the board’s decision making? 7 How has the board responded to any problems or crises that have emerged and could or should these have been foreseen? 8 Is the board handling appropriate matters? 9 How well does the board communicate with management team, company employees and others? 10 Is the board as a whole up to date with latest developments in the regulatory environment and the market? 11 Has the board developed and ensured that the institution has a workable succession plan? 12 How effective are the board’s committees? 13 Has each board member attended at least seventy five (75) percent of board meetings or board committee meetings? 14 Is appropriate, timely information of the right depth and quality provided to the board and is management responsive to requests for clarification? Does the board provide helpful feedback to management on its requirements? 15 Are sufficient board and committee meetings of appropriate length held to enable proper consideration of issues? Is time used effectively? 16 Are board procedures conducive to effective performance and flexible enough to deal with all the eventualities? 17 Are new directors properly oriented to the institution and their roles, responsibilities and expectations? 4th July, 2025 387

CHAIRPERSON AND DIRECTORS
EVALUATION Response (explain your response) 1 Is the chairperson demonstrating effective leadership of the board? 2 Are relationships and communication with shareholders well managed? 3 Are relationships and communication within the board constructive? 4 Are the processes for setting the agenda working? Do they enable board members to raise issues and concerns? 5 Is the company secretary being used appropriately and to the maximum value? 6 How well prepared and informed are board members for board meetings or board subcommittee meetings and is their attendance satisfactory? 7 Do the directors demonstrate willingness to devote time and effort to understand the company and its business and readiness to participate in events outside the boardroom? 8 What has been the quality and value of the directors’ contributions at the board meeting? 9 What has been the directors’ contribution to development of strategy and to risk management? How successfully have they brought their knowledge and experience to bear in the consideration of strategy? 10 How effectively have the directors probed to test information and assumption? Where necessary, how resolute are the directors’ in maintaining individual views and resisting pressure from others? 11 How effectively and appropriately have the directors followed up on the board’s areas of concern? 12 How effective and successful are the director’s relationships with other board members, the company secretary and senior management officials? Does the directors performance and behaviour engender mutual trust and respect within the board? 13 How actively and successfully do the directors refresh their knowledge and skills? Are the directors up to date with latest developments in areas such as corporate governance framework and financial reporting? 388 4th July, 2025

CHAIRPERSON AND DIRECTORS
EVALUATION Response (explain your response) 14 How well does the director communicate with fellow board members, senior management officials and others such as shareholders? 15 Do the directors or their related parties have obligations to the institution that may affect the directors’ objectivity? 16 Do the directors have any litigation in or outside Malawi that raise issues of fitness and propriety as a director? 17 How well prepared and informed are the directors for the Board meetings and is their attendance satisfactory? G. BOARD SUB-COMMITTEE MEETINGS AND ATTENDANCE Name of Committee Name of Member Executive/ Independent
I. MEETINGS OF THE BOARD ................................................................. Committee
Member Meeting Attendance Comment
..../..../20.... ...../..../20.... ..../..../20.... ..../..../20.... ..../..../20....
II. MEETINGS OF THE BOARD - COMMITTEE
Member Meeting Attendance Comment
..../..../20.... ...../..../20.... ..../..../20.... ..../..../20.... ..../..../20... 4th July, 2025 389

III. MEETINGS OF THE BOARD - COMMITTEE
Member Meeting Attendance Comment
..../..../20.... ...../..../20.... ..../..../20.... ..../..../20.... ..../..../20... SECOND SCHEDULE TRUSTEE CODE OF PRACTICE AND CONDUCT

1. INTRODUCTION

2. This Trustee Code of Practice and Conduct (the Code) has been developed to provide
   guidance to individuals entrusted with the duty to oversee the management of a pension scheme. It is not meant to replace the overall policies and procedures established for the governance of the pension scheme.

3. The Code sets out expectations of the Registrar for a trustee to be considered fit and
   proper on a continuing basis. A breach of the Code may be grounds for removal as a trustee and disqualification from acting as a trustee in future.

4. The Code consists of eight principles, together with corresponding guidance. A trustee
   must, as part of fit and proper requirements sign a statement, on appointment, confirming that he has read and understood the Code and that, he shall at all times fulfil his duties in accordance with the Code.

5. CODE OF PRACTICE AND CONDUCT PRINCIPLES
   Principle 1: Act in good faith and in the best interests of pension fund members. Principle 2: Act with prudence and reasonable care. Principle 3: Act with skill, competence and diligence. Principle 4: Avoid conflict of interest. Principle 5: Maintain confidentiality. Principle 6: Comply with all applicable laws, regulations, trust deed and fund rules. Principle 7: Communicate effectively, in a transparent manner, with all members and the Registrar. Principle 8: Review the performance of pension fund service providers 390 4th July, 2025 para. 21, & 32

6. GUIDANCE ON THE PRINCIPLES
   Principle 1: Act in good faith and in the best interests of fund members. The overriding objective of a pension scheme is to serve as a secure source of retirement income. Pension scheme trustees have a primary duty to act for the benefit of the scheme members and beneficiaries. Trustees shall comply with this duty by striving to safeguard and grow the assets of the pension scheme to provide maximum benefit to the scheme members and beneficiaries. A trustee shall__ (a) act in good faith with proper motive and purpose; (b) act in the best interests of members in accordance with the objects of the trust. This includes striving to achieve a balance between the fund’s various objectives, such as__ (i) achieving long-term asset growth; (ii) minimising management costs; (iii)minimising risks; (iv)making payments to members in a timely manner; and (v) taking steps to ensure that the employer is current in paying contributions. (c) be on guard that while the overriding concern is to give priority to the interests of members, their decisions should not be overly burdensome on other stakeholders such as the fund sponsor; (d) treat all members fairly and not put the interests of any one group of members above another. This includes decisions regarding investments and risk/return trade￾offs; (e) maintain and disclose to members a clear and comprehensible statement of the risks and objectives of the fund, as well as being clear and transparent on members’ rights; (f) ensure that any fees and charges are appropriate and fair to all members and avoid the cross-subsidization of one group of members in favour of another; and (g) understand that while many trustees will undertake their role on a purely voluntary basis, some funds may provide for a modest meeting allowance or professional fee. Such allowances and fees should be disclosed clearly to members and ideally, voted on by the membership when new trustees are elected. PRINCIPLE 2: ACT WITH PRUDENCE AND REASONABLE CARE An effective trustee shall exhibit the care and prudence necessary to meet his obligations to pension scheme members and beneficiaries. The exercise of prudence requires acting with the appropriate levels of care, skill, and diligence that a person acting in a like capacity and familiar with such matters would use under the same circumstances. Depending on the nature of the scheme, some trustees are expected to make various decisions with regard to management of pension schemes, including dealing with complaints and appeals from members. It is therefore imperative that they should exercise prudence and reasonable care in the performance of their duties including__ (a) being fully aware of the scheme’s trust deeds and rules and acting in accordance with the objects of the trust within the parameters set out in the trust deed and rules and any established procedures; (b) being fully comprehensive of any powers given to trustees by law or the scheme’s trust deed and rules and obtain all relevant
   facts and information so that trustees use these powers properly and fairly; 4th July, 2025 391

(c) understanding when it is necessary to provide reports or issues for the attention of the Registrar; (d) acting in a judicious manner to avoid harming members; (e) acting on a fully informed basis and actively participating in discussions and decisions over matters which the trustee has discretion under the trust deed; (f) helping to identify and manage risks proactively, consistently and in a timely manner; (g) seeking assistance from relevant experts, internally or externally, where required. A trustee shall make reasonable efforts to ensure that__ (i) the experts act with appropriate skill, competence and diligence; (ii) the experts have the knowledge, experience and qualifications necessary to provide the service agreed; (iii)there are clearly defined responsibilities of the appointed experts and agreements made on monitoring their performance; (iv)trustees receive any professional advice in writing for purposes of keeping records of the advice received; (v) the experts are free of conflicts of interests and their incentives are aligned such that they act in the best interests of the pension fund’s members and beneficiaries; and (vi)the experts’ decisions have a reasonable basis and the decision process is properly documented; and (vii)exercising powers and discretion consistently. Where a trustee makes a decision is a departure from agreed practice or procedure, the trustee should be able to demonstrate that the decision was appropriate and reasonable in the circumstances. PRINCIPLE 3: ACT WITH SKILL, COMPETENCE AND DILIGENCE

1. Skill and diligence requires trustees to be knowledgeable about the matters and duties
   with which they have been entrusted. Improper or ill-advised decisions can be costly to the pension scheme and detrimental to the scheme’s members and beneficiaries. Prior to taking action on behalf of the scheme, trustees shall analyze the implication of their decisions and act only after undertaking due diligence to ensure they have sufficient knowledge on the matter.
2. A trustees shall have adequate knowledge and understanding of__
   (a) Financial Services laws and other trust related laws such as the Financial Services Act, Pension Act, Insurance Act, Trustee Act, Registrar’s Directives etc; (b) pension fund policies and procedures; (c) the investment strategies of the pension fund. While trustees are generally not expected to be investment experts, they should seek the appropriate expert or professional guidance if they believe they lack the necessary expertise to make an informed investment decision; (d) the basic structure and function of the selected investments of the pension fund; and (e) pension fund liabilities and what is due and payable by sponsors. 392 4th July, 2025

PRINCIPLE 4: AVOID CONFLICTS OF INTEREST

1. A trustee shall avoid actual, potential or perceived conflicts of interest at all times, and
   shall always have regard to his legal duties as a trustee. It is the duty of a trustee to act impartially and in line with the fund’s trust deed and rules. This takes priority over any other interests or external duties trustees may have.
2. A trustee shall place the interests of members over those of the sponsor, providers and
   even themselves.
3. A trustee shall ensure that any decisions regarding the sponsor, service providers or
   other connected /related parties are made on arm’s length basis, that is, independently as if no other relationship existed. This is clearly challenging where a related party provides services such as investment management or pension administration. In such circumstances, a trustee shall ensure that fees and charges, brokerage fees, trade execution fees and fund management fees are competitive and deliver the best value for money for members.
4. A trustee shall declare relationships with connected/related parties and declarations
   must be maintained in a register. A trustee shall have procedures for dealing with conflicts, which may include prohibition of individual trustees deliberating on certain decisions where a conflict may exist.
5. A trustee shall not seek or accept, whether directly or indirectly, any gifts, service,
   remuneration, favour or entertainment from anyone engaged by, or seeking business from, the trustee on behalf of the fund. It is recommended that a trustee implements written gifts and entertainment policies and, where in the normal course of business such gifts, services or remuneration have been received, such gifts must be declared and included on the register.
6. A trustee shall not use the status of his position, or any information obtained in the
   course of his duties, for personal advantage or gain.
7. Where actual or perceived conflicts of interest arise, trustees are expected to__
   (a) disclose all actual or potential conflicts of interest in an effective and timely manner; and (b) exclude themselves from any deliberations and decision-making on matters where there may be a conflict of interest. PRINCIPLE 5: MAINTAIN CONFIDENTIALITY A trustee shall__ (a) maintain confidentiality in respect of any information obtained in the course of his duties, and treat any personal data of members with the utmost care and sensitivity, including financial, pay, medical, personal or other information; (b) avoid disclosure of information to third parties unless it is necessary for the management of the fund, has the express consent of the pension fund member or is required by applicable law and regulations; and (c) develop and ensure that all trustees sign oath of confidentiality upon assuming office. 4th July, 2025 393

PRINCIPLE 6: COMPLY WITH ALL APPLICABLE LAWS, REGULATIONS, TRUST DEED AND FUND RULES

1. A trustee shall, to the best of his abilities, assist in monitoring and ensuring that the
   fund, its sponsor and all service providers comply with all applicable financial services laws, trust deed and fund rules. While trustees are generally not expected to be experts in law or pension regulation, they shall report any suspected illegal, unethical activities, or financial irregularities, to the Registrar or the Fund’s auditor.

2. Where necessary, trustees shall consider consulting professional experts to provide
   technical expertise on applicable laws and regulations.
   PRINCIPLE 7: COMMUNICATE EFFECTIVELY IN A TRANSPARENT MANNER WITH ALL MEMBERS AND THE REGISTRAR A trustee shall__ (a) communicate with members, the Registrar and other interested parties (e.g. sponsors, employers, investment managers and pension administrators) in a timely, accurate and transparent manner. This includes the provision of complete and accurate data in the regular returns required by the Registrar for compliance and supervision purposes; (b) ensure that information communicated, in particular to members, is accurate, relevant and complete. Where trustees are considering implementing significant changes, this information shall be communicated well in advance to affected parties to allow them the opportunity to provide inputs or otherwise prepare for the changes; (c) not misrepresent any aspect of their services or activities in any communications, including information communicated verbally, electronically or in writing; (d) as far as possible, ensure that the information communicated is in plain language, and in a manner which facilitates effective communication of the information; and (e) ensure that the literature about the scheme is consistent with the scheme trust deed and rules and does not mislead members or potential members. PRINCIPLE 8: REVIEW THE PERFORMANCE OF PENSION FUND SERVICE PROVIDERS.

3. A trustee shall regularly review the performance of the pension fund’s service
   providers such as investment managers, pension administrator, custodian, consultants and actuaries, by ensuring that an appropriate service level agreement has been signed. The service level agreement shall clearly spell out the expected deliverables of the service providers. This review may include assessing whether service providers__ (a) are adequately staffed and qualified to provide their services effectively; (b) have adequate levels of compliance and meet all professional standards; and (c) continue to be competitive, have been able to meet their stated objectives, service level agreement and all aspects of their contract.

4. A trustee shall ensure that the fund has proper monitoring and control procedures for
   investment managers. While a trustee may delegate the selection and monitoring of investment managers to an investment committee or other professional staff, a trustee shall continue to maintain oversight and decision-making powers over investment managers. 394 4th July, 2025

5. DECLARATION
   I, the undersigned declare that I have read, understood and agree to abide by the provisions of this Code. I confirm that a breach of this Code may result in removal from the board.
   Name of Trustee/Director.........................................................................................................
   Signature............................................................ Date...................................................
   THIRD SCHEDULE
   BOARD OF TRUSTEES EVALUATION FORM
   SUBMISSION TO THE REGISTRAR OF FINANCIAL INSTITUTIONS Name of pension fund or provident fund
   Date:.................................. Address:......................................................................................
   H. DETAILS OF EACH TRUSTEE’S DURATION ON THE BOARD AS AT ..../...../20....
   Date of
   Name Position Appointment Duration
   I. OTHER BOARD APPOINTMENTS IN THE FINANCIAL INDUSTRY
   Name Other Board Appointments Date of Appointment 4th July, 2025 395 para. 40

J. ANNUAL GENERAL MEETING
Annual general meeting was held on ……………………………………; attendance was as shown below__ Name Comment K. CHANGES IN MANAGEMENT
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
L. ATTENDANCE TO BOARD MEETINGS OR SUBCOMMITEE MEETINGS
NAME OF
TRUSTEE BOARD ATTENDANCE COMMENT
...../...../20..... ....../...../20..... ...../...../20..... ...../...../20.....
396 4th July, 2025

M. CORPORATE GOVERNANCE QUESTIONNAIRE
BOARD EVALUATION Response (explain your response 1 Have any performance objectives been set for the board? 2 How well has the board performed against any performance objectives that have been set? 3 What has been the board’s contribution to the development, determination, testing and monitoring of the fund’s strategy? 4 Is the composition of the board and its committees appropriate, with the right mix of knowledge and skills to maximize performance in light of current and future strategy? 5 How do you describe the working relationship among the directors? 6 How has the board responded to any problems or crises that have emerged and could or should these have been foreseen? 7 Is the board handling appropriate matters? 8 How well does the board communicate with management team, fund employees, members and others? 9 Is the board as a whole up to date with latest developments in the regulatory environment and the market? 10 Has the board developed and ensured that the fund has a workable succession plan? 11 How effective are the board’s committees? 12 Has each trustee attended at least seventy five (75) percent of board meetings? Or committee meetings? 13 Where a trustee has attended less than seventy-five (75) percent of the meetings in a year, provide reasons for lack of attendance and justification, if any, for the trustee to continue as such 14 Is appropriate, timely information of the right depth and quality provided to the board and is management responsive to requests for clarification? Does the board provide helpful feedback to management on its requirements? 4th July, 2025 397

BOARD EVALUATION Response (explain your response 15 Are sufficient board and committee meetings of appropriate length held to enable proper consideration of issues? Is time used effectively? 16 Are board procedures conducive to effective performance and flexible enough to deal with all the eventualities? 17 Are new trustees properly oriented to the fund and their roles, responsibilities and expectations? CHAIRPERSON AND TRUSTEES EVALUATION Response (explain your response) 1 Is the chairperson demonstrating effective leadership of the board? 2 Are relationships and communication with members well managed? 3 Are relationships and communication with the board constructive? 4 Are the processes for setting the agenda working? Do they enable board members to raise issues and concerns? 5 How well prepared and informed are trustees for the board meetings and is their attendance satisfactory? 6 Do they demonstrate willingness to devote time and effort to understand the fund and its business and readiness to participate in events outside the boardroom? 7 What has been the quality and value of the trustees’ contributions at the board meeting? 8 What has been the trustees’ contribution to development of strategy and to risk management? How successfully have the trustees brought their knowledge and experience to bear in the consideration of strategy? 10 How effective have the trustees probed to test information and assumption? Where necessary, how resolute are the trustees in maintaining their own views and resisting pressure from others? 11 How effectively and appropriately have the trustees followed up on areas of concern? 398 4th July, 2025

CHAIRPERSON AND TRUSTEES EVALUATION Response (explain your response) 12 How effective and successful are the trustees’ relationships with fellow trustees and senior management officials? Does the trustees performance and behaviour engender mutual trust and respect within the board? 13 How actively and successfully do the trustees refresh their knowledge and skills? Are they up to date with latest developments in areas such as corporate governance framework, risk management, investment and financial reporting? 15 Do the trustees or their related parties have obligations to the fund that may affect their objectivity? 16 Do they have trustees litigation in or outside Malawi that raise issues of fitness and propriety as a trustee? 17 How well prepared and informed are the trustees for the board meetings and is their attendance satisfactory? N. BOARD SUB-COMMITTEE MEETINGS AND ATTENDANCE Name of Committee Name of Member Executive/ Independent
IV. MEETINGS OF THE ............................................................................... COMMITTEE
Member Meeting Attendance Comment
..../..../20.... ...../..../20.... ..../..../20.... ..../..../20.... ..../..../20....
4th July, 2025 399

V. MEETINGS OF THE ............................................................................... COMMITTEE
Member Meeting Attendance Comment
..../..../20.... ...../..../20.... ..../..../20.... ..../..../20.... ..../..../20....
VI. MEETINGS OF THE .............................................................................. COMMITTEE
Member Meeting Attendance Comment
..../..../20.... ...../..../20.... ..../..../20.... ..../..../20.... ..../..../20....
Made this 7th day of February, 2025.
DR. M. M. MWALE
(REF. NO. FIN/PFSPD/01/06) Registrar of Financial Institutions GOVERNMENT NOTICE NO. 61 PENSION ACT (NO. 6 OF 2023) PENSION (LICENSING AND REGISTRATION OF PENSION ENTITIES) DIRECTIVE, 2025 ARRANGEMENT OF PARAGRAPHS
PART I__PRELIMINARY
PARAGRAPH

1. Citation
2. Interpretation
3. Objective
   400 4th July, 2025