Regulation for Non-Bank Financial Businesses Operating in the Special Economic Zone

2016/R-9:

• Applications for licenses to conduct non-bank financial business in the Special Economic Zone must be submitted to the Board of Investment by 12:00 noon on the 25th of Rabee' al-Akhir 1437 (February 4, 2016).
• Applications received after 12:00 noon on the 25th of Rabee' al-Akhir 1437 (February 4, 2016) will not be considered.
• Applications must be submitted in hard copy to the Board of Investment.
• For further information, please contact legalaffairs@po.gov.mv.

President of the Republic of Maldives
Mohamed Waheed Hassan Manik

Minister of State for the Presidency
Abdulla Shahid

Tel: 6334 333
Fax: 0274 331
Website: www.gazette.gov.mv
Volume: 13, Issue: 45, Date: 25 Rabee' al-Akhir 1437 - 4 February 2016

Volume: 45, Issue: 13, Maldives Government Gazette

Regulation for Non-Bank Financial Businesses Operating in the Special Economic Zone

First Part

Definitions

1. Definitions
   This Regulation shall be known as the "Regulation for Non-Bank Financial Businesses Operating in the Special Economic Zone".

2. Commencement
   This Regulation shall come into force from the date of its publication in the Maldives Government Gazette.

3. Application
   Second Part

Licensing

4. Licensing Requirement
   No person shall conduct non-bank financial business in the Special Economic Zone without a license issued by the Maldives Monetary Authority under the Special Economic Zone Act No. 24/2014 (Special Economic Zone Act).

5. Application for License
   An application for a license to conduct non-bank financial business in the Special Economic Zone must be submitted to the Board of Investment in writing, accompanied by the following information:

(a) The manner and amount of capital proposed to be held, as determined by the Board of Investment.

(b) The business plan and address(es) for conducting the business.

(c) The names, financial interests, addresses, income, and other information regarding major shareholders, directors, board members, and other officers of the licensee, as determined by the Board of Investment.

(d) The names, financial interests, educational background, relevant experience, and other information regarding persons proposed to act as Executive Officers, as determined by the Board of Investment.

(e) A declaration signed by each Executive Officer and Major Shareholder stating that they have not been convicted of any offense under the laws of the Maldives or any other country, nor declared bankrupt, nor involved in the management of any company that has been declared bankrupt, nor engaged in any activities contrary to public order or morality.

(f) Detailed business plans, including the organizational structure, internal controls, and anti-money laundering and counter-terrorism financing measures.

(g) Audited financial statements for the past three years, including balance sheets, profit and loss accounts, and cash flow statements.

(h) A declaration that the applicant is not licensed by any other non-bank financial regulatory authority outside the Maldives, or if so, details of such licensing and the relationship with the Maldives Monetary Authority.

(i) The application fee, as determined by the Board of Investment.

6. Granting of License
   (a) The Board of Investment shall grant or refuse the application within seven (7) working days from the date of receipt of a complete application. If the application is incomplete, the Board shall notify the applicant of the missing information and documents, and grant a deadline for submission. If the applicant fails to submit the required information within the deadline, the application shall be refused.

(b) The Board of Investment may grant a license to any company registered in the Maldives or any other country to conduct non-bank financial business under this Regulation.

7. Conditions of License
   (a) Each licensee shall comply with the conditions set by the Maldives Monetary Authority.

(b) The licensee shall maintain capital at the levels specified in this Regulation and conduct business in a sound and prudent manner, adhering to the guidelines and instructions issued by the Board of Investment.

(1) Establish internal controls and audit procedures, and implement appropriate systems to mitigate risks.

(2) Prohibit money laundering, terrorism financing, fraud, corruption, and other criminal activities.

(3) Conduct business only at the premises specified in the license.

(4) Conduct all business activities of the licensee only at the premises and offices established thereunder.

(5) Ensure that major shareholders, directors, board members, branch managers, and executive officers meet the "fit and proper" criteria specified by the Board of Investment at all times.

(6) The licensee shall not establish any other office or subsidiary without prior approval from the Maldives Monetary Authority. Furthermore, no subsidiary shall be established without prior approval.

8. Establishment of Additional Offices and Subsidiaries
   The licensee shall not establish any other office or subsidiary without prior approval from the Maldives Monetary Authority. Such approval shall be granted directly or through the licensee. Furthermore, the licensee shall not hold assets or liabilities of any other person directly or indirectly, nor guarantee the liabilities of any other person.

9. Prohibition of Holding Shares
   Third Part

Sound and Prudent Business Practices

10. Minimum Capital Requirements
    (a) Each non-bank financial institution included in this Regulation shall maintain a minimum capital of MVR 10,000,000 (Ten Million) or such higher amount as may be determined by the Board of Investment, in the form of minimum paid-up capital or subordinated capital.

(b) Each non-bank financial institution included in this Regulation shall maintain a minimum capital for each branch or agent office of not less than the amount determined by the Board of Investment, in the form of minimum paid-up capital or subordinated capital.

(c) Each non-bank financial institution included in this Regulation shall maintain a minimum capital of not less than the amount determined by the Board of Investment, in the form of minimum paid-up capital or subordinated capital, excluding any other non-bank financial institution.

(d) Each non-bank financial institution shall conduct business in accordance with sound procedures, guidelines, license conditions, and instructions issued by the Board of Investment.

11. Accounting Procedures
    (a) Each non-bank financial institution shall maintain capital and liquidity at levels adequate to cover its liabilities. Furthermore, it shall make provisions for expected losses, asset depreciation, and other expected losses. It shall also maintain records and take necessary steps to minimize the impact of losses on the institution, and maintain assets and liabilities in a manner that minimizes losses.

(b) If the Board of Investment specifies a particular procedure or level for compliance with the provisions of paragraph (a), each non-bank financial institution shall comply with such procedure or level. Furthermore, it shall maintain capital at the levels specified by the Board of Investment, adjust asset categories, make provisions for loans, recognize income at the appropriate time, limit lending to related parties, limit lending to all related parties, conduct transactions with related parties, maintain foreign exchange positions, monitor liquidity, and establish procedures for maintaining sound and prudent business practices and other matters as determined by the Board of Investment.

(c) If a major shareholder changes, the licensee shall notify the Board of Investment within three (3) days, providing details of the change.

12. Change of Shareholders
    Each non-bank financial institution, its employees, licensees, officers, external auditors, and other persons authorized by the Board of Investment shall have access to the records, books, and accounts of the non-bank financial institution. However, such access shall not be granted to any person without the written consent of the licensee, or the person holding the information, or a court order, except for information related to the licensee, major shareholders, beneficial owners, or customers.

13. Confidentiality
    Non-bank financial institutions shall maintain confidentiality of information, subject to the exceptions provided in Article 13 of this Regulation.

14. Exceptions to Confidentiality
    Confidentiality may be breached in the following circumstances:

(a) When information is required by external auditors or persons entrusted with responsibilities to fulfill their duties.

(b) When the licensee is required to submit information, records, or documents.

(c) When information is required under laws prohibiting money laundering and terrorism financing.

(d) When information is required in legal proceedings between the institution and a customer, or to establish rights related to transactions.

Fourth Part

Board of Directors, Management, and Internal Audit

15. Board of Directors
    (a) All members of the Board of Directors of a non-bank financial institution must meet the "fit and proper" criteria specified by the Board of Investment.

(b) Members of the Board of Directors shall perform their duties with honesty and integrity, and shall be responsible for the duties of their office. They shall possess the necessary skills and care. If a director fails to perform duties with the necessary skills and care, resulting in losses to the institution, they shall be personally liable for such losses. In such cases, the Board of Investment may initiate legal proceedings against the director to recover damages.

(c) The Board of Directors shall appoint a Managing Director or Chief Executive Officer from among its members. For foreign non-bank financial institutions, the Board of Directors shall appoint a Branch Manager from among those authorized to conduct business in the Maldives.

16. Management
    (a) The Board of Directors shall determine the procedures and frequency of meetings, which shall be conducted by the Managing Director, Chief Executive Officer, or authorized Branch Manager.

(b) To ensure sound business practices, the institution shall appoint Executive Officers responsible for compliance with laws, regulations, guidelines, orders, and procedures, and for monitoring assets and liabilities. The Board of Directors may form committees from among its members to oversee these matters.

(c) The Managing Director, Chief Executive Officer, Branch Manager, and other Executive Officers of a non-bank financial institution must meet the "fit and proper" criteria specified by the Board of Investment.

(d) Each non-bank financial institution shall conduct internal audits. The Board of Directors shall define the responsibilities, duties, and conditions of internal audit in an Audit Charter.

17. Internal Audit
    Fifth Part

Accounting

18. Accounting Standards and Procedures
    Each non-bank financial institution shall maintain accounts, records, and other documents in a sound manner, preparing them in accordance with International Financial Reporting Standards (IFRS). If the Board of Investment specifies other standards, the institution shall comply with such standards.

19. External Audit
    (a) Each non-bank financial institution shall appoint an external auditor with relevant experience and qualifications, approved by the Board of Investment.

(b) Each non-bank financial institution shall have its annual financial statements audited by an external auditor.

(c) Each non-bank financial institution shall submit audited annual financial statements and related reports to the Board of Investment within four (4) months of the end of the financial year.

20. Submission of Annual Financial Statements
    Sixth Part

Supervision

21. Supervision
    Each non-bank financial institution shall submit information, details, and reports to the Board of Investment at specified times.

(a) The Board of Investment shall monitor the conduct of non-bank financial institutions, the competence of management, preparedness to mitigate risks, compliance with laws and regulations, and the fit and proper status of licensees. It may conduct inspections at any time, requiring the production of books, accounts, and documents by directors, officers, employees, agents, subsidiaries, or affiliates.

(b) The licensee shall submit additional information or documents as requested, certifying their accuracy.

(c) All persons involved in inspections shall maintain confidentiality of information obtained. The Board of Investment may require the production of books, accounts, and documents from directors, officers, employees, agents, subsidiaries, or affiliates. The Board of Investment shall submit inspection reports to its Board.

Seventh Part

Corrective Measures and Administrative Penalties

22. Corrective Measures and Administrative Penalties
    If the Board of Investment determines that a non-bank financial institution, its Executive Officer, or any other person has violated any provision of this Regulation, license conditions, or license terms, or is conducting business in an unsafe or unsound manner, it may take corrective measures or impose administrative penalties against such person, as specified in paragraph (c).

(a) Corrective measures and administrative penalties include:

(1) Issuing a written warning;

(2) Directing the correction of violations;

(3) Ordering the cessation of specific activities or practices;

(4) Imposing specific conditions for future business operations;

(5) Directing the suspension of certain activities of the non-bank financial institution;

(6) Recommending the suspension or removal of the Chief Executive Officer, Managing Director, or other Executive Officers, or agents, due to the severity of the violation;

(7) Directing the removal of the Chairman or other members of the Board of Directors;

(8) In cases of violations involving liability, directing the removal of the Chief Executive Officer, Managing Director, or other Executive Officers.