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Mugabe to sign Banking Amendment Bill
02 May 2016 at 11:32hrs | Views
President Mugabe is expected to sign into law the Banking Amendment Bill which will strengthen corporate governance in the financial services sector.
In an update on the status of Bills last week, Parliament said the Banking Amendment Bill, promoted by the Ministry of Finance and Economic Development was transmitted for Presidential Assent.
The Banking Amendment Bill seeks to strengthen corporate governance systems and plug corporate incest in the financial services sector.
Some of the salient features of the Bill include barring individuals from owning shareholding in a banking institution or in a holding company if the shares exceed 25 percent of the total nominal value or the total voting rights of all the issued shares of the banking institution.
The Bill seeks to address the weaknesses of the legislation which in the past allowed individuals to own directly controlling shareholding in banking institutions or their holding companies.
This in most cases, led to what the central bank occasionally referred to as corporate incest due to the weak corporate governance systems.
It is expected that the law will provide for early warning systems which will alert monetary authorities of areas of breach, as and when they arise.
More importantly, the new law exposes directors and senior executives in banks to lawsuits where it is proven that they acted recklessly or negligently.
Section 20A(4) of the Banking Amendment Bill now states that whenever it is established that a bank is unable to repay some or all of its depositors by reason of recklessness, gross negligence, fraud or other criminal conduct, then every director or other person who was knowingly a party to the carrying on of the business of that banking institution recklessly, with gross negligence or fraudulently or through other criminal conduct, by act or omission has caused the business of the bank to be managed in breach of the duties of the directors, shall jointly and severally be liable for any loss suffered by the depositors or the banking institution.
Furthermore, Section 20A(5) says that without prejudice to any other criminal liability incurred, where following an investigation it is established that the business of a banking institution was carried on recklessly, with gross negligence, fraudulently or in other illegal manner, every director of the banking institution or other person who was knowingly a party to the carrying on of the business in the manner aforesaid shall be guilty of an offence and liable to imprisonment for a minimum period of 10 years.
Depositors have in the past lost their monies in some institutions where directors and senior managers did not perform to the expected standards.
In an update on the status of Bills last week, Parliament said the Banking Amendment Bill, promoted by the Ministry of Finance and Economic Development was transmitted for Presidential Assent.
The Banking Amendment Bill seeks to strengthen corporate governance systems and plug corporate incest in the financial services sector.
Some of the salient features of the Bill include barring individuals from owning shareholding in a banking institution or in a holding company if the shares exceed 25 percent of the total nominal value or the total voting rights of all the issued shares of the banking institution.
The Bill seeks to address the weaknesses of the legislation which in the past allowed individuals to own directly controlling shareholding in banking institutions or their holding companies.
It is expected that the law will provide for early warning systems which will alert monetary authorities of areas of breach, as and when they arise.
More importantly, the new law exposes directors and senior executives in banks to lawsuits where it is proven that they acted recklessly or negligently.
Section 20A(4) of the Banking Amendment Bill now states that whenever it is established that a bank is unable to repay some or all of its depositors by reason of recklessness, gross negligence, fraud or other criminal conduct, then every director or other person who was knowingly a party to the carrying on of the business of that banking institution recklessly, with gross negligence or fraudulently or through other criminal conduct, by act or omission has caused the business of the bank to be managed in breach of the duties of the directors, shall jointly and severally be liable for any loss suffered by the depositors or the banking institution.
Furthermore, Section 20A(5) says that without prejudice to any other criminal liability incurred, where following an investigation it is established that the business of a banking institution was carried on recklessly, with gross negligence, fraudulently or in other illegal manner, every director of the banking institution or other person who was knowingly a party to the carrying on of the business in the manner aforesaid shall be guilty of an offence and liable to imprisonment for a minimum period of 10 years.
Depositors have in the past lost their monies in some institutions where directors and senior managers did not perform to the expected standards.
Source - the herald
