ZIMBABWE MICROFINANCE LEGISLATION; [Microfinance Act 24:29] Some Issues from the New Legislation. A detailed review & analysis and implications will be available on request. -The Reserve Bank shall appoint one of its employees as Registrar of Microfinanciers -No person shall conduct Microfinance Business unless they are registered in terms of the Act -No person shall be registered as a Microfinancier unless that person is a Company. -No moneylender registered in terms of this Act shall conduct the business of deposit taking Microfinance Business -The Act does not apply to SEDCO & COOPERATIVES, who are regulated under separate enactments -The registration of a microfinancier shall be annually renewed upon submission within the prescribed time of the prescribed renewal of registration form and payment of the prescribed fee: -Provided that if there has been any material change to the particulars on the basis of which a microfinancier was originally registered, the microfinancier concerned shall disclose those changes in the prescribed renewal of registration form. -The Registrar shall refuse to register the applicant concerned if; --The registrar is not satisfied that the Applicant has complied with any provisions of this Act --Or if the Registrar considers that it is not in the public interest to register the Applicant -Before refusing to register, the Registrar shall notify the applicant in writing, give them 30 days within which to make representations in the matter. -The period between the Registrar’s receipt of the application and all documentation relating to application for registration as a Microfinance Institution/Moneylender/Microfinancier as the case may be, and the date on which the Registrar communicates their decision or proposed decision to the Applicant shall not exceed sixty days. -However, the Registrar’s non-compliance with the above clause does not entitle the Applicant to automatic/default registration. The Registrar shall cancell the license if s/he has reasonable grounds for believing that; -The Registration was obtained in error, through fraud or misrepresentation of a material fact by the microfinancier. -the microfinancier has refused or failed to pay a monetary penalty imposed upon it in terms of this Act; or -the microfinancier has not complied with any instruction requirement or condition imposed by the Registrar in terms of this Act; or -the microfinancier has failed to disclose any material change to its registration particulars in its application for the renewal of its registration; -the microfinancier has failed to comply with a term or condition of its registration; or -the microfinancier misrepresents the facilities which it offers to the public; or -the microfinancier is (subject to section _____) engaging in undesirable methods of conducting business; or -the microfinancier has not conducted any microfinance business for ninety consecutive days; or -in the case of a microfinance institution, the institution has not conducted its microfinance business in accordance with sound administrative, accounting or risk-management practices; or -where the microfinancier is a subsidiary of a banking institution or building society which has ceased to be registered under the Banking Act [Chapter 24:20] (Act No. 9 of 1999) or the Building Societies Act -where it is in the public interest that the microfinancier’s registration should be cancelled. Upon the cancellation of its registration, a microfinancier shall immediately cease conducting any microfinance business, except to the extent that the Registrar may permit it to do so for the purpose of; (a) recovering any amounts due to it from the borrowers; or (b) settling its obligations towards any depositors; or (c) transferring its business to another registered microfinancier. (2) A microfinancier whose registration has been cancelled shall without delay return its registration certificate to the Registrar. Every microfinancier shall display the following information conspicuously, in easily legible letters, in every premise where it conducts a microfinance business; (a) the services offered by the microfinancier; and (b) the monthly and annual rates of interest it charges on loans and advances; and (c) details of all charges, other than interest, which it imposes on loans and advances; and (d) in the case of a corporate microfinancier, the names of the directors and chief executive officer and the name of the person in charge of the premises where the information is displayed; and (e) such information relating to the rights and responsibilities of borrowers and depositors as may be prescribed. -Every loan agreement to which a microfinancier is a party shall be in writing, setting out clearly all its material terms and conditions; and (b) permit the borrower to make partial or total pre-payments of any amounts owed by him or her under the contract; and specify any penalties for prepayments of amounts owed by the borrower under the contract; and contain such terms and conditions as may be prescribed. -Any provision of a loan agreement which purports to allow the microfinancier unilaterally to alter the rate of interest payable by the borrower, or any other obligation of the borrower, shall be void. The operations of a Microfinancier shall be governed by directors; At least 1 Director in the case of a Moneylender At least 3 Directors in the case of Microfinance Business engaged in Credit Only business At least 5 Directors in the case of an MFI engaged exclusively in deposit taking At least 7 directors in the case of an MFI engaged in both deposit taking & lending No person shall exercise any of the functions of a director of a corporate microfinancier following his or her appointment or re-appointment as a director, unless the Registrar has by written notice approved the appointment or re-appointment, as the case may be. The accounts of a corporate microfinancier shall be audited, in accordance with the Companies Act [Chapter 24:03] and such other requirements as may be prescribed by a person registered as a public auditor in terms of the Public Accountants and Auditors Act [Chapter 27:12]. Every corporate microfinancier shall send the Registrar a copy of its audited accounts, and the auditor’s report thereon, within one month after receiving them from the auditor. Before a microfinance institution makes a loan or advances credit to a borrower, the institution shall take reasonable steps to ensure that; a) the borrower will be able to fulfil his or her obligations under the agreement while still being able to meet the necessary living expenses of himself or herself and his or her family; and (b) the borrower understands the essential terms of the loan agreement; and (c) a credit control advisor provides the borrower with the necessary information to enable him to manage his or her credit A microfinance institution shall allow a borrower an opportunity to read the loan agreement or to have it read to him or her, before he or she signs it, and shall provide the borrower with a copy of the agreement when he or she signed it. If a microfinance institution makes a loan or advances credit without complying with subsections above (a) no interest shall be payable on the loan or advance; and (b) the capital sum of the loan or advance shall not be recoverable from the borrower except by a court order. A registered microfinance institution shall not pay a dividend to its shareholders unless it has made adequate provision against losses on loans and has taken adequate provision against losses on loans and has taken adequate steps to ensure compliance with the financial requirements specified in this Act. No microfinance shall knowingly extend credit to or for the benefit of; (a) any of its officers or directors; or (b) any person who holds a significant interest in the microfinance institution; or (c) any relative of persons referred to in paragraph (a) or (b); on terms and conditions that are more favourable than those on which the institution, applying criteria normally applied in the microfinance industry, would extend credit to other persons of the same financial standing: Every microfinance institution shall appoint a chief executive officer, a chief accounting officer and such other officers as may be prescribed, and no person shall be appointed to hold two or more such posts at the same time. No microfinance institution shall alter its memorandum of association or its articles of association or other rules for the conduct of its business unless the Registrar has given his or her written consent to the alteration. Every registered microfinance institution shall maintain in Zimbabwe such a minimum capital and reserves as may be prescribed. Subject to this section, no person shall hold more than twenty-five per centum of the shares of a microfinance institution. The Registrar may register a microfinance institution in which a person holds more than twenty-five per centum of its shares, if the institution has satisfied the Registrar that it will implement a plan to reduce the person’s shareholding within four years from the date on which the institution is registered, in order to comply with subsection No person shall transfer, or cause to be transferred, more than ten per centum of the shares of a registered microfinance institution without the prior approval of the Registrar. No person shall exercise any of the functions of a director of a corporate microfinancier following his or her appointment or re-appointment as a director, unless the Registrar has by written notice approved the appointment or re-appointment, as the case may be. A person who is aggrieved by any conduct on the part of a microfinancier that may constitute an undesirable method of conducting business may, within a reasonable time after the conduct giving rise to the complaint, lodge his or her complaint, in writing and in the prescribed form and manner, with the Registrar.
Posted on: Tue, 08 Oct 2013 21:46:59 +0000
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