FINANCIAL INSTITUTIONS ACT, 2004

PART II - LICENCES

3. (1) No person in Seychelles shall advertise for or engage in banking business or offshore banking business without a banking licence or an offshore banking licence as the case may be issued by the Central Bank. A person holding funds which were obtained by doing banking business or offshore banking business without a valid licence shall repay those funds in accordance with the directions of the Central Bank.

(2) No person in Seychelles shall advertise for or engage in foreign exchange business without a licence to conduct foreign exchange business issued by the Central Bank under this Act.

(3) A licence granted under this Act is granted in writing for an indefinite period of time and shall not be transferable. The licence shall specify the activities which the holder of the licence is authorised to undertake and the terms and conditions under which it has been issued.

(4) No person other than a company incorporated under the Companies Act or an overseas company registered under section 310 of the Companies Act shall be issued a licence under this Act. A banking licence for a branch in Seychelles shall only be issued to a financial institution incorporated outside Seychelles authorised to engage in the business of receiving money deposits or other repayable funds from the public in the country where its head office is located.

4. (1) Banks may engage only in the following activities –

(a) receiving money deposits (in the form of demand deposits, time deposits or other forms of deposit) or other repayable funds, bearing interest or not;

(b) extending credits, including but not limited to consumer and mortgage credit; factoring, with or without recourse; forfeiting; financing of commercial transactions; and issuing credit cards;

(c) financial leasing;

(d) buying and selling for its own account or for the account of customers (including underwriting) of money market instruments (including inter alia cheques, bills of exchange and certificates of deposit); futures and options relating to debt securities or interest rates; exchange and interest rate instruments; and debt securities;

(e) providing money transmission services;

(f) buying and selling foreign currencies, including contracts for the future sale of foreign currencies;

(g) issuing and administering means of payment (including payment cards, travellers’ cheques and bankers’ drafts);

(h) money broking;

(i) safekeeping and administration of valuables, including securities;

(j) providing services as a portfolio manager or adviser;

(k) providing credit reference services;

(l) offshore banking; and

(m) anything that shall be incidental to the foregoing.

(2) Bureaux de Change may engage only in the following activities –

(a) buying and selling of foreign currency in the form of notes, coins and travellers' cheques; and

(b) anything that shall be incidental to the foregoing.

(3) Financial institutions may be authorised in writing by the Central Bank to own subsidiaries that engage in other activities. Such authorisation shall for each subsidiary list the activities that it may engage in and the activities of the subsidiary shall be restricted to those listed in the authorisation.

5. (1) Any company incorporated under the Companies Act or financial institution incorporated outside Seychelles seeking to establish a branch in Seychelles may apply for a licence; such application shall state the type of licence requested and be made in writing to the Central Bank in such manner as the Central Bank may specify and shall include –

(a) an authenticated copy of the instrument of incorporation under which the applicant is formed, together with the memorandum of association or bylaws, if any, and the address of its head office;

(b) the amounts of the authorised and subscribed capital of the applicant, including the amounts that have been paid in, or the assigned capital in the case of a branch of a financial institution incorporated outside Seychelles;

(c) the name, nationality, residence and business or profession of every administrator, together with a statement detailing the qualifications and professional experience and at least three references. For a proposed bank, at least one reference must be provided from an internationally reputable bank other than the applicant;

(d) the name, nationality, residence and business or profession of every person holding a substantial interest, together with at least two references verifying good financial standing, and, where the person holding a substantial interest is a body corporate, copies of the latest three audited annual balance sheets and profit and loss accounts where applicable;

(e) a list of all shareholders and ultimate beneficial owners of shares stating the name, address and respective shareholding;

(f) for each administrator and person holding a substantial interest an affidavit duly signed by the individual stating convictions for crimes, past or present involvement in a managerial function in a body corporate or other undertaking subject to insolvency proceedings or personal bankruptcy filings, if any;

(g) copies of the latest three audited annual balance sheets and profit and loss accounts of the applicant, and in the case of a newly formed company, financial projections for the next 3 years;

(h) a business plan setting out the business objectives and types of activities of the proposed financial institution, including a description of its organisational structure and internal controls together with projected balance sheets, profit and loss accounts and cash flow statements for the next three financial years;

(i) a statement by the auditor selected to be appointed indicating the auditor’s willingness to take on this task;

(j) a list of companies in which the applicant holds shares, specifying the number of shares and the registered addresses of those companies;

(k) the location of the principal and other places in or outside Seychelles where it proposes to conduct business, and in the case of a mobile office, the area to be served;

(l) in the case of an application by a financial institution incorporated outside Seychelles, in addition,

(i) a certificate of designation specifying the name, nationality, residence and business or profession of its managing agent, being the officer, agent or other person in Seychelles responsible for carrying out the functions of the financial institution and on whom any process may be served;

(ii) a statement that the foreign supervisory authority responsible for the supervision of the applicant in the country of incorporation is aware of the application and exercises consolidated supervision;

(m) in the case of an application by a bank incorporated outside Seychelles seeking to establish a branch, in addition, a sworn undertaking of its head office through its principal officer, supported by an appropriate resolution of its board of directors, that it will, on demand of the Central Bank, make available, in such currency and at such place as may be specified by the Central Bank, funds necessary to cover all obligations and liabilities incurred in the conduct of banking business authorised under the banking licence;

(n) proof of payment of the application fee as prescribed by the Central Bank;

(o) such other information as the Central Bank may require.

(2) An application for a licence to solely conduct foreign exchange business does not require the information or documents specified under subsection (l)(i), (j) and (l)(ii) above.

(3) The application and every document submitted in accordance with subsection (1) shall be signed by the directors of the applicant, or by a principal officer of the applicant duly authorised so to do. Where documents are not executed in the English language, certified translations in English must be submitted as well.

(4) For the purpose of subsection (l)(k), an automated teller machine by itself shall not constitute a place of business.

6. (1) In considering an application for a licence received under section 5, the Central Bank shall conduct such investigation as it may deem necessary and shall grant a licence to the applicant on being satisfied as to –

(a) the validity of the documents submitted under section 5(1);

(b) the financial status and history of the applicant;

(c) the character and professional experience of its administrators;

(d) the identity and character of its owners, in particular persons holding a substantial interest;

(e) the adequacy of its capital structure;

(f) its ability to cover all obligations and liabilities incurred in the conduct of the proposed business to be authorised under the licence;

(g) the soundness of its proposed operations;

(h) the viability of the business plan; and

(i) in the case of a branch or subsidiary of a financial institution incorporated outside Seychelles, the adequacy of supervision exercised on a consolidated basis by the foreign supervisory authority:

Provided that, in the case of an application for an offshore banking licence, the applicant shall satisfy the Central Bank that it is of international repute and good standing.

(2) Within 30 days after the receipt of an application, the Central Bank shall inform the applicant whether the application is deemed complete or specify the additional information required to make the application complete.

(3) Within 90 days after the receipt of a complete application, the Central Bank shall –

(a) grant a licence; or

(b) inform the applicant that it has refused to grant a licence giving the reasons for the refusal.

(4) Where a licence is granted under this Act, the Central Bank shall publish in the Gazette and in a local newspaper a notice to that effect specifying the name of the financial institution and the activities authorised by the licence.

7. (1) In granting a licence, the Central Bank may specify the terms and conditions which shall be complied with by the financial institution.

(2) The financial institution may only start its operations once the annual fee for its first year of operation has been paid to the Central Bank.

(3) A financial institution holding a licence shall not engage in any business other than the activities specified therein.

8. A financial institution holding a licence shall display a copy of that licence conspicuously in a public part of each place of its business in Seychelles and shall continue to keep that copy so displayed.

9. (1) The operations of a financial institution are subject to statutory directions and instruments made under this Act and to any determination, notice or other requirement that may be made or issued by the Central Bank from time to time under or in accordance with this Act, the Central Bank of Seychelles Act or any other written law.

(2) Without prejudice to the Companies Act, no local financial institution shall, without the prior written approval of the Central Bank, alter the instrument under which it is formed.

(3) The Central Bank shall approve no alteration which conflicts with this Act, the Companies Act or other laws.

(4) Without prejudice to section 312 or any other relevant provision of the Companies Act, every foreign financial institution shall notify the Central Bank of any alteration in the instrument under which it is formed within 30 days of the alteration.

10. (1) Every financial institution shall pay to the Central Bank such annual fee for its licence as may be prescribed by the Central Bank having regard to the costs of the Central Bank directly caused by its supervisory functions in relation to financial institutions.

(2) The Central Bank may prescribe different annual fees for different classes of financial institutions which shall apply uniformly to financial institutions within each class.

(3) With the exception of the year in which a licence is granted, where the holder of a licence fails to pay the annual fee prescribed under subsection (1) before the beginning of the year for which the licence fee is due, the licence shall cease to be valid at the beginning of the year for which the fee is due.

11. (1) The prior written approval of the Central Bank is required –

(a) for a financial institution to open or close a branch or agency in any part of Seychelles, or to change the location of any existing place of business in Seychelles;

(b) for a local financial institution to open or close a branch, agency or office outside Seychelles.

(2) An approval under subsection (1) may be given subject to such conditions as the Central Bank may prescribe by regulations or specify in the written approval.

(3) Every financial institution shall notify the Central Bank before installing and operating an automated teller machine.

12. (1) No person other than a bank shall, without the prior written approval of the Central Bank –

(a) use the words "bank", "savings" or, "savings and loan" or any of their derivatives in any language, or any other word indicating or likely to indicate the transaction of banking business, in the name, description or title under which that person is doing business in Seychelles; or

(b) make any representation to the effect that it carries on banking business in any billhead, letter paper, notice or advertisement.

(2) No person other than a financial institution shall, without the prior written approval of the Central Bank, use the words "financial institution" or any of their derivatives in any language in the name, description or title under which that person is doing business in Seychelles.

(3) Nothing in subsections (1) or (2) prevents the use of the words there specified or any of their derivatives in any language when it is for the sole purpose of organising a company for the purpose of applying for a licence under this Act.

(4) No person shall be granted or shall continue to hold a licence under a name which so closely resembles the name of an existing financial institution as would be likely, in the opinion of the Central Bank, to mislead the public.

(5) Except with the prior written approval of the Central Bank, no financial institution shall use, or refer to itself by, a name other than that under which it is licensed under this Act.

(6) Where the Central Bank approves a change of name under subsection (5), the Central Bank shall publish in the Gazette and in a local newspaper a notice to that effect specifying such name.

13. (1) The Central Bank may revoke or vary the terms and conditions of a licence if the licensee –

(a) has obtained the licence on the grounds of false or fraudulent statements or other material irregularities connected with the licence application;

(b) fails to commence operations within a period of 6 months or such longer period as has been allowed in writing by the Central Bank;

(c) fails to comply with the terms and conditions of the licence or any corrective measures required by the Central Bank in accordance with section 53 (Central Bank’s power over unsafe practices);

(d) no longer possesses the minimum amount of capital and reserves required by regulations under this Act or can no longer be relied upon to fulfil its obligations towards its creditors, and in particular no longer provides security for the assets entrusted to it;

(e) has failed to obtain prior approval of the Central Bank for the transfer of a substantial interest held in the financial institution;

(f) is insolvent or apparently insolvent; for the purpose of this paragraph a financial institution is apparently insolvent when the financial institution is not paying its financial obligations as they fall due or the Central Bank has determined that the capital of the financial institution is less than 25 percent of the minimum capital required pursuant to section 23(1) or (2) or that the capital funds of the financial institution are 8 percent or below 8 percent of the total value of its assets determined on a risk adjusted basis;

(g) undergoes a merger, consolidation, amalgamation or division;

(h) is in breach of any material provision of this Act or of regulations, rules, orders or directions which are applicable to the licence or the licensee; or

(i) being a bank, has ceased for more than 3 months to engage in the business of receiving money deposits or other repayable funds from the public or extending credits for its own account.

(2) The Central Bank shall give reasons for its decision under subsection (1).

(3) Subject to subsection (5), the revocation or variation of a licence under subsection (1) takes effect 30 days after the date on which the Central Bank gives notice of it to the licensee.

(4) The licensee may, within 15 days after receipt of notice under subsection (3), submit to the Central Bank reasons why, in the opinion of the licensee, the licence should not be revoked or the terms and conditions of the licence should not be varied.

(5) At the latest 3 days before the revocation or variation of a licence is to take effect pursuant to subsection (3), the Central Bank shall –

(a) confirm the revocation or the variation with or without modification; or

(b) withdraw the revocation or the variation unconditionally.

(6) A notice of any action taken under subsection (5) shall be published by the Central Bank in the Gazette and in at least one local newspaper.

14. (1) Where the Central Bank has given notice of revocation under section 13(3) it may give a direction to the licensee –

(a) prohibiting it from receiving money deposits or other repayable funds from the public;

(b) prohibiting it from dealing with or disposing of its assets in any manner specified in the direction;

(c) prohibiting it from entering into any transaction or class of transactions specified in the direction;

(d) prohibiting it from soliciting deposits;

(e) requiring it to take certain steps or pursue a particular course of action,

and the licensee shall comply with that direction notwithstanding the notice of revocation.

15. (l) In an emergency situation requiring urgent action, the Central Bank may revoke a licence pursuant to section 13(1) and (2) to take effect immediately and direct the financial institution to immediately suspend all business operations.

(2) The Central Bank shall give notice of the revocation to the licensee as soon as practicable. The notice shall state the reasons requiring urgent action. The filing of an appeal pursuant to section 16 does not effect a suspension of any measures imposed by the Central Bank.

16. (1) Where the Central Bank takes a decision –

(a) to refuse to grant a licence under section 6;

(b) to refuse to grant an approval for the opening or closure of a branch or agency of a financial institution under section 11;

(c) under section 19, to revoke or vary the terms or conditions of an approval granted under section 11;

(d) to confirm a revocation of, or variation of the terms or conditions of a licence under section 13(5).

the aggrieved party may appeal to the Central Bank within 15 days from the date on which the aggrieved party receives notification of the decision of the Central Bank to reconsider its decision. The filing of an appeal does not effect a suspension of any measures imposed by the Central Bank.

(2) The Central Bank shall afford to the aggrieved party an opportunity of submitting a written statement of its case and, at the request of the aggrieved party, provide for a hearing before the Board. The Central Bank shall take a final decision within 90 days after considering the case.

(3) If an aggrieved party is not satisfied with the final decision of the Central Bank under this section, the aggrieved party may appeal to the Supreme Court within the time and in accordance with the procedures applicable to civil appeals to that Court.

(4) Notwithstanding anything in any other law, no action or proceeding may be instituted in any court in respect of loss or damage actually incurred, or likely to be or alleged to be incurred by reason of the application of section 13(1), section 14(1) or section 15(1).

17. (1) Where the revocation of a licence is made final by the Central Bank under section 16(2), the Central Bank shall –

(a) direct the financial institution immediately to suspend business authorised under the licence;

(b) take charge of all its books, records and assets; and

(c) take such measures as may be necessary to prevent the continuance of the business of that institution.

(2) Where the revocation of a licence has been made final in respect of a local financial institution, the Central Bank shall immediately take appropriate steps for the winding up of that institution in accordance with Schedule 2.

(3) Where the revocation of a licence has been made final in respect of a foreign financial institution, without prejudice to Schedule 5, the Central Bank shall direct the head office of that institution immediately to cover all obligations and liabilities incurred in the conduct of the business of the institution under the banking licence in accordance with the undertaking of the head office given under section 5(1)(m).

(4) The Central Bank may, in substitution for the procedures laid down in subsections (1), (2) and (3), take such other action as it considers fit, including arranging for the amalgamation of the financial institution with any other financial institution which is agreeable to such amalgamation.

18. (1) Subject to this section, a financial institution may, with the prior written approval of the Central Bank, surrender its licence to the Central Bank.

(2) The Central Bank shall grant its approval to an application for the surrender by a financial institution of a licence under subsection (1) where it is satisfied that the financial institution has made adequate provision in respect of all its liabilities in relation to its business.

(3) In granting its approval under subsection (2), the Central Bank shall appoint a date on which the surrender shall take effect.

(4) Where approval has been granted to a financial institution under subsection (2), the financial institution shall, not later than 30 days before the date appointed under subsection (3), publish in a local newspaper and an international financial newspaper approved by the Central Bank a notice of the proposed surrender of the licence and specifying the date on which the surrender shall take effect.

(5) A surrender of a licence under this section shall have effect as a revocation of a licence under this Act.

(6) The Central Bank shall, as soon as is practicable, publish in the Gazette a notice of every surrender of a licence under this section but any delay in publishing, or failure to publish, the notice shall not affect the validity of the surrender or its effect.

19. (1) The Central Bank may, for exceptional reasons, revoke or vary the terms or conditions of an approval given under section 11, including ordering the closure of a branch or agency of a financial institution.

(2) Any action under subsection (1) shall be communicated by the Central Bank to that financial institution, which shall carry out all the obligations and meet all the liabilities of the branch, agency or office.

(3) The Central Bank shall give reasons for its decision under subsection (1).

(4) Where an order of closure has been made under subsection (1), the Central Bank shall take all necessary steps to ensure that –

(a) all persons who have deposited monies in that branch or agency are given the opportunity to withdraw those monies within a reasonable period of time; and

(b) such measures are taken as will safeguard the interests of those depositors.

20. (1) If at any time the Central Bank has reason to believe that any person is doing banking business or foreign exchange business without a valid licence, it shall investigate the matter.

(2) Concerning persons who violate this Act by engaging, without a licence, in activities for which a licence is required under this Act, the Central Bank shall be empowered to liquidate the business of such person, the net proceeds of which shall be transferred to the Consolidated Fund.

21. For the purpose of section 20, the Central Bank may in accordance with section 36 of the Central Bank of Seychelles Act, examine the books, accounts and records of the person suspected to be doing banking business without a licence to ascertain whether that is the case.