FINANCIAL INSTITUTIONS ACT, 2004

(Act 14 of 2004)

I assent

J. A. Michel

President

29th December, 2004

AN ACT to repeal and replace the Financial Institutions Act, 1984.

ENACTED by the President and the National Assembly.

1. This Act may be cited as the Financial Institutions Act, 2004.

2. In this Act, unless the context otherwise requires –

"abandoned property" has the meaning given in section 59;

"administrator", in relation to a financial institution, means any person who is a director, managing director or manager of such institution, or in the case of a branch of a foreign financial institution, the person designated as managing agent pursuant to section 313(1) of the Companies Act;

"assigned capital", in relation to a branch of a foreign financial institution, means unimpaired capital assigned to the branch by its head office;

"automated teller machine" means a terminal device, whether installed by a financial institution or other person, which is linked directly or indirectly to a computer system used by a financial institution and which provides facilities to the customers of the financial institution;

"bank" means any person licensed under this Act to conduct banking business;

"banking activities" means the activities that are listed in section 4;

"banking business" means the business of receiving deposits of money or other repayable funds from the public and extending credits for its own account;

"banking licence" means a licence to conduct banking business granted under section 6;

"Board" means the Board of the Central Bank;

"branch" means a place of business that forms a legally dependent part of a financial institution and conducts directly all or some of its licensed activities;

"Bureau de Change" means any person authorised under the Exchange Control Act to buy and sell foreign currency and licensed under this Act to carry on foreign exchange business;

"capital funds" means the paid-up or assigned capital, as the case may be, of a financial institution plus the reserve fund referred to in section 24;

"Central Bank" means the Central Bank of Seychelles established by section 3 of the Central Bank of Seychelles Act;

"close relation", in relation to an administrator or a natural person holding a substantial interest in a financial institution, means spouse, parents, children or dependent relatives;

"control", in relation to a financial institution, means the relationship between the financial institution and any body corporate in which the financial institution –

(a) directly, indirectly or acting through one or more persons owns, controls or has the right to vote 20 percent or more of its voting shares or has the right to elect a majority of its directors; or

(b) exercises such a controlling influence as the Central Bank may determine;

"credit" means any commitment to disburse a sum of money in exchange for a right to repayment of the amount disbursed and outstanding and to payment of interest or other charges on such amount, any

extension of the due date of a monetary claim, any guarantee issued, and any commitment to acquire a debt security or other instrument stipulating the payment of a sum of money;

"debt security" means any negotiable instrument of indebtedness and any other instrument equivalent to such instrument of indebtedness, and any negotiable instrument giving the right to acquire another negotiable debt security (which may be in certificated or in book entry form) by subscription or exchange;

"deposit" means a sum of money paid on terms –

(a) that it is to be repaid in full, with or without interest or premium of any kind, and either on demand or at a time agreed by or on behalf of the person making the payment and the person receiving it; and

(b) that is not referable to the provision of property or service or the giving of security,

whether or not evidenced by any entry in a record of the person receiving the sum, or by any receipt, certificate, note or other document. A sum of money paid to a body corporate in exchange for the issuance of corporate debentures or corporate bonds is not deemed to constitute receipt of a deposit or repayable funds under the meaning of this Act, unless such activity is done on a frequent basis as determined by the Central Bank;

"director" has the meaning given in section 2(1) of the Companies Act, and in relation to a branch of a foreign financial institution includes the person designated as managing agent pursuant to section 313(1) of the Companies Act;

"financial institution" means –

(a) any bank; or

(b) any Bureau de Change,

and, for the purposes of this Act, all branches and agencies of a financial institution in Seychelles are deemed to be one financial institution;

"foreign exchange business" means the business of buying and selling of foreign currency;

"foreign exchange licence" means a licence to conduct foreign exchange business granted under section 6;

"foreign financial institution" means a financial institution established under the laws of a country other than Seychelles;

"group of closely-related customers" means –

(a) two or more persons who, unless it is shown otherwise, constitute a single risk because one of them, directly or indirectly, has control as defined in this section above, over the other or others;

(b) two or more persons between whom there is no relationship of control as defined in paragraph (a) but who are to be regarded as constituting a single risk because they are so interconnected that if one of them were to experience financial problems the other or all of the others would be likely to encounter repayment difficulties;

"local financial institution" means a financial institution established under the law of Seychelles;

"Minister" means the Minister for the time being responsible for finance;

"net profits" means profits after providing for management charges and taxation;

"offshore banking business" means banking business solely conducted with non-residents in currencies other than the Seychelles Rupee;

"place of business" means any branch, agency or mobile office of a financial institution in Seychelles which is open to the public;

"rupees" means rupees in Seychelles currency; "sell" includes –

(a) to sell by auction;

(b) to offer or attempt to sell;

(c) to expose, display or advertise for sale;

(d) to sell or hire under a hire-purchase or installment sale agreement; or

(e) to exchange or dispose of goods or services for any valuable consideration,

and the expressions "to purchase" and "to buy" shall be construed accordingly;

"substantial interest" means holding individually or together with a close relation, directly or indirectly, 10 percent or more of the capital or of the voting rights of a company or undertaking or, directly or indirectly, exercising such significant influence over the management of the company or undertaking as the Central Bank may determine;

"subsidiary" means any body corporate in which another person or group of persons acting in concert holds –

(a) the equivalent of fifty percent or more of the voting shares; or

(b) a substantial interest that permits such other person or group of persons to exercise effective control over the management or policies of the subsidiary;

"unsecured" –

(a) in relation to credits, means credits granted without security;

(b) in relation to credits against security, means any part of those credits which at any given time exceeds the market value of the assets comprising the security given, or which exceeds the valuation approved by the Central Bank at any time when it considers that no market value exists for those assets.