RF.R.5.11 Exemption from prohibited investments

Summary:

• This regulation allows the Minister to grant exemptions for certain prohibited investments as specified in section 282(4) of the FIM Act.
• Specifically, the board of a retirement fund can apply to the Minister to invest the fund's assets in or lend them to an employer participating in the fund or a subsidiary of that employer.
• The exemption is granted if the fund's rules and investment policy permit such investments, and the Minister sets the period and conditions for the exemption.

What to do:

• Retirement funds intending to invest in a participating employer must ensure that both the investment policy and its rules explicitly provide for the fund making such an investment.

Standards Chapter 10: General

GEN.S.10.2 Fit and proper requirements

This standard applies to all persons required to be fit and proper under the Act, including the following:

• All financial institutions and financial intermediaries registered or applying to be registered or authorised for registration under the Act;
• Directors, members of a board, principal officers, other officers, trustees, custodians, auditors, valuators and key persons of financial institutions and financial intermediaries registered under the Act;
• Members of boards of entities that control a financial institution or financial intermediary registered under the Act; and
• Any other person or entity exercising an oversight function or control over the management or administration of a financial institution or financial intermediary registered under the Act.

Summary:

• NAMFISA assesses whether individuals or key persons are fit and proper by ensuring their appointment will not negatively impact the sound management of the financial institution or financial intermediary.
• This assessment is based on three main criteria: 1) competence and capability, 2) honesty, integrity, fairness and ethical behaviour, and 3) financial soundness, as outlined in Schedule 1 of the standard.
• Applicants must provide supporting documents such as completed forms contained in Schedule 2 of the standard, certified copies of qualifications, up-to-date CV, conduct certificates, and identity documents.
• If the applicant is an entity, the fitness and propriety of key individuals and shareholders of the entity are assessed, as well as the conduct of the entity and the financial soundness and operational ability of the entity.
• Entities must submit similar documentation and completed forms contained in Schedule 3 of the standard.
• Entities must have a documented policy relating to fitness and propriety for the individuals or key persons, approved by their boards. This policy must be communicated clearly to all relevant individuals to ensure ongoing compliance.
• The standard contains disqualification criteria whereby NAMFISA may disqualify an individual or an entity that fails to demonstrate fitness and propriety from controlling or participating in the management or operations of a financial institution or financial intermediary.
• Similarly, the standard contains rehabilitation criteria whereby an individual or entity is capable of being restored in terms of their fitness and propriety.

What to do:

• Financial institutions and financial intermediaries must include the fitness and propriety requirements when appointing the persons to whom these requirements apply as per the standard.
• Entities must prepare a policy on fitness and propriety, in line with the requirements of the standard.

This Standard applies to ‒

• the financial institutions and financial intermediaries that are required to appoint an auditor pursuant to section 401 of the Act; and
• the auditor so appointed.

Summary:

• Financial institutions and financial intermediaries must notify NAMFISA within 30 days of appointing or terminating an auditor.
• Notifications must be submitted electronically via NAMFISA ERS, using prescribed forms and supporting documents.
• Both the financial institution/ financial intermediary and the auditor must provide written reasons for termination or resignation.
• The standard must be read with the provisions contained in the standards on fit and proper requirements (GEN.S.10.2) and independence (GEN.S.10.8).

What to do:

• The processes of financial institutions and financial intermediaries must be adjusted to make provision for the notification of NAMFISA within 30 days of appointing or terminating an auditor.