Troubled Financial Institutions (Resolution) Act
- Commenced on 14 January 2005
- [This is the version of this document at 31 December 2016 and includes any amendments published up to 31 December 2017.]
- [Note: This version of the Act was revised and consolidated by the Law Development Commission of Zimbabwe]
Part I – Preliminary
1. TitleThis Act may be cited as the Troubled Financial Institutions (Resolution) Act [Chapter 24:28].
2. ApplicationThis Act shall apply to all financial institutions referred to in section 6(1), including those formed, registered or incorporated before the date of commencement of this Act:Provided that if the Reserve Bank proposes to issue a declaration in relation to a financial institution, and, before such declaration is issued, there is made or presented to the court⎯
3. InterpretationIn this Act⎯“administrator” means an administrator appointed under section 6(1), and includes any assistant administrator appointed under that provision;“administration”, in relation to a troubled financial institution, means the administration of the troubled financial institution in accordance with the notice of declaration or a scheme of resolution;“associate”, “board”, “curator”, “director”, “chief executive officer”, “inspector”, “registered” and “supervisor” have the meanings assigned to those terms by the Banking Act;“the Banking Act” means the Banking Act [Chapter 24:20];“the Companies Act” means the Companies Act [Chapter 24:03];“commencement of the administration” means the date when a declaration in relation to a financial institution takes effect in terms of section 6(7);“court”, “Master”, “Registrar”, “secretary” and “share” have the meanings assigned to those terms by the Companies Act;“declaration” means a declaration issued in terms of section 6;“document” includes any document stored in electronic form in any computer;“financial institution” means—(a)any banking institution registered or required to be registered in terms of the Banking Act [Chapter 24:20]; or(b)any building society registered or required to be registered in terms of the Building Societies Act [Chapter 24:02]; or(c)the People’s Own Savings Bank established in terms of the People’s Own Savings Bank of Zimbabwe Act [Chapter 24:22]; or(d)an asset manager as defined in the Asset Management Act [Chapter 24:26]; or(e)a collective investment scheme as defined in section 3 of the Collective Investment Schemes Act, 1997; or(f)any person who carries on a business of acceptance of deposits and other repayable funds from the public;“member”, in relation to a financial institution, means⎯(a)a shareholder, debenture-holder or other person having a right to vote at meetings of the financial institution; or(b)any contributory as defined in section 202 of the Companies Act;“Minister” means the Minister of Finance and Economic Development or any other Minister to whom the President may, from time to time, assign the administration of this Act;“officer”, in relation to a troubled financial institution, includes an auditor of the institution;“public funds” means funds held by or on behalf of the State (whether or not appropriated by Act of Parliament) and includes any moneys advanced by the Troubled Bank Fund;“Reserve Bank” means the Reserve Bank of Zimbabwe referred to in section 4 of the Reserve Bank of Zimbabwe Act [Chapter 24:22];“scheme of resolution” means a scheme referred to in section 26;“specified person” means any person specified in terms of section 14(8);“successor financial institution” means a successor to a troubled financial institution that is reconstructed, amalgamated or transferred in terms of section 10(a), (b) or (c);“troubled financial institution” means a financial institution in respect of which a declaration has been made;“Troubled Bank Fund” means the Troubled Bank Fund established by the Reserve Bank for the purpose of providing financial assistance to financial institutions.
Part II – Declaration of troubled financial institutions
4. Investigation of certain financial institutions
5. Action where investigated financial institution not troubled but in default of Banking Act, etc.
6. Declaration of troubled financial institution
7. Effect of declarationA declaration shall have the effect of—
8. Transmission of declaration to certain officers
9. Confirmation of declaration
Part IV – Objects of administration and functions of administrator
10. Object of administrationThe object of administration is to safeguard the interests of the depositors, creditors and members of a troubled financial institution by restoring the troubled financial institution to a sound financial condition or, if it cannot be so restored, to safeguard the interests of the depositors, creditors and members by any one or more of the following modes of resolution—
11. General powers of administrator in relation to troubled financial institution
12. Application of certain provisions of Companies Act to administrationSections 220, 236, 269, 270, 278 and 290 of the Companies Act shall apply to the proof of claims against a troubled financial institution, the dissolution of a troubled financial institution, voidable and undue preferences made by a troubled financial institution before a declaration was issued in respect of it, the application of certain provisions of the law relating to insolvent estates to the troubled financial institution, the books to be kept by the administrator and the use of the books of the troubled financial institution and the administrator as evidence, subject to such modifications as may be necessary, including in particular—
13. Voidable dispositions of property by troubled financial institutions and specified persons
14. Statement of troubled financial institution’s affairs
15. Revaluation of assets, liabilities and share capital of troubled financial institutions
16. Initial meeting of creditors and members
17. Subsequent meetings of creditors and members
Part IV – Specified persons in relation to troubled financial institutions[Please note: numbering same as in original.]
18. Identification of persons responsible for causing financial institution to be troubled
19. Special commissioners for taking evidence
20. Forfeiture or vesting in State of rights of, or disposal of shares held by, specified persons
21. Attachment of assets of specified persons in satisfaction of their liabilities to troubled financial institution
22. Powers of administrator in relation to specified personsFor the duration of the administration or a period of six months from the commencement of the administration, whichever is the shorter period, the administrator shall have power—
23. Transactions by specified persons
24. Offences by specified persons
25. Power of administrator to compromise with persons liable to be specified or prosecuted
Part V – Schemes of resolution and interim management of successor financial institutions
26. Powers of administrator with respect to scheme of resolution
27. Special provisions for the repayment of depositors of troubled financial institutions
28. Approval of scheme of resolution
29. Consequences where resolution not possibleIf, after representations made to it by the administrator, the Reserve Bank⎯
30. Implementation of scheme of resolution and matters incidental thereto
31. Duties of interim boardAn interim board shall, subject to the memorandum and articles of the successor financial institution—
Part VI – General
32. Arbitration where valuation of shares, etc. by administrator or Reserve Bank disputed
33. Persons employed by troubled financial institution before its administrationTo the extent that it is possible to do so without prejudicing the viability of the troubled financial institution or the successor financial institution, the administrator and interim board shall endeavour to retain in employment every person, other than a specified person, employed by the institution immediately before the commencement of its administration on terms not less favourable than those enjoyed by him or her immediately prior to the commencement of the administration.
34. Application of assets during administration
35. Remuneration of administrator and assistant administrators
36. Liabilities incurred by administrator and interim board to have preference over pre-administration liabilities
37. Period of administration excluded in determining preference under mortgage bondThe time during which any troubled financial institution, which is a debtor under a mortgage bond, is subject to administration, shall be excluded from the calculation of any period for the purpose of determining whether the mortgage confers any preference in terms of section 111(3) of the Insolvency Act [Chapter 6:04] as applied to the winding up of companies by the Companies Act.
38. Position of auditor during administrationNotwithstanding the issue of a declaration in respect of any troubled financial institution and for so long as the declaration is in force, the provisions of the Banking Act or Companies Act relating to the appointment and reappointment of an auditor and the rights and duties of an auditor shall continue to apply as if any reference in those provisions to the directors of the troubled financial institution were a reference to the administrator.
39. Administration expenses
40. Cancellation of declaration
41. Offences consequent upon administration
43. Cap. 14:28 not to applyThe Competition Act [Chapter 14:28] shall not apply to any amalgamation, merger or transfer of any financial institution carried out in accordance with this Act.
History of this document
14 January 2005