Legal Chapter 4 (Admin Hearings) PDF

CHAPTER FOUR SECURITIES INDUSTRY ACT, 2016 (ACT 929) This syllabus area will provide approximately 10 of the 50 questions for the examinations. ***Unless otherwise stated, the words in italics in this unit, are explanations and comments, and not sections of this Act.*** Learning Objective To know...

CHAPTER FOUR SECURITIES INDUSTRY ACT, 2016 (ACT 929) This syllabus area will provide approximately 10 of the 50 questions for the examinations. ***Unless otherwise stated, the words in italics in this unit, are explanations and comments, and not sections of this Act.*** Learning Objective To know the contents of the Securities Industry Act, 2016 (Act 929). The Securities Industry Act, 2016 (Act 929) was passed ‘to revise and consolidate the Securities Industry Act, 1993 (PNDCL 333) and to provide for related purposes’. The memorandum to the Securities Industry Bill stated as follows: “The Securities Industry Act, 1993 (PNDCL 333) was enacted in 1993 to provide a legal framework to regulate the securities industry and other related matters. It was subsequently amended by the Securities Industry (Amendment) Act, 2000 (Act 590). It has however become necessary to further amend the Securities Industry Act, 1993 (PNDCL 333) to accord with international standards and best practice as required by the International Organisation of Securities Commissions (IOSCO) in conformity with IOSCO’s principles and objectives of securities regulation and to address weaknesses identified in the existing law. The enactment of the Bill will remove the regulatory overlaps, plug the loopholes in the existing law and remove the provisions that are obstacles to the facilitation of securities market development. The Bill will ensure the compliance with IOSCO objectives and principles to meet IOSCO Multilateral Memorandum of Understanding, qualification requirements in line with IOSCO core principles of securities regulation, internationally accepted benchmarks and best practices. The Bill will ensure that the legal framework for the securities industry is robust enough to accommodate all forms of securities presently and in the future. The Bill will also strengthen the operational independence of the Commission for an effective and efficient regulation of the securities industry in Ghana.” The Act was amended by Securities Industry (Amendment) Act, 2021 (Act 1062). Establishment of the Commission 1. (1) There is established by this Act a body corporate to be known as the Securities and Exchange Commission. The Commission is a member of the International Organisation of Securities Commissions (IOSCO). In 2015 the Securities Commissions in Ghana, Nigeria and West African Economic Monetary Union (WAEMU) established the West Africa Securities Regulators Association (WASRA) to spearhead the integration of capital markets in West Africa. Object of the Commission 2. The object of the Commission is to regulate and promote the growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected. Functions of the Commission 3. To achieve the object the Commission shall (a) advise the Minister on matters relating to the securities industry; (b) maintain surveillance over activities in securities to ensure orderly, fair and equitable dealings in securities; (c) register, license, authorise or regulate, in accordance with this Act or the Regulation (i) securities exchanges, (ii) commodities and futures exchanges, (iii) securities depositories, (iv) clearing and settlement institutions, (v) credit rating agencies, (vi) fund managers, (vii) investment advisers, (viii) unit trusts, (ix) mutual funds, (x) hedge funds, (xi) private equity funds, (xii) venture capital funds, (xiii) nominees, (xiv) underwriters, (xv) issuing houses, (xvi) registrars, (xvii) custodians, (xviii) trustees, (xix) primary dealers, (xx) broker-dealers, and (xxi) the representatives of the persons specified in subparagraphs (i) to (xx); and (xxii) any other institution in the securities industry to control and supervise their activities with a view to maintaining proper standards or conduct and acceptable practices in the securities business; (d) formulate principles for the guidance of the industry; (e) monitor the solvency of licence holders and take measures to protect the interest of customers where the solvency of a licence holder is in doubt; (f) protect the integrity of the securities market against any abuses arising from dealing in securities including insider trading; (g) adopt measures to minimize and resolve any conflict of interest that may arise for market operators; (h) review, approve and regulate takeovers, mergers, acquisitions and all forms of business combinations in accordance with any law or code of practice requiring it to do so; (i)create the necessary atmosphere for the orderly growth and development of the capital market; (j)perform the functions referred to in the Companies Act 1963 (Act 179); (k) examine and approve invitations to the public made by issuers other than the government; (l) authorise and regulate the issuing of securities in Ghana by foreign issuers; and (m) undertake activities that are necessary or expedient for giving full effect to the provisions of this Act. The Commission has a Board whose duty under section 4(4) of Act 929 is to ‘monitor and oversee the operations of the Commission and ensure the effective implementation of the object and functions of the Commission.’ In section 8 of Act 929, the Board may establish committees consisting of members or non-members of the Board or both to perform a function. Levies payable to the Commission 15. (1) There is imposed by this Act a levy on a person issued with a market operator’s licence under section 109. (2) A person who holds a market operator’s licence for a financial year shall pay the levy imposed towards the expenses of the Commission for that financial year. (3) The Commission shall in consultation with licensees calculate the levy payable under subsection (2). (4) The Commission shall provide in writing (a) the formula for calculating the levy, (b) the time and method of payment, including installment payments, (c) the payment of interest on moneys overdue, and (d)penalties for non-payment. (5) The Commission may issue directives, guidelines or circulars on the imposition of the levy payable to the Commission (a) by a buyer and a seller that carries out a transaction in securities; (b) by a collective investment scheme in respect of the net asset value of the scheme; and (c) on funds under the management of a fund manager other than funds of a collective investment scheme. (6) The Commission may exempt the payment of the levy under paragraph (c) of subsection (5) in respect of funds under a pensions scheme registered under the National Pensions Act, 2008 (Act 766). Establishment of Administrative Hearings Committee 18. (1) Without limiting section 8 there is established an Administrative Hearings Committee of the Board. (2) The Hearings Committee consists of three members of the Board elected by the members, except that the chairperson of the Board, the Director-General and the two Deputy Directors- General shall not be members. The exclusion of the chairperson is due to the fact that the decisions of the Committee are subject to the approval of the Board of the Commission. This composition is necessary to ensure neutrality and to remove any undue influence on the part of the chairperson of the Commission. (3) The members of the Committee shall elect a chairperson from among the three members. (4) The functions of the Hearings Committee are (a) to examine and determine complaints and disputes related to, in respect of, or arising out of a matter to which this Act applies; and (b) to perform a duty related to the functions specified under paragraph (a) that may be referred to it by the Commission. Submission of complaints and examination of issues 19. (1) A complaint, dispute or a violation arising under this Act shall, before any redress is sought in the courts, be submitted to the Commission for hearing and determination in accordance with this Act. (2) A person who intends to submit a complaint or matter to which subsection (1) applies shall submit it in writing to the Director-General. (3) The Director-General shall cause the matter to be investigated and unless the Director- General can settle the disputed matter or complaint, refer the matter together with the findings of the investigations to the Hearings Committee within thirty days of the receipt of the written complaint, dispute or violation; and at the same time inform the complainant or persons concerned of the submission to the Hearings Committee. (4) Subject to section 22, the Hearings Committee shall on receipt of a complaint or a matter under this section, examine and determine the complaint or matter. (5) The Hearings Committee shall not determine a complaint or matter which is the subject matter of an action before a court. Representation before the Hearings Committee 20. A person appearing before the Hearings Committee may (a) make a representation; (b) be represented by a lawyer or other expert of the person’s choice; and (c) produce the evidence which that person considers necessary for the adjudication of the complaint or matter. Proceedings of the Hearings Committee 21. (1) The Hearings Committee may exclude persons from its proceedings, other than parties to the proceedings and their lawyers or experts, where the Hearings Committee considers it necessary in the interest of public order, public morality or the protection of the private lives and interest of persons concerned in the proceedings. (2) The Hearings Committee may call witnesses and request the production of documents which it considers necessary to determine the issue before it. (3) Witnesses appearing before the Hearings Committee may be paid allowances determined by the Board in consultation with the Minister. (4) The Hearings Committee shall give a fair hearing to the persons who appear before it and shall be guided by the rules of natural justice. (5) Where a complaint is submitted to the Hearings Committee under subsection (1) of section 19, the Hearings Committee shall, within a period of sixty days from the date of receipt of the complaint or matter, examine and determine the complaint or matter unless there is a delay caused by the complainant or the representative or witness of the complainant. (6) Except as otherwise provided in this Act, the Hearings Committee shall determine the procedure for its hearings. Referral of final decisions of Hearings Committee 22. (1) The final decision of the Hearings Committee on a matter submitted to it for determination shall be referred to the Board. (2) The Board on receipt of the final decision may (a) approve of the decision; (b)remit the matter to the Hearings Committee for further consideration; or (c)modify the final decision. Appeals from decisions of the Board with reference to the Hearings Committee 23. A person dissatisfied with a decision of the Board may seek redress at the High Court. Production of books and documents Power of Commission to require production of books 24. (1) The Commission may by notice in writing, where it considers that there is sufficient cause to do so, give directives to (a) existing licensees and past licensees; (b) a member of the governing body of a securities exchange; (c) an issuer or a former issuer; (d) a person who is controlled by any other person referred to in paragraph (a), (b) or (c) orjointly controlled by two or more persons at least one of whom is a person referred to in these paragraphs; (e) a person who is or has been an officer or an employee of, or an agent, lawyer, auditor or other person acting in any capacity for or on behalf of, a person referred to in paragraph (a), (b), (c), or (d); (f) any other person who is or has been a party to a dealing in securities; or (g) any other person, to produce to the Commission or a person authorised by the Commission the books, subject to subsection (2), specified in the directive. (2) For the purposes of subsection (1), books in respect of which a request to produce may be made relate to (a) the business or affairs of an issuer, a securities exchange, a licensee or past licensee; (b) a dealing in securities; (c) a dealing in unit trusts and mutual funds; (d) advice concerning securities or the issuing or publication of a report or analysis concerning securities; (e) the character or financial position of, or any business carried on by, a person referred to in paragraph (c), (d) , (e), or (f) of subsection (1); (f) an audit of, or any report of an auditor concerning a dealing in securities or the accounts or records of a broker-dealer or of a fund manager; or (g) information relating to the business of a person or to the business administered or managed by that person for that person’s clients. (3) A directive to produce shall not be made to a person under subsection (1) (g) unless the Commission has reasonable cause to believe that the person has custody or control of books which relate to a matter specified under subsection (2). (4) Books shall not be directed to be produced by a person under subsection (1) (g) at a time or place that may unduly interfere with the proper conduct of the normal daily business of that person. (5) The Commission may in writing authorise a person possessed of a qualification that the Commission considers adequate to exercise the power to request for the production of books conferred on the Commission under this section. (6) A reference in subsection (1) to dealing in securities or to a business carried on by a person includes a reference to dealing in securities by a person as a trustee. (7) An authorisation from the Commission to a person under subsection (5) may be of general application or may be limited to making requirements of a specific nature. (8) Where the Commission, or a person authorised by the Commission, requires the production of books under this section and a person has a lien on the books, the production of the books shall not prejudice the lien. (9) An authorised person shall where required to do so, produce evidence of authorisation. (10) An action shall not lie against a person for complying with a directive or requirement made or given under this section to produce books. (11) A power conferred by this section to make a requirement of a person extends where that person is a body corporate, to making that requirement of any person who is or has been an officer of the body corporate whether that body corporate is in the course of being wound up or has been dissolved. (12) The Commission may publish and disseminate any information obtained under this section. Action on production or non-production of books 25. (1) Where the required books are produced under section 24, the person to whom they are produced (a) may take possession of them, make copies of them, or take extracts from them; (b)`may require the other person or any person who was party to the compilation of the books to make a statement providing an explanation of any of the books; (c) may retain possession of the books for as long as the Commission considers necessary to enable the books to be inspected and copies of or extracts from the books to be made or taken by or on behalf of the Commission; and (d) shall permit the person who produced them, upon giving a reasonable notice and specification of the books, to have access to them. (2) Where the books are not produced, the Commission or the authorised person may require the person who should have produced the books (a) to state, to the best of the knowledge and belief of that person, where the books may be found; (b) to identify the person who, to the best of the knowledge and belief of that person, last had custody of the books and where the identified person may be found; or (c) to state the reasons why the books cannot be produced. Searches 26. (1) A person authorized by the Commission may (a) enter any premises or property which the Commission has reason to believe is occupied or used by a person in contravention of this Act or any regulations made under this Act; (b) search for a book, record, statement, document or any other item; (c) seize or make a copy of a book, record, statement, document or any other item (d) question a person, auditor, director, member or a partner of a person conducting business in the premises (e)direct that the premises or any part of it or anything on it be secured and left undisturbed for as long as necessary; and (f) close down the business as the Commission considers necessary. (2) For the purposes of this subsection (1), the Commission may request the assistance of the Police for a specific assignment. (3) In this section “premises” includes a structure, building, place, aircraft, vehicle or vessel. Non-disclosure of information from books 27. (1) An information obtained from a book that has been produced to a person authorised by the Commission under section 24, shall not be published or disclosed by that authorised person without the prior consent in writing of the person who has custody or control of the books, except to the Commission and its officers and employees, unless the publication or disclosure is required (a) with a view to the institution of, or for the purposes of criminal proceedings; or (b) for the purposes of proceedings under section 24, 25 or 26. (2) A person who publishes or discloses information in contravention of subsection (1) commits an offence and is liable on summary conviction to a fine of not less than one hundred and fifty penalty units and not more than five hundred penalty units or to a term of imprisonment of not less than one year and not more than three yearsor to both. Incriminating statement 28. (1) It is not an excuse for a person to fail to provide a statement explaining a matter relating to the compilation of books or a matter requested of that person under section 24 on the grounds that the statement might tend to incriminate the person. (2) Where the person claims before making a statement required of the person that the statement might tend to incriminate the person, the statement provided in answer to the request shall not be admissible in evidence against the person in any criminal proceedings other than proceedings under section 24, 25 or 26. (3) Subject to subsection (2), a statement made by a person in compliance with a requirement under section 24 may be used in evidence in criminal or civil proceedings against the person. Penalties 29. A person who (a) without reasonable excuse, refuses or fails to comply with a directive given under section 24, 25 or 26, (b) furnishes information or makes a statement that is false or misleading in a material particular for the purposes of section 24, 25 or 26, or (c) without reasonable excuse, obstructs or hinders the Commission or a person in the exercise of a power under section 24, 25 or 26 commits an offence and is liable on summary conviction to a fine of not less than one hundred and fifty penalty units and not more than five hundred penalty units or to a term of imprisonment of not less than one year and not more than three years or to both. Period for keeping records and books 30. (1) Despite a provision in any other enactment, a book or record required to be kept under this Act shall be kept for a period of at least seven years after the completion of the transaction to which it relates. (2) A person who contravenes subsection (1) is liable to pay to the Commission an administrative penalty of one thousand penalty units. Admission in evidence of copies or extracts of books 31. (1) Subject to this section and section 27, a copy of or extract from a book relating to a matter specified in subsection (1) or (2) of section 24 is admissible in evidence as if it were the original book. (2) A copy of or extract from a book is not admissible in evidence under subsection (1) unless it is proved that the copy or extract is a true copy of the book or of the relevant part of the book. (3) For the purposes of subsection (2), evidence that a copy of or extract from a book is a true copy of the book or of a part of the book may be given by a person who has compared the copy or extract with the book or the relevant part of the book and may be given orally or by an affidavit or statutory declaration. Savings for lawyers 32. Section 24, 25 or 26 shall not compel a legal practitioner to produce a document that contains privileged communication made by or to that legal practitioner in a professional capacity or authorise the taking of possession of that document which is in the possession of the legal practitioner but if the legal practitioner refuses to produce the document, the legal practitioner shall nevertheless be obliged to give the name and address of the person to whom or by or on whose behalf the communication was made. Disclosure of acquisition or disposal of securities to the Commission 33. (1) The Commission may, where it considers it necessary for the protection of investors, require a broker-dealer to disclose to the Commission, in relation to an acquisition or a disposal of securities, the name of the person from or through whom or on whose behalf the securities were acquired or disposed of and the nature of the instructions given to the broker-dealer in respect of the acquisition or disposal. A broker-dealer means a person who carries on a business of dealing in securities as principal or as an agent, whether that person carries on any other business approved by the Commission or does not carry out any additional business. Securities under Act 929 include: - shares or debentures within the meaning of the Companies Act, 1963 (Act 179) now Companies Act, 2019 (Act 992); - loan instruments of a company; - bonds or other loan instruments of the Government or the Government of any other country; - bonds or other loan instruments of a corporation established under an enactment; - rights or interest whether described as units or otherwise under any unit trust; - warehouse receipts; - a right or option in respect of any shares, debentures, bonds or notes; - commodities futures, contracts, options or other derivatives; - derivatives as defined under this Act; and - any other instruments as the Minister my by notice in the Gazette prescribe upon the recommendation of the Commission. (2) The Commission may require a person who has acquired, held or disposed of securities to disclose to the Commission (a) whether the person acquired, held or disposed of securities as a trustee for or on behalf of another person or as a nominee; (b) the name of that person; and (c) the nature of the instruction given as trustee or nominee in respect of the acquisition, holding or disposal. (3) The Commission may require a stock exchange to disclose to the Commission, in relation to an acquisition or disposal of securities on that stock exchange, the names of the members of that stock exchange who acted in the acquisition or disposal. Suspicion regarding breach of specified provisions 34. (1) Where the Commission considers (a) that it may be necessary to prohibit trading in securities of, or made available by a body corporate pursuant to section 49; or (b) that a person may have contravened the provisions of section 147 to 153 in relation to securities of, or made available by a body corporate; or (c) that a person may have contravened provisions of Chapter Two of the Companies Act, 1963 (Act 179) in relation to securities in a body corporate it may require a director, secretary or executive officer of the body corporate referred to in paragraph (a), (b) or (c) to disclose to the Commission an information of which the director, secretary or executive officer is aware, being information that might have affected a dealing that has taken place,or that might affect a future dealing in securities of, or made available by, the bodycorporate. (2) For the purposes of paragraph (a), (b) or (c) of subsection (1) the Commission may require a person whom the Commission believes on reasonable grounds to be capable of giving information concerning (a) a dealing in relevant securities; (b) an advice given by a broker-dealer, a fund manager, or an investment adviser or, a representative of a broker-dealer, of a fund manager, or of an investment adviser concerning securities; (c) the issuing or publication of a report or analysis by a broker-dealer, a fund manager, an investment adviser, a representative of a broker-dealer, of a fund manager, or of an investment adviser concerning relevant securities; (d) the financial position of a business carried on by a person who is or has been alone or together with other persons, a broker-dealer, a fund manager or an investment adviser and has dealt in, or given advice concerning relevant securities; (e) the financial position of any business carried on by a nominee controlled by a person referred to in paragraph (c) or jointly controlled by two or more persons at least one of whom is a person referred to in that paragraph; or (f) an audit of, or any report of an auditor concerning any accounts or records of a broker- dealer, fund manager or of an investment adviser, being accounts or records relating to dealings in relevant securities; to disclose to the Commission the information that the person has in relation to any of the matters specified in this subsection. (3) For the purposes of subsection (2) “relevant securities” means securities of, or made available by, the body corporate referred to in subsection (1). (4) A person is not excused from disclosing information to the Commission pursuant to a requirement made of that person under subsections (1) and (2) on the grounds that the disclosure of the information might tend to incriminate that person. (5) Where a person claims, before making an oral statement disclosing information which that person is required to disclose under subsection (1) or (2)), that the statement might tend to incriminate the person, that statement provided in answer to the request is not admissible in evidence against the person in criminal proceedings other than proceedings under this section. (6) A person who or stock exchange which, without reasonable excuse, refuses or fails to comply with a requirement of the Commission under subsection (1), (2), or (3) of section 33 or subsections (1) or (2) of this section commits an offence and is liable on summary conviction to a fine of not less than one hundred and fifty penalty units and not more than five hundred penalty units or to a term of imprisonment of not less than one year and not more than three years or to both. (7) A person who, for the purposes of subsections (1), (2), or (3) of section 33 or subsections (1) or (2) of this section, discloses information, or makes a statement, that is false or misleading in a material particular commits an offence and is liable on summary conviction to a fine of not less than one hundred and fifty penalty units and not more than five hundred penalty units or to a term of imprisonment of not less than one year and not more than three years or to both. (8) It is a defense to a prosecution for an offence under subsection (7) for the defendant to prove belief on reasonable grounds that the information or statement was true and was not misleading. (9) In this section a reference to disclosing information includes, in relation to information that is contained in a document, the furnishing of the document. (10) A person shall not be subject to a liability for having complied with a requirement made or purported to have been made under this section. Investigation and inspection Investigation of certain matters Section 35 has been amended under theSecurities Industry (Amendment) Act, 2021 (Act 1062) as follows:35. (1) Where the Commission (a) has reason to suspect that a person, has (i) committed an offence under this Act or the Companies Act, 2019 (Act 929), or (ii) beenfound guilty of fraud or dishonesty in relation to dealing in securities and the business of an issuer; or (b) is assisting other domestic and foreign regulatory authorities in their investigation, the Commission may conduct an investigation that the Commission considers appropriate in pursuance of this Act. Inspection by Commission 36. (1) The Commission may, inspect the books, accounts, documents and transactions of (a)any licensee or former licensee; or (b)any issuer or former issuer. (2) The Commission may engage the services of a person possessed of the qualification that the Commission considers adequate to exercise the power of the Commission under subsection (1). (3) For the purposes of an inspection under this section, persons referred to in subsection (1), shall (a) afford the Commission access to; (b) produce books, accounts and documents; and (c) give the information and facilities that may be required to conduct the inspection. (4) A person engaged by the Commission may copy or take possession of the books, accounts and other documents of a licensee, former licensee, issuer or former issuer. (5) A licensee, former licensee, issuer or former issuer that fails, without reasonable excuse, to produce a book, account, document, information or facilities in accordance with subsection (3) is liable to pay to the Commission a fine of one thousand penalty units. Orders of the Court and Statements of Principle Power to request bank account records Section 37as amended Act 1062 with the insertion of 37A. (1) The Commission may, in writing, request the Bank of Ghana to provide banking records or information held by a bank or specialised deposit-taking institution on any transaction concerning a person under investigation where the Commission is of the opinion that the bank or specialised deposit-taking institution is a proper person to assist with the investigation. (2) When the Bank of Ghana provides the records or information requested, the Commission may request an authorized person of the bank or institution to provide an explanation on the contents of the records or information, where necessary. (3) When considering an application from the Commission pursuant to a request for assistance from a foreign securities regulatory authority, the Judge may only refuse the request if: (a) the request is not made in accordance with the terms of the international agreement or memorandum of understanding between the Commission and the requesting securities regulatory authority; or (b) criminal proceedings have already been instituted or final punitive sanctions issued in the country, in respect of the same facts and matters and against the same person as is the subject of the request for assistance. (4) An application under subsection (1) made by the Commission and an appeal made by the Commission or the respondent institution shall be heard in camera. (5) A provision of this Act shall not be construed to confer on the respondent institution in its capacity as appellant, a right to access the information contained within a request for international assistance. 37A Request for assistancefrom a foreign securities regulatory authority (1) The Commission may, instead of relying on subsection (1) of section 37, apply to the court pursuant to a request for assistancefrom a foreign securities regulatory authority. (2) When considering an application from the Commission under subsection (1), the Judge may refuse the request only if (a) the request is not made in accordance with the terms of the international agreement or memorandum of understanding between the Commission and the requesting foreign securities regulatory authority; or (b) criminal proceedings have been instituted or finalpunitive sanctions issued in the country, in respect of the same facts and matters and against the same person as is the subject of the request for assistance. (3) An application under subsection (1) made by the Commission and an appeal by the Commission of the respondent institution shall be herd in camera. (4) A provision of this Act shall not be construed to confer on the respondent in the capacity as appellant, a right to access information contained within a request for assistance. Power of court to make certain orders 38. (1) Where (a)on the application of the Commission, it appears to a court that a person has committed an offence under this Act, or has contravened the conditions or restrictions of a licence or the rules or listing rules of a stock exchange or is about to do an act with respect to dealing in securities that, if done, would be an offence or a contravention; or (b)on the application of a securities exchange, it appears to the court that a person has contravened the rules of that securities exchange, the court may, without prejudice to any other orders make an order as specified in subsection (2). (2) For the purposes of subsection (1) the Court may make an order (a)in the case of persistent or continuing breaches of this Act, or of the conditions or restriction of a licence, or of the rules of a securities exchange an order restraining the person from carrying on a business for which the person has been licensed, or from posing as carrying on that business or so acting; (b)restraining a person from acquiring, disposing of or otherwise dealing with the securities that are specified in the order; (c)appointing a receiver of the property of a broker-dealer or of property that is held by a broker-dealer for or on behalf of another person whether on trust or otherwise; (d)declaring a contract relating to securities to be void or voidable; (e)for the purposes of securing compliance with any other order under subsection (1), directing a person to do or refrain from doing a specified act; or (f)ancillary to any of the orders specified in paragraph (a) to (e) considered necessary. (3) The Court may, before making an order under subsection (1) direct that notice of the application be given to a person who the court considers fit or direct that notice of the application be published in the manner that the court considers fit, or both. (4) A person appointed by order of the Court under subsection (1) as a receiver of the property of a broker-dealer may (a)require the broker-dealer to deliver to the receiver property of which the latter has been appointed receiver or to give to the receiver the information concerning that property that may reasonably be required; (b)acquire and take possession of property of which that person has been appointed receiver; (c)deal with property that person has acquired or taken possession of in a manner in which the broker-dealer might lawfully have dealt with the property; and (d)exercise any other powers in respect of the property specified in the order. (5) In subsections (1), (2) and (4), “property” in relation to a broker-dealer, includes moneys, securities and documents of title to securities or other property entrusted to or received on behalf of any other person by the broker-dealer or any other person in the course of or in connection with a business of dealing in securities carried on by the broker-dealer. (6) A person who, without reasonable excuse, contravenes or fails to comply with (a)an order under subsection (1), or (b)a requirement of a receiver appointed by order of the court under subsection (1), commits an offence and is liable on summary conviction to a fine of not less than one hundred and fifty penalty units and not more than five hundred penalty units or to a term of imprisonment of not less than one year and not more than three years or to both. (7) Subsection (6) does not affect the powers of the Court to punish for contempt of court. (8) The Court may on an application by the Commission compel a person to give a statement or testimony under oath in investigations and other matters relating to securities. (9) The Court may rescind, vary or discharge an order made by it under this section or suspend the operation of an order. Statements of principle 39. (1) The Commission may issue statements of principle with respect to the conduct and financial standing expected of persons licensed under this Act. (2) The conduct expected may include compliance with (a)a code or standard issued with the permission of the Commission by a person or body; or (b)a code or standard acceptable to the Commission. (3) Failure to comply with a statement of principle under this section is a ground for the taking of disciplinary action or the exercise of powers of intervention, but does not constitute an offence or give rise to a right of action by investors or other persons affected or affect the validity of any transaction. (4) The exercise of disciplinary action under subsection (3) includes the exercise of powerunder section 118 or 122 and those sections shall be construed accordingly. (5) Where a statement of principle relates to compliance with a code or standard issued by a person or body other than the Commission, the statement of principle may provide (a)that failure to comply with the code or standard shall be a ground for taking disciplinary action or exercising a power under section 118 or 122 only in the cases and to the extent that may be specified; and (b) that an action shall not be taken, or power exercised, except at the request of the person or authority by whom the code or standard in question was issued. (6) The Commission shall exercise its power in the manner that appears to it appropriate to secure compliance with statements of principle under this section. Exchange of Information and Co-operation This section provides for the exchange of information between the Commission and a foreign regulatory authority with capacity to protect the confidentiality of information. The foreign regulatory authority must have the responsibility to regulate financial institutions and the conduct of financial markets and the provision of financial services. The Commission may also a foreign regulatory authority. Exchange of information and mutual assistance 40. (1) Where the Commission is satisfied that a foreign regulatory authority has the capacity to protect the confidentiality of information, the Commission may enter into an agreement or arrangement for the exchange of that information with that foreign regulatory authority with responsibility to regulate financial institutions and the conduct of financial markets and the provision of financial services. (2) In addition to the exchange of information, an agreement or arrangement between the Commission and a foreign regulatory authority may require that the Commission provide mutual assistance to the foreign regulatory authority that may be required for the purposes of its regulatory functions. Cooperation in securities regulation 41. (1) On request made by a foreign regulatory authority, the Commission may provide the foreign regulatory authority with assistance in accordance with section 40 if that foreign regulatory authority states that it is conducting an investigation to determine whether a person has violated, is violating, or is about to violate any law or rule relating to securities matters, irrespective of where the securities are issued or listed. (2) Assistance may be provided without regard as to whether facts stated in the request may constitute a violation of the domestic laws of this country. (3) In deciding whether to provide assistance, the Commission shall consider whether (a) the foreign regulatory authority has agreed to provide reciprocal assistance in securities matters to the Commission; and (b) compliance with the request is likely to adversely affect the public interest of the country. Establishment of securities exchanges 42. A person shall not establish or assist in establishing or maintaining or pose as providing or maintaining a securities exchange unless that person is authorised under this Act. A securities exchange is defined under this Act as ‘an exchange or approved trading facility such as a stock exchange, commodity exchange, metal exchange, petroleum exchange, options exchange, futures exchange, over the counter market and any other derivatives exchanges that use instruments for trading.’ An exchange means ‘a facility for the trading of securities, commodities or derivatives’. Power of Commission to approve a securities exchange 43. (1) An application for approval as a securities exchange may be made to the Commission in the prescribed form. (2) An approval shall not be granted to a person to operate as a securities exchange other than a body corporate. (3) The Commission may approve a body corporate as a securities exchange if the Commission is satisfied (a) that at least three members of the body corporate will carry on the business of dealing in securities independently of and in competition with each other; (b) that the rules of the body corporate will make satisfactory provision (i) for the exclusion from membership of persons who are not of good character and high business integrity; (ii) for the expulsion, suspension or disciplining of members for conduct inconsistent with just and equitable principles in the transaction of business or for a contravention of or failure to comply with the rules of the securities exchange or a provision of this Act; (iii) for the making of a report to the Commission by the body corporate where it rejects an application for membership or where it suspends or expels a member; (iv) for the terms and conditions of the chief executive officer of the body corporate; (v) with respect to the conditions under which securities may be listed for trading in the market proposed to be conducted by the body corporate; (vi) with respect to the conditions governing dealing in securities by members; (vii) with respect to the class of securities that may be dealt in by members; (viii) with respect to a fair representation of persons in the selection of members of its governing body and administration of its affairs and provide that one or more members is or are representative of listed companies, investors, and the professions relevant to securities trading and not be associated with a stock broker, or dealer; and (ix) generally, for the carrying on of the business of the securities exchange with due regard to the interest of the public; and (c) that the interests of the public will be served by the granting of the approval. (4) The grant by the Commission of approval as a securities exchange shall be within three months from the date of application for the approval as a securities exchange. (5) This section does not preclude the Commission from appointing not more than two persons who are knowledgeable in the securities industry and who are not associated with a broker- dealer, to be on the governing body of a securities exchange to represent the public interest. (6) A person appointed under subsection (5) (a) shall have the same rights, powers, duties and obligations, liberties and privileges as any other member of the governing body of the securities exchange; and (b) shall hold office for a period specified by the Commission which may at any time revoke the appointment. (7) The Commission shall publish in the Gazette, notice of approval for the establishment of a securities exchange and every cancellation or suspension of an approval. (8) Where the Commission is of the opinion that an approval granted to a securities exchange under subsection (3) should be withdrawn in the public interest, it may serve on the governing body of that securities exchange a written notice that it is considering the withdrawal of the approval for the reasons stated in the notice and after giving an opportunity to the governing body to be heard on the matter, it may cancel the approval granted under subsection (3). (9) A cancellation under subsection (8) shall not take effect until after the expiration of three months from the date on which the cancellation is published in the Gazette. (10) With effect from the date on which a notice of cancellation of approval under subsection (9) is published in the Gazette, the governing body shall ensure that trading on the securities exchange ceases. (11) During the three months between the publication and the effective date of the cancellation, the governing body shall take steps to wind up the business of the securities exchange. Disciplinary power of the Commission 46. (1) The Commission may review a disciplinary action taken by a securities exchange under subsection (2) of section 45 and may affirm or set aside a decision of an exchange after giving the member and the exchange an opportunity to be heard. (2) Subsection (1) does not preclude the Commission, in a case where a securities exchange fails to act against a member of the exchange, from suspending, expelling or otherwise disciplining a member of the exchange but before doing so the Commission shall give the member and the exchange an opportunity to be heard. (3) A person who is aggrieved by the decision of the Commission under this section may, within one month after notification of the decision, appeal to the High Court. Observance or enforcement of rules of a securities exchange 47. (1) Where a person who is under an obligation to comply with, observe, enforce or give effect to the rules or regulations of a securities exchange fails in performing the duty, the Court, on the application of the Commission, that securities exchange or a person aggrieved by the failure, and after giving to the person against whom the order is sought an opportunity of being heard, may make an order giving directives to that person to perform the duty. (2) For the purposes of subsection (1), (a) a body corporate which is admitted to any official list of a securities exchange and has not been removed from that official list; or (b) a person associated with a body corporate which is admitted to an official list of a securities exchange and has not been removed from that official list is under an obligation to comply with, observe and give effect to the directives of that securities exchange to the extent to which those rules apply in relation to it or that person. Directives to a securities exchange 48. (1) The Commission may, where it appears to be in the public interest, issue a directive to a securities exchange (a) with respect to trading on or through the facilities of that securities exchange or with respect to a security traded on that securities exchange; (b) with respect to the manner in which a securities exchange carries on its business, including the manner of reporting off-market purchases; or (c) with respect to any other matters which the Commission considers necessary for the effective administration of this Act and the securities exchange shall comply with the directives. (2) A securities exchange which, without reasonable excuse, fails or refuses to comply with a directive given under subsection (1), is liable to pay to the Commission an administrative penalty of five hundred penalty units and to a further administrative penalty of fifty penalty units for each day that the default continues. (3) Where the Commission is satisfied that an executive officer of a securities exchange (a) has wilfully contravened a provision of this Act or any Regulations made under it or the rules of a securities exchange; or (b) has without reasonable justification or excuse, failed to enforce compliance with that provision by a member of the securities exchange or a person associated with that member; the Commission may, in the public interest or for the protection of the investors, and after giving the executive officer an opportunity of being heard, direct by notice in writing the securities exchange to remove from office or employment the executive officer, and the securities exchange shall comply with the directive; or the Commission may instead censure the executive officer. Prohibition of trading in particular securities 49. (1) Without limiting section 48, where the Commissionis of the opinion that it is necessary to prohibit trading in particular securities of, or made available by, a body corporate on a securities exchangein order to protect the interest of the public, the Board may give notice in writing to the exchange stating that it has formed that opinion and setting out its reasons. (2) If, after the receipt of the notice, the exchange does not take action to prevent trading in the securities to which the notice relates, and the Commission is still of the opinion that it is necessary to prohibit trading in those securities on that exchange, the Commission may, by notice in writing to that exchange, prohibit trading in those securities on that exchange during the period, not more than fourteen days, that may be specified in the notice. (3) Where the Commission gives a notice to a securities exchange under subsection (2), the Commission shall (a)at the same time send a copy of the notice to the body corporate together with a statement setting out the reasons for the giving of the notice; and (b) as soon as practicable furnish to the Minister a written report setting out the reasons for giving the notice and send a copy of the report to the securities exchange. (4) A securities exchange which permits trading in securities on the exchange in contravention of a notice under subsection (2)is liable to pay to the Commission an administrative penalty of five hundred penalty units and to a further administrative penalty of twenty-five penalty units for each day that the defaults continues. Self-regulatory organisations Recognition of a self-regulatory organisation A self-regulatory organisation in this Act means ‘a registered securities exchange or an organisation of intermediaries which represents a particular segment of the securities market and is recognized by the Commission under this Act.’ 50. (1) The Commission may, subject to the terms and conditions that the Commission considers fit, accord recognition to a company or organisation as a self-regulatory organisation in relation to a specified segment of the securities industry, if the Commission is satisfied that that company or organisation (a) has a constitution and internal rules and policies which are consistent with this Act and any enactment applicable to the relevant sector or industry; (b) has the capacity and the financial and administrative resources required to carry out its functions to perform as a self-regulatory organisation including dealing with breaches of the law or of applicable standards or guidelines; (c) shall not discriminate against a person in offering access to its services or in carrying out its functions as a self-regulatory organisation; (d) is a fit and proper person; (e) is managed or controlled by competent officers; and (f) satisfies other criteria specified in the rules of the Commission. (2) The Commission may, by written arrangement, delegate a power or function of the Commission to a self-regulatory organisation. (3) An arrangement under subsection (2), shall provide for (a) a power or function delegated to the self-regulatory organisation by the Commission; (b) the terms and conditions by which the power or function has been delegated and may be exercised by the self-regulatory organisation; (c) the person authorised to exercise the delegation on behalf of the self-regulatory organisation; and (d) the submission to the Commission of periodical reports in respect of the exercise of a delegated power or function by the self-regulatory organisation. Rules of a self-regulatory organisation 51. (1) A self-regulatory organisation may make rules, not inconsistent with this Act, the Regulations or rules of the Commission or any applicable enactment, with respect to the matters for which it has functions, including the functions delegated to it by the Commission. (2) Rules made by a self-regulatory organisation under subsection (1), and amendments to the rules, shall be of no effect unless approved by the Commission. (3) The Commission shall be deemed to have granted approval for the purposes of subsection (1) where it has not objected to the rules within one month after the rules have been submitted to the Commission for approval. (4) The rules of a self-regulatory organisation may make provision with respect to shareholding and voting rights in a self-regulatory organisation, interests of the members of a self-regulatory organisation, the consumers, investors and the users of their services. Restriction on decision-making 52. A self-regulatory organisation shall not make a decision under its rules that is likely to adversely affect the rights of a person unless (a) that self-regulatory organisation has given that person an opportunity to make representations about the matter; or (b) the self-regulatory organisation considers, on reasonable grounds, that any delay in making the decision will adversely affect a class of consumers, investors or members of the relevant sector or industry. Obligations of officers of a self-regulatory organisation 53. A self-regulatory organisation shall notify the Commission of the appointment of an officer in the manner specified in the rules of the Commission, at least fourteen days before that person is appointed as an officer of the self-regulatory organisation. Directives by Commission to self-regulatory organisation 54. (1) The Commission may, after giving a self-regulatory organisation reasonable opportunity to make representations about a matter, give a written directive to (a) suspend for the period specified in the directive, a specified provision of its constitution or its rules; (b) require, subject to the Companies Act, 1963 (Act 179) (now Companies Act, 2019) or any other enactment, the amendment of its constitution as specified in the directive to bring it in conformity with this Act, the Regulations or any rules of the Commission; (c) require the amendment of its rules as specified in the directive so as to bring them in conformity with the relevant Act; or (d) for the implementation or enforcement of its constitution or its rules. (2) Where the Commission has reasonable grounds to believe that (a) an officer of a self-regulatory organisation is not a fit and proper person; or (b) a particular person’s appointment or continuing in office as an officer of a self-regulatory organisation is likely to be detrimental to the self-regulatory organisation or to adversely affect the interest of investors and consumers of financial services or of members of the relevant sector or industry, the Commission may, after giving the officer and the self-regulatory organisation reasonable opportunity to make representations, direct the self-regulatory organisation not to appoint the officer, or to remove the officer from office. (3) Subsections (1) and (2) do not limit the directives that the Commission may give to a self- regulatory organisation. The Act did not describe who a ‘fit and proper person’ is. There are some enactments which describe who a fit and proper person is, which application can be used as guidance to make such a determination. In section 156 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), a fit and proper person means ‘a person who is suitable to hold the particular position which that person holds or is to hold as regards (a) the probity, competence and soundness of judgment of the person for purposes of fulfilling the responsibilities of that person; (b) the diligence with which that person fulfills or is likely to fulfill those responsibilities; (c) whether the interest of depositors or potential depositors of the entity are threatened, or likely to be, in anyway threatened by the person holding that position; and (d) that the integrity of the person is established and the qualifications and experience of the person are appropriate for the position in the light of the business plan and activities of the entity which the person serves, or is likely to serve, taking into account the size, nature and complexity of the institution.’ Termination of arrangements and revocation of recognition 55. (1) The Commission may revoke a recognition where (a) the self-regulatory organisation has failed to commence operations within three months after recognition; (b) the Commission is not satisfied that the self-regulatory organisation is properly performing or is able to perform the functions or powers delegated to it, or its other functions; (c) the Commission determines that the self-regulatory organisation has committed a material breach of this Act or other applicable enactment; (d) it appears to the Commission that the self-regulatory organisation is involved in a financial crime; or (e) the self-regulatory organisation fails to comply with a directive of the Commission. (2) The Commission shall not revoke a recognition unless the Commission has (a) notified the self-regulatory organisation of its intention and the reasons for the Commission’s action, and (b) given the self-regulatory organisation a reasonable opportunity to make representations to the Commission. (3) The Commission shall publish the notice of the revocation under subsection (1) in the Gazette. Amendments to the constitution of a self-regulatory organisation 56. Despite a provision in the Companies Act, 1963 (Act 179), an amendment to the constitution of a self-regulatory organisation is of no effect unless it is approved by the Commission. Protection of self-regulatory organisation 57. A self-regulatory organisation, an officer or employee of a self-regulatory organisation or a member of a committee of a self-regulatory organisation is not liable for any loss sustained or damage caused to a person as a result of anything done or omitted by that person in the performance of functions and the discharge of duties in connection with the functions of the self-regulatory organisation, including those delegated to it by the Commission. Unit Trust and Mutual Fund Under section 216 of Act 929, a unit trust includes (a) a collective investment scheme established under a trust deed; and (b) a unit trust scheme. A unit trust scheme means ‘an arrangement by which securities or any other charge other than a charge to secure the debentures of one body corporate, are vested in trustees and the beneficial interest in it is divided into units, sub-units or other interests by whatever name called with a view to an invitation being made to the public to acquire the units or any of them’. A mutual fund on the other hand means ‘a public or external company incorporated to operate as a collective investment scheme’. A collective investment scheme means ‘an arrangement by which (a) contributions to a scheme by persons taking part in that scheme are pooled; (b) the contributions to the scheme are invested in eligible assets by the manager of the scheme on behalf of the contributors; (c) persons making contributions to a scheme become shareholders or unit holders in that scheme but do not have day to day control over the management of the assets;