The Companies Act (the “Act”) has recently undergone significant amendments, which took effect on 24 January 2025 (“Commencement Date”). These changes aim to enhance corporate governance, transparency, and regulatory compliance.
Below, we outline the key amendments:
Mandatory Company Constitutions
The Act now requires all companies to have a constitution in a prescribed form. Previously, companies could operate without a constitution and would be governed solely by the Companies Act. The amendment suggests that companies without a constitution must adopt the prescribed version set out in the Schedule to the Act. Companies have been given 12 (Twelve) months from the Commencement Date, to comply with this requirement.
Private Companies to File Financial Statements
Private companies are now required to file financial statements with the Registrar of Companies.
Exempt private companies (those with (i) total assets of less than P5,000,000 and (ii) annual turnover of less than P10,000,000 in the preceding financial year) must file financial statements in a prescribed form.
Non-exempt private companies (those with (i) total assets exceeding P5,000,000 and (ii) annual turnover exceeding P10,000,000, in the preceding year) must file financial statements, any group financial statements (in the form prescribed for public companies under the Act), and an auditor’s report.
Previously, this requirement only applied to public companies, companies in which a public company holds more than 25% of the share capital, or companies required by law to submit financial statements to the Registrar.
Licensing of Company Secretaries
Company secretaries must now be licensed by the Registrar of Companies (in a manner to be prescribed) before being appointed. Previously, a company secretary only needed to meet the qualification requirements set out in the Act and consent to the appointment. Companies have 24 (Twenty-Four) months from the Commencement Date, to comply with this requirement.
New Provisions Relating to Nominee Directors and Shareholders
The amendment introduces new definitions for the terms “Nominee” and “Nominator”:
A nominee is defined as an individual or legal entity instructed by another to act on their behalf in relation to a company.
A nominator is defined as an individual, group, or legal entity issuing instructions (directly or indirectly) to a nominee to act as a director or shareholder. This includes shadow directors and silent partners.
Nominee shareholders and directors must disclose their nominee status and the identity of their nominator to the Registrar, which will be recorded in the register. Additionally, nominees must disclose their status to any competent authority upon request, and any changes to this information must be reported to the Registrar within 10 (ten) days.
Registrar Empowered to Exchange Company Information
The Registrar of Companies is now authorized to exchange company information including basic details, beneficial ownership records, and nominee-nominator information, with foreign corporate registries or competent authorities.
Maintenance of Beneficial Ownership Records
All companies must now maintain an up-to-date record of beneficial ownership information, including details of any shareholder companies registered outside Botswana. Companies must update this record and notify the Registrar within 10 (Ten) days of any changes. Failure to comply is an offence punishable under the Act.
Trading After Removal from the Company Register
The amendment makes it an offence for a company that has been removed from the register to continue trading.
Other Key Changes
The threshold for substantial shareholders under Section 329 of the Act has increased from 5% to 10%.
Companies that have been removed from the register for more than five years may not be restored.
Companies removed from the register for failing to pay annual returns may be restored within seven days of payment.
Conclusion
These amendments are designed to strengthen Botswana’s corporate regulatory framework and promote greater transparency and compliance among companies in Botswana. However, there will be no doubt that the amendment will increase the administrative burden associated wtih regulating companies in Botswana.
For more information on these changes and general company law in Botswana, please contact:
Bigamy is one of those crimes we think doesn’t happen anymore, like challenging your rival to a duel or cheque fraud. But it appears that it still has a place in modern society.
Bigamy is the crime of going through a marriage ceremony with a second person while still being in a marriage that has not been dissolved by death, divorce, or annulment. It is provided for in our Penal Code, along with marriage with dishonest or fraudulent intent, which also carries a 5-year sentence. Additionally, signing a false marriage certificate can result in a 7-year sentence.
The effect of bigamy is that the second “marriage” is void.
As with all crimes, there must be the appropriate mens rea or criminal intent. The mens rea is undoubtedly present when the bigamist knows that he or she is still married, as is most often the case—separation from your spouse is not enough to allow a second marriage.
The Indian Court dealt with a landmark case involving a woman married to a man who converted to another religion. He had been married to his wife for a long period, and they had children from their marriage. However, he entered into a second marriage. The Court ruled that the husband had converted to avoid prosecution under bigamy and had no faith in his new religion. The second “marriage” was found to be fraudulent, and the first marriage could not be dissolved simply because the husband converted to a different religion.
Bigamy can, and should be, dealt with by criminal law, but there are also remedies in civil law.
The Natal High Court found that where a man purported to enter into a second civil marriage while his first marriage was still valid, the second marriage was bigamous and unlawful. In that case, the second wife was unaware of the first marriage and had a claim for damages against the husband. However, she had no claim for spousal support.
A duped second “wife” may apply for the marriage to be declared null and void and may claim damages for impairment of dignity, insult, and degradation, as may the wronged first wife.
However, if you know a person to be already married and receive a proposal of marriage from them, don’t expect to be able to make a claim for breach of promise to marry!
In our own courts, the reported case of Ntshekang v Pule dealt with the position of the law in regard to customary law. It was found that “A party married according to civil rights commits bigamy if he or she marries again before divorcing the spouse in the first marriage. Similarly, a party married according to customary law commits bigamy if he or she contracts a civil rights marriage with a third party. The only time a party married according to customary law may contract a civil rights marriage is if he or she marries the spouse already married to him or her according to customary law before a second customary marriage is contracted by the husband with a third party.”
At Armstrongs, we have very recently dealt with two cases of bigamy—both instances committed by husbands. In the first, the husband from Botswana was married under civil law. The marriage turned sour, but instead of seeking a divorce, he simply married his new paramour in a neighboring country, swearing on oath that there was no impediment to the second marriage. Because the offense was not committed in Botswana, our neighbors’ authorities are dealing with it.
In the second case, the husband had been married for many years following a civil ceremony in the United Kingdom and is still married. He and his wife have two adult children. The wife quite by chance discovered a marriage certificate from a marriage officer in Botswana and a video of the wedding. The husband is shown in the video swearing that he had never been married before and that there was no impediment to his marriage to his very young bride, whom he apparently met on a dating site.
We obtained an order ring-fencing the husband’s considerable assets in Botswana pending the wife’s divorce action in the United Kingdom and her claim for her half-share of the assets.
The lessons to be learned—unless you want five years in prison and two mothers-in-law—dissolve your first marriage first, and be careful of whom you meet on a dating site.
Statutory management is a regulatory intervention mechanism used by the Non-Bank Financial Institutions Regulatory Authority (the Regulator) in the financial services sector. This regime is particularly relevant for non-bank financial institutions (NBFIs) that are in distress or facing significant financial instability.
Under this regime, a Statutory Manager is appointed to take control of an NBFI to protect the interests of depositors, shareholders, creditors, and the broader financial system.
The financial services legal framework that governs the statutory management regime is the Non-Bank Financial Institutions Regulatory Act, 2023, as well as other sector-specific legislation, such as the Securities Act (which regulates the conducting of securities business in Botswana, i.e., asset managers), the Insurance Industry Act (which regulates the conducting of insurance business in Botswana, i.e., insurers and reinsurers), and the Retirement Funds Act.
What is an NBFI?
The Non-Bank Financial Institutions Regulatory Act, 2023, defines a “nonbank financial institution” as, amongst others, the following persons operating an institution of:
an asset manager;
a retirement fund;
an administrator of a retirement fund;
a collective investment undertaking;
an insurance agent;
an insurance broker;
an insurer;
an investment adviser;
a securities broker or dealer;
a securities exchange;
a medical aid fund;
a microlender;
a pawnshop; and
a virtual asset service provider.
Appointment of a Statutory Manager
A Statutory Manager may be appointed in two ways. Firstly, by the Regulator appointing the Statutory Manager directly. However, upon the direct appointment of a Statutory Manager by the Regulator, the Regulator must then apply to the High Court within five days for an order confirming the appointment of the Statutory Manager.
Secondly, by way of an application to the High Court. This can be done by either the Regulator or an interested party (i.e. a creditor), provided that they obtain the written consent of the Regulator before they apply for statutory management at the High Court.
The basis for appointing a Statutory Manager of an NBFI in terms of the financial services legal framework is if the NBFI is likely:
to not be complying with any financial services law; or
to be in an unsound financial position; or
to be involved in a financial crime.
In the event that the Regulator elects to appoint a Statutory Manager directly, it may also do so on the basis that it is necessary to protect the:
interests of a client of the NBFI;
stability, fairness, efficiency, and orderliness of the financial system; or
safety and soundness of the NBFI.
Powers and Duties of a Statutory Manager
The Statutory Manager’s primary duty is to manage the affairs of the NBFI to the exclusion of its directors and act in the best interests of the institution’s stakeholders and the public.
The Statutory Manager has broad powers in managing the affairs of an NBFI, which include, amongst other things, taking control of assets, managing operations, restructuring the institution, and making decisions to stabilize and restore its financial health.
The Statutory Manager also has the power to repudiate contracts deemed detrimental to the interests of any client of the NBFI. This means that the Statutory Manager can refuse to fulfill contractual obligations that the NBFI has, thereby rejecting or renouncing the contract.
It must be noted that the powers of a Statutory Manager are not unfettered, as they cannot make unilateral decisions on the business of the NBFI that would require shareholders’ approval. Furthermore, the Statutory Manager is also subject to complying with the Regulator’s directions during the statutory management of the NBFI.
The Statutory Manager shall, as soon as practicable after appointment and investigating the affairs of the NBFI, advise and report to the Regulator on procedures to ensure the NBFI is compliant with financial services laws, financially sound, and free from financial crimes.
If it is not practicable to use the prescribed procedures to ensure compliance, the Statutory Manager may:
Direct that the business of the NBFI be transferred to another person, specifying the terms of such transfer; or
Recommend to the Regulator that the NBFI be wound up or placed under liquidation.
Remuneration of a Statutory Manager/Who pays the Statutory Manager?
The Statutory Manager is entitled to receive remuneration from the business of the NBFI as ordered by the Court during the period of statutory management.
Termination of Statutory Management
The office of the Statutory Manager terminates when:
the Regulator is satisfied that the purpose for the appointment no longer exists; or
the Regulator applies to the High Court for the NBFI to be wound up on the basis of insolvency and the unlikelihood of returning to solvency within a reasonable time.
Is Statutory Management the same as Judicial Management?
Although statutory management and judicial management are similar in that a manager is appointed to manage the affairs of the entity, they are not the same. This is because judicial management:
generally refers to situations where a company is unable to pay its debts due to mismanagement or some other cause, in which a Judicial Manager is appointed with the objective of rescuing the company and returning it to profitability, and thereafter returning the company to its directors;
is a process where the Judicial Manager is appointed in terms of Part XXVI of the Companies Act and therefore falls within the jurisdiction of the Master of the High Court, unlike the Statutory Manager, who is appointed in terms of the abovementioned financial services laws and is answerable to the Regulator;
applies to all companies whilst the statutory management applies only to NBFIs; and
is made by way of a petition to the High Court by the company itself, a creditor, or a member to the High Court.
Historical Use of Statutory Management
The Courts have recently confirmed the appointment of Statutory Managers of NBFIs by the Regulator in cases such as those set out below.
A notable case involved Capital Management Botswana (Proprietary) Limited (“CMB”), a licensed asset manager at the time, being placed under statutory management by the Regulator on the basis that it discovered that CMB was in breach of the provisions of the Securities Act, in particular, the failure to submit audited financials.
Another notable case involved a company called Bluthorn Fund Managers (Proprietary) Limited (“Bluthorn”), which was licensed as a collective investment undertaking. It was also placed under statutory management by the Regulator on the basis that there were various breaches of the provisions of the Collective Investment Undertakings Act.
Conclusion
It is therefore important for directors and managers of NBFIs to be aware of the possible steps that the Regulator may take to ensure compliance with financial services laws, in particular, statutory management. Understanding this mechanism helps in better governance and adherence to financial services laws, which ultimately safeguards the interests of clients, maintains the stability of the financial system, and upholds the integrity of the NBFI itself.
Directors should proactively ensure that their institutions operate within the legal framework to avoid the need for such interventions. By prioritizing financial soundness, transparency, and regulatory compliance, NBFIs can contribute positively to the broader financial ecosystem and prevent the adverse consequences of statutory management.
In the age of information technology, where the lifeline of a business is storing information in servers and the cloud, hackers are now increasingly accessing millions of data belonging to businesses and demanding ransom payments. This is now a growing trend in Botswana, with a few businesses having been on the receiving end of extortion by hackers.
We hope that will soon be combated as the Botswana business landscape braces for a new dawn once the Data Protection Act of Botswana (“DPA”), which was passed into law on 15 October 2021, becomes fully in force after 14 October 2024.
The DPA’s main objective is to ensure that personal data is processed in a lawful manner. In this regard, personal data is defined as information relating to an identified or identifiable individual, which can be identified directly or indirectly, in particular by reference to an identification number or to one or more factors specific to the individual’s physical, physiological, mental, economic, cultural, or social identity.
The DPA also seeks to protect individuals against unlawful processing of their sensitive personal data. This includes personal data that reveals, among other things, an individual’s racial or ethnic origin, physical or mental health, membership of a trade union, personal financial information, political opinions, genetic data, biometric data, and personal data of minors, among others.
With this in mind, businesses, especially those which deal with a great deal of people’s information, have a few months to ensure that they will be compliant with the DPA.
The big question, however, is how can a business accomplish this. First of all, you need an experienced team of lawyers with commanding experience in dealing with data protection law solutions and also to elect an internal resource which will lead the implementation project for your business.
At a very high level, the process essentially comprises:
The starting point is a risk assessment exercise which will be conducted on the business, particularly the business activities that pertain to the processing of personal data. This includes assessing information provided from completed data protection information gathering surveys and related documentation. This is typically called the gap analysis stage;
The purpose is to determine existing compliance levels and risks in regard to non-compliance in the business operations. The results of the process are captured in a report that breaks down the business’s level of compliance as it relates to the 8 principles of the data lifecycle;
Preparation of all relevant data processing policies (internal and external privacy policies, records retention and destruction policies, cookie policy, information security policies), procedures (privacy impact assessment procedures, data breach response procedure), agreements (data processing agreements, cross-border data transfer agreements), privacy forms and templates, and other compliance documentation required to embed DPA compliance in the business, and assistance with the setup of relevant governance forums and procedures/terms of reference for various governance structures to manage ongoing data protection compliance;
Addressing and managing all key compliance and legal risks to the business with the implementation and operationalization of the DPA; and
Setting up an information repository along with preparation of an overall compliance manual and compliance documentation and procedures to manage ongoing DPA compliance within the business, including conducting ongoing data privacy impact assessments.
To this end, we urge your business (especially if you handle large amounts of personal data) to do the needful to become exemplary in data protection compliance.
For more information on the above, please contact Mr. Simon Bathusi at simon@armstrongs.bw or call +267 395 3481.
