19 Aug 2021

The Collective Investment Undertakings (CIUs) Bill that seeks, among others, to empower the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) to licence, exempt, investigate and recognise CIUs, has passed second reading.

The Bill further seeks to empower the Regulatory Authority to inspect CIUs and to cooperate with other Regulatory Authorities.

In addition, it will provide for general requirements that all CIUs should adhere to.

Other clauses of the bill provide for different types of CIUs, including investment companies, unit trusts and Collective Investment Undertaking partnerships, and further lays out the general operational requirements peculiar to licensed CIUs.

There is also provision for terminations, winding up, transfers as well as supervision and regulation of CIUs.

Presenting the bill, Minister of Finance and Economic Development, Ms Peggy Serame said the purpose of the bill was to repeal the current Act and enact one that would address a number of shortcomings so far identified.

The shortcomings, she said, included exclusion of other forms of investment companies, and as a result, limiting forms in which CIUs could be accredited to the International Financial Services Centre.

Other shortcomings are that the current law does not make it clear how a fund established offshore should market its products in Botswana.

Besides, there are no supporting rules and guidelines for applying and interpreting the Act and regulations. Contributing to the debate on the bill, Lobatse MP, Dr Thapelo Matsheka said CIUs would protect Batswana venturing in collective mutual funds.

He said the law would further make provision for regulation of the business to minimise risks associated with collective investments.

Lentsweletau-Mmopane MP, Ms Nnaniki Makwinja said the bill would bring about standards on collective investment undertakings as well as protect the vulnerable.

She said Batswana should emulate Scandinavian countries and tap into such collective businesses to thrive in investment undertakings.

She also said the bill was important as it would deepen the country’s capital markets and capital raising, adding that the law would guard against illegal business undertakings which had previously defrauded Batswana.

Ms Makwinja also underscored the importance of internal governance procedures for any business undertaking to thrive.

Jwaneng-Mabutsane MP, Mr Mephato Reatile said the bill was a progressive piece of law in that it had potential to improve lives of those partaking in collective investments.

Francistown South MP, Mr Wynter Mmolotsi called for the tightening of screws to guard against false identity, especially in relation to inspectors. ENDS