Malawi: Directive on New Directors, Audit Committee Members and Senior Management Officials

Legal requirements of directors, managers of licensed banks & financial institutions in Malawi
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This directive on "New Directors, Audit Committee Members and Senior Management Officials," issued by the Reserve Bank of Malawi, applies to all financial institutions operating in Malawi. It is divided into the following sections:

Part I - the preliminary section explains the short title, the authorization and the application of the directive. This section also interprets the various terms found in the directive, such as "audit committee," "Board of Directors," "Credit," etc.

Part II - "The Statement of Policy," outlines the directive's:

  • Objectives:
    • Ensure that banks are managed by competent personnel;
    • Promote self-discipline.
  • Rationale:
    • A key aspect of the licensing process is an evaluation of the competence of the proposed management; this would promote public confidence and ensure the safety of depositors' funds.

Part III lists the requirements for a person to be approved by the Reserve Bank.

Part IV - "Fit and Proper Standard," discusses:

  • The legal factors that the proposed management should meet, such as a lack of involvement in insolvency, bankruptcy, forgery, perjury, etc;
  • Personal characteristics, such as the person's reputation, competence and expertise to do banking business, and the person's capacity to comply with the provisions of the banking Act.

Part V deals with remedial measures and administrative sanctions that the Reserve bank may impose on a bank that has a capital deficiency.

Part VI concludes by stating the effective date of the directive as 13th March, 1996.