NO individuals shall hold more than 10 percent shareholding in a banking institution or it's controlling company, according to proposed draft amendments to the Banking Act. Currently, the limitation on shareholding in banks and controlling companies is not captured in the legislation but the Reserve Bank used regulatory powers to cap equity limits. The draft also seeks to limit shares held by corporates in banks at 25 percent. "Subject to this Act, without the permission of the registrar given . . . no individual shall hold shares in a banking institution or a controlling company if the shares exceed 10 percent of the total nominal value or the total voting rights of all the issued shares of the banking institution or controlling company," read part of the proposed amendment. However, the registrar may, by written notice to the shareholder and the banking institution or controlling company concerned, give permission for the shareholder to hold more shares in a banking institution or controlling company, if satisfied that the shareholding will not be contrary to the public interest, the interests of the banking institution concerned, its depositors or of the controlling company concerned. The registrar may also use discretion to have individuals and corporates to exceed the shareholding limits if it is deemed "fit and proper" to hold shares in a banking institution. "Before giving permission . . . the registrar shall, through the governor, consult the minister and shall provide the minister with such information regarding the shareholder and his or her shareholding or proposed shareholding as the minister may reasonably require." Shares in a banking institution or controlling company which are held by an individual shall be deemed to include any shares in the same banking institution or controlling company which are held by a close relative of the individual while shares held by a corporate shall also be deemed to include any shares in the same banking institution or controlling company which are held by an associate of the corporate. But if the close relative or associate concerned purchased the shares through a stock exchange, the provision will not apply. Most local banks have collapsed, some as a result of undue influence from controlling shareholders who abused depositors' funds. For instance, Renaissance Merchant Bank , now Capital Bank , was driven into negative equity after top shareholders of its holding company allegedly borrowed millions of dollars of depositors' funds in breach of banking regulations. Mr Patterson Timba had 44,7 percent shareholding in RFHL through Bethel Trust and other vehicles while his then fellow top executive, Mr Dunmore Kundishora , held an effective 24,2 percent stake. The two thus held almost 69 percent between them, allowing them to dominate the ownership. Other banking institutions that fell under similar circumstances include Interfin Banking Corporation -- whose top shareholders include Mr Farai Rwodzi, Mr Timothy Chiganze and Mr Jerry Tsodzai -- Royal Bank and First National Building Society .
Most Popular Stories
- Photo ID Required for Unemployment Benefits
- Software Writers Sought in Indiana
- Ukraine Crisis Limits Losses in Gold, Silver
- Can GOP Dodge Immigration Bullet?
- Tech Firms to Increase Hiring for 4th Year in a Row
- How Past Mistakes Will Drive Ukraine's Future
- Job Fair for S.C. Grads
- Chiquita, Fyffes to Form Top Banana
- Millennials Favor Saving Over Investing: UBS
- Big Earthquake Rumbles Northern California