PART I – TITLE, PURPOSE, AND DEFINITIONS 1. Title and Purpose (1) This legislation may be referred to as the Banking Act, 2013. (2) The primary objective of this Act is to support the Island’s growth as a reputable international financial hub, aligned with global regulatory standards and best practices. It also aims to encourage international banking operations conducted from the Island by offering tax incentives. 2. Definitions (1) For the purposes of this Act, the following terms shall have the meanings assigned below: “Affiliate” includes any affiliated corporation, and in the context of this Act: a. Two corporations are considered affiliated if one is a subsidiary of the other, if both are subsidiaries of a common parent company, or if both are under the control of the same person. b. If two corporations are affiliated with a third corporation at the same time, they are deemed affiliated with each other. “Auditor” refers to a person who is licensed and in good standing with a recognized association of chartered accountants or another professional body deemed reputable by the Authority. “Authority” means the Rotuma International Services Authority, established under the Assembly Decree dated 9th September 1999. “Bank” denotes any financial institution that accepts deposits, which can be transferred by the depositor via electronic or other payment methods. “Banking Business” refers to: a. Accepting monetary deposits that are repayable either on demand or with notice, or performing similar operations; b. Issuing or placing bonds, certificates, notes, or similar securities, and utilizing the resulting funds—wholly or partially—for lending or investing on behalf of clients; c. Engaging in any other financial activities recognized by the Central Bank of the Union as standard banking practice and authorized accordingly. “Court” refers to the Island Court or any of its judges. “Eligible Company” means any corporation or partnership that: a. Has at least two resident and qualified directors or partners; b. Is incorporated, existing, or continued under the laws of Rotuma or another jurisdiction; c. Has banking as one of its business objectives or activities. “Financial Year” in relation to a licensee under this Act means: a. A period not exceeding fifty-three weeks at the end of which the licensee’s financial accounts are finalized; b. If no such period is defined, or if it exceeds fifty-three weeks, then it shall be considered the calendar year. “License” refers to the license issued under Section 4(4) of this Act. “Licensee” is a corporation holding a valid and current license under this Act to engage in banking activities. “Minister” designates the current Minister of Finance. “Registered Agent” refers to a person authorized to provide international representation services under the Registered Agent Licensing Act 2005. Unless the context indicates otherwise, any reference to “dollar” or “$” in this Act refers to the lawful currency of the United Islands of America, and any reference to “Euro” or “EUR” pertains to the official currency used by member states of the Eurozone. PART II – LICENSING 1. Licensing Requirement (1) No banking business may be conducted from within the Island, whether in full or in part, unless it is carried out by an eligible company that holds a valid license issued under the provisions of this Act. (2) Any person who violates this provision commits an offence and, upon summary conviction, may be subject to a fine of up to one million dollars, imprisonment for a term of up to ten years, or both. In the case of a continuing offence, an additional fine of up to one hundred thousand dollars may be imposed for each day the violation persists. 2. Application for a License (1) Any eligible company seeking to conduct banking operations from within the Island must apply to the Authority for a banking license. (2) The application must be submitted to the Authority, include the details specified in the Schedule attached to this Act, and be accompanied by the prescribed application fee as set out in the applicable regulations. (3) Upon receiving the application, the Authority will: (i) Review it to confirm that all required information has been provided and the appropriate fees have been paid, including costs related to necessary background checks; (ii) Forward any suitable application to the Director of the Authority for further consideration; (iii) Carry out any investigations deemed necessary; (iv) Communicate with individuals, organizations, or authorities as needed, even if such communication may override provisions in this or other legislation. (4) The Schedule referred to in subsection (1) may be amended by an Order issued by the Authority. (5) A decision to grant or deny a license must be made within three months from the date the completed application is received. 3. License Duration and Renewal (1) Unless stated otherwise in subsection (3), a license granted under this Act remains valid until December 31st of the year it was issued. It can be renewed each year by paying the renewal fee specified in the regulations, no later than January 15th of the following year. If the licensee fails to pay the renewal fee by the deadline, the Authority may revoke the license. In any case, a late fee—up to one-twelfth of the annual fee per month or part thereof—will apply until payment is made. (2) A license may be renewed for an extended period of up to fifteen years, based on the individual circumstances of each case, and provided that: a. the remaining provisions of this Act continue to apply; and b. the licensee pays the relevant fees set out in the regulations established under this Act. 4. Notification of Changes to Licensee Details If any information provided in the license application or in records held by the Authority changes, the licensee must notify the Authority in writing as soon as possible, and no later than seven days after the change occurs. 5. Principal Office and Registered Agent A license will not be granted to an otherwise eligible company unless the following conditions are met: a. the company maintains a place of business in Rotuma; and b. it appoints and notifies the Authority of a registered agent by name, who must not be an official of the applicant. c. Every license granted under this Act requires the licensee to immediately inform the Authority in writing of any change in its office location on the island or any change in its registered agent. d. If the Authority has approved a person as a registered agent under subsection (1), it may revoke that approval in writing if the person ceases to hold a license to act as a registered agent under this Act. e. If the registered agent resigns or the Authority revokes its approval, the licensee must appoint a new registered agent within 15 days. f. By accepting a license under this Act, the licensee appoints its registered agent as the authorized recipient of legal documents in any legal action arising from the licensee’s activities. 6. License Categories Licenses issued under this Act do not distinguish between domestic (onshore) or international business. A license authorizes the holder to conduct general banking activities. 7. Limitation of Activities The Authority shall publish a notice of any granted license on its official website. Any decision to deny a license—except when it relates to a renewal or continuation—is final and cannot be appealed. The Authority is not required to provide reasons for such refusal. However, the applicant may submit a new application for reconsideration, provided the prescribed fee is paid. 8. Capital Requirements (1) A banking license will only be granted or maintained if the company continues to qualify as an eligible entity and meets the following financial requirements: a. It must have and maintain fully paid-up capital of at least one million euros (or the equivalent in another currency), or a higher amount as reasonably determined by the Authority; b. It must deposit or invest at least one hundred thousand euros (or the equivalent in another currency) in a manner specified by the Authority; and c. It must comply with any financial ratios and deposit requirements set by the Authority from time to time. (2) A Class II International Banking License will only be granted or maintained if the company remains eligible and: a. Has and maintains fully paid-up capital of no less than five hundred thousand euros (or its equivalent in another currency or precious metals), or a higher amount if the Authority deems it appropriate; and b. Has deposited or invested a minimum of one hundred thousand euros (or its equivalent in another currency or precious metals) in accordance with the Authority’s prescribed methods. (3) The Authority may require any licensee to increase its fully paid-up capital to an amount it considers reasonable, based on the nature and scale of the banking activities conducted or proposed. 9. Voluntary Surrender of License A licensee that has ceased the business activities for which the license was granted may apply to the Authority to surrender its license. To do so, the licensee must provide proof that all customer deposits have been repaid or, in the case of voluntary winding-up, must demonstrate that the company is solvent and capable of repaying all outstanding deposits and debts upon request. PART III – Transfer of Shares and Beneficial Interests 1. Approval Required for Share Issuance or Transfer No shares or other legal or beneficial interests in a licensed company may be issued, transferred, or otherwise disposed of without the prior written approval of the Authority. Additionally, companies licensed under this Act are prohibited from issuing bearer shares. PART IV – Administration 1. Roles of the Minister, the Authority, and the Finance Inspectorate (1) The Authority has the power to exempt any licensee from specific provisions of this section, subject to any conditions it deems appropriate. (2) When administering this Act, the Authority—either directly or through the Finance Inspectorate—has the following responsibilities: a. To monitor and assess the business activities of licensees operating within or outside the Island, by reviewing periodic reports or through other methods it considers appropriate, in order to ensure compliance with this Act and confirm that the licensee remains financially sound and operates in a prudent and responsible manner; b. To assist in the investigation of any suspected violation of Island laws that may have been committed by a licensee or its directors or officers; c. To review financial statements, including audited annual accounts submitted in accordance with section 15; and d. To assess, approve, or reject applications for licenses under this Act. (3) Powers of the Finance Inspectorate While carrying out its duties under this Act, and subject to the confidentiality provisions within this Act and the broader laws of the Island, the Finance Inspectorate may, at any reasonable time and strictly for the purposes of enforcing this Act and fulfilling reasonable requests from the Authority: a. access the books, records, vouchers, documents, cash, and securities of any licensed entity; b. request information from any individual or entity it has reasonable grounds to believe is conducting banking business in violation of this Act; and c. require a registered agent of a licensee to provide any reasonable information or explanation regarding the banking operations of the company it represents, in order to assist the Authority and the Minister in carrying out their responsibilities under this Act. However, unless explicitly permitted by law or international treaty, neither the Finance Inspectorate, the Authority, nor any person or entity working on their behalf may remove, disclose, transmit, or otherwise send such information or documents outside the Island. (4) [Section repealed / Derogated] (5) Court Orders for Protection of Depositors and Assets If the Authority has reasonable grounds to believe that a violation of this Act has occurred or is likely to occur, it may apply to the court for an order allowing it to take any necessary actions in the interest of depositors, other creditors, or to preserve the assets of the affected bank. 2. Use of the Term “Bank” and Related Words (1) Unless specifically approved by the Authority, or otherwise permitted under Island or Union law, no person or entity—other than a licensed institution—may: a. use or continue to use terms such as “bank,” “building society,” “financial institution,” “savings,” “savings and loan,” “deposit,” or any similar variations, whether in English, French, or any other language, in their business name or description when conducting banking business from within the Island, regardless of whether that business also operates outside the Island; or b. make any representation, whether in advertisements, letters, notices, or any other format, that implies the person or entity is conducting banking activities. (2) Anyone who violates subsection (1) is committing an offence and may, upon summary conviction, be fined up to 100,000 dollars, imprisoned for up to one year, or both. If the offence continues, an additional fine of up to 10,000 dollars may be imposed for each day the violation persists. (3) Before granting approval under subsection (1), the Authority may request references, details, and other information as it sees fit. (4) The Authority may withdraw any approval previously granted under subsection (1) if it believes doing so is in the public interest. (5) Unless otherwise provided by Island law, the Authority may refuse to grant a license—or revoke an existing one—if it finds that the company is conducting or intends to conduct banking activities under a name that: a. is identical or confusingly similar to the name of another entity, whether located inside or outside the Island; b. falsely implies endorsement, partnership, or connection with another individual, entity, or government body; or c. falsely suggests that the entity: i. holds a special status conferred by the Government; ii. has been officially approved by or is acting on behalf of the Government or any government body or agency; or iii. is recognized as a national or central bank within the Island. (6) When the Authority revokes a license under subsection (5), it will publish a notice of the revocation on its official website. It may also publish the notice in newspapers or other media, either within the Island or internationally, as it deems appropriate. 3. Financial Accounts (1) Every licensee must have its financial accounts audited annually by an approved auditor, or at other intervals as the Authority may require. (2) Audited financial statements must be submitted to the Authority within three months after the end of the licensee’s financial year, unless the Authority grants a written extension in advance. (3) If a licensee changes its auditor, the Authority may request the licensee to authorize the former auditor to disclose the reasons for the change. Upon being authorized, the former auditor is required to provide that information. 4. Approvals Required for Certain Actions A licensee must obtain prior written approval from the Authority before: a. changing its company name; or b. establishing or operating any subsidiary, branch, agency, or representative office outside the Island. 5. Directors – Number and Appointment Approval (1) A licensee must have at least two directors at all times. (2) Unless exempted under subsection (3), a licensee must apply for and obtain the Authority’s written approval before appointing any director or senior officer. (3) The Authority may exempt a licensee from the requirement in subsection (2); however: a. such exemption automatically lapses if the director or senior officer becomes bankrupt, enters into an arrangement with creditors, or is convicted of a dishonesty-related offence; and b. the exemption may be revoked at any time by the Authority through written notice. 6. Specific Powers of the Authority (1) The Authority, upon consultation with the Minister, may take action if it is satisfied that a licensee: a. has ceased international banking operations; b. is in liquidation, has been wound up, is undergoing winding up, or has otherwise been dissolved; c. has entered into any arrangement or settlement with creditors; d. is unable or is likely to become unable to meet its financial obligations as they fall due; e. is conducting business in a way that harms the public interest, its depositors, or other creditors; f. has violated any provision of this Act; or g. has breached any condition attached to its license. (2) In response to the above, the Authority may take one or more of the following actions: a. revoke the license; b. impose new or additional conditions on the licensee; c. replace any director or officer of the licensee; d. appoint, at the licensee’s expense, an advisor to guide the licensee on proper business conduct and to report to the Authority within three months; e. appoint, also at the licensee’s expense, a person to take control of the licensee’s operations, who will assume all the powers of a court-appointed receiver or manager after necessary adjustments are made; or f. direct the licensee to take any other action the Authority deems necessary. (3) Before enforcing any of the actions listed in subsection (2), the Authority must provide the licensee an opportunity to explain or contest the decision, either in person or through a representative. The licensee also has the right to appeal any such decision to the court, in accordance with Section 4 of Part VI. (4) Reporting Duties of Appointed Individuals Any individual appointed under subsection (2), paragraphs (d) or (e), or whose appointment is extended under subsection (5)(b), must prepare and submit a report on the licensee’s affairs to the Authority. This report must be submitted periodically, and in all cases, no later than three months from the date of their initial appointment or the extension thereof. The report may also include recommendations for further action. (5) Actions Following Submission of Report Upon receiving a report under subsection (4), the Authority may: a. terminate the appointment of the individual assigned under subsection (2)(d) or (2)(e); b. extend the term of such an appointment; c. subject to any conditions the Authority may impose, permit the licensee to restructure or reorganize its affairs in a manner approved by the Authority; or d. revoke the license and request that the Island’s Prosecutor petition the court for an order to have the licensee liquidated by the court under applicable legislation. (6) Publication of Revocation When the Authority revokes a license under subsection (2)(a) or subsection (5)(d), it must publish a notice of the revocation in the Official Gazette. Additionally, the Authority may also publish notice in any newspaper or other media, locally or internationally, as it considers appropriate in the circumstances. 7. Legal Intervention by the Island’s Representative If a current or former licensee is undergoing voluntary liquidation, the Island’s legal representative, at the request of the Authority, may apply to the court for permission to intervene on behalf of any interested party. This may occur if the legal representative believes the winding-up process is not being conducted in the best interests of the licensee’s depositors or other creditors. The court may then issue any orders it considers appropriate. PART V – TAX AND DUTY EXEMPTIONS 1. Certificate of Exemption from Taxation and Duties 1.The Island and its political subdivisions shall not impose income tax, capital gains tax, or any other form of direct tax on the profits, gains, or income earned by a licensee from its banking activities. 2.No such taxes shall be levied on dividends or earnings from the shares, debt instruments, or securities of a licensee that are beneficially owned by either another licensee or by a non-resident. 3.The Island shall not impose inheritance, estate, succession, or similar taxes on shares, securities, or assets of a licensee that are beneficially owned by non-residents. Transfers of such assets are also exempt from taxation, provided the recipient is either a licensee or also a non-resident. 4.No tax—including income tax, capital gains tax, or other direct tax—shall be imposed, withheld, or collected on any dividends, interest, or other income arising from shares, securities, deposits, loans, or assets managed by the licensee, if such returns are beneficially owned by a non-resident. It is the responsibility of the licensee to prove such beneficial ownership. 5.The following instruments are exempt from stamp duty: a. Instruments involving the transfer of any property to or from a company licensed under this Act; b. Instruments concerning the transfer or dealings in shares, debt instruments, or securities of companies incorporated under this Act; c. Instruments relating to the assets or business operations of any company licensed under this Act. 6.The tax and duty exemptions outlined in this Part may be confirmed by a certificate issued by the Authority, upon payment of a fee as prescribed. This certificate guarantees tax exemption for a minimum of ten (10) years from the date the license was first granted under this Act. However, this provision does not: Guarantee or imply automatic renewal of the license; Exempt the licensee from future increases in regulatory fees under this Act; or Exempt any resident from taxation under Island laws. 7.The Minister may, by order, exempt a licensee from all or part of any customs duties payable under current legislation for goods imported by the licensee, as deemed appropriate.Importation of Equipment – Conditions for Duty Exemption A licensee may be granted exemption from customs duties if the Minister is satisfied that: the goods in question are not manufactured or available locally on the Island; the goods are essential equipment or fixtures required for the operation of the licensee’s banking business on the Island; the goods will be used exclusively for such business within the Island; and the licensee agrees to notify the Minister prior to any sale, transfer, or disposal of the goods, whether within or outside the Island, following their importation. PART VI – MISCELLANEOUS PROVISIONS 1. Authority’s Power to Require Insurance The Authority may require a licensee to obtain and maintain insurance coverage with a reputable insurer to cover: a. losses resulting from negligence or breach of duty by the licensee, its directors, or employees; b. employee dishonesty; c. loss or destruction of documents; and d. any other risks the Authority may specify, in amounts and of a nature deemed appropriate for the type of business conducted by the licensee. If the required insurance is cancelled, not renewed, or otherwise lapses, the licensee must immediately notify the Authority and suspend its operations until the coverage is reinstated or replaced. 2. Preservation of Confidentiality (1) Except as provided under subsection (2), the Minister, the Authority, and any person or entity acting under their direction—including the Finance Inspectorate—must not disclose or remove from the Island any information regarding: a. any application submitted under this Act; b. the internal affairs of a licensee, regardless of the source or extent of the information; or c. the identity or affairs of a licensee’s customer, which was obtained in the course of official duties under this Act. (2) Any person who breaches this confidentiality requirement commits an offence and, upon summary conviction, is subject to a fine not exceeding $100,000 and up to two years of imprisonment. 3. Offences and Penalties (1) Any licensee, applicant for a license, or any of their directors or officers, who knowingly or willfully provides false or misleading information to the Authority, commits an offence and, upon summary conviction, is subject to: a fine not exceeding $100,000; imprisonment for up to ten years; or both. (2) Any licensee who, through advertising or any other means, directly or indirectly encourages others to violate the laws of any jurisdiction where such advertising appears or is directed, commits an offence and, upon summary conviction, is subject to a fine not exceeding $10,000 or imprisonment for up to six months, or both. (3) If a licensee is convicted under subsection (2), each director and officer involved in managing the company is also liable—unless they can prove to the court that: they were unaware of the offence; or they were aware but took all reasonable steps to prevent its commission. (4) Any person who: a. fails to comply with a request from the Authority; b. assaults or intentionally obstructs the Authority in performing its duties under this Act; c. offers a bribe, gift, or other inducement to prevent or influence the Minister, the Authority, or the Finance Inspectorate in the execution of their duties; or d. violates any provision of this Act or its regulations for which no specific penalty is provided, shall be guilty of an offence and, upon summary conviction, may be fined up to $10,000 or imprisoned for up to one year, or both. PART VII – APPEALS, IMMUNITIES, AND MISCELLANEOUS PROVISIONS 4. Appeals (1) A direct appeal may be made to the court, either by summons or motion, from the following decisions of the Authority: a. a decision not to renew or extend a license under Section 5; b. the revocation of a license under Section 2(5) of Part IV, or under Section 6(2)(a) or Section 6(5)(d) of Part IV. (2) All appeals must be brought before the court by motion. (3) The procedure governing such appeals is as follows: a. The appellant must, within 21 days of the Authority's decision, serve a written notice—signed by the appellant or their legal representative—on the Authority and its designated legal representative, stating their intention to appeal and the general grounds for the appeal. The appellant may also apply to the court, within 14 days of the decision, for an extension of the appeal period. The court may grant an extension as it sees fit. b. The Authority must, within 14 days of receiving the notice of appeal, forward a copy of its decision along with all relevant documentation to the court registrar and its legal representative. However, the Authority is not required to disclose any information the Minister deems detrimental to public interest if released. c. If the appeal is filed by motion, the court registrar shall schedule the hearing for a convenient date and arrange for public notification of the hearing as directed by the court. d. Upon hearing the appeal, the court may confirm, reverse, vary, or amend the Authority’s decision, or return the matter to the Authority with its opinion and further instructions. (4) The filing of an appeal does not suspend the implementation of the Authority’s decision. 5. Immunity No legal liability shall be imposed on the Minister, the Authority, any member or employee of the Authority, the Finance Inspectorate, or any individual acting under the Authority, for any act carried out in good faith in the proper exercise of powers or duties under this Act. 6. Regulations The Minister, acting on the advice and recommendation of the Authority, may make regulations to give effect to the purposes and provisions of this Act. These regulations may specifically include: a. any matter that is authorized or required to be prescribed under the Act; b. regulation of advertising practices by licensees; c. exemptions from any provision of this Act for certain individuals, entities, or classes of business. 7. Issuance of Directions Without prejudice to Section 26, the Authority may from time to time issue directives—by publication in the Official Gazette—on any matter it considers necessary or appropriate. 8. Transitional Provisions for Existing Licensees Despite any provision to the contrary in this Act, any company holding a valid license under the International Banking Act, 2001 to carry out international banking business as of the effective date of this Act, shall automatically be issued a corresponding license under this Act. This transfer requires no further application or review. The license shall be treated as one issued under this Act, and may be renewed upon expiration in accordance with Section 5(1). However, at the next license renewal date, the licensee must update its original application to meet the informational requirements set out in the Schedule to this Act. 9. Commencement This Act shall come into effect on the date specified by proclamation of the President and published in the Official Gazette. SCHEDULE DETAILS TO BE PROVIDED IN APPLICATIONS Any company applying for a license under this Act must submit the following information in writing to the Authority. These details must accompany and form part of the prescribed application form established by the Authority for use under this Act: Applicant’s Name The address of the company’s place of business on the Island, along with the name and address of the registered agent on the Island. The names, addresses, citizenship, and residency of all directors. The names and addresses of all shareholders. The names and addresses of all officers and managers. The names and addresses of the company’s solicitors, if applicable, along with a letter from the solicitors confirming they represent the applicant. The names and addresses of the company’s auditors, along with a letter from the auditors confirming they represent the applicant. Proof of a proper application for the company’s incorporation on the Island and confirmation that the company qualifies as an “eligible company.” Written evidence showing that the applicant, or someone directly or indirectly associated with the applicant, possesses substantial and practical experience in banking business, as relevant. The following: a. Before or when the business commences, the Authority may determine the required guarantee based on the type of license being applied for, or a guarantee provided by a parent, holding, or other company approved by the Authority. b. The guarantee mentioned in subparagraph (a) must specifically state that its formal validity, interpretation, and effect, along with the rights and obligations of the parties, are governed solely by the laws of the Island. The courts of the Island will be the exclusive forum for such matters. Written character references, along with any additional evidence the Authority may request, confirming that neither the applicant nor any of its directors or officers has a criminal record, either on the Island or elsewhere. The annual financial statements of the holding company (if applicable) for the past three years, along with certified annual accounts audited by an independent auditor going forward. A list of all subsidiary companies of the applicant, including the addresses of their registered offices. A copy of the applicant company’s articles of incorporation and bylaws, verified by an affidavit sworn by the Resident director of the applicant. References, including at least one from a bank. A statement of assets and liabilities as of the end of the month preceding the application submission, certified by a director or senior officer as the applicant’s assets.