Malawi: Directive on Transactions with Related Persons

Publication Date: 13 Mar 2006
Published by: Reserve Bank of Malawi (RBM)
Document Type: Other (PDF)

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What are the guidelines for conducting transactions between licensed institutions, its insiders and related persons?

This directive is issued by the Reserve Bank of Malawi pursuant to its authority set forth in Sections 26 and 27 of the Banking Act (1989), for the purpose of implementing the provisions of Sections 28(a) and 29 of the Banking Act. The objectives of this directive are:

• To ensure that all transactions between a licensed institution and its insiders and related persons are done on an arm’s-length basis;
• To ensure that licensed institutions do not enter into a transaction with or for the benefit of an insider or related person if such transaction would be entered into on less favorable terms and conditions, or not at all, with or for the benefit of persons who are not so related to the licensed institution.

This directive also includes:

• Requirement for arm’s length transactions;
• Limitations;
• Reporting;
• Remedial measures and administrative sanctions.