National Clearance and Settlement Systems Act
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This Act was repealed by Act 14 of 2014 (National Payment System Act, 2014) with effect from 18 August 2014. The text below is reproduced for historical reference purposes only.
CONSOLIDATED TO 30 JUNE 2012
LAWS OF SEYCHELLES
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NATIONAL CLEARANCE AND SETTLEMENT SYSTEMS ACT
[5th July 2010]
ARRANGEMENT OF SECTIONS
PART I - PRELIMINARY
1. Short title.
2. Interpretation.
PART II - CLEARANCE AND SETTLEMENT SYSTEMS
3. Application for recognition of clearance and settlement system.
4. Recognition of clearance and settlement systems.
5. Approval of amendments to constitution and rules of recognised systems.
6. Rules or regulations of recognised system to be open to inspection.
7. Withdrawal of recognition from clearance and settlement system.
8. Establishment and operation of Central Bank system.
9. Provision of information to Central Bank.
10. Control of undesirable conduct in regard to recognised systems.
PART III - FINALITY OF SETTLEMENTS WITHIN RECOGNISED SYSTEMS OR CENTRAL BANK SYSTEM
11. Finality of payments and transfers.
12. Utilisation of deposits.
PART IV - WINDING-UP OR RECEIVERSHIP OF PARTICIPANTS IN RECOGNISED SYSTEM OR CENTRAL BANK SYSTEM
13. Central Bank to be notified of winding-up or receivership of participant in recognised system or the Central Bank system.
14. Rules, etc, of recognised systems binding on liquidator, judicial manager or curator.
15. Priority of certain instruments on winding-up of participant in recognised systems.
PART V - GENERAL
16. Prohibition against unrecognised systems.
17. Prohibition against payment intermediation.
18. Settlement of disputes arising out of recognised systems or Central Bank system.
19. Preservation of secrecy.
20. Use of confidential information for personal gain.
21. Evidence.
22. Computer entries.
23. Imaging.
24. Records.
25. Regulations.
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PART I - PRELIMINARY
1. This Act may be cited as the National Clearance and Settlement Systems Act.
2. In this Act, unless the context otherwise requires —
“Bankruptcy and Insolvency Act” means the Bankruptcy and Insolvency Act;
“Central Bank” means the Central Bank of Seychelles as established in the Central Bank of Seychelles Act 2004;
“Central Bank System” means a system established and operated by the Central Bank of Seychelles for the discharge of settlement obligations between participants in the system;
“clearance and settlement system” means a system that facilitates the presenting and exchanging of transfer instructions regarding funds, securities or other financial instruments and the settlement of those transfer instructions between participants in the system;
“clearance” means the process of transmitting, reconciling and, in some cases, confirming transfer instructions regarding funds, securities or other financial instruments prior to settlement;
“commencement of winding-up”, “commencement of the placing under receivership”, “winding-up” and other cognate words and expressions when used in relation to a participant have the same meaning as under the Companies Act or the Bankruptcy and Insolvency Act, as the case may be;
“Companies Act” means the Companies Act 1972;
“financial instrument” means a financing document and includes a document or instrument evidencing, denoting, creating or acknowledging indebtedness or containing a transfer instruction;
“funds” means notes and coins issued by the Central Bank, bank draft, cheque, banker's acceptance, an instruction for the movement of funds through a financial intermediary, a recognised system or the Central Bank system;
“management body” in relation to a recognised system, means a body which represents participants in the system and organises, and manages their participation in the system;
“multilateral netting” means an arrangement among three or more parties to net their obligations, where—
(a) obligations covered by the arrangement may arise from financial contracts, transfer instructions or both; and
(b) the multilateral netting of obligations normally takes place in the context of a multilateral net settlement system;
“netting” means an agreed offsetting of positions or obligations by participants in a clearance and settlement system. The netting reduces a large number of individual positions or obligations to a smaller number of positions. Netting may be conducted on a bilateral or a multilateral basis;
“obligation” means a duty imposed by contract or law;
“participant” in relation to a clearance and settlement system, recognised system or the Central Bank system, means a participant in the clearance and settlement system, recognised system or Central Bank system, as the case may be;
“payment instruction” means an instruction by a payer to transfer funds;
“payment instrument” means an instrument or a process enabling a payer to issue a payment instruction and includes bills of exchange, promissory notes, electronic money, credit cards and debit cards;
“recognised system” means a clearance and settlement system recognised under section 4;
“securities” means —
(a) shares or stocks in the share capital of a company, whether incorporated in Seychelles or elsewhere, other than a collective investment scheme;
(b) shares or other units of participation in a mutual fund as defined in the Mutual Fund and Hedge Fund Act;
(c) debentures, debenture stock, loan stock, bonds, certificates of deposit or other similar instruments;
(d) rights warrants, options or interests in respect of securities mentioned in paragraphs (a) and (b);
(e) treasury bills, loan stock, bonds and other instruments creating or acknowledging indebtedness and issued by or on behalf of or guaranteed by the Government of Seychelles or any public authority created thereby;
(f) options, futures, forwards and other derivatives whether on securities or commodities;
(g) any such other instruments as may be prescribed;
“settlement” means an act of discharging obligations by transferring funds, securities or financial instruments between two or more parties;
“settlement system” means a system used to facilitate the settlement of transfer instructions regarding payments, securities or other financial instruments;
“system” means a recognised system or the Central Bank system;
“system operator” means a person who operates a recognised system;
“system participant” means a person authorised to participate in a clearance and settlement system;
“systemic risk” means the risk that the failure of one participant in financial markets generally, to meet its required obligations will cause other participants or financial institutions to be unable to meet their obligations (including settlement obligations in a clearance and settlement system) when due;
“transfer” means the sending of funds, securities or other financial instruments or a right relating to those funds, securities or other financial instruments from one party to another party by —
(a) conveyance of funds or physical instruments;
(b) accounting entries on the books of a financial intermediary; or
(c) book-entry movement of funds or physical instruments through a recognized system or the Central Bank system;
“transfer instruction” means an order or electronic message requesting the movement of funds, securities or other financial instruments or a right relating to those funds, securities or other financial instruments from one
party to another party.
PART II - CLEARANCE AND SETTLEMENT SYSTEMS
3. (1) An application may be made to the Central Bank for recognition of a clearance and settlement system.
(2) An application under subsection (1) shall be made—
(a) in the prescribed form; and
(b) be accompanied by the prescribed documents.
4. The Central Bank may, on an application under section 3, recognise a clearance and settlement system if it is satisfied that —
(a) the system fairly represents the interests of all participants in the system;
(b) the Central Bank will be able adequately to monitor and regulate the system and the activities of its participants in order to ensure compliance with this Act and any other relevant law;
(c) the rules or regulations governing the system are fair, equitable and transparent and make adequate provision for —
(i) admitting participants into the system, and regulating and terminating their participation;
(ii) controlling its participants' use of the clearance and settlement system or operations;
(iii) appointing a management body or committee, representative of the participants, to organise and manage the clearance and settlement system and its participants' participation in the system;
(iv) criteria according to which a participant may be authorised to introduce any person to provide payment services;
(d) the management body or committee of the system has ensured provision of contingency plan in support of the operational clearance and settlement system and any other matters as may be prescribed.
5. No amendment to the rules or regulations of any recognised system shall have effect until they have been approved by the Central Bank.
6. The rules or regulations of a recognised system, together with any amendments to those rules or regulations, shall be kept at—
(a) the Central Bank; and
(b) the head office in Seychelles of the recognised system,
and shall be open for inspection by members of the public at all times during normal office hours.
7. (1) Subject to subsections (2) and (3), the Central Bank may, by notice in writing to the management body of a recognised system, withdraw its recognition of the recognised system if the Bank has reasonable grounds for believing that —
(a) the recognised system no longer fairly represents the interests of all the participants in the recognised system;
(b) the system operator of the recognised system is insolvent; or
(c) the system operator is in the course of being wound up or otherwise dissolved;
(d) the system operator has entered into a compromise or scheme of arrangement with its creditors;
(e) the management body has contravened a provision of this Act or of the recognised system's rules or regulations; or
(f) the manner in which the recognised system is being conducted does not adequately protect the recognised system against systemic risk; and that it is in the public interest to withdraw its recognition from the recognised system concerned.
(2) Before withdrawing its recognition from a recognised system in terms of subsection (1), the Central Bank shall notify the management body of the recognised system, in writing, that it is considering doing so and of its reasons for considering such a step, and shall give the management body an opportunity to make representations in the matter.
(3) The Central Bank shall not withdraw its recognition from a recognised system in terms of subsection (1) without paying due regard to any representations made by the management body of the recognised system.
8. (1) The Central Bank shall establish and operate its own system for the settlement of obligations among participants of the system.
(2) The Central Bank may specify rules, procedures and participant requirements for the Central Bank system established in terms of subsection (1), provided that no such rule, procedure or participant requirement shall be made without adequate consultation with the participants of the Central Bank system.
9. (1) In addition to any information that is required to be provided to the Central Bank in terms of the Financial Institutions Act, the management body of a recognised system, and every participant in the recognised system, shall provide the Central Bank with such reports, returns and other information as the Central Bank may reasonably require regarding—
(a) the volumes and values of transfer instructions cleared in the recognised system;
(b) the volumes or values of the participants' payment and settlement obligations; and
(c) any other information regarding the operation of the recognised system.
(2) The Central Bank shall —
(a) obtain reports from any person or institution involved in payment intermediation whether under this Act or any other written law; and
(b) require such institutions to adopt or conform to specified operating requirements.
10. (1) If the Central Bank has reasonable grounds to believe that a management body or a participant in a recognised system or the Central Bank system is engaging in or is about to engage in any act, omission or course of conduct which —
(a) results or is likely to result in systemic risk; or
(b) prejudices or will prejudice the integrity, effectiveness or security of the recognised system or the Central Bank system, as the case may be, or both systems, the Central Bank may issue a written directive requiring the management body or the participant of recognised system or the Central Bank system, as the case may be, to do any one or more of the following—
(i) to cease engaging in the act, omission or course of conduct concerned;
(ii) to do such things as the Central Bank may specify to remedy the situation; or
(iii) to provide the Central Bank with such information relating to the matter as is specified in the direction.
(2) A person who contravenes any provision of a directive in terms of subsection (1) shall be guilty of an offence and liable to a fine not exceeding R 500,000 or to imprisonment for a period not exceeding 12 months.
(3) If any person contravenes any provision of a directive in terms of subsection (1), whether or not criminal proceedings have been or may be instituted against the person for an offence in terms of subsection (2), the Central Bank may apply to the Supreme Court for an order directing the person to comply with the provision concerned.
(4) On an application by the Central Bank in terms of subsection (3), the Supreme Court may make such order as in its opinion will ensure proper compliance with the directive concerned.
(5) This section shall be construed as additional to, and not in substitution for, any provision of the Financial Institutions Act that permits the Central Bank to issue directions to financial institutions.
PART III - FINALITY OF SETTLEMENTS WITHIN A RECOGNISED SYSTEM OR IN THE CENTRAL BANK SYSTEM
11. (1) Notwithstanding any other written law to the contrary, a payment or transfer instruction which is entered into a recognised system or the Central Bank System shall be legally enforceable and binding on third parties, notwithstanding the commencement of the winding-up of the participant or placing of the participant under receivership, provided that the payment or transfer instruction was entered into the recognised system or the Central Bank System, as the case may be, prior to the commencement of the winding-up of the participant or placing of the participant under receivership.
(2) Where a payment or transfer instruction has been entered into a recognised system or the Central Bank System after the commencement of the winding-up of the participant or placing of the participant under receivership and is carried out on the day of the commencement of the winding-up of the participant or placing of the participant under receivership the payment or transfer instruction shall be legally enforceable and binding on third parties only if, after the time of settlement, the management body or the Central Bank System, as the case may be, can prove that it was not aware nor should have been aware of the commencement of the winding-up of the participant or placing of he participant under receivership, as the case may be.
(3) For the purposes of this section, the moment of entry of a payment or transfer instruction into a recognised system or the Central Bank System shall be determined by the rules of that system.
(4) If the Central Bank considers that the making of a payment or transfer pursuant to a payment or transfer instruction under this section is likely to result in systemic risk, the Central Bank may, by written notice to the parties concerned —
(a) prohibit the making of the payment or transfer, if it has not already been made; or
(b) set aside the payment or transfer, if it has already been made; and
(c) provide the parties with a written statement of its reasons for doing so:
provided that the payment or transfer shall not be set aside more than twenty-four hours after it has been made.
(5) Where the Central Bank has prohibited the making of a payment or transfer in terms of subsection (4) (a), a transaction effected in contravention of the prohibition shall be void.
(6) Where the Central Bank has set aside a payment or transfer in terms of subsection (4) (b), the payment or transfer concerned shall be void ab initio.
12. Notwithstanding any other written law to the contrary, any asset of a participant (in a recognised system or Central Bank System) which is provided prior to the commencement of the winding-up of the participant or placing of the participant under receivership into the system as security in respect of its payment or settlement obligations may be used to the extent required for the discharge of such obligations of the participant.
PART IV - WINDING-UP OR RECEIVERSHIP OF PARTICIPANTS IN RECOGNISED SYSTEM OR CENTRAL BANK SYSTEM
13. Where a participant in a recognised system or the Central Bank System is being wound up or placed under receivership in terms of the Companies Act or any other relevant law, the person at whose instance the winding-up or placing under receivership is being carried out shall, not less than seven (7) days before the commencement of the winding-up of the participant or placing of the participant under receivership and not more than seven (7) days after the commencement of the winding-up of the participant or the participant has been placed under receivership, send to the Central Bank, in each instance, a notice to this effect containing the prescribed particulars.
14. Notwithstanding any other written law to the contrary, where a participant in a recognised system or the Central Bank System is wound up or placed under receivership in terms of the Companies Act or any other relevant law, any provision contained in the rules of the system or, in any clearance and settlement agreement to which the participant is a party shall be binding upon the liquidator, receiver, judicial manager or administrator or other similar official, as the case may be, appointed in respect of the participant, in respect of any payment or settlement obligation which —
(a) was determined in accordance with the rules of the applicable system or, any clearance and settlement agreement or clearance and settlement to which the participant is a party, before the commencement of the winding-up of the participant or the participant was placed under receivership, as the case may be; and
(b) was either —
(i) to be discharged or transferred on or after the commencement of the winding-up of the participant or the participant being placed under receivership; or
(ii) was overdue for settlement on the commencement of the winding-up of the participant or the participant being placed under receivership.
15. (1) In this section —
“Priority transfer instruction” means a transfer instruction issued by a participant in a recognised system or the Central Bank System.
(2) Notwithstanding any other written law to the contrary, but subject to this section, where a participant in a recognised system or the Central Bank System is wound up or placed under receivership in terms of the Companies Act or any other relevant written law, the following items shall be paid from the assets of the participant, in the following order—
(a) undelivered transfer instructions, other than priority transfer instruction, that were drawn on the participant and cleared through the system before the commencement of the winding-up of the participant or the participant was placed under receivership; and
(b) undelivered priority transfer instructions that were drawn on the participant and cleared in accordance with the rules of the applicable system or, any clearance and settlement agreement before the commencement of the winding-up of the participant or the participant was placed under receivership,
and shall rank in preference above any other unsecured claim against the assets of the participant.
(3) No payment or transfer shall be made pursuant to subsection (2) in preference to any other claim against the assets of a participant unless a request for such payment or transfer has been made within sixty days after the commencement of the winding-up of the participant or the participant being placed under receivership.
(4) Subsection (2) shall not be construed as permitting a transfer instruction to be satisfied in preference to any other claim against the assets of a participant after the commencement of the winding-up of the participant or the participant being placed under receivership, where the instruction was—
(a) certified by the participant; or
(b) in the case of a priority transfer instruction, was issued by the participant,
with a view to giving the drawee of the instruction a preference over the other creditors of the participant.
PART V – GENERAL
16. A person or entity operating or participating in a system which is not a recognised system or the Central Bank System shall be guilty of an offence and liable to a fine not exceeding R 100,000 or to imprisonment for a period not exceeding 6 months.
17. (1) Subject to subsection (3), no person other than —
(a) a participant in a recognised system or the Central Bank System, acting in accordance with the rules or regulations of the system; or
(b) a person introduced by a participant in a recognised system or Central Bank System in accordance with a provision of the rules or regulations of the system,
shall, as a regular feature of the person's business, accept a transfer instruction from any other person for the purpose of making a transfer on behalf of that other person to a third person to whom the transfer is due.
(2) A person who contravenes subsection (1) shall be guilty of an offence and liable to a fine not exceeding R 200,000 or to imprisonment for a period not exceeding one year or to both such fine and such imprisonment.
(3) Subsection (1) shall not apply to —
(a) a person who is acting as the duly appointed agent of the person to whom the payment is due; or
(b) any person exempted by the Central Bank in terms of subsection (4).
(4) The Central Bank may by notice in the Official Gazette exempt any person or class of persons from the provisions of subsection (1), if the Central Bank is satisfied that such an exemption will be in the public interest and will not cause undue risk to any recognised system or the Central Bank System.
18. (1) In this section —
“business day” means any day other than a Saturday, Sunday or public holiday.
(2) If —
(a) the management body of a recognised system is aggrieved by any decision taken by the Central Bank under or for the purposes of this Act, including a decision to withdraw recognition from the system; or
(b) a participant in a recognised system or the Central Bank System is aggrieved by —
(i) a decision taken by the Central Bank under or for the purposes of this Act; or
(ii) a decision, act or omission by the management body of the recognised system or the body responsible for management of the Central Bank System, as the case may be, or
(iii) by another participant in the system,
the matter shall be settled in accordance with this section.
(3) The party aggrieved in terms of subsection (2) shall provide the Central Bank, the management body or the other participant, as the case may be, with a written statement setting out the full particulars of its grievance, and the parties shall thereupon attempt to settle the matter amicably by consensus within seven business days.
(4) If the parties are unable to settle the matter as contemplated in subsection (3), they may attempt to settle it within a further period of ten business days by a process of mediation whereby —
(a) the parties agree on a mediator;
(b) the mediator takes cognizance of the parties' respective contentions;
(c) the mediator and all parties discuss the matter at one or more meetings attended by them all, and attempt to settle the matter by consensus; and
(d) the parties share the mediator's costs equally.
(5) If the parties are unable to settle the matter by consensus in terms of subsection (3) or by mediation in terms of subsection (4), or if mediation in terms of subsection (4) has been unsuccessful, the matter shall be referred to a single arbitrator, and the provisions of the Commercial Code Act relating to arbitration shall apply in respect of the matter as if the parties had entered into an arbitration agreement contemplated by the relevant provisions of that Act:
Provided that the arbitrator shall decide on the matter in issue within one month after being appointed, unless the parties agree to an extension of that period.
(6) A decision of an arbitrator on arbitration in terms of subsection (5) shall be final and binding on the parties.
19. (1) Subject to subsections (2) and (3), no person who is—
(a) an officer or employee of the Central Bank; or
(b) a member or employee of a management body,
shall disclose any information which the person has acquired in the performance of the person's functions under this Act or the regulations or rules of a recognised system or the Central Bank System and which relates to the affairs of a participant, except when required by law or a court of competent jurisdiction to do so.
(2) The Central Bank may disclose any information whose disclosure, in the opinion of the Central Bank, is reasonably necessary to protect the integrity, effectiveness or security of a recognised system or the Central Bank System.
(3) Subsection (1) shall not apply to —
(a) any disclosure made by the person concerned in the performance of the person's functions under this Act or under the rules or regulations of any recognised system or the Central Bank System, or when required to do so by a court of competent jurisdiction or in terms of a written law; or
(b) the disclosure of information that is generally known to members of the public or a substantial section of the public.
(4) A person who contravenes subsection (1) shall be guilty of an offence and liable to a fine not exceeding R 500, 000 or to imprisonment for a period not exceeding one year or to both such fine and such imprisonment.
20. (1) Subject to subsection (2), if a person who is —
(a) an officer or employee of the Central Bank; or
(b) a member or employee of a management body,
and who for personal gain makes use of any information acquired in the performance of the person's functions under this Act or under the rules or regulations of any recognised system or the Central Bank System, and which relates to the affairs of a participant, shall be guilty of an offence and liable upon conviction to —
(i) a fine not exceeding R 500, 000 or double the amount of the person's gain, whichever is the greater; or
(ii) imprisonment for a period not exceeding five years, or to both such fine and such imprisonment.
(2) It shall be a defence to a charge under subsection (1) for the person charged to show that the information used was generally known to members of the public or to a substantial section of the public.
21. Notwithstanding any written law to the contrary, a document purporting to be signed by or on behalf of the Central Bank and stating —
(a) that a system is or is not a recognised system or the Central Bank System; or
(b) that a person is or is not a participant in a recognised system or the Central Bank System,
shall be admissible in any proceedings in any court on its production and shall be prima facie proof of the facts stated therein.
22. The entries relating to a system or a clearance and settlement system in ledgers, day-books, cash books and other accounts of any participant, whether captured manually by handwriting or computerised shall be prima facie evidence of the matters, transactions and accounts therein recorded, on proof being given by affidavit in writing of one of the directors, managers, or officers of such participant or by oral evidence, that the ledgers, day books, cash books or other account books are or have been the ordinary books of such participant and that the said entries have been made in the usual and ordinary course of business, and that the books are in or come immediately from the custody or control of the participant.
23. Notwithstanding any other written law to the contrary, photographic images such as film, microfilm, microfiche, or computer images of original documents such as cheques or other payment instruments, securities, certificates of deposits, account ledgers, shall be admissible as prima facie evidence of the matters, and of transactions of the original instrument, on proof being given on written affidavit or by oral testimony.
24. (1) A participant in a system shall maintain in Seychelles for a period of at least 7 years such records as are necessary to exhibit, clearly and correctly, its participation in the relevant system and the state of its business so as to enable the Central Bank to determine whether it is complying with this Act.
(2) The Central Bank may prescribe other records or documents that a participant must maintain for the purposes of subsection (1) and the manner in which any record may be kept.
25. (1) The Central Bank may make regulations to give effect to the purpose and provisions of this Act and, without derogating from the generality of the foregoing, may —
(a) prescribe anything which is required to be prescribed under this Act;
(b) prescribe fees or charges in respect of any matter under this Act.
(2) The Chief Justice may make rules of court relating to proceedings in court under this Act.
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NO SUBSIDIARY LEGISLATION
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