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Newsflash: Tobacco Control Act No 19. of 2021

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The Tobacco Control Act No. 19 of 2021 (The Act) will be the primary tobacco control law in Botswana. The Act was passed on October 2021 however, it has not commenced yet. The Act repeals the Control of Smoking Act (Cap 65:04). The Act keeps pace with global tobacco control recommendations and provides for effective regulation of new tobacco products.

The Act governs several aspects of tobacco control including but not limited to licencing, the ban of smoking in public areas or enclosed areas, a ban of retailers displaying cigarettes and prohibition of sale to or by persons of the age of 21.

NOTABLE PROVISIONS

Tobacco Control Committee 

The Act establishes the Tobacco Control Committee which will provide oversight in the implementation of the provisions of the Act.

Licensing

The Act provides for four types of licences namely: –

  • tobacco manufacturing licence;
  • tobacco importing licence;
  • tobacco exporting licence; and
  • tobacco sales licence.

No sale of tobacco or any tobacco products will be permitted without a licence. The licence shall be valid for a period of 1 (one) year from the date of issue. Furthermore, it will be an offence to purchase any tobacco or tobacco product from an unlicensed vendor. The Act provides for the following sanctions:

  • a manufacturer who sells any tobacco product without a licence will be liable to a fine of BWP750 000 or to imprisonment for a term not exceeding a period of 4 (four) years or to both;
  • a wholesaler, importer or exporter who sells any tobacco product without a licence will be liable to a fine of not more than BWP5000.00, or to imprisonment for a term not exceeding a period of 6(six) months or to both;
  • a person who buys tobacco products will be liable to a fine not exceeding  BWP2000, or to imprisonment for a term not exceeding 5(five) months or to both.

In addition to the fines and imprisonment, the Tobacco Control Committee may seize or destroy any tobacco or tobacco products sold or manufactured without a licence.

Minimum package size for smoked tobacco products

A manufacturer will not be allowed to distribute or sell any smoked tobacco product unless the tobacco product is contained in a sealed unit packet of at-least 20 sticks.

Sale Restrictions to Persons Under the Age of 21

Persons under the age of 21 will not be allowed to sell or buy cigarettes.

Prohibition of Tobacco Display

Shops and stores will not be allowed to display any tobacco products, including at a point of sale. Any person who contravenes this provision will be liable to a fine not exceeding BWP 1000 000.00 or imprisonment to a term not exceeding 10 (ten) years.

The information contained in this newsflash was intended for our clients and correct to the best of the author’s knowledge at the time of publication. Before making any decision or taking any action, please consult us, at info@peolegal.co.bw or +267 3975779.

Newsflash: The Economic Inclusion Bill, 2021

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The Economic Inclusion Bill, 2021 (the Bill) was published on the 8th of July 2021. The object of the Bill is to promote effective participation of targeted citizens in the economic growth and development of the economy. Currently Botswana does not have standalone citizen economic inclusion legislation, instead citizen economic empowerment provisions are captured across various statutes, policies, initiatives and directives. Through the Economic Empowerment Office, the Bill aims to facilitate enforcement of the economic empowerment laws and initiatives, ensure compliance, foster accountability and the monitoring and evaluation of implementation and compliance. The intention is to develop empowerment programmes that are non-homogenous but target specific.

The Bill applies to all sectors of the economy, public bodies and any private sector employer that plays a significant role in economic empowerment. The Bill proposes the development of an integrated, coordinated and uniform approach to economic transformation and empowerment.

At this juncture, it is unclear if the Bill will have overriding powers in respect of conflicting legislation.

NOTABLE DEFINITIONS

 

Citizen Owned Enterprise: means an enterprise wholly owned by a targeted citizen or jointly by targeted citizens.

Economic Empowerment: means the capacitation of a targeted person to participate, contribute and benefit from economic growth processes.

Empowerment: means any practice, scheme or programme aimed at enhancing and promoting economic empowerment.

Fronting: means obtaining an economic empowerment initiative, programme or scheme benefit to enable another person, who would otherwise not qualify to obtain such an empowerment benefit.

Public Body: means any office, organisation, establishment or body created by or under any enactment or under powers conferred by any enactment; and includes any enterprise in which government has equity shares or any organisation or body where public moneys are used.

Non-State Actor: means any other entity other than that owned by the State.

Professional body: means an organisation with individual members practising a profession or occupation in which the organisation maintains an oversight over the knowledge, skills, conduct and practice of that profession or occupation.

Targeted citizen: means a citizen whose access to economic resources has been constrained by such various factors as may be determined.

NOTABLE PROVISIONS

In addition to existing provisions relating to reservation of trades, preferential treatment and localisation requirements, some of the proposed provisions in the Bill include the following:-

Ownership of land and property: A public body shall enable ownership of land and property by targeted citizens. This shall include, inter alia:- 

  • providing opportunities to own productive land and assets including businesses; and
  • providing specific measures and criteria for access to commercial, industrial, civic and community land.

Investment Opportunities: A public body shall create investment opportunities for targeted citizens through, inter alia:- 

  • making assets in the public sector accessible by accelerating the process of privatisation of public institutions and increasing participation in shareholding in Botswana Stock Exchange listed companies; and
  • prohibiting the allotting, issuing, or transferring of any portion of a private sector enterprise that is owned and controlled by a targeted citizen to a non-citizen or a citizen that is not targeted.

Empowerment Programmes: A public body shall implement economic empowerment programmes to empower targeted citizens through, inter alia:- 

  • promoting economic empowerment investment programmes that lead to inclusiveness and meaningful participation in the economy; and
  • encouraging partnership between targeted citizens and foreign enterprises at a percentage to be determined from time to time.

Representation of Target Citizens: A public body shall create an enabling environment for representation of targeted citizens in the work force through:- 

  • entrenching assumption of a leadership position for a targeted citizen where there is partnership with foreign investors; and
  • ensuring that where a targeted citizen qualifies and is available, such citizen is equitably represented at Board and management level in the workforce.

Representation in Professional Bodies: A professional body shall ensure that there is a minimum representation of 50% of citizens in its executive 

Capacity Development: A public body shall create an environment that re-focuses the capacity development of targeted citizens towards production of quality products. 

Combating Fronting: A public body shall implement economic empowerment laws, policies, initiatives and programmes to combat fronting or corruption, and create capacity to investigate fronting.

Role of Private Sector: A private sector enterprise that is non-citizen owned or non- targeted citizen owned shall, inter alia:- 

  • mentor and share knowledge and technology regarding business development and market penetration with a targeted citizen;
  • partake in activities that build capacity of targeted citizens; and 
  • develop sector codes and codes of good practice for economic empowerment. 

Foreign Investors: Foreign investors shall empower targeted citizens through participation in the value chain and through other measures as the Minister may prescribe.

Economic Empowerment Standards: A public body shall apply economic empowerment standards as may be prescribed, including −

  • determining qualification criteria for the issuing of licenses, concessions or other authorisations; and
  • applying preferential treatment to private sector enterprises that achieve applicable economic empowerment of targeted citizens.

Offences and Penalties: A person committing an offence in terms of the Bill may be subjected to a fine not of not less than P5 000 but not exceeding P1 000 000, or to imprisonment for a term of not less than six months, and not exceeding 10 years. A public body, enterprise, member of the private sector or any relevant party committing an offence in terms of the Bill may be subjected to a fine of not less than P5 000 and not exceeding P10 000 000 for organisations. In instances of breach of compliance, the organisation or individual may be blacklisted from bidding for government tenders.

 

Should you require any assistance with the implications and application of the proposed Bill please feel free to contact us on info@peolegal.co.bw or +267 3975779.

The information contained in this newsflash was intended for our clients and correct to the best of the authors knowledge at the time of publication. Before making any decision or taking any action, you should consult the contacts listed here.

 

Newsflash: Know Your Customer

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Know Your Customer in terms of the Financial Intelligence Act, 2019.

What is customer due diligence? 

In terms of the Financial Intelligence Act, 2019 (FIA Act) “Customer due diligence means the process where relevant information about the customer is collected and evaluated for any potential risk of commission of a financial offence.”  This includes obtaining information about who the customer is through Know Your Customer (KYC) forms, independent verification of  this information, conducting a risk assessment on the customer and ensuring all information in respect of the customer is kept up to date. Upon the completion of a customer due diligence process, the customer’s risk rating in respect of money laundering, terrorist finance and proliferation is categorised and this rating will determine if any further information is required from the customer.

Who is responsible for conducting customer due diligence?

In terms of Section 14 of the FIA Act, a specified party or accountable institution shall conduct customer due diligence when:-

  1. when establishing a business relationship or concluding a transaction with a customer;
  2. when carrying out a transaction in excess of P10 000. 00 on behalf or on the instruction of a customer or any person, whether conducted as a single transaction or several transactions that appear to be linked;
  3. when carrying out a domestic or international wire transfer;
  4. when there is doubt about the veracity of previously obtained customer identification and data; and
  5. where there is suspicion of a financial offence

Specified institutions are listed in Schedule 1 of the FIA Act and include, but are not limited to, an attorney, an accountant and a bank.  An accountable institution is any legal entity incorporated or registered under any law. This means every company or registered entity is required to conduct customer due diligence in accordance with the FIA Act.

A specified party or accountable institution who fails to conduct customer due diligence shall be liable to a fine of  BWP1 000 000.

For purposes of KYC a specified or accountable institution is required before conducting a business relationship or carrying out a transaction to:-

  1. establish and verify the identity of a customer, unless the identity of that customer is known and has been verified by the specified party;
  2. establish and verify the identity of the beneficial owner;
  3. collect information to enable understanding of the anticipated  purpose and intended nature of the business relationship or transaction; and
  4. obtain approval of senior management where the business relationship or transaction is established in a high-risk jurisdiction or involves a high-risk business.

Where the customer is acting on behalf of another person, the specified party or accountable institution shall establish:- —

  1. the identity of the person on whose behalf the customer is acting;
  2. and verify the customer’s authority to establish the business relationship or to conclude the transaction on behalf of that other  person; and
  3. verify the other person’s identity on the basis of documents or information obtained from a reliable source which is independent of both the customer and the person on whose behalf the customer is acting

For purposes of section 16 of the FIA Act, the proof of the identity of the customer shall be through:-

  1. production of a National Identity Card for citizens;
  2. production of a passport for non-citizens;
  3. in relation to a company —
    1. a certificate of incorporation or a certificate of registration,
    2. trading licence, and
    3. ownership and control structure and directors;
  4. a deed of trust; or
  5. such other identity document as the Minister may prescribe from time to time. 

Where a specified party had previously established a business relationship with a customer before the coming into force of the FIA Act, the specified party or accountable institution shall apply the customer due diligence measures on that customer.

A  person who transacts business with a  specified party or accountable institution using false identification documents commits an offence and is liable to a fine not exceeding P500 000 or to imprisonment for a term not exceeding 10 years or to both. A  specified party or accountable institution that fails to verify the identity of a customer shall be liable to a fine not exceeding  BWP1  000 000 as may be imposed by the supervisory authority.

Though Botswana has made real progress in strengthening its AML/CFT framework, the obligation lies with all registered and incorporated entities to do their part.

For all your compliance, policy, training, AML and KYC needs please feel free to contact us at info@peolegal.co.bw or +267 3975779.

The information contained in this newsflash was intended for our clients and correct to the best of the authors knowledge at the time of publication. Before making any decision or taking any action, you should consult the contacts listed here

Newsflash: Director fiduciary duties in Botswana

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The Companies Act [CAP 42:01] (the Companies Act) provides that the business and affairs of a company shall be managed by, or under the direction or supervision of the company’s board of directors. Directors are the directing mind of the company and their acts are regarded as those of the company. 

In order to protect the company and its shareholders from prejudice, both the common law and statutory law require directors to comply with standards of conduct and a degree of care, diligence and skill in the discharge of their duties- these standards are referred to as fiduciary duties.  In Botswana, these fiduciary duties are detailed in section 130 of the Companies Act and include the duty:- 

  • to exercise their powers honestly, in good faith and in the best interest of the company
  • not to incur company obligations unless the director believes that the company will be able to perform the obligation when required to do so
  • not to use or disclose company confidential information
  • not to compete with the company or become a director of a competitor 
  • not to use assets of the company without authorisation 
  • to attend board meetings regularly and to have prepared for them
  • to account to the company for any monetary gain or advantage obtained by a director in connection with the exercise of his powers

The obligation is on the director to ensure that he has familiarised himself with both the statutory and common law fiduciary duties. 

In the case of Mbonini and Another v Masunga Filling Station (Pty) Ltd and Others, Mr Mbonini was a director of Masunga Filling Station and was found to have utilised company assets and funds for his own benefit to the prejudice of the company. The Court of Appeal determined that his conduct was a clear breach of his fiduciary duties, and entitled the company to a refund of amounts claimed.  The court held that the question of whether a director acted in good faith and in the interests of the company is an objective one; that is, “ whether an intelligent and honest person in the position of the director would, in the overall circumstances , have reasonably believed that he was acting in the best interests of the company rather than in his own and to the prejudice of his company.” The obligation is on the director to show that he had reasonable grounds for believing he was acting otherwise. 

In determining the appropriate sanctions in instances of breach of fiduciary duties, the court  in Mbonini noted that a breach of a fiduciary duty does not necessarily involve fault – “For example if a director were to obtain separate profit, the company could claim such profit from him without alleging fraud.  An action of that kind could be described as sui generis.  The claim would arise merely by virtue of the fact that the director in breach of his fiduciary duty, obtained for himself a secret profit which he should have obtained for the company.” In addition, the Court held that a breach of fiduciary duties can give rise to a claim for either a repayment of profit made or a claim for damages.  

Mbonini is a timely reminder to directors to familiarise themselves with their fiduciary duties and act in accordance with them at all times. It also demonstrates that the law protects the company where directors have misappropriated funds or assets for their own benefit. The court will not hesitate to give an appropriate damages or refund remedy in cases of breach of fiduciary duties.

Please do not hesitate to contact us on info@peolegal.co.bw or +267 3975779 for all your corporate governance and training needs. 

The information contained in this newsflash was intended for our clients and correct to the best of the authors knowledge at the time of publication. Before making any decision or taking any action, you should consult the contacts listed here.

Newsflash: GABCON reaches a compromise with the Competition and Consumer Authority

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The Competition and Consumer Authority Botswana (CCAB) has entered into a settlement Agreement with Gaborone Container Terminal (Proprietary) Limited (GABCON) in a matter before the Competition and Consumer Tribunal. In this matter, GABCON was charged with contravention of Section 31(1) of the Competition Act 2018 (the Act) which deals with the abuse of dominance. GABCON has since admitted to engaging in abusive conduct through anti-competitive practices and has made commitments to ensure compliance with the aforesaid section of the Act. "

Sourced from Internet Archives

GABCON is a joint venture between Botswana Railways Organisation and Transnet licensed to carry on the business of a dry port and container depot in Botswana. GABCON facilitates the movement of containers by rail to and from the South African seas and dry ports linking to the rest of the world’s international ports. In the business of haulage or delivery of containers from the GABCON facilities to the customers’ premises, GABCON is subject to competition from private hauliers. 

In 2017, the CCAB received a complaint from a group of private hauliers alleging that GABCON had imposed restrictions preventing them from efficiently servicing their customers and effectively forcing them out of business. The allegation was that GABCON revised its transport and delivery policies such that every transporter entering the GABCON facilities was required to have a permit and to pay an entrance fee. 

In their investigations, the CCAB established that the private haulier trucks collecting containers at GABCON were subjected to several anti-competitive requirements which were detrimental to their businesses including:

  • the introduction of the 75/25% rule which meant that only 25% of the  containers was allocated to private hauliers; and
  • imposing stringent conditions on private hauliers which included excessive prices and use of permits to access the facility.

According to the investigations of the CCAB, GABCON was contravening the Act by engaging in conduct amounting to abuse of dominance through refusal to deal and excessive pricing behaviour.

The parties have entered into a settlement agreement in terms of which:

  • GABCON has made commitments that it will desist from all anti-competitive practices.
  • Private hauliers will be consulted regarding any increase in access fees before such increments are operational.
  • GABCON will revise its policy on the registration of trucks, trailers, and drivers to ensure that it is compliant with prevailing competition laws.
  • GABCON will cease and desist from imposing the 25/75% restriction and implement a policy which is compliant with the prevailing competition laws.
  • GABCON will develop, implement, and monitor a competition law compliance programme incorporating corporate governance designed to ensure that its employees and agents do not engage in future contraventions of the Act.
  • GABCON will submit a copy of a compliance programme to the authority within 30 days of the date of the Confirmation of the settlement agreement.

For assistance with any matter relating to the Competition Act, 2018 and compliance matters please contact us on +267 397 5779 or info@peolegal.co.bw 

Source: Competition & Consumer Authority-Botswana

The information contained in this newsflash was intended for our clients and correct to the best of the authors knowledge at the time of publication. Before making any decision or taking any action, you should consult the contacts listed here.