Explanatory Memorandum for Microfinance Bill, 2012 H.B. 2, 2012 Clause 17 creates an obligation upon the microfinancier to comply with the microfinanciers code of conduct. set out in the First Schedule. Part V Clause 19 emphasizes the need for every corporate microfinancier to conduct their businesses in accordance with sound administrative and accounting practises. Clause 20 provides for the constitution of the boards of corporate microfinanciers. Clause 21 makes it mandatory for every corporate microfinancier to maintain a record of transactions to clearly illustrate the state of its business and to enable it to explain transactions. Clauses 21- 22 provide for the accounts and financial records of the corporate microfinancier. Part VI This Part provides for provisions applying specifically to microfinance institutions (that is to say, corporate microfinanciersthat engage in deposit-taking microfinance business) with specific reference to the requirements for lending by microfinance institutions and employees and agents of microfinance institutions. Clauses 28- 30 provide for restrictions on the microfinance institutions on the payment of dividends, extending credits to officers, employees and certain shareholders. Clause 31 provides for the appointment of a chief executive officer of a microfinance institution and any such other officer as may be prescribed from time to time. Clause 32 prohibits the alteration of the memorandum or articles of association by microfinance institutions unless they have the written consent of the Registrar. Clause 33 provides for the minimum capital and reserves for microfinance institutions. Clause 34 provides for the limits on shareholding and transfer of shares in microfinance institutions. Clauses 35 provides for the curatorship and winding up of microfinance institutions. Part VII Clause 36 provides for the responsibilities of the Reserve Bank to continuously monitor and supervise the microfinanciers by inspecting their documents and visiting their premises. Clause 37 provides for what action is to be taken by the Reserve Bank where a microfinancier has contravened the Act or any of its conditions of registration. Clause 38 provides for investigations of microfinanciers when then have contravened provisions of this Act. It also provides for the powers of the supervisor in relation to the investigation. Clause 39-41 provide for the procedure to be followed following the completion of the investigation as well as the action to be taken by the Reserve Bank following the investigation. - ii -