ON TIME’S LICENCE FOR GENERAL DEALER - FSRA

MBABANE – Preliminary investigations by FSRA have revealed that Sukke On Time Investments allegedly operated unlawfully.
Sukke On Time Investment is the company in which thousands of emaSwati invested their monies which they now want back.

This after the company allegedly unilaterally severed their contracts with it.
The investigations by the Financial Services Regulatory Authority (FSRA), also unearthed that the company is not licensed to carry out business of a financial services provider.

It was also allegedly uncovered that Sukke On Time Investments only holds a licence of a general dealer and was only authourised to trade as ‘On Time General Dealer’.

FSRA and the Central Bank of Eswatini yesterday filed an application at the High Court to be joined as co-applicants in the matter where a number of people who invested in the company want the court to issue a final order to freeze its two bank accounts.

Interdicting

The ‘investors’ are further seeking an order to interdict  On Time Investments from utilising, withdrawing, transferring, alienating in any manner whatsoever the amount of money held with the EswatiniBank and First National Bank.
In his founding affidavit, FSRA Acting Chief Executive Officer, Bukhosi Dlamini, submitted that on or about the month of October 2019, the authority became aware of a matter before the High Court wherein the applicants sought certain interdictory relief against the company. He asserted that on enquiry, it transpired that the company (Sukke On Time Investments) was being accused of conduct involving the handling and/or receiving monies from the general public.

Dlamini averred that FSRA, in line with its mandate as the supervisor and administrator of the Financial Services Regulatory Authority Act, 2010 thereafter embarked on preliminary investigation into Sukke On Time Investments business model and the operational licence the company held.

“It transpired that the company invited the entire public through advertisements to ‘invest’ with it.  The nature of the investment is such that participants deposit funds with the company and it thereafter acquires certain assets which are then ‘leased’ by the ‘investor’ back to the company at monthly fee,” submitted Dlamini.

He went on to inform the court that investigations revealed that a number of people reacted to the invitation by the company and funds were deposited or ‘invested’ with it.
According to the acting chief executive officer, the company’s business model fell within the definition of a Collective Investment Scheme in terms of Section 2 of the Securities Act of 2010.

Investment

The Act provides as follows: “Collective investment scheme means any arrangement in respect of property of any description, including money, the purpose of which is to enable a person taking part in the arrangement, whether by becoming the owner of the property or any part of it or otherwise, to participate in or receive profits or income arising from the acquisition, holding management or disposal of the property or sums paid out of the profits or income.”

Dlamini informed the court that a collective investment scheme was a financial services provider within the meaning of Section 2 of the FSRA Act.
He contended that in terms of Section 35 of the FSRA Act, Sukke On Time Investments was prevented from carrying out business of a financial services provider without the necessary authorisation or permission.

Dlamini contended that the company had been conducting its business unlawfully.  He told the court the company’s business model further infringed the provisions of Section 87, which dealt with advertisements offering securities.

These are allegations whose veracity is still to be tested.
“The effect of the advertisement is two-fold. Firstly, they convey a message that the issuer is duly authorised to engage in the business so advertised. Secondly they contravene Section 88 of the Securities Act in that they are issued without compliance with the conditional requirements of submitting a prospectus for the approval of the Registrar of Capital Markets prior to the issue of any advertisement,” averred the acting chief executive officer.

He argued that the domino effect was obviously none- compliance with Section 89, 90, 91 and 92 of the Securities Act.
The matter is still pending before Principal Judge Qinisile Mabuza.
FSRA and the Central Bank of Eswatini are represented by lawyers from Warring Attorneys in Mbabane.

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