9
Clause 133: Validity of contracts
21.
Clause 133, which is carried over from the existing Banking Ordinance and DTC Ordinance, provides, inter alia, that, in case of contravention of this Ordinance on the entering into of any contract, the institution may enforce the contract if the court is satisfied that the institution exercised all due diligence to avoid the contravention of the prohibition. One of the representations has drawn our attention to the difficulties this provision has caused in a recent case where a deposit-taking company could not enforce repayment of some loans due to it. clearly not in the interest of depositors of the institution. The more sensible alternative is to provide that contravention of this Ordinance on the entering into of any contract will not render that contract unenforceable. But contravention of any provision of this Ordinance, of course, will attract the sanction provided for under that provision.
This is
Schedules 3 and 4: Capital to risk assets ratio and liquidity ratio
22.
Schedules 3 and 4 on the capital to risk assets
Indeed, a ratio and liquidity ratio are technical. number of technical terms are used on the possibly naive assumption that their meanings are well understood among the professions. It is clear from the many comments received, however, that this assumption is not necessarily well founded. The two schedules have therefore been completely re-drafted to use language as legally precise as possible. Despite the complete re-drafting, there has been little change in the substance; the only point I should mention is that instead of deducting from the capital base investment in companies, not being subsidiaries, in which the authorized institution holds 20% or more of shares, such