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WEDNESDAY, MAY 28, 1986
SIR JOHN SAID THE INTENTION WAS FOR THE BILL TO COME INTO EFFECT THREE MONTHS AFTER ENACTMENT EXCEPT FOR THE NEW CAPITAL ADEQUACY RATIO. SINCE THIS RATIO WOULD PLACE SUBSTANTIAL REQUIREMENTS ON SOME OF THE INSTITUTIONS CONCERNED, IT WOULD BE BROUGHT INTO EFFECT IN ABOUT TWO YEARS' TIME.
HE DESCRIBED BRIEFLY THE MAIN AMENDMENTS.
CLAUSE 7(2) COMMISSIONER'S GUIDELINES
THESE INCLUDED:
HE SAID THIS CLAUSE SPELT OUT THE FUNCTIONS OF THE COMMISSIONER OF BANKING. IT REFLECTED AN APPROACH TO PRUDENTIAL SUPERVISION THAT RELIED MORE ON THE COMMISSIONER'S DISCRETION AND QUALITATIVE JUDGEMENT THAN PREVIOUSLY. IT HAD BEEN SUGGESTED THAT THE COMMISSIONER SHOULD ISSUE GUIDELINES TO THE INDUSTRY ON HOW HE WOULD EXERCISE HIS FUNCTIONS UNDER VARIOUS PROVISIONS. ALTHOUGH THERE IS NOTHING TO PREVENT HIM FROM DOING SO UNDER THE BILL AS DRAFTED. THE ADMINISTRATION ACCEPTS THAT IT WOULD BE USEFUL EXPLICITLY TO PROVIDE FOR THAT THROUGH AN AMENDMENT TO THIS CLAUSE,' SIR JOHN SAID, 'THE COMMISSIONER WILL ISSUE THESE GUIDELINES ONLY AFTER THE NECESSARY CONSULTATIONS WITH THE INDUSTRY AND THE ADVISORY COMMITTEES,"
CLAUSES 44(7) ETC: APPEALS
AMENDMENTS WOULD BE MOVED TO CLAUSES 44(7), 46(7), 49(7), 70(5) AND 72(4), TO PROVIDE FOR APPEALS TO THE GOVERNOR IN COUNCIL IN RESPECT OF CONDITIONS WHICH THE COMMISSIONER ATTACHED TO HIS APPROVALS TO THE ESTABLISHMENT OF BRANCHES, EXERCISE OF VOTING POWER, GIVING OF DIRECTIONS AND INSTRUCTIONS BY CONTROLLERS, AND THE APPOINTMENT OF SECRETARIES.
CLAUSES 70, 71: SUBSTANTIAL SHAREHOLDERS
CONTROL OF OWERNSHIP IN LOCALLY INCORPORATED INSTITUTIONS WAS AN ESSENTIAL PROPOSAL OF THE BILL, AND WAS EMBODIED IN CLAUSES 70 AND 71, SIR JOHN SAID. HOWEVER, AS THERE WERE LIKELY TO BE CONSIDERABLE DIFFICULTIES IN IMPLEMENTING CLAUSE 71, IT WOULD BE DELETED. THIS MEANT THAT THE ONLY SANCTION AGAINST SUBSTANTIAL SHAREHOLDERS VOTING WITHOUT THE COMMISSIONER'S APPROVAL (AS REQUIRED UNDER CLAUSE 70) WOULD BE THE PENALTY UNDER CLAUSE 70(6). IT WAS CONSIDERED THEREFORE THAT THAT PENALTY SHOULD BE RAISED -- TO $500 000 AND FIVE YEARS' IMPRISONMENT.
CLAUSE 72. APPOINTMENT OF DIRECTORS
SINCE IT WAS CUSTOMARY IN HONG KONG FOR A DIRECTOR FORMALLY TO RETIRE AFTER A THREE-YEAR TERM, AND TO BE REAPPOINTED IF REQUIRED, THE ADMINISTRATION HAD ACCEPTED THE SUGGESTION THAT SUCH ROTATING DIRECTORS, ON REAPPOINTMENT, SHOULD NOT REQUIRE THE COMMISSIONER'S APPROVAL.
/CLAUSE 76: