XN000022-1981-05-13 — Page 7

WEDNESDAY, MAY 13, 1981

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SIR PHILIP SAID CLAUSE 9 OF THE BILL SEEKS TO INCREASE FROM $10 MILLION TO $100 MILLION THE MINIMUM PAID-UP SHARE CAPITAL OF A LICENSED BANK WHICH IS INCORPORATED IN HONG KONG. A TRANSITIONAL PERIOD OF 24 MONTHS, OR LONGER AT THE DISCRETION OF THE GOVERNOR IN COUNCIL, FOR AN INDIVIDUAL BANK, IS SET TO ALLOW THE 23 LOCALLY INCORPORATED BANKS WITH CAPITAL OF LESS THAN $100 MILLION TO ATTAIN THIS NEW MINIMUM,

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HE ALSO SAID THE MINIMUM CAPITAL REQUIREMENT WOULD NO LONGER APPLY TO THOSE LICENSED BANKS INCORPORATED OUTSIDE HONG KONG BECAUSE THE BANKING AUTHORITIES IN THE COUNTRIES OF ORIGIN HAD THE RESPONSIBILITY TO ENSURE THAT THEY HAD AN ADEQUATE CAPITAL STRUCTURE FOR THEIR BUSINESS.

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SIMILARLY, THE BILL NO LONGER APPLIED THE MINIMUM CAPITAL REQUIREMENT TO AN APPLICANT FOR A BANKING LICENCE INCORPORATED OUTSIDE HONG KONG.

+ THE REASON FOR THIS IS THAT THE CRITERIA UNDER WHICH BANKS INCORPORATED OUTSIDE HONG KONG ARE 'CONSIDERED, WHEN THEY APPLY FOR A LICENCE, ARE DETERMINED BY THE GOVERNOR IN COUNCIL FROM TIME TO TIME, HE SAID.

SIR PHILIP SAID CLAUSE 8 SEEKS TO RAISE FROM $20 MILLION TO $200 MILLION THE LEVEL OF PA ID-UP SHARE CAPITAL AND PUBLISHED RESERVES WHICH A LICENSED BANK INCORPORATED IN HONG KONG HAS TO ATTAIN BEFORE IT CAN PAY OUT IN DIVIDENDS MORE THAN TWO-THIRDS OF ITS ANNUAL PUBLISHED PROF ITS AFTER TAX. THIS INCREASE REFLECTS THE PROPOSED 10-FOLD INCREASE IN THE MINIMUM PAID-UP SHARE CAPITAL.

+THIS PROVISION WILL ALSO NOW APPLY ONLY TO LICENSED BANKS WHICH ARE INCORPORATED IN HONG KONG.

+CLAUSE 10 OF THE BILL SEEKS TO RAISE FROM $20 MILLION TO $200 MILLION THE LEVEL OF PAID-UP SHARE CAPITAL AND PUBLISHED RESERVES WHICH A LICENSED BANK INCORPORATED IN HONG KONG HAS TO ATTAIN BEFORE IT CAN MAKE ANY DISTRIBUTION OF EXTRAORDINARY PROFITS.

+THIS INCREASE AGAIN REFLECTS THE 10-FOLD INCREASE IN THE MINIMUM PAID-UP SHARE CAPITAL SET OUT IN CLAUSE 9.

+CLAUSE 12 OF THE BILL SEEKS TO REDUCE FROM 25 PER CENT OF A BANK'S PAID-UP CAPITAL AND RESERVES TO 10 PER CENT THE LIMIT ON THE TOTAL AMOUNT WHICH A LICENSED BANK MAY ADVANCE, BY WAY OF UNSECURED LOANS OR OTHER UNSECURED FACILITIES, TO ALL ITS DIRECTORS, THE IR RELATIVES, AND ANY PRIVATE COMPANIES CONNECTED WITH ITS DIRECTORS OR THEIR RELATIVES- AND IT SEEKS TO PLACE AN ABSOLUTE CEILING OF $250 000 ON EACH UNSECURED LOAN OR FACILITY GRANTED TO A DIRECTOR, OR A RELATIVE OF A DIRECTOR.

+CLAUSE 11 EASES THE EXISTING RESTRICTIONS ON LOANS AND ADVANCES MADE BY A LICENSED BANK TO A SINGLE CUSTOMER.

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