XN000022-1986-03-07 — Page 5

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FRIDAY, MARCH 7, 1986

AFTER COMMENCEMENT OF THE BILL, ANY PERSON WHO, INDIVIDUALLY OR IN CONCERT WITH OTHERS, ACQUIRES SHARES WHICH BRING HIS HOLDING TO 10 PER CENT OR MORE OF THE VOTING SHARES OF THE LOCAL INSTITUTION WILL NEED THE COMMISSIONER'S APPROVAL BEFORE HE IS ABLE TO EXERCISE HIS VOTING RIGHTS IN THOSE ACQUIRED SHARES.

AS A SANCTION TO SUPPORT THIS REQUIREMENT, ALL RESOLUTIONS OF THE INSTITUTION MADE IN RELIANCE UPON THE UNAPPROVED VOTING SHARES WHICH COULD NOT OTHERWISE HAVE BEEN MADE WILL BE VOID, BUT THE RIGHT OF THIRD PARTIES DEALING WITH THE INSTITUTION IN GOOD FAITH WILL BE PROTECTED.

ALL THE BILL ALSO REQUIRES THAT, AFTER COMMENCEMENT, APPOINTMENTS TO DIRECTOR AND COMPANY SECRETARY POSTS OF A LOCAL INSTITUTION BE SUBJECT TO THE COMMISSIONER'S PRIOR APPROVAL.

THE COMMISSIONER'S CONTROL ALSO EXTENDS TO THE +CONTROLLER+ A PERSON (INCLUDING A BODY CORPORATE) IN ACCORDANCE WITH WHOSE DIRECTIONS OR INSTRUCTIONS THE DIRECTORS OF AN INSTITUTION OR OF ITS HOLDING COMPANY ARE ACCUSTOMED TO ACT: OR A PERSON WHO CONTROLS MORE THAN 50 PER CENT OF THE VOTING SHARES OF THAT INSTITUTION OR OF ITS HOLDING COMPANY. ANY CONTROLLER WILL HAVE TO SEEK THE COMMISSIONER'S APPROVAL BEFORE CONTINUING TO GIVE DIRECTIONS OR INSTRUCTIONS TO THE INSTITUTION.

RESTRICTION ON LOANS

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THE BILL PLACES NEW RESTRICTIONS IN ADDITION TO THOSE IN THE PRESENT ORDINANCES ON LOANS BY AUTHORISED INSTITUTIONS. IT REQUIRES THAT AN INSTITUTION SHALL NOT, EXCEPT WITH THE COMMISSIONER'S APPROVAL, GRANT ANY ADVANCE, LOAN OR CREDIT FACILITY AGAINST THE SECURITY OF THE SHARES OF ITS HOLDING COMPANY (IF ANY) OR ANY SUBSIDIARY OF THE INSTITUTION OR SUCH HOLDING COMPANY.

IT ALSO PROVIDES THAT THE COMMISSIONER MAY, BY NOTICE IN THE GAZETTE, ISSUE DIRECTIONS TO AUTHORISED INSTITUTIONS NOT TO ENGAGE IN SPECIFIED BUSINESS PRACTICES WHICH, IN THE COMMISSIONER'S OPINION, WILL OR MAY CAUSE THE SOUNDNESS OF THE FINANCIAL POSITION OF AN AUTHORISED INSTITUTION TO BE DEPENDENT UPON THE SOUNDNESS OF THE FINANCIAL POSITION OF A SINGLE PARTY.

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