XN000022-1991-04-19 — Page 10

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FRIDAY, APRIL 19, 1991

BILL TO CLARIFY VALIDALITY OF LOAN SECURITY

* * *

THE LAW AMENDMENT AND REFORM (CONSOLIDATION) 1991 WAS PUBLISHED IN THE GAZETTE TODAY (FRIDAY).

(AMENDMENT}

BILL

OF BANKS

AND CREDIT THEM BY

A GOVERNMENT SPOKESMAN SAID THE COMMON PRACTICE OTHER LENDING INSTITUTIONS TO SEEK TO SECURE LOANS AND

DEPOSITS HELD WITH FACILITIES BY TAKING CHARGES OVER CASH

DOUBT INTO

BY A BORROWERS OR THIRD PARTIES HAD BEEN DECISION IN THE UNITED KINGDOM IN 1986.

THROWN

"THE BILL IS INTENDED TO PUT IT BEYOND DOUBT THAT THE IS AND ALWAYS HAS BEEN VALID," HE SAID.

COURT

PRACTICE

IT WAS HELD

BY

FROM

IN RE. CHARGE CARD SERVICES LTD (1986) 3 WLR697, THAT, WHEREAS A PERSON MIGHT TAKE A VALID SECURITY OVER A DEBT DUE

A SECURITY ANOTHER, HE COULD NOT TAKE SUCH

OVER

DUE A DEBT

HIMSELF.

"A BANK DEPOSIT IS A DEBT DUE BY A BANK, THE SPOKESMAN SAID.

VALID SECURITY ANOTHER BANK OR A TAKE A MORTGAGE

"THE DECISION IMPLIES THAT A BANK MIGHT TAKE A OVER A DEPOSIT HELD BY A THIRD PARTY, SAY SUBSIDIARY DEPOSIT TAKING COMPANY, BUT IT COULD NOT OR CHARGE OVER A DEPOSIT LODGED BY THE BORROWER OR A THIRD PARTY ITSELF, HE ADDED.

"

THE SPOKESMAN SAID

BOTH IN

THE CHARGE

CARD

HAÐ DECISION

WITH

HAD

GENERATED FINANCIAL

LED

то

CONSIDERABLE CONTROVERSY AND CONFUSION WITHIN THE LEGAL AND COMMUNITIES

AND HONG KONG,

AND CONSIDERABLE DISRUPTION TO BANKING PRACTICE IN HONG KONG.

ENGLAND

AN ENGLISH SUPERIOR "A REVIEW OF THE CHARGE CARD DECISION BY

CONSIDERED COURT APPEARS UNLIKELY SINCE THIS PARTICULAR POINT WAS NOT

INSOLVENCY LEGISLATION HAS BEEN ON APPEAL ON THE CASE, AND ENGLISH AMENDED SUBSEQUENTLY, HE SAID.

+

THE SPOKESMAN

UNSATISFACTORY.

SAID THE STATE OF

UNCERTAINTY WAS HIGHLY

AND

BANK ING COMMUNITY IN "AFTER CONSULTATION WITH THE LEGAL

IT WAS DECIDED AUGUST 1990 ON HOW THE PROBLEM SHOULD BE DEALT WITH, THAT THE PROBLEM SHOULD BE ADDRESSED BY WAY OF LEGISLATIVE AMENDMENT, HE SAID.

•

LAW AMENDMENT AND THE BILL SEEKS TO ADD A NEW SECTION TO THE

PUT IT BEYOND DOUBT THAT THE REFORM (CONSOLIDATION) ORDINANCE TO

A SECURING

LOAN MADE BY IT BY PRACTICE OF A LENDING INSTITUTION

LAW ENFORCEABLE LEVEL TAKING A CHARGE OR MORTGAGE OVER AN ACTION AT

BEEN AGAINST IT BY THE BORROWER OR BY A THIRD PARTY IS AND ALWAYS HAS VALID.

THE BILL IS EXPECTD COUNCIL ON MAY 29.

BE TO

INTRODUCED INTO THE

LEGISLATIVE

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