XN000022-1995-06-28 — Page 31

- 11 -

Clause 18(b)

On returns and information to be submitted by institutions, the new section 63(2A) as amended by new clause 18(b) requires the holding company and sister companies of an institution, among others, to submit the appropriate information to the Monetary Authority. Such a request for information will only be made by the Monetary Authority when he considers it reasonable to do so for the purpose of exercising his functions under the Ordinance. Furthermore, a new criterion has been introduced so that the Monetary Authority must consider that the information is necessary in the interests of the depositors or potential depositors of the institution concerned.

Clause 24

Institutions are at present required to limit their exposure to a single party or to a group of connected parties to an amount equivalent to 25 per cent of their capital base, in accordance with section 81 of the Ordinance. The new section 81(4A) as amended by new clause 24 will mean that institutions will not have to add together, and regard as group exposure for the purposes of section 81, their exposures to individual public sector entities which are wholly owned by the Government, such as the Kowloon-Canton Railway Corporation, or the Financial Secretary Incorporated in trust on behalf of the Government, such as the Mass Transit Railway Corporation. This would remove a potential impediment to the fund-raising efforts of such public sector entities when they issue debt instruments in future to finance infrastructural projects. However, exposures to the public sector entities, taken individually, will still be subject to the section 81 limit. The new clause 24(b) allows the Financial Secretary to amend section 81(6) which sets out the types of exposure which are exempted from section 81.

Clause 26

Regarding the limitation on unsecured advances to directors, controllers and certain employees of institutions, section 83(4)(c) is amended by new clause 26(a) to clarify that the relevant limitation is applied to employees of an institution who are responsible for approving the loan, instead of to all employees who have a role in the process of determining the loan application.