A190
Commissioner
may publish
guidelines on
business practices
of authorized institutions.
Limitation on advances to directors, etc. of bank.
Ord. No. 27/86
BANKING
Provided that the reference in this paragraph to a guarantor shall not include a person (not being an authorized institution) who guarantees the obligations of another under-
(i) a hire purchase agreement, that is to say an agreement for the bailment of goods under which the bailee may buy the goods, or under which the property in the goods will or may pass to the bailee; or
(ii) a conditional sale agreement, that is to say an agreement for the sale of goods under which the purchase price or part of it is payable by instalments, and the property in the goods is to remain in the seller (notwithstanding that the buyer is to be in possession of the goods) until such conditions as to payment of instalments or otherwise as may be specified in the agreement are fulfilled; and
(e) the expression "letter of comfort" means a letter of comfort whether or not
it is enforceable at law.
(11) Every director and every manager of an authorized institution which contravenes subsection (1) commits an offence and is liable-
(a) on conviction upon indictment to a fine of $200,000 and to imprisonment for 2 years and, in the case of a continuing offence, to a further fine of $10,000 for every day during which the offence continues; or
(b) on summary conviction to a fine of $50,000 and to imprisonment for 6 months and, in the case of a continuing offence, to a further fine of $5,000 for every day during which the offence continues.
(12) Any document purporting to be certified by the Commissioner as a true copy of any accounts, being accounts of the nature referred to in subsection (5), shall be admissible in evidence in any proceedings arising out of a contravention or alleged contravention of subsection (1) as truth of the matters stated in those accounts.
82. (1) Without prejudice to section 7(3) or to the other provisions of this Part, the Commissioner may, after consultation with the Financial Secretary, by notice in the Gazette from time to time publish for the guidance of authorized institutions, guidelines, not inconsistent with this Ordinance, specifying business practices which should not be engaged in by authorized institutions because, in his opinion, such business practices will or may cause the soundness of the financial position of authorized institutions to be dependent upon the soundness of the financial position of a single party.
(2) For the purposes of subsection (1), guidelines given in a notice under that subsection-
(a) may be expressed to apply to all authorized institutions or to a class of
authorized institutions specified in the notice; and
(b) may specify what constitutes a single party for the purposes of any such guidelines and, without prejudice to the generality of that power, any class or description of persons or business may constitute such a single party.
(3) Where an authorized institution engages in business practices specified in a notice under subsection (1), the Governor in Council, the Financial Secretary or the Commissioner, as the case may be, may, where he is of the opinion that the case is of sufficient importance to justify him so doing, exercise any of his powers under Part V, VI or X in respect of the institution.
83. (1) A bank shall not grant any facility specified in subsection (3) to or on behalf of any person or body specified in subsection (4) if the aggregate amount of such facilities for the time being granted by that bank to or on behalf of any one or more such persons or bodies would thereby exceed 10 per cent of the paid-up capital and reserves of the bank.
BANKING
Ord. No. 27/86
A191
(2) Subject to subsection (1), a bank shall not grant any facility specified in subsection (3) to or on behalf of any person specified in subsection (4)(a), (b), (c), (d), (e) or (f) if the aggregate amount of such facilities for the time being granted by that bank to or on behalf of that person would thereby exceed $250,000.
(3) For the purposes of subsections (1) and (2), the following facilities are specified--
(a) the granting, or permitting to be outstanding, of unsecured advances, un- secured loans or unsecured credit facilities including unsecured irrevocable documentary letters of credit;
(b) the giving of unsecured financial guarantees; and
(c) the incurring of any other unsecured liability.
(4) For the purposes of subsections (1) and (2), the following persons and bodies are specified-
(a) any director of the bank;
(b) any relative of any such director;
(c) any employee of the bank who is responsible, either individually or as a
member of a committee, for determining loan applications;
(d) any relative of any such employee;
(e) any controller (not being an authorized institution) of the bank; (f) any relative of an individual who is a controller of the bank;
(g) any firm, partnership or non-listed company (other than a firm, partnership or non-listed company which is an authorized institution, or a bank incorporated outside Hong Kong which is not licensed under this Ordinance but is approved by the Commissioner for the purposes of this paragraph) in which the bank or any of its directors or any relative of any of its directors is interested as director, partner, manager or agent; and
(h) any individual, firm, partnership or non-listed company of which any director of the bank or any relative of any such director is a guarantor.
(5) The provisions of this section shall apply to a facility granted to or on behalf of a person or body jointly with another person or body as they apply to a facility granted to or on behalf of a person or body severally.
(6) For the purposes of subsections (2) and (4), a facility granted to or on behalf of any firm, partnership or non-listed company which a person specified in subsection (4)(a), (b), (c), (d), (e) or (ƒ) is able to control, shall be deemed to be granted to that person or on his behalf.
(7) Every director and every manager of a bank which contravenes subsec- tion (1) or (2) commits an offence and is liable-
(a) on conviction upon indictment to a fine of $200,000 and to imprisonment for 2 years and, in the case of a continuing offence, to a further fine of $10,000 for every day during which the offence continues; or
(b) on summary conviction to a fine of $50,000 and to imprisonment for 6 months and, in the case of a continuing offence, to a further fine of $5,000 for every day during which the offence continues.
Limitation on advances to directors, etc. of deposit-taking
84. (1) A licensed deposit-taking company shall not grant any facility specified in subsection (3) to or on behalf of any person or body specified in subsection (6)(g) or (h) if the aggregate amount of such facilities for the time being granted by the licensed deposit-taking company to or on behalf of any one or more such persons or companies. bodies would thereby exceed 10 per cent of the paid-up capital and reserves of the licensed deposit-taking company.
(2) A licensed deposit-taking company shall not grant any facility specified in subsection (3) to or on behalf of any person specified in subsection (6)(a), (b), (c), (d), (e) or (ƒ).
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