TNAG-2755-FCO40-3972-Banking-situation-in-Hong-Kong-1993 — Page 70

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CAP. 345] Hang Lung Bank (Compensation of Former

Shareholders) Regulations

[Subsidiary]

[1989 Ed.

3.

4.

For the purpose of making the calculation under paragraph 2 the Tribunal shall--

(a) disregard----

(i) the acquisition under the Ordinance:

(ii) the possibility of such acquisition;

(iii) the possibility of any financial support or assistance being made directly or indirectly by or at the behest of the Hong Kong Government at or after commencement;

(iv) the possibility of any financial support or assistance being made by another bank

or financial institution except in the ordinary course of business.

and the effect that such events may have had on the amount to be calculated under that paragraph:

(b) assume that the purchaser would have—

(i) been a corporation with sufficient credit standing so as to be able to attract for the company inter bank deposits at normal inter bank interest rates and with sufficient funds at commencement to operate the company properly and prudentially as a going concern and in particular to reconstruct the company in accordance with paragraph 6;

(ii) had as full and true knowledge of the financial position of the company at commencement as it would have had if it had conducted its own thorough audit and investigation with full co-operation and disclosure by the company and its management, including, but without derogating from the generality thereof, knowledge of

(A) the amount of its liabilities including contingent or deferred liabilities,

capital commitments and contracts for future performance:

(B) the value of its banking assets after making a proper and prudent provision

against bad or doubtful debts calculated in accordance with paragraph 4; (C) any immediate funding requirements of the company and in particular whether, and to what extent, short term borrowings or other credit facilities need be made or refinanced by the company;

(D) the market value of all fixed assets and investments and any adjustments that might need to be made in the books of account of the company to state such assets at market value; and

(E) in the light of his knowledge of matters set out in sub-sub-paragraphs (A), (B), (C) and (D), the amount of shareholders funds including any accounted for in the form of inner reserves:

(c) assume that all necessary consents to the sale and transfer of the shares would be

given;

(d) except as provided by paragraph 4 have regard only to information that would have

been available at commencement.

For the purpose of calculating the level of proper and prudent provision for a bad or doubtful debt to be made against each debt at commencement the Tribunal shall accept as proper and prudent the provision made by the directors appointed under section 7 of the Ordinance against such debt as at 31 March 1984 unless the Tribunal is satisfied, having regard to the information that would have been available to the purchaser at commencement, that the purchaser would have made different prudent provision against such debt in which event the Tribunal may determine the level of such provision.

5. (1) The amount the purchaser would, at commencement in the ordinary course of business. have paid referred to in paragraph 2 shall be the amount produced by deducting the amount of company reconstruction costs (if any) calculated in accordance with paragraph 6 from the value of the reconstructed company as a going concern, calculated in accordance with paragraph 7.

(2) The amount the purchaser would at commencement in the ordinary course of business have paid shall be deemed to be nil if the sum calculated in accordance with subparagraph (1) is a negative amount.

6. (1) Company reconstruction costs means the amount (if any) by which revised shareholders funds calculated in accordance with subparagraph (2) is less than required shareholders funds calculated in accordance with subparagraph (3).

Г.