750
Objects and Reasons.
1. By section 3 (5) of the principal Ordinance the whole or part of the deposit required to be made might consist of fixed deposits in certain banks. To cover the remaining portion, if any, of the deposit companies often offer mortgages of leasehold property. These are an unsatis- factory form of security in that they are liable to great fluctuation in value, are not readily realizable and cause considerable work to Government in periodical assessing of their value. Moreover, it is not now the practice in England to accept mortgages as securities under such acts as the Assurance Companies Act, 1909, the Trustee Act, 1925, and the Road Traffic Act, 1934, although they are authorized investments under the Trustee Act, 1925. It is considered that the time has come when mortgages should no longer be accepted as security under the Ordinance and existing ones should be replaced.
2. Clause 2 of the Bill, which replaces section 3 (5), sets out the nature of the securities to be deposited. In future only cash or gilt-edged securities will be accepted as deposit. The proviso allows those companies which have already made a deposit a period of three years within which to comply with the new requirements.
3. The amendment in clause 3 is consequential on the repeal of section 3 (5).
June, 1940.
C. G. ALABASTER,
Attorney General.
No comments yet.
Private notes are available after approval.