604737-1940-Supplementary-Bills-read-a-first-time---Fire-and-Marine-Insurance-Companies-Deposit-Amendment-Life-Insurance-Companies-Amendment--1939-Supplementary-Appropriation — Page 1

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LEGISLATIVE COUNCIL.

No. 8. 361.-The following Bills were read a first time at a meeting of the Council held on the 25th July, 1940:-

Short title.

Amendment

A BILL

[No. 20:19.6.40.-1.]

INTITULED

An Ordinance to amend the Fire and Marine Insurance

Companies Deposit Ordinance, 1917.

BE it enacted by the Governor of Hong Kong, with the advice and consent of the Legislative Council thereof, as follows:

1. This Ordinance may be cited as the Fire and Marine Insurance Companies Deposit Amendment Ordinance, 1940.

2. Sub-section (2) of section 5 of the Fire and Marine of Ordinance Insurance Companies Deposit Ordinance, 1917, is repealed

and the following sub-section is substituted therefor :--

No. 32 of

1917,

s. 5 (2).

[cf. Ordin- ance No. 18

of 1934.

s. 4].

(2) The deposit shall consist of securities of the follow- ing nature--

(a) fixed deposits in banks approved by the Governor in Council;

(b) stocks, funds or securities, other than the security of a charge on land by way of legal mortgage or otherwise, authorized by the Trustee Act, 1925, or in any manner which may be authorized by any Act amending or replacing the said Act;

(c) any Government securities of the Colony:

Provided that any company which has, before the 1st day of July, 1940, deposited securities not of the aforesaid nature shall have a period of three years from such date to replace such securities by securities of the aforesaid nature.

Objects and Reasons.

1. By section 5 (2) of the Principal Ordinance one half of the deposit required to be made might consist of cash deposit or gilt-edged securities or stock. To cover the remain- ing portion of the deposit companies often offer mortgages of leasehold property. These are an unsatisfactory 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.

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