1964_BANKING_ORDINANCE — Page 62

1987 Ed.]

Banking

[CAP. 155

61

"value" means-

(a) in the case of shares in a company other than a trust company registered under Part VIII of the Trustee Ordin- ance, the total of the current book value and the amount for the time being remaining unpaid on the shares; and

(b) in any other case, the current book value.

(2) In determining the paid-up capital and reserves of an authorized institution for the purposes of this Part, there shall be deducted any loss disclosed in the most recent balance sheet of the institution lodged with the Commissioner under section 60(2).

(3) For the purposes of sections 83, 84 and 85, "unsecured" means granted without security, or, in respect of any advance, loan or credit facility granted or financial guarantee or other liability incurred with security, any part thereof which at any time exceeds the market value of assets constituting that security; and "security" means such security as would, in the opinion of the Commissioner, be acceptable to a prudent banker.

(4) Subject to paragraph (a) of the proviso to section 81(2), in relation to any authorized institution that is incorporated outside Hong Kong, this Part shall apply, save for the purpose of deter- mining the paid-up capital or reserves of the institution, only to its principal place of business in Hong Kong and its local branches, and shall do so as if that principal place of business and those branches were collectively a separate authorized institution. (Amended, 64 of 1987, s. 19)

80. (1) An authorized institution shall not grant any ad- vances, loans or credit facilities, including irrevocable documentary letters of credit to the extent to which they are not covered by marginal cash deposits, or give any financial guarantee or incur any other liability, against the security of its own shares.

(2) An authorized institution shall not, except with the ap- proval in writing of the Commissioner, which approval shall be subject to such conditions as the Commissioner may think proper to attach thereto, grant any advances, loans or credit facilities, in- cluding irrevocable documentary letters of credit to the extent to which they are not covered by marginal cash deposits, or give any financial guarantee or incur any other liability, against the security of the shares of-

(a) any holding company of the institution;

(b) any subsidiary of the institution; or

(c) any other subsidiary of any holding company of the

institution.

(3) Every director and every manager of an authorized institu- tion which contravenes subsection (1) or (2) commits an offence and is liable--

(Cap. 29.)

Advance against security of own shares, etc.