1964_BANKING_ORDINANCE — Page 63

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CAP. 155]

Limitation on advances by authorized institutions.

(Cap. 32.)

Third Schedule.

Banking

[1987 Ed.

(a) on conviction upon indictment to a fine of $100,000 and to

imprisonment for 12 months; or

(b) on summary conviction to a fine of $50,000 and to impri-

sonment for 6 months.

81. (1) The financial exposure of an authorized institution.

to-

(a)

any one person;

(b)

3/90323

two or more companies which-

subject to Subsection (IA)

are subsidiaries of the same holding company; or

(ii) have the same controller (not being a company);

(c) any holding company and one or more of its subsidiaries;

or

(d) any one person (not being a company) and one or more

companies of which that person is the controller,

shall not exceed an amount equivalent to 25 per cent of the paid-up capital and reserves of the institution.

LIA)Z

(2)- The financial exposure of an authorized institution to any such person, company or combination thereof as is referred to in subsection (1)(a), (b), (c) or (d), shall for the purposes of this section be taken to be the aggregate of-

(a) all advances by the authorized institution to; and

(b) the value of the authorized institution's holdings of shares and debentures (within the meaning of those terms in section 2 of the Companies Ordinance) and other debt securities as defined in paragraph 1 of the Third Schedule issued by, (Amended, 64 of 1987, s. 20)

that person, company or combination:

Provided that this section shall not apply to-

(a) transactions between authorized institutions, for which purpose section 79(4) shall not apply to any such author- ized institution that is incorporated outside Hong Kong; (Replaced, 64 of 1987, s. 20)

(b) transactions to the extent to which they are covered by a

form of guarantee acceptable to the Commissioner;

(c) an authorized institution the liabilities of which are assured by a letter of comfort accepted by the Commissioner under subsection (3) or (4), so long as the institution conforms with any limitation on the aggregate amount of any investments and advances which the institution may make, being a limitation imposed by the Commissioner under subsection (5)(a) or (7) or by the terms of a letter of comfort;