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Banking (Amendment) Bill 1999
Amend the Banking Ordinance.
Enacted by the Legislative Council.
1. Short title and commencement
(1) This Ordinance may be cited as the Banking (Amendment) Ordinance 1999.
(2) This Ordinance shall come into operation on a day to be appointed by the Secretary for Financial Services by notice in the Gazette.
2. Interpretation
Section 2(9) of the Banking Ordinance (Cap. 155) is amended by repealing "primary" and substituting "a".
3. Control of establishment, etc. of
overseas banking corporations
Section 51A(4) is amended by adding ", with effect from such time as is specified in the notice (being a time reasonable in all the circumstances of the case)," after "attach" and "cancel" respectively.
4. Section added
The following is added in Part IX---
"51B. Acquisition by authorized institutions
incorporated in Hong Kong of share
capital in companies
(1) In this section---
"relevant day" (有關日期) means the day of commencement of section 4 of the Banking (Amendment) Ordinance 1999 ( of 1999);
"value" (價值) has the meaning assigned to it in section 79(1).
(2) An authorized institution incorporated in Hong Kong shall be subject to a condition that it shall not---
(a) acquire (whether by one acquisition or a series of acquisitions, and by whatever means) all or part of the share capital of a company (and whether or not the company was established by the institution) to a value of 5% or more of the capital base of the institution at the time of the acquisition unless the approval of the Monetary Authority has been given to the proposed acquisition of such share capital;
(b) if any such approval granted in respect of the company is revoked under subsection (5), hold share capital in the company to a value of 5% or more of the capital base of the institution on or after the time such revocation comes into effect.
(3) Approval under subsection (2)(a) shall be deemed to have been granted in respect of any company---
(a) in relation to which an authorized institution incorporated in Hong Kong held, immediately before the relevant day, share capital to a value of 5% or more of the capital base of the institution;
(b) in relation to which an authorized institution incorporated in Hong Kong comes to hold, not later than 3 months after the relevant day, share capital to a value of 5% or more of the capital base of the institution where the acts or circumstances by virtue of which the institution comes to hold such share capital substantially occurred before the relevant day.
(4) The Monetary Authority may at any time, by notice in writing served upon an authorized institution, attach, with effect from such time as is specified in the notice (being a time reasonable in all the circumstances of the case), to an approval granted under subsection (2)(a), or deemed to have been granted under subsection (3), in respect of any company in relation to which the institution is to come to hold, or holds, share capital to a value of 5% or more of the capital base of the institution, such conditions, or amend or cancel, with effect from such time as is specified in the notice (being a time reasonable in all the circumstances of the case), any conditions so attached, as he may think proper.
(5) The Monetary Authority may revoke---
(a) in such case as he thinks fit; and
(b) with effect from such time as is specified by him, being a time reasonable in all the circumstances of such case,
an approval granted under subsection (2)(a), or deemed to have been granted under subsection (3), in respect of any company.
(6) Where the Monetary Authority refuses to grant approval under subsection (2)(a) or revokes an approval under subsection (5), he shall notify the authorized institution concerned in writing of the refusal or revocation.
(7) Every director and every manager of an authorized institution which contravenes the condition in subsection (2) or any condition attached under subsection (4) commits an offence and is liable---
(a) on conviction upon indictment to a fine at tier 7; or
(b) on summary conviction to a fine at tier 5,
and, in the case of a continuing offence, to a further fine at tier 2 for every day during which the offence continues.
(8) For the purposes of this section, the capital base of an authorized institution means the capital base of the institution as determined in accordance with the Third Schedule except that, for those purposes, any requirement under section 79A(1) or 98(2) referred to in that Schedule shall not apply in determining such capital base.
(9) For the purposes of this section, share capital of a company acquired by an authorized institution shall not include share capital so acquired---
(a) in the course of the satisfaction of debts due to the institution; or
(b) under an underwriting or subunderwriting contract for a period not exceeding 7 working days, or such further period as the Monetary Authority approves in writing, and subject to such conditions as he may think proper to attach thereto in any particular case.".
5. Audit
Section 59(4) is repealed.
6. Publication of audited balance sheet, etc.
Section 60 is amended---
(a) by repealing subsections (1) and (2);
(b) in subsection (3)---
(i) by repealing "Where an authorized institution has complied with subsection (1) in respect of a financial year, it shall, as soon as is practicable thereafter" and substituting "Every authorized institution incorporated in Hong Kong shall, not later than 4 months after the close of each financial year, or within such further period as the Monetary Authority approves in writing,";
(ii) by repealing paragraphs (d) and (e);
(c) in subsection (5), by repealing "Every" and substituting "Subject to subsection (5A), every";
(d) by adding---
"(5A) With the approval in writing of the Monetary Authority, an authorized institution may, instead of complying with subsection (5) by lodging with the Monetary Authority the documents required under that subsection, comply with that subsection by lodging with the Monetary Authority the like documents of its holding company on a consolidated basis.";
(e) in subsection (8), by repealing "(2),";
(f) in subsection (9), by repealing "(1), (2),";
(g) in subsection (11), by repealing "and the Tenth Schedule".
7. Section added
The following is added---
"60A. Publication of information relating
to financial affairs
(1) Without prejudice to the operation of section 60, the Monetary Authority may, by notice in the Gazette, and subject to such conditions, if any, as are specified in the notice, require every authorized institution, or every authorized institution belonging to a class of authorized institutions, to publish or disclose information---
(a) relating to such state of affairs, or profit and loss, of the institution as is specified in the notice; and
(b) in such manner, and at such time or times, as are specified in the notice.
(2) It is hereby declared that a notice under subsection (1) is subsidiary legislation.
(3) Every director and every manager of an authorized institution which contravenes subsection (1) commits an offence and is liable---
(a) on conviction upon indictment to a fine at tier 7; or
(b) on summary conviction to a fine at tier 5,
and, in the case of a continuing offence, to a further fine at tier 2 for every day during which the offence continues.
(4) The Monetary Authority may from time to time cause guidelines to be prepared and published in the Gazette---
(a) for the guidance of authorized institutions the subject of a notice under subsection (1) in relation to their complying with that subsection; and
(b) which are not inconsistent with this Ordinance.".
8. Provisions applicable to persons proposing to
become controllers, and to certain existing
controllers, of authorized institutions
incorporated in Hong Kong
Section 70 is amended---
(a) by adding---
"(6A) For the avoidance of doubt, it is hereby declared that a conditional notice of consent served on a person who has become the minority shareholder controller of an authorized institution may revoke a prior notice of consent, if any, served on the person in relation to the person becoming or being, as the case may be, such a controller.";
(b) in subsection (9), by repealing "conditional notice of consent or".
9. Certain persons prohibited from acting as
employees of authorized institutions
except with consent of Monetary
Authority
Section 73 is amended by adding---
"(1D) Where the Monetary Authority has granted consent under subsection (1) or (1A) to a person where paragraph (c) of that subsection is applicable to the person, then that paragraph shall not again be applicable to the person in the case, but only in the case, of the authorized institution referred to in that paragraph which gave rise to that paragraph being applicable to the person.".
10. Limitations on advances by
authorized institutions
Section 81 is amended---
(a) in subsection (2)---
(i) in paragraph (b), by repealing "and" at the end;
(ii) by adding---
"(ba) financial exposure, being financial exposure declared in a notice under subsection (2A) to be financial exposure falling within this paragraph, of the institution to; and";
(b) by adding---
"(2A) The Monetary Authority may, by notice in the Gazette, and subject to such conditions, if any, as are specified in the notice, declare financial exposure specified in the notice to be financial exposure falling within subsection (2)(ba).
(2B) It is hereby declared that a notice under subsection (2A) is subsidiary legislation.";
(c) in subsection (6), by adding---
"(kc) any financial exposure to The Hong Kong Mortgage Corporation Limited arising from the obligations placed upon it for the purposes of the Mortgage Insurance Programme;".
11. Limitation on advances to employees
Section 85(1) is amended by adding ", without the written consent of the Monetary Authority given generally or in any particular case or class of case," after "not".
12. Disclosure of information relating to
authorized institutions
Section 121(3) is repealed and the following substituted---
"(3) The Monetary Authority---
(a) may, subject to paragraph (b), attach a condition to any disclosure of information made pursuant to this section;
(b) shall, to the extent that any disclosure of information made pursuant to this section relates to the affairs of any individual customer of an authorized institution or a local representative office, attach a condition,
that neither---
(i) the person to whom the information has been disclosed; nor
(ii) any person obtaining or receiving the information (whether directly or indirectly) from the person referred to in paragraph (i),
shall disclose that information to any other person without the consent of the Monetary Authority.".
13. Winding-up of authorized institutions
Section 122 is amended by adding---
"(7) Where a petition for the winding up of an authorized institution is presented by a person other than the Financial Secretary, a copy of the petition shall be served on the Monetary Authority and he shall be entitled to be heard on the petition and to call, examine and cross-examine any witness and, if he so thinks fit, support or oppose the making of a winding-up order.".
14. Appeals
Section 132A(1) is amended---
(a) in paragraph (a), by adding "51B(5)," after "51A(5),";
(b) in paragraph (d), by adding ", 51B(2)(a)" after "51A(2)";
(c) in paragraph (e)---
(i) by repealing "or 51A(2)" and substituting ", 51A(2) or 51B(2)(a)";
(ii) by repealing "or 51A(4)" and substituting ", 51A(4) or 51B(4)".
15. Power to amend Schedules
Section 135(3) is amended by repealing ", Tenth".
16. Transitional provisions in relation to amendments made by Banking (Amendment) (No. 2)
Ordinance 1991
Section 150 is amended---
(a) by repealing subsections (2) and (3);
(b) in subsection (7), by repealing "(3),";
(c) by adding---
"(11) Where immediately before the commencement of section 16 of the Banking (Amendment) Ordinance 1999
( of 1999) a person was lawfully a controller of an authorized institution wholly or partly by virtue of any of the provisions of subsections (2) and (3), then, on and after that commencement---
(a) the repeal effected by that section of those subsections shall not of itself cause the person to cease to be such a controller;
(b) the previous operation of those subsections shall not prevent a conditional notice of consent under section 70 from being served on such a controller.".
17. Capital Adequacy Ratio
The Third Schedule is amended---
(a) by repealing "[ss. 98 & 135(3) ]" and substituting "[ss. 51B, 98 & 135(3) ]";
(b) in paragraph 1, in the definition of "residential mortgage", in paragraph (b), by adding "at the time the mortgage was approved by the authorized institution concerned" after "property".
18. Notice relating to authorized institution's
audited annual accounts
The Tenth Schedule is repealed.
Explanatory Memorandum
The object of this Bill is to amend the Banking Ordinance (Cap. 155) to---
(a) empower the Monetary Authority to recognize a wider range of banking supervisory authorities outside Hong Kong (clause 2);
(b) require authorized institutions to have the approval of the Monetary Authority before acquiring the share capital of a company to a value of 5% or more of the capital base of the institution (new section 51B at clause 4);
(c) modify the provisions relating to authorized institutions' accounts and reports thereon required to be published or lodged with the Monetary Authority (clause 6);
(d) empower the Monetary Authority to require, by notice in the Gazette, authorized institutions to publish or disclose information relating to such of their state of affairs or profit and loss as is specified in the notice (new section 60A at clause 7);
(e) empower the Monetary Authority to serve a conditional notice of consent under section 70 on a controller of an authorized institution at any time (clause 8);
(f) provide that a person to whom a consent has been granted under section 73(1) or (1A) where paragraph (c) of that section is applicable does not have to seek a further such consent where he seeks to be employed by another authorized institution unless he was a director or concerned in the management of yet another separate authorized institution which has been wound up or the authorization of which has been revoked (clause 9);
(g) empower the Monetary Authority to declare, by notice in the Gazette, financial exposure specified in the notice to be financial exposure to be taken into account for the purposes of section 81 and to exempt an authorized institution's certain financial exposure to The Hong Kong Mortgage Corporation Limited from the limits imposed by the other provisions of that section (clause 10);
(h) empower the Monetary Authority to consent to employees of authorized institutions being provided with facilities specified in section 85(2) in excess of one year's salary for the employees respectively (clause 11);
(i) modify the provisions relating to the Monetary Authority's power to disclose information to certain regulatory authorities outside Hong Kong (clause 12);
(j) confer on the Monetary Authority the right to be heard in respect of a winding-up petition against an authorized institution (clause 13);
(k) amend the definition of "residential mortgage" in the Third Schedule to clarify that the market value of the property concerned means the market value of the property as at the time the mortgage concerned was approved by the authorized institution (clause 17); and
(l) consequentially amend or repeal provisions (clauses 3, 5, 14, 15, 16 and 18).
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