Banks and Deposit Companies Act 1999
BANKS AND DEPOSIT COMPANIES ACT 1999
1
BERMUDA
1999 : 40
BANKS AND DEPOSIT COMPANIES ACT 1999
[Date of Assent 23 September 1999]
[Operative Date 1 January 2000]
ARRANGEMENT OF SECTIONS
PRELIMINARY
1 Short title and
commencement
2 Interpretation
3 Meaning of "deposit"
4 Meaning of "deposit-
taking business"
5 Power to amend
definitions of "deposit"
and deposit-taking
business
6 Meaning of "related
company"
7 Meaning of "director",
"controller", "senior
executive" and "associate"
8 Functions of Bermuda
Monetary Authority
9 Authority's statement of
principles
10 Minister to issue
directions to Authority
LICENSING
11 Restriction on carrying on
deposit-taking business
12 Exempted persons
13 Applications for licences
14 Grant and refusal of
licences
15 Form, display and
registration
16 Fees
17 Restriction of licence
18 Revocation of licence
BANKS AND DEPOSIT COMPANIES ACT 1999
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19 Winding up on petition
from Authority
20 Notice of restriction or
revocation of licence
21 Restriction in cases of
urgency
22 Directions to protect
interests of depositors
23 Notification and
confirmation of directions
24 Surrender of licence
OBJECTIONS TO
CONTROLLERS
25 Notification of new or
increased control
26 Objection to new or
increased control
27 Objection to existing
shareholder controller
28 Contraventions by
controller
29 Restriction on and sale of
shares
30 Rights of appeal
31 Constitution of tribunals
32 Determination of appeals
33 Costs, procedure and
evidence
34 Further appeals on a
point of law
INFORMATION
35 Notification of change of
director, controller or
senior executive
36 Notification of acquisition
of significant shareholding
37 Annual returns
38 Reports of large exposures
39 Power to obtain
information and reports
40 Power to require
production of documents
41 Right of entry to obtain
information and
documents
INVESTIGATIONS
42 Investigations on behalf of
the Authority
43 Investigation of suspected
contraventions
44 Powers of entry in cases of
suspected contraventions
45 Obstruction of
investigations
FINANCIAL STATEMENTS AND
AUDIT
46 Appointment of auditors
47 Duty to audit etc.
48 Auditor's report
49 Communication by
auditor, etc. with
Authority
RESTRICTION ON
INSTITUTIONS ACTIVITIES
50 Restriction on advances
on institution shares
51 Restriction on commercial
activities of institutions
RESTRICTION ON
DISCLOSURE OF
INFORMATION
52 Restricted information
53 Disclosure for facilitating
the discharge of functions
of the Authority
BANKS AND DEPOSIT COMPANIES ACT 1999
3
54 Disclosure for facilitating
the discharge of functions
by other authorities
55 Information supplied to
the Authority by relevant
overseas authority
MISCELLANEOUS AND
SUPPLEMENTAL
56 Offences by companies
57 Restriction on use of word
"bank"
58 Notices
59 Service of notice on
Authority
60 Regulations
61 Repeals
62 Consequential
amendments
63 Transitional
64 Savings
FIRST SCHEDULE
SECOND SCHEDULE
WHEREAS it is expedient to make new provision for regulating
deposit-taking business; for protecting depositors; and for purposes
connected with those matters:
Be it enacted by The Queen's Most Excellent Majesty, by and
with the advice and consent of the Senate and the House of Assembly of
Bermuda, and by the authority of the same, as follows:
PRELIMINARY
Short title and commencement
1 This Act may be cited as the Banks and Deposit Companies Act
1999, and shall come into operation on such day as the Minister may
appoint by notice published in the Gazette.
Interpretation
2 In this Act—
"associate", has the meaning given in section 7(9);
"the Authority" means the Bermuda Monetary Authority
established by the Bermuda Monetary Authority Act
1969;
"available capital" means such capital as is determined by the
Authority pursuant to section 38(7) to be available
capital;
"company" means a body corporate wherever incorporated;
"controller" has the meaning given in section 7(3);
"court" means the Supreme Court;
BANKS AND DEPOSIT COMPANIES ACT 1999
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"day" means any day on which institutions in Bermuda are
open for business;
"debenture" has the same meaning as in the Companies Act
1981;
"deposit" has the meaning given in section 3;
"deposit-taking business" has the meaning given in section 4;
"director" has the meaning given in section 7(2);
"documents" includes information recorded in any form; and
in relation to information recorded otherwise than in
legible form, references to its production include
references to producing a copy of the information in
legible form;
"financial statements" in relation to the business of an
institution means the statements specified in subsection
(1)(a) and the notes specified in subsection (1A) of
section 84 of the Companies Act 1981;
"financial year", in relation to an institution, means the
period not exceeding fifty-three weeks at the end of
which the balance of the accounts is struck or, if no
such balance is struck or a period of more than fifty-
three weeks is employed for that purpose, means a
calendar year;
"holding company" has the same meaning as in the
Companies Act 1981;
"institution" means a company licensed under this Act as a
bank or deposit company;
"licence" means a licence granted under section 14;
"the Minister" means the Minister of Finance;
"related company" has the meaning given in section 6;
"senior executive" has the meaning given in section 7(7);
"share" has the same meaning as in the Companies Act 1981;
"shareholder controller" has the meaning given in section
7(5);
"significant shareholder" has the meaning given in section
36(2);
BANKS AND DEPOSIT COMPANIES ACT 1999
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"subsidiary" has the same meaning as in the Companies Act
1981.
Meaning of "deposit"
3 (1) Subject to the provisions of this section, in this Act "deposit"
means a sum of money paid on terms
(a) under which it will be repaid, with or without interest or
a premium, and either on demand or at a time or in
circumstances agreed by or on behalf of the person
making the payment and the person receiving it; and
(b) which are not referable to the provision of property or
services or the giving of security;
and references in this Act to money deposited and to the making of a
deposit shall be construed accordingly.
(2) For the purposes of subsection (1)(b)
(a) money is paid on terms which are referable to the
provision of property or services if, and only if it is paid
by way of advance or part payment under a contract for
the sale, hire or other provision of property or services,
and is repayable only in the event that the property or
services is not or are not in fact sold, hired or otherwise
provided;
(b) money is paid on terms which are referable to the giving
of security if, and only if
(i) it is paid by way of security for the performance
of a contract or by way of security in respect of
loss which may result from the non-performance
of a contract; or
(ii) without prejudice to paragraph (i), it is paid by
way of security for the delivery up or return of
any property, whether in a particular state of
repair or otherwise.
(3) Except so far as any provision of this Act otherwise
provides, in this Act "deposit" does not include—
(a) a sum which is paid by one company to another at a
time when one is a subsidiary of the other or both are
subsidiaries of another company or the same individual
holds 50 per cent or more of the shares in both of them;
or
BANKS AND DEPOSIT COMPANIES ACT 1999
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(b) a sum which is paid by a person who, at the time when
it is paid, is a close relative of the person receiving it or
who is, or is a close relative of, a director, controller or
senior executive of that person.
(4) In subsection (3)(b), "close relative", in relation to any
person, means—
(a) his spouse;
(b) his children and step children, his parents and step-
parents, his brothers and sisters and step-brothers and
step-sisters; and
(c) the spouse of any person within paragraph (b).
Meaning of "deposit-taking business"
4 (1) Subject to the provisions of this section, a person carries on
deposit-taking business for the purposes of this Act if
(a) in the course of the business, he lends money received
by way of deposit to others; or
(b) he finances any other activity of the business wholly or
to any material extent, out of the capital of or the
interest on money received by way of deposit.
(2) For the purposes of subsection (1), all the activities which a
person carries on by way of business shall be regarded as a single
business carried on by him.
Power to amend definitions of "deposit" and "deposit-taking
business"
5 (1) The Minister acting on the advice of the Authority may by
order amend the meaning of deposit or deposit-taking business for the
purposes of all or any provisions of this Act.
(2) An order under subsection (1) may contain such
transitional provisions as the Minister acting on the advice of the
Authority thinks necessary or expedient.
(3) An order made under this section shall be subject to
affirmative resolution procedure.
Meaning of "related company"
6 (1) In this Act a "related company" in relation to an institution
or the parent company of an institution, means a company (other than a
subsidiary company) in which the institution or parent company holds a
qualifying capital interest.
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(2) A qualifying capital interest means an interest in relevant
shares of the company which the institution or parent company holds on
a long term basis for the purpose of securing a contribution to its own
activities by the exercise of control or influence arising from that interest.
(3) A holding of 20 per cent or more of the nominal value of the
relevant shares of a company shall be presumed to be a qualifying
capital interest unless the contrary is shown.
(4) Relevant shares means shares comprised in the equity
share capital of the company of a class carrying rights to vote in all
circumstances at general meetings of the company.
(5) Equity share capital means the issued share capital of a
company excluding any part of that capital which, neither as respects
dividends nor as respects capital, carries any right to participate beyond
a specified amount in a distribution.
Meaning of "director", "controller", "senior executive" and
"associate"
7 (1) In this Act, "director", "controller", "senior executive" and
"associate" shall be construed in accordance with the provisions of this
section.
(2) "Director", in relation to an institution, includes any person
who occupies the position of director, by whatever name called.
(3) "Controller", in relation to an institution, means
(a) a managing director of the institution or of another
company of which it is a subsidiary;
(b) a chief executive of the institution or of another company
of which it is a subsidiary;
(c) a person who satisfies the requirements of this
paragraph; and
(d) a person in accordance with whose directions or
instructions the directors of the institution or of another
company of which it is a subsidiary or persons who are
controllers of the institution by virtue of paragraph (c) (or
any of them) are accustomed to act.
(4) A person satisfies the requirements of subsection (3)(c) in
relation to an institution if, either alone or with any associate or
associates
BANKS AND DEPOSIT COMPANIES ACT 1999
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(a) he holds 10 per cent or more of the shares in the
institution or another company of which it is a
subsidiary company;
(b) he is entitled to exercise, or control the exercise of 10 per
cent or more of the voting power at any general meeting
of the institution or another company of which it is such
a subsidiary; or
(c) he is able to exercise a significant influence over the
management of the institution or another company of
which it is such a subsidiary by virtue of
(i) a holding of shares in; or
(ii) an entitlement to exercise, or control the
exercise of, the voting power at any general
meeting of,
the institution, or as the case may be, the other
company concerned.
(5) A person who is a controller of an institution by virtue of
subsection (3)(c) is in this Act referred to as a "shareholder controller" of
the institution; and in this Act—
(a) a "10 per cent shareholder controller" means a
shareholder controller in whose case the percentage
referred to in the relevant paragraph is 10 or more but
less than 20;
(b) a "20 per cent shareholder controller" means a
shareholder controller in whose case that percentage is
20 or more but less than 30;
(c) a "30 per cent shareholder controller" means a
shareholder controller in whose case that percentage is
30 or more but less than 40;
(d) a "40 per cent shareholder controller" means a
shareholder controller in whose case that percentage is
40 or more but less than 50;
(e) a "50 per cent shareholder controller" means a
shareholder controller in whose case that percentage is
50 or more but less than 60;
(f) a "60 per cent shareholder controller" means a
shareholder controller in whose case that percentage is
60 or more but less than 75; and
BANKS AND DEPOSIT COMPANIES ACT 1999
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(g) a "principal shareholder controller" means a shareholder
controller in whose case that percentage is 75 or more.
(6) In subsection (5), "the relevant paragraph" in relation to a
shareholder controller means whichever of paragraphs (a) and (b) of
subsection (4) gives the greater percentage in his case.
(7) "Senior executive", in relation to an institution, means a
person (other than a chief executive) who, under the immediate authority
of a director or chief executive of the institution
(a) exercises managerial functions; or
(b) is responsible for maintaining accounts or other records
of the institution.
(8) In this section "chief executive", in relation to an institution,
means a person who, either alone or jointly with one or more persons, is
responsible under the immediate authority of the directors for the
conduct of the business of the institution.
(9) In this Act "associate" in relation to a person entitled to
exercise or control the exercise of voting power in relation to, or holding
shares in, a company , means
(a) if that person is an individual
(i) the spouse, child, step-child or parent of that
person;
(ii) the trustees of any settlement under which that
person has a life interest in possession;
(iii) any company of which that person is a director;
(iv) any person who is an employee or partner of
that person;
(b) if that person is a company
(i) any director of that company;
(ii) any subsidiary of that company ;
(iii) any director or employee of any such subsidiary
company;
(c) if that person has with any other person an agreement
or arrangement with respect to the acquisition, holding
or disposal of shares or other interests in that company
or under which they undertake to act together in
exercising their voting power in relation to it, that other
person.
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(10) For the purposes of subsection (9), "settlement" includes
any disposition or arrangement under which property is held in trust.
Functions of Bermuda Monetary Authority
8 (1) The Authority shall have the powers conferred on it by this
Act and the duty generally to supervise the institutions licensed by it in
the exercise of those powers.
(2) It shall also be the duty of the Authority to keep under
review the operation of this Act and developments in the field of deposit-
taking which appear to it to be relevant to the exercise of its powers and
the discharge of its duties.
(3) The Authority shall as soon as practicable after the end of
each of its financial years, make to the Minister and publish in such
manner as it thinks appropriate a report on its activities under this Act
in that year.
(4) Neither the Authority nor any person who is, or is acting as,
an officer or servant of the Authority shall be liable in damages for
anything done or omitted in the discharge or purported discharge of the
functions of the Authority under this Act unless it is shown that the act
or omission was in bad faith.
Authority's statement of principles
9 (1) The Authority shall as soon as practicable after the coming
into force of this Act, publish in such manner as it thinks fit a statement
of principles in accordance with which it is acting or proposing to act—
(a) in interpreting the criteria specified in the Second
Schedule and the grounds for revocation specified in
section 18;
(b) in exercising its power to grant, revoke or restrict a
licence; and
(c) in exercising its power to obtain information, reports and
to require production of documents.
(2) If the Authority makes a material change to the principles it
shall publish a statement of the change or the revised statement of
principles in the same manner as it published the statement under
subsection (1).
Minister to issue directions to Authority
10 The Minister may from time to time give to the Authority general
policy directions, not inconsistent with the provisions of this Act, as to
BANKS AND DEPOSIT COMPANIES ACT 1999
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the performance of its functions under this Act and the Authority shall
give effect to such directions.
LICENSING
Restriction on carrying on deposit-taking business
11 (1) Subject to the provisions of section 12, no person shall
carry on a deposit-taking business in or from within Bermuda unless
that person is a company incorporated in Bermuda and is for the time
being licensed by the Authority under this Act.
(2) A person who contravenes this section is guilty of an offence
and liable
(a) on summary conviction, to a fine of $100,000 or to
imprisonment for a period of two years or to both;
(b) on conviction on indictment, to a fine of $250,000 or to
imprisonment for a period of five years or to both.
Exempted persons
12 (1) Section 11 shall not apply to the carrying on of a deposit-
taking business in or from within Bermuda by the persons for the time
being specified in the First Schedule to this Act.
(2) The exemption of a person specified in the First Schedule
shall be subject to any restrictions there specified in respect of that
person.
(3) The Minister acting on the advice of the Authority may by
order amend the First Schedule
(a) by adding any person or class of persons or relaxing any
restriction ; or
(b) by removing any person or class of persons for the time
being specified in it or imposing or extending any
restriction.
(4) Any order made under subsection (1) shall be subject to
affirmative resolution procedure.
Applications for licences
13 (1) A company incorporated in Bermuda may make application
for a licence to the Authority in such manner as the Authority may direct
and such application shall be accompanied with
(a) a business plan setting out the nature and scale of the
deposit-taking business which the applicant intends to
BANKS AND DEPOSIT COMPANIES ACT 1999
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carry on, any plans of the applicant for the future
development of that business and particulars of the
applicant's arrangements for the management of the
business;
(b) such fee as may be prescribed under the Government
Fees Act 1965; and
(c) such other information, documents or reports as the
Authority may reasonably require for the purposes of
determining the application.
(2) An application may be withdrawn by notice in writing to the
Authority at any time before it is granted or refused, but in any such
case no application fee shall be refunded to the applicant.
Grant and refusal of licences
14 (1) Subject to this section, the Authority may grant or refuse
the application for a licence.
(2) The Authority shall not grant a licence unless it is satisfied
that
(a) the minimum criteria specified in the Second Schedule
are fulfilled with respect to the applicant; and
(b) the Minister has advised the Authority that he is
satisfied that the grant of the licence is in accordance
with the economic and financial policy of the
government.
(3) The Minister acting on the advice of the Authority may by
order amend the Second Schedule by adding new criteria or by
amending or deleting the criteria for the time being specified in the
Second Schedule.
(4) An order made under subsection (3) shall be subject to
negative resolution procedure.
(5) The Authority may grant licences of the following classes
(a) a banking licence, which requires the institution to
provide the following minimum services to the public in
Bermuda
(i) current accounts in Bermuda dollars on terms
which require repayment on demand;
(ii) the payment and collection of cheques, drafts
and orders;
BANKS AND DEPOSIT COMPANIES ACT 1999
13
(iii) savings, deposit or other similar accounts in
Bermuda dollars;
(iv) overdraft and other loan facilities in Bermuda
dollars;
(v) either directly or indirectly, loans in Bermuda
dollars secured on the mortgage of real property
in Bermuda;
(vi) foreign exchange services; and
(vii) either directly or indirectly, credit card or debit
card facilities;
(b) a deposit company licence, which does not authorise the
institution to accept deposits of money on current
account or otherwise on terms which require repayment
on demand, and which requires the institution to
provide the following minimum services to the public in
Bermuda
(i) savings, deposit or other similar accounts in
Bermuda dollars on terms which require
repayment on notice;
(ii) loans in Bermuda dollars secured on the
mortgage of real property in Bermuda whereby
not less than the prescribed minimum
percentage of total assets of the institution shall
at all times be invested in loans secured to the
full amount of the outstanding balance owed to
the institution under such mortgages .
(6) For the purposes of subsection (5), "prescribed minimum
percentage" means such percentage as the Minister acting on the advice
of the Authority prescribes by Order.
(7) An order made under subsection (6) shall be subject to
negative resolution procedure.
Form, display and registration
15 (1) A licence shall be in such form as may be prescribed.
(2) An institution shall, at all times, keep the licence on display
at its principal place of business in Bermuda.
(3) The Authority shall cause a notice to be published in the
Gazette of every grant of a licence.
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(4) The Authority shall compile and maintain in such manner
as it thinks fit a register containing, in respect of each licence, such
particulars as may be prescribed; and the register shall, at all reasonable
times, be available for inspection at the offices of the Authority by any
person upon payment of the fee prescribed under the Government Fees
Act 1965.
Fees
16 (1) An institution shall pay such fee as may be prescribed
under the Government Fees Act 1965—
(a) on the grant of its licence; and
(b) on or before 31 January in every year after the year in
which the licence was granted.
(2) Notwithstanding section 4(1) of the Government Fees Act
1965, all fees payable under this Act shall be paid to the Authority.
Restriction of licence
17 (1) The Authority may restrict a licence
(a) if it is satisfied of the matters specified in paragraphs (a),
(b), (d) or (e) of section 18 but it appears to it that the
circumstances are not such as to justify revocation;
(b) if it is satisfied that a person has become a controller of
an institution in contravention of section 25 or has
become or remains a controller after being given a notice
of objection pursuant to section 26 or 27; or
(c) in connection with the revocation of a licence
(i) when giving the institution notice that it
proposes to revoke its licence; or
(ii) at any time after such notice has been given to
the institution; or
(d) at any time after the institution has served a notice
surrendering its licence with effect from a later date.
(2) The Authority may restrict a licence by imposing such
conditions as it thinks desirable for the protection of the institution's
depositors or potential depositors, and for safeguarding its assets or
otherwise, and may in particular
(a) require the institution to take certain steps or to refrain
from adopting or pursuing a particular course of action
BANKS AND DEPOSIT COMPANIES ACT 1999
15
or to restrict the scope of its business in a particular
way;
(b) impose limitations on the acceptance of deposits, the
granting of credit or the making of investments;
(c) prohibit the institution from soliciting deposits, either
generally or from persons who are not already
depositors;
(d) prohibit the institution from entering into any other
transactions or class of transactions;
(e) require the removal of any director, controller or senior
executive;
(f) specify requirements to be fulfilled otherwise than by
action taken by the institution.
(3) Any condition imposed under this section may be varied or
withdrawn by the Authority.
(4) The Authority may on the application of an institution vary
any condition imposed on its licence.
(5) An institution which fails to comply with any requirement or
contravenes any prohibition imposed on it by a condition under this
section shall be guilty of an offence and liable on summary conviction to
a fine of $50,000 and on conviction on indictment to a fine of $150,000.
(6) The fact that a condition imposed under this section has
not been complied with (whether or not constituting an offence under
subsection (5)) shall, where the restriction has been imposed pursuant to
paragraphs (a) or (b) of subsection (1), be a ground for the revocation of
the licence in question but shall not invalidate any transaction.
Revocation of licence
18 Subject to section 20, the Authority may revoke the licence of an
institution if the Authority is satisfied that—
(a) the criteria specified in the Second Schedule are not or
have not been fulfilled, or may not be or may not have
been fulfilled, in respect of the institution;
(b) the institution has failed to comply with any obligation
imposed on it by or under this Act;
(c) a person has become a 50 per cent, 60 per cent or a
principal shareholder controller of the institution in
contravention of section 25 or has become or remains
BANKS AND DEPOSIT COMPANIES ACT 1999
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such a controller after being given a notice of objection
pursuant to section 26 or 27;
(d) the Authority has been provided with false, misleading
or inaccurate information by or on behalf of the
institution or, in connection with an application for a
licence, by or on behalf of a person who is or is to be a
director, controller or senior executive of the institution;
or
(e) the interests of the depositors or potential depositors of
the institution are in any way threatened, whether by
the manner in which the institution is conducting or
proposes to conduct its affairs or for any other reason.
Winding up on petition from the Authority
19 (1) On a petition presented by the Authority by virtue of this
section, the court may wind up an institution in respect of which a
licence is revoked, if the court is of the opinion that it is just and
equitable that the institution be wound up.
(2) Part XIII (Winding Up) of the Companies Act 1981 shall
apply to the winding up of an institution under this section.
Notice of restriction or revocation of licence
20 (1) Where the Authority proposes to
(a) restrict a licence under section 17(1);
(b) vary a restriction imposed on a licence otherwise than
with the agreement of institution concerned; or
(c) revoke a licence under section 18,
the Authority shall give to the institution concerned written notice of its
intention to do so.
(2) If the proposed action is within subsection 1(a) or 1(b), the
notice under that subsection shall specify the proposed restriction or, as
the case may be, the proposed variation.
(3) A notice under subsection (1) shall state the ground or
grounds on which the Authority intends to act and give particulars of the
institution's rights under subsection (5).
(4) Where
(a) the ground for a proposal to impose or vary a restriction
or for a proposed revocation is that it appears to the
Authority that the criterion in paragraph 1 of the Second
BANKS AND DEPOSIT COMPANIES ACT 1999
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Schedule is not or has not been fulfilled, or may not be
or may not have been fulfilled, in the case of any person;
or
(b) a proposed restriction consists of or includes a condition
requiring the removal of any person as a director,
controller or senior executive,
the Authority shall give that person a copy of the notice mentioned in
subsection (1), together with a statement of his rights under subsection
(5).
(5) An institution which is given notice under subsection (1)
and a person who is given a copy of it under subsection (4) may make
representations in writing to the Authority within the period of fourteen
days beginning with the day on which the notice was given (or such other
longer period as the Authority may allow).
(6) After giving a notice under subsection (1) and taking into
account any representations made under subsection (5), the Authority
shall decide whether
(a) to proceed with the action proposed in the notice;
(b) to take no further action;
(c) if the proposed action was to revoke the institution's
licence, to restrict its licence instead; or
(d) if the proposed action was to restrict the institution's
licence or to vary the restrictions on a licence, to restrict
it or to vary the restrictions in a different manner.
(7) The Authority shall give the institution and any such person
as is mentioned in subsection (4), written notice of its decision and,
except where the decision is to take no further action, the notice shall
state the reasons for the decision and give particulars of the rights
conferred by subsection (9) and section 30.
(8) A notice under subsection (7) of a decision to restrict a
licence, to vary the restrictions on a licence or to revoke a licence shall,
subject to sections 30(4) and (5), have the effect of restricting the licence
or varying the restriction in the manner specified in the notice or
revoking the licence.
(9) Where the decision notified under subsection (7) is to
restrict the licence or to vary the restrictions on a licence otherwise than
as stated in the notice given under subsection (1), the institution may
within the period of seven days beginning with the day on which the
notice was given under subsection (7) make written representations to
BANKS AND DEPOSIT COMPANIES ACT 1999
18
the Authority with respect to the restrictions and the Authority may,
after taking those representations into account, alter the restrictions.
(10) A notice under subsection (7) shall be given within the
period of twenty-eight days beginning with the day on which the notice
under subsection (1) was given; and if no notice under subsection (7) is
given within that period, the Authority shall be treated as having at the
end of that period given a notice under that subsection to the effect that
no further action is to be taken.
(11) Where the Authority varies a restriction on an institution's
licence with its agreement or withdraws a restriction consisting of a
condition the variation or withdrawal shall be effected by written notice
to the institution.
(12) The Authority may omit from the copy given to a person
under subsection (4) and from a notice given to him under subsection (7)
any matter which does not relate to him.
(13) The Authority shall publish in the Gazette, in such form as
it thinks fit, notice of every revocation of a licence under this Act.
Restriction in cases of urgency
21 (1) No notice need be given under section 20 in respect of the
imposition or variation of a restriction on an institution's licence in any
case in which the Authority considers that the restriction should be
imposed or varied as a matter of urgency.
(2) In any such case the Authority may by written notice to the
institution impose or vary the restriction.
(3) Any such notice shall state the reason for which the
Authority has acted and particulars of the rights conferred by subsection
(5) and section 30.
(4) Section 20(4) shall apply to a notice under subsection (2)
imposing or varying a restriction as it applies to a notice under section
20(1) in respect of a proposal to impose or vary a restriction; but the
Authority may omit from a copy given to a person by virtue of this
subsection any matter which does not relate to him.
(5) An institution to which a notice is given under this section
of the imposition or variation of a restriction and a person who is given a
copy of it by virtue of subsection (4) may within the period of fourteen
days beginning with the day on which the notice was given make
representations to the Authority.
BANKS AND DEPOSIT COMPANIES ACT 1999
19
(6) After giving a notice under subsection (2) imposing or
varying a restriction and taking into account any representations made
in accordance with subsection (5) the Authority shall decide whether
(a) to confirm or rescind its original decision; or
(b) to impose a different restriction or to vary the restriction
in a different manner.
(7) The Authority shall within the period of twenty-eight days
beginning with the day on which the notice was given under subsection
(2) give the institution concerned written notice of its decision under
subsection (6) and, except where the decision is to rescind the original
decision, the notice shall state the reason for the decision.
(8) Where the notice under subsection (7) is of a decision to
take the action specified in subsection (6)(b), the notice under subsection
(7) shall have the effect of imposing the restriction or making the
variation specified in the notice and with effect from the date on which it
is given.
Directions to protect interests of depositors
22 (1) The Authority may give an institution directions under this
section at any time after its licence is revoked or surrendered.
(2) Directions under this section shall be such as appear to the
Authority to be desirable for safeguarding the interests of the
institution's depositors.
(3) No direction shall be given to an institution under this
section after it has ceased to have any liability in respect of deposits for
which it had a liability at a time when it was licensed; and any such
direction which is in force with respect to an institution shall cease to
have effect when the institution ceases to have any such liability.
(4) An institution which fails to comply with any requirement or
contravenes any prohibition imposed on it by a direction under this
section shall be guilty of an offence and liable
(a) on summary conviction to a fine of $50,000;
(b) on conviction on indictment to a fine of $150,000.
Notification and confirmation of directions
23 (1) A direction under section 22 shall be given by notice in
writing and may be varied by a further direction; and a direction may be
revoked by the Authority by a notice in writing to the institution
concerned.
BANKS AND DEPOSIT COMPANIES ACT 1999
20
(2) A direction under section 22, except one varying a previous
direction with the agreement of the institution concerned
(a) shall state the reasons for which it is given and give
particulars of the institution's rights under subsection
(3) and section 30; and
(b) without prejudice to section 22(3) shall cease to have
effect at the end of the period of twenty-eight days
beginning with the day on which it is given unless before
the end of that period it is confirmed by a further written
notice given by the Authority to the institution
concerned.
(3) An institution to which a direction is given which requires
confirmation under subsection (2) may, within the period of fourteen
days beginning with the day on which the direction is given, make
written representations to the Authority; and the Authority shall take
any such representations into account in deciding whether to confirm
the direction.
Surrender of licence
24 (1) An institution may surrender its licence by written notice to
the Authority.
(2) A surrender shall take effect on the giving of the notice or, if
a later date is specified in it, on that date; and where a later date is
specified in the notice the institution may by further written notice to the
Authority substitute an earlier date, not being earlier than that on which
the first notice was given.
(3) The surrender of a licence shall be irrevocable unless it is
expressed to take effect at a later date and before that date the Authority
by notice in writing allows it to be withdrawn.
OBJECTIONS TO CONTROLLERS
Notification of new or increased control
25 (1) No person shall become a 10 per cent, 20 per cent, 30 per
cent, 40 per cent, 50 per cent, 60 per cent or principal shareholder
controller of an institution unless
(a) he has served on the Authority a written notice stating
that he intends to become such a controller of the
institution; and
(b) either the Authority has, before the end of the period of
three months beginning with the date of service of that
BANKS AND DEPOSIT COMPANIES ACT 1999
21
notice, notified him in writing that there is no objection
to his becoming such a controller of the institution, or
that period has elapsed without the Authority having
served him under section 26 or 27 a written notice of
objection to his becoming such a controller of the
institution.
(2) A notice under subsection (1)(a) shall contain such
information as the Authority may direct and the Authority may after
receiving such a notice from any person, by notice in writing require him
to provide such additional information or documents as the Authority
may reasonably require for deciding whether to serve notice of objection.
(3) Where additional information or documents are required
from any person by a notice under subsection (2) the time between the
giving of the notice and the receipt of the information or documents shall
be added to the period mentioned in subsection (1)(b).
Objection to new or increased control
26 (1) The Authority may serve a notice of objection under this
section on a person who has given notice under section 25 unless it is
satisfied
(a) that the person concerned is a fit and proper person to
become a controller of the description in question of the
institution;
(b) that the interests of depositors and potential depositors
of the institution would not be in any other manner
threatened by that person becoming a controller of that
description of the institution; and
(c) without prejudice to paragraphs (a) and (b), that, having
regard to that person's likely influence on the institution
as a controller of the description in question the criteria
in the Second Schedule would continue to be fulfilled in
the case of the institution or, if any of those criteria is
not fulfilled, that the person is likely to undertake
adequate remedial action.
(2) Before serving a notice of objection under this section the
Authority shall serve the person concerned with a preliminary written
notice stating that the Authority is considering service on that person of
a notice of objection and that notice
(a) shall specify which of the matters mentioned in
subsection (1) the Authority is not satisfied about and,
BANKS AND DEPOSIT COMPANIES ACT 1999
22
subject to subsection (5), the reasons for which it is not
satisfied; and
(b) shall give particulars of the rights conferred by
subsection (3).
(3) A person served with a notice under subsection (2) may,
within a period of twenty-eight days beginning with the day on which the
notice is served, make written representations to the Authority; and
where such representations are made the Authority shall take them into
account in deciding whether to serve a notice of objection.
(4) A notice of objection under this section shall
(a) specify which of the matters mentioned in subsection (1)
the Authority is not satisfied about and, subject to
subsection (5), the reasons for which it is not satisfied;
and
(b) give particulars of the rights conferred by section 30.
(5) Subsections (2)(a) and (4)(a) shall not require the Authority
to specify any reason which would in its opinion involve the disclosure of
confidential information the disclosure of which would be prejudicial to a
third party.
(6) Where a person required to give a notice under section 25 in
relation to becoming a controller of any description becomes a controller
of that description without having given the notice, the Authority may
serve him with notice of objection under this section at any time within
three months after becoming aware of his having done so and may, for
the purpose of deciding whether to serve him with such a notice, require
him by notice in writing to provide such information or documents as the
Authority may reasonably require.
(7) The period mentioned in section 25(1)(b) (with any extension
under subsection (3) of that section) and the period mentioned in
subsection (6) shall not expire, if it would otherwise do so, until fourteen
days after the end of the period within which representations can be
made under subsection (3).
Objection to existing shareholder controller
27 (1) Where it appears to the Authority that a person who is a
shareholder controller of any description of an institution is not or is no
longer a fit and proper person to be such a controller of the institution it
may serve him with a written notice of objection to his being such a
controller of the institution.
BANKS AND DEPOSIT COMPANIES ACT 1999
23
(2) Before serving a notice of objection under this section the
Authority shall serve the person concerned with a preliminary written
notice stating that the Authority is considering service on that person of
a notice of objection and that notice shall
(a) subject to subsection (5), specify the reasons for which it
appears to the Authority that the person in question is
not or is no longer a fit and proper person as mentioned
in subsection (1);and
(b) give particulars of the rights conferred by subsection (3).
(3) A person served with a notice under subsection (2) may,
within a period of twenty-eight days beginning with the day on which the
notice is served, make written representations to the Authority; and
where such representations are made the Authority shall take them into
account in deciding whether to serve a notice of objection.
(4) A notice of objection under this section shall
(a) subject to subsection (5), specify the reasons for which it
appears to the Authority that the person in question is
not or is no longer a fit and proper person as mentioned
in subsection (1); and
(b) give particulars of the rights conferred by section 30.
(5) Subsections (2)(a) and (4)(a) shall not require the Authority
to specify any reason which would in its opinion involve the disclosure of
confidential information the disclosure of which would be prejudicial to a
third party.
Contraventions by controller
28 (1) Subject to subsection (2), any person who contravenes
section 25 by
(a) failing to give the notice required by subsection (1)(a) of
that section; or
(b) becoming a controller of any description to which that
section applies before the end of the period mentioned in
subsection (1)(b) of that section in a case where the
Authority has not served him with a preliminary notice
under section 26(2),
shall be guilty of an offence.
(2) A person shall not be guilty of an offence under subsection
(1) if he shows that he did not know of the acts or circumstances by
virtue of which he became a controller of the relevant description; but
BANKS AND DEPOSIT COMPANIES ACT 1999
24
where any person becomes a controller of any such description without
such knowledge and subsequently becomes aware of the fact that he has
become such a controller he shall be guilty of an offence unless he gives
the Authority written notice of the fact that he has become such a
controller within fourteen days of becoming aware of the fact.
(3) Any person who
(a) before the end of the period mentioned in section 25
(1)(b), becomes a controller of any description to which
that subsection applies after being served with a
preliminary notice under section 26(2));
(b) contravenes section 25 by becoming a controller of any
description after being served with a notice of objection
to his becoming a controller of that description; or
(c) having become a controller of any description in
contravention of that section (whether before or after
being served with such notice of objection) continues to
be such a controller after such a notice has been served
on him,
shall be guilty of an offence.
(4) A person guilty of an offence under subsection (1) or (2)
shall be liable on summary conviction to a fine of $50,000.
(5) A person guilty of an offence under subsection (3) shall be
liable
(a) on summary conviction to a fine of $50,000 and in
respect of an offence under paragraph (c) of that
subsection, to a fine of $500 for each day on which the
offence has continued;
(b) on conviction on indictment to a fine of
$100,000 to imprisonment for two year or to both.
Restriction on and sale of shares
29 (1) The powers conferred by this section shall be exercisable
where a person
(a) has contravened section 25 by becoming a shareholder
controller of any description after being served with a
notice of objection to his becoming a controller of that
description;
BANKS AND DEPOSIT COMPANIES ACT 1999
25
(b) having become a shareholder controller of any
description in contravention of that section continues to
be one after such a notice has been served on him; or
(c) continues to be a shareholder controller of any
description after being served under section 27 with
notice of objection to his being a controller of that
description.
(2) The Authority may by notice in writing served on the person
concerned direct that any specified shares to which this section applies
shall, until further notice, be subject to one or more of the following
restrictions—
(a) any transfer of, or agreement to transfer, those shares
or, in the case of unissued shares, any transfer of or an
agreement to transfer the right to be issued with them,
shall be void;
(b) no voting rights shall be exercisable in respect of the
shares;
(c) no further shares shall be issued in right of them or in
pursuance of any offer made to their holder; or
(d) except in liquidation no payment shall be made of any
sums due from the institution on the shares, whether in
respect of capital or otherwise.
(3) The court may, on the application of the Authority, order
the sale of any specified shares to which this section applies and, if they
are for the time being subject to any restrictions under subsection (2),
that they shall cease to be subject to those restrictions.
(4) No order shall be made under subsection (3) in a case
where the notice of objection was served under section 26 or 27 —
(a) until the end of the period within which an appeal can
be brought against the notice of objection;
(b) if such an appeal is brought, until it has been
determined or withdrawn.
(5) Where an order has been made under subsection (3) the
court may, on the application of the Authority, make such further order
relating to the sale or transfer of the shares as it thinks fit.
(6) Where shares are sold in pursuance of an order under this
section the proceeds of sale, less the costs of the sale, shall be paid into
court for the benefit of the persons beneficially interested in them; and
BANKS AND DEPOSIT COMPANIES ACT 1999
26
any such person may apply to the court for the whole or part of the
proceeds to be paid to him.
(7) This section applies—
(a) to all the shares in the institution of which the person in
question is a shareholder controller of the relevant
description which are held by him or any associate of his
and were not so held immediately before he became
such a controller of the institution; and
(b) where the person in question became a shareholder
controller of the relevant description as a result of the
acquisition by him or any associate of his of shares in
another company, to all the shares in that company
which are held by him or any associate of his and were
not so held before he became such a controller of that
institution.
(8) A copy of the notice served on the person concerned under
subsection (2) shall be served on the institution or company to whose
shares it relates and, if it relates to shares held by an associate of that
person, on that associate.
Rights of appeal
30 (1) An institution which is aggrieved by a decision of the
Authority
(a) to restrict its licence, to restrict it in a particular manner
or to vary any restrictions of its licence; or
(b) to revoke its licence,
may appeal against the decision to a tribunal constituted in accordance
with section 31.
(2) Where
(a) the ground or a ground for a decision within subsection
(1)(a) or (b) is that mentioned in section 20(4)(a); or
(b) the effect of a decision within subsection (1)(a) is to
require the removal of a person as a controller or senior
executive of an institution,
the controller or senior executive to whom the ground relates or whose
removal is required may appeal to a tribunal constituted as aforesaid
against the finding that there is such a ground for the decision or, as the
case may be, against the decision to require his removal.
BANKS AND DEPOSIT COMPANIES ACT 1999
27
(3) Any person on whom notice of objection is served under
section 26 or 27 may appeal to a tribunal constituted as aforesaid
against the decision of the Authority to serve the notice; but this
subsection does not apply to a person in any case in which he has failed
to give a notice or become or continued to be a controller in
circumstances in which his doing so constitutes an offence under section
28(1), (2) or (3).
(4) The tribunal may suspend the operation of a restriction or
a variation of a restriction pending the determination of an appeal in
respect of the decision imposing or varying the restriction.
(5) The revocation of an institution's licence pursuant to a
decision against which there is a right of appeal under this section shall
not have effect
(a) until the end of the period within which the appeal can
be brought; and
(b) if such an appeal is brought, until it is determined or
withdrawn.
Constitution of tribunals
31 (1) Where an appeal is brought under section 30 a tribunal to
determine the appeal shall be constituted in accordance with this
section.
(2) The tribunal shall consist of a chairman, or, in his absence,
a deputy chairman and two other members.
(3) The chairman and the deputy chairman shall be appointed
by the Minister for a term not exceeding three years, and shall be
barristers and attorneys of at least seven years' standing.
(4) The two other members of the tribunal shall be selected by
the chairman, or, in his absence, the deputy chairman, from a panel of
members appointed by the Minister, who shall be persons appearing to
the chairman or, as the case may be, the deputy chairman, to have
respectively experience of accountancy and experience of banking.
(5) The Minister shall appoint a panel of not less than nine
persons with experience in accountancy and banking to serve as
members of appeal tribunals.
(6) A person shall not be eligible for appointment as chairman,
deputy chairman or member of the tribunal if he is or has at any time
during the period of three years ending with the date of his appointment
been an officer, servant or agent of the Authority or of any institution.
BANKS AND DEPOSIT COMPANIES ACT 1999
28
(7) In Part B of the First Schedule to the Government
Authorities Fees Act 1971, in its appropriate alphabetical order there
shall be inserted—
"appeal tribunal - constituted in accordance with section 31 of
the Banks and Deposit Companies Act 1999."
Determination of appeals
32 (1) On an appeal under section 30(1) and (2) the question for
the determination of the tribunal shall be whether, for the reasons
adduced by the appellant, the decision was unlawful or not justified by
the evidence on which it was based.
(2) On any such appeal the tribunal may confirm or reverse the
decision which is the subject of the appeal but shall not have power to
vary it except that
(a) where the decision was to impose or vary any restriction
the tribunal may direct the Authority to impose different
restrictions or to vary them in a different way; or
(b) where the decision was to revoke a licence the tribunal
may direct the Authority to restrict it instead.
(3) Notice of a tribunal's determination, together with a
statement of its reasons, shall be given to the appellant and to the
Authority; and, unless the tribunal otherwise directs, the determination
shall come into operation when the notice is given to the appellant and to
the Authority.
Costs, procedure and evidence
33 (1) A tribunal may give such directions as it thinks fit for the
payment of costs or expenses by any party to the appeal.
(2) The Minister may make regulations with respect to appeals
and those regulations may in particular make provision
(a) as to the period within which and the manner in which
such appeals are to be brought;
(b) as to the manner in which such appeals are to be
conducted, including provision for any hearing to be
held in private and as to the persons entitled to appear
on behalf of the parties;
(c) as to the procedure to be adopted where appeals are
brought both by an institution and by a person who is to
be a controller or senior executive of an institution,
BANKS AND DEPOSIT COMPANIES ACT 1999
29
including provision for the hearing of the appeals
together and for the mutual disclosure of information;
(d) for requiring an appellant or the Authority to disclose or
allow the inspection of documents in his or its custody
or under his or its control;
(e) for requiring any person, on tender of the necessary
expenses of his attendance, to attend and give evidence
or produce documents in his custody or under his
control and for authorising the administration of oaths
to witnesses;
(f) for enabling an appellant to withdraw an appeal or the
Authority to withdraw its opposition to an appeal and for
the consequences of any such withdrawal;
(g) for taxing or otherwise settling any costs or expenses
which the tribunal directs to be paid and for the
enforcement of any such direction;
(h) for enabling any preliminary or incidental functions in
relation to an appeal to be discharged by the chairman
or, as the case may be, the deputy chairman of the
tribunal; and
(i) as to any other matter connected with such appeals.
(3) Regulations made under subsection (2) shall be subject to
negative resolution procedure.
(4) A person who, having been required in accordance with
regulations made under this section to attend and give evidence, fails
without reasonable excuse to attend or give evidence, shall be guilty of
an offence and liable on summary conviction to a fine of $10,000.
(5) A person who without reasonable excuse alters, suppresses,
conceals, destroys or refuses to produce any document which he has
been required to produce in accordance with regulations under this
section, or which he is liable to be so required to produce, shall be guilty
of an offence and liable
(a) on summary conviction to a fine of $50,000 or to
imprisonment for six months or to both; and
(b) on conviction on indictment to a fine of
$100,000 or to imprisonment for two years or to both.
BANKS AND DEPOSIT COMPANIES ACT 1999
30
Further appeals on a point of law
34 (1) An institution or other person who has appealed to a
tribunal may appeal to the court on any question of law arising from the
decision of the appeal by the tribunal and an appeal on any such
question shall also lie at the instance of the Authority; and if the court is
of the opinion that the decision was erroneous in point of law it shall
remit the matter to the tribunal for re-hearing and determination by it.
(2) No appeal to the Court of Appeal shall be brought from a
decision under subsection (1) except with leave of that court.
INFORMATION
Notification of change of director, controller or senior executive
35 (1) An institution shall give written notice to the Authority of
the fact that any person has become or ceased to be a director, controller
or senior executive of the institution.
(2) A notice required to be given under subsection (1) shall be
given before the end of the period of fourteen days beginning with the
day on which the institution becomes aware of the relevant facts.
(3) An institution which fails to give a notice required by this
section shall be guilty of an offence and liable on summary conviction to
a fine of $50,000.
Notification of acquisition of significant shareholding
36 (1) A person who becomes a significant shareholder in relation
to an institution shall within seven days thereof give written notice of
that fact to the Authority.
(2) For the purposes of this section "a significant shareholder",
in relation to an institution, means a person who is not a shareholder
controller but who, either alone or with any associate or associates—
(a) holds five per cent or more of the shares in the
institution or another company of which it is a
subsidiary company; or
(b) is entitled to exercise, or control the exercise of, five per
cent or more of the voting power at any general meeting
of the institution or of another company of which it is
such a subsidiary.
(3) Subject to subsection (4), any person who contravenes
subsection (1) shall be guilty of an offence.
BANKS AND DEPOSIT COMPANIES ACT 1999
31
(4) A person shall not be guilty of an offence under subsection
(3) if he shows that he did not know of the acts or circumstances by
virtue of which he became a significant shareholder in relation to the
institution; but where any person becomes such a shareholder without
such knowledge and subsequently becomes aware of the fact that he has
become such a shareholder he shall be guilty of an offence unless he
gives the Authority written notice of the fact that he has become such a
shareholder within fourteen days of becoming aware of that fact.
(5) A person guilty of an offence under this section shall be
liable on summary conviction to a fine of $1000.
Annual returns
37 (1) Every institution shall deliver to the Authority a return,
signed by a director or secretary of the institution, made up to 31
December of each year.
(2) Each return shall contain the following information
(a) the name and address of every person who
(i) is a director or member of the institution on the
date to which the return was made up; or
(ii) has ceased to be a director or member of the
institution since the date to which the last
return was made up (or, in the case of a first
return, since the incorporation of the
institution);
(b) the return shall also state
(i) the name and address of each person who is a
member of the institution and the number of
shares of each class held by him at the date to
which the return is made;
(ii) the name and address of each person who has
ceased to be a member and the number of
shares of each class transferred since the date to
which the last return was made up (or, in the
case of the first return, since the incorporation
of the institution) by each such person and the
dates of registration of the transfers.
(3) If an institution fails to deliver an annual return in
accordance with this section before the end of the period of 28 days after
the return date, the institution shall be guilty of an offence and liable on
BANKS AND DEPOSIT COMPANIES ACT 1999
32
summary conviction to a fine of $10,000 and in the case of a continued
offence to a daily default fine of $1000.
Reports of large exposures
38 (1) An institution shall make a report to the Authority if—
(a) it has entered into a transaction or transactions relating
to any one person as a result of which it is exposed to
the risk of incurring losses in excess of 10 per cent of its
available capital resources; or
(b) it proposes to enter into a transaction or transactions
relating to any one person which, either alone or
together with a previous transaction or previous
transactions entered into by it in relation to that person,
would result in its being exposed to the risk of incurring
losses in excess of 25 per cent of those resources.
(2) Subsection (1) applies also where the transaction or
transactions relate to different persons if they are connected in such a
way that the financial soundness of any of them may affect the financial
soundness of the other or others or the same factors may affect the
financial soundness of both or all of them.
(3) If an institution to which subsection (1) applies has one or
more subsidiaries which are not licensed under this Act the Authority
may by notice in writing to that institution direct that that subsection
shall apply to it as if the transactions and available capital resources of
the subsidiary or subsidiaries, or such of them as are specified in the
notice, were included in those of the institution.
(4) The reports required to be made by an institution under
subsection (1) shall be made, in a case within paragraph (a) of that
subsection, in respect of such period or periods and, in a case within
paragraph (b) of that subsection, at such time before the transaction or
transactions are entered into, as may be specified by notice in writing
given to the institution by the Authority; and those reports shall be in
such form and contain such particulars as the Authority may reasonably
require.
(5) For the purposes of this section a transaction entered into
by an institution relates to a person if it is—
(a) a transaction under which that person incurs an
obligation to the institution or as a result of which he
may incur such an obligation;
(b) a transaction under which the institution will incur, or
as a result of which it may incur, an obligation in the
BANKS AND DEPOSIT COMPANIES ACT 1999
33
event of that person defaulting on an obligation to a
third party; or
(c) a transaction under which the institution acquires or
incurs any obligation to acquire, or as a result of which
it may incur an obligation to acquire, an asset the value
of which depends wholly or mainly on that person
performing his obligations or otherwise on his financial
soundness;
and the risk of loss attributable to a transaction is, in a case within
paragraph (a) or (b), the risk of the person concerned defaulting on the
obligation there mentioned and, in a case within paragraph (c), the risk
of the person concerned defaulting on the obligations there mentioned or
of a deterioration in his financial soundness.
(6) Any question whether an institution is or would be exposed
to risk as mentioned in subsection (1) (or in that subsection as extended
by subsection (2)) shall be determined in accordance with principles
published by the Authority or notified by it to the institution concerned;
and those principles may in particular make provision for determining
the amount at risk in particular circumstances or the event to which any
such amount is to be taken into account for the purposes of this section.
(7) For the purposes of this section the available capital
resources of an institution (or, in a case within subsection (3), of an
institution and its relevant subsidiary or subsidiaries) and the value of
those resources at any time shall be determined by the Authority and
notified by it to the institution by notice in writing; and any such
determination, which may be varied from time to time, shall be made by
the Authority after consultation with the institution concerned and in
accordance with principles published by the Authority.
(8) The principles referred to in subsections (6) and (7) may
make different provision for different cases and those referred to in
subsection (6) may, in particular, exclude from consideration, either
wholly or in part, risks resulting from transactions of a particular
description or entered into in particular circumstances or with persons of
particular descriptions.
(9) An institution which fails to make a report as required by
this section shall be guilty of an offence; but where an institution shows
that at the time when the report was required to be made it did not know
that the facts were such as to require the making of the report it shall
not be guilty of an offence by reason of its failure to make a report at that
time but shall be guilty of an offence unless it makes the report within
seven days of becoming aware of those facts.
BANKS AND DEPOSIT COMPANIES ACT 1999
34
(10) An institution guilty of an offence under this section shall
be liable on summary conviction to a fine of $25,000.
(11) The Minister acting on the advice of the Authority may by
order—
(a) amend subsection (1) so as to substitute for either of the
percentages for the time being specified in that
subsection such other percentage as may be specified in
the order;
(b) make provision, whether by amending subsection (5) or
otherwise, with respect to the transactions and risks to
be taken into account for the purposes of this section.
(12) An order made under subsection (11) shall be subject to
negative resolution procedure.
Power to obtain information and reports
39 (1) The Authority may by notice in writing served on an
institution—
(a) require the institution to provide the Authority (or such
person acting on behalf of the Authority as may be
specified in the notice), at such time or times or at such
intervals or in respect of such period or periods as may
be so specified, with such information as the Authority
may reasonably require for the performance of its
functions under this Act;
(b) require the institution to provide the Authority with a
report, in such form as may be specified in the notice, by
the institution's auditor or by an accountant or other
person with relevant professional skill on, or on any
aspect of, any matter about which the Authority has
required or could require the institution to provide
information under paragraph (a).
(2) The person appointed by an institution to make any report
required under subsection (1)(b) shall forthwith give written notice to the
Authority of any fact or matter of which he becomes aware which
indicates to him that the business of the institution is being conducted
in a manner detrimental to the interests of the depositors or potential
depositors of the institution.
Power to require production of documents
40 (1) The Authority may—
BANKS AND DEPOSIT COMPANIES ACT 1999
35
(a) by notice in writing served on an institution require it to
produce, within such time and at such place as may be
specified in the notice, such document or documents of
such description as may be so specified;
(b) authorise an officer, servant or agent of the Authority, on
producing evidence of his authority, to require any such
institution to provide him forthwith with such
information, or to produce to him forthwith such
documents, as he may specify,
being such information or documents as the Authority may reasonably
require for the performance of its functions under this Act.
(2) Where, by virtue of subsection (1), the Authority or any
officer, servant or agent of the Authority has power to require the
production of any documents from an institution, the Authority or that
officer, servant or agent shall have the like power to require the
production of those documents from any person who appears to be in
possession of them; but where any person from whom such production
is required claims a lien on documents produced by him, the production
shall be without prejudice to the lien.
(3) The power under this section to require an institution or
other person to produce any documents includes power—
(a) if the documents are produced, to take copies of them or
extracts from them and to require that institution or
person, or any other person who is a present or past
director, controller or senior executive of, or is or was at
any time employed by or acting as an employee of, the
institution in question, to provide an explanation of any
of them; and
(b) if the documents are not produced, to require the person
who was required to produce them to state, to the best of
his knowledge and belief, where they are.
(4) If it appears to the Authority to be desirable in the interests
of the depositors or potential depositors of an institution to do so, it may
also exercise the powers conferred by section 39 and subsection (1) of
this section in relation to any company which is or has at any relevant
time been—
(a) a parent company, subsidiary company or related
company of that institution;
(b) a subsidiary company of a parent company of that
institution;
BANKS AND DEPOSIT COMPANIES ACT 1999
36
(c) a parent company of a subsidiary company of that
institution; or
(d) a company in the case of which a shareholder controller
of that institution, either alone or with any associate or
associates, holds 50 per cent or more of the shares or is
entitled to exercise, or control the exercise of more than
50 per cent of the voting power at a general meeting.
(5) The Authority may by notice in writing served on any
person who is or is to be a director, controller or senior executive of an
institution require him to provide the Authority, within such time as may
be specified in the notice, with such information or documents as the
Authority may reasonably require for determining whether he is a fit and
proper person to hold the particular position which he holds or is to
hold.
(6) Any person who without reasonable excuse fails to comply
with a requirement imposed on him under this section shall be guilty of
an offence and liable on summary conviction to a fine of
$10,000 or to imprisonment for a term of six months or to both.
(7) Nothing in this section shall compel the production by a
barrister and attorney of a document containing a privileged
communication made by him or to him in that capacity.
Right of entry to obtain information and documents
41 (1) Any officer, servant or agent of the Authority may, on
producing if required evidence of his authority, enter any premises
occupied by a person on whom a notice has been served under sections
39(1) and 40(1) for the purpose of obtaining there the information or
documents required by that notice and of exercising the powers
conferred by section 40(3).
(2) Any officer, servant or agent of the Authority may, on
producing if required evidence of his authority, enter any premises
occupied by any person on whom a notice could be served under
sections 39(1) and 40(1) for the purpose of obtaining there such
information or documents as are specified in the authority, but the
Authority shall not authorise any person to act under this subsection
unless it has reasonable cause to believe that if such a notice were
served it would not be complied with or that any documents to which it
would relate would be removed, tampered with or destroyed.
(3) Any person who intentionally obstructs a person exercising
rights conferred by this section shall be guilty of an offence and liable on
summary conviction to a fine of $10,000 or to imprisonment for six
months or to both.
BANKS AND DEPOSIT COMPANIES ACT 1999
37
INVESTIGATIONS
Investigations on behalf of the Authority
42 (1) If it appears to the Authority desirable to do so in the
interests of the depositors or potential depositors of an institution the
Authority may appoint one or more competent persons to investigate and
report to the Authority on—
(a) the nature, conduct or state of the institution's business
or any particular aspect of it; or
(b) the ownership or control of the institution;
and the Authority shall give written notice of any such appointment to
the institution concerned.
(2) If a person appointed under subsection (1) thinks it
necessary for the purposes of his investigation, he may also investigate
the business of any company which is or has at any relevant time been—
(a) a parent company, subsidiary company or related
company of the institution under investigation;
(b) a subsidiary company or related company of a parent
company of that institution;
(c) a parent company of a subsidiary company of that
institution; or
(d) a company in the case of which a shareholder controller
of that institution, either alone or with any associate or
associates, holds 50 per cent or more of the shares or is
entitled to exercise, or control the exercise of more than
50 per cent of the voting power at a general meeting.
(3) Where a person appointed under subsection (1) decides to
investigate the business of any company by virtue of subsection (2) he
shall give it written notice to that effect.
(4) It shall be the duty of every person who is or was a director,
controller, senior executive, employee, agent, banker, auditor or barrister
and attorney of a company which is under investigation (whether by
virtue of subsection (1) or (2)), any person appointed to make a report in
respect of that company under section 39(1)(b) and anyone who is a
significant shareholder in relation to that company within the meaning
of section 36 —
(a) to produce to the persons appointed under subsection
(1), within such time and at such place as they may
BANKS AND DEPOSIT COMPANIES ACT 1999
38
require, all documents relating to the company
concerned which are in his custody or power;
(b) to attend before the persons so appointed at such time
and place as they may require; and
(c) otherwise to give those persons all assistance in
connection with the investigation which he is reasonably
able to give;
and those persons may take copies of or extracts from any documents
produced to them under paragraph (a).
(5) For the purpose of exercising his powers under this section
a person appointed under subsection (1) may enter any premises
occupied by a company which is being investigated by him under this
section; but he shall not do so without prior notice in writing unless he
has reasonable cause to believe that if such a notice were given any
documents whose production could be required under this section would
be removed, tampered with or destroyed.
(6) A person exercising powers by virtue of an appointment
under this section shall, if so required, produce evidence of his authority.
(7) Any person who—
(a) without reasonable excuse fails to produce any
documents which it is his duty to produce under
subsection (4) ;
(b) without reasonable excuse fails to attend before the
persons appointed under subsection (1) when required
to do so;
(c) without reasonable excuse fails to answer any question
which is put to him by persons so appointed with
respect to an institution which is under investigation or
a company which is being investigated by virtue of
subsection (2); or
(d) intentionally obstructs a person in the exercise of the
rights conferred by subsection (5) ,
shall be guilty of an offence and liable on summary conviction to a fine of
$10,000 or to imprisonment for a term of six months or to both.
(8) A statement made by a person in compliance with a
requirement imposed by virtue of this section shall not be used in
evidence against him.
BANKS AND DEPOSIT COMPANIES ACT 1999
39
(9) Nothing in this section shall compel the production by a
barrister and attorney of a document containing a privileged
communication made by him or to him in that capacity.
Investigation of suspected contraventions
43 (1) Where the Authority has reasonable grounds for suspecting
that a person has contravened section 11 the Authority or any duly
authorised officer, servant or agent of the Authority may by notice in
writing require that or any other person—
(a) to provide, at such place as may be specified in the
notice and either forthwith or at such time as may be so
specified, such information as the Authority may
reasonably require for the purpose of investigating the
suspected contravention;
(b) to produce, at such place as may be specified in the
notice and either forthwith or at such time as may be so
specified, such documents, or documents of such
description, as may be specified, being documents the
production of which may be reasonably required by the
Authority for that purpose;
(c) to attend at such place and time as may be specified in
the notice and answer questions relevant for determining
whether such a contravention has occurred.
(2) The Authority or a duly authorised officer, servant or agent
of the Authority may take copies of or extracts from any documents
produced under this section.
(3) Any officer, servant or agent of the Authority may, on
producing if required evidence of his authority, enter any premises
occupied by a person on whom a notice has been served under
subsection (1) for the purpose of obtaining there the information or
documents required by the notice, putting the questions referred to in
paragraph (c) of that subsection or exercising the powers conferred by
subsection (2).
(4) Any person who without reasonable excuse fails to comply
with a requirement imposed on him under this section or intentionally
obstructs a person in the exercise of the rights conferred by subsection
(3) shall be guilty of an offence and liable on summary conviction to a
fine of $10,000 or to imprisonment for a term of six months or to both.
(5) A statement made by a person in compliance with a
requirement imposed by virtue of this section shall not be used in
evidence against him.
BANKS AND DEPOSIT COMPANIES ACT 1999
40
(6) Nothing in this section shall compel the production by a
barrister and attorney of a document containing a privileged
communication made by him or to him in that capacity.
Powers of entry in cases of suspected contraventions
44 (1) A magistrate may issue a warrant under this section if
satisfied on information on oath laid by an officer of the Authority or laid
under the Authority's authority that there are reasonable grounds for
suspecting that a person is guilty of such a contravention as is
mentioned in section 43 and—
(a) that that person has failed to comply with a notice
served on him under that section;
(b) that there are reasonable grounds for suspecting the
completeness of any information provided or documents
produced by him in response to such a notice; or
(c) that there are reasonable grounds for suspecting that if
a notice were served on him under that section it would
not be complied with or that any documents to which it
would relate would be removed, tampered with or
destroyed.
(2) A warrant under this section shall authorise any police
officer not below the rank of inspector, together with any other person
named in the warrant and any other police officers—
(a) to enter any premises occupied by the person mentioned
in subsection (1) which are specified in the warrant,
using such force as is reasonably necessary for the
purpose;
(b) to search the premises and take possession of any
documents appearing to be such documents as are
mentioned in subsection (1)(c) or to take, in relation to
any such documents, any other steps which may appear
to be necessary for preserving them or preventing
interference with them;
(c) to take copies of or extracts from any such documents;
(d) to require any person named in the warrant to answer
questions relevant for determining whether that person
is guilty of any such contravention as is mentioned in
section 43.
BANKS AND DEPOSIT COMPANIES ACT 1999
41
(3) A warrant under this section shall continue in force until
the end of the period of one month beginning with the day on which it is
issued.
(4) Any documents of which possession is taken under this
section may be retained—
(a) for a period of three months; or
(b) if within that period proceedings to which the documents
are relevant are commenced against any person for any
such contravention as is mentioned in section 43, until
the conclusion of those proceedings.
(5) Any person who intentionally obstructs the exercise of any
right conferred by a warrant issued under this section or fails without
reasonable excuse to comply with any requirement imposed in
accordance with subsection (2)(d) shall be guilty of an offence and
liable—
(a) on summary conviction, to a fine of $10,000 or to
imprisonment for a term of six months or to both;
(b) on conviction on indictment, to a fine of $50,000 or to
imprisonment for a term of two years or to both.
Obstruction of investigations
45 (1) A person who knows or suspects that an investigation is
being or is likely to be carried out—
(a) into a suspected contravention of section 11; or
(b) under section 42,
shall be guilty of an offence if he falsifies, conceals, destroys or otherwise
disposes of, or causes or permits the falsification, concealment,
destruction or disposal of, documents which he knows or suspects are or
would be relevant to such an investigation unless he proves that he had
no intention of concealing facts disclosed by the documents from persons
carrying out such an investigation.
(2) A person guilty of an offence under this section shall be
liable—
(a) on summary conviction, to a fine of $10,000 or to
imprisonment for a term of six months or to both;
(b) on conviction on indictment, to a fine of
$50,000 to imprisonment for a term of two years or to
both.
BANKS AND DEPOSIT COMPANIES ACT 1999
42
FINANCIAL STATEMENTS AND AUDIT
Appointment of auditors
46 (1) Every institution shall appoint annually an approved
auditor to audit the financial statements of the institution.
(2) If an institution fails to appoint an approved auditor under
subsection (1) or, at any time, fails to fill a vacancy for such auditor, the
Authority may appoint an approved auditor and shall fix the
remuneration to be paid by that institution to such auditor.
(3) An institution shall forthwith give written notice to the
Authority if the institution
(a) proposes to remove an auditor before the expiration of
his term of office; or
(b) proposes to replace an auditor at the expiration of the
term of his office with a different auditor.
(4) An auditor of an institution shall forthwith give written
notice to the Authority if the auditor
(a) resigns before the expiration of his term of office;
(b) does not seek to be re-appointed;
(c) decides to include a modification of his report on the
institution's financial statements and in particular, a
qualification or denial of his opinion, or the statement of
an adverse opinion;
(d) becomes aware of any fact or matter which indicates to
him that the business of the institution is being
conducted in a manner detrimental to the interests of
the depositors or potential depositors of the institution.
(5) An institution or auditor who fails to comply with this
section shall be guilty of an offence and shall be liable on summary
conviction to a fine of $50,000 .
(6) For the purposes of this section, "approved auditor" means
a person who is a member of a professional body for the time being
declared by the Minister by notice published in the Gazette to be
approved for the purposes of this Act.
(7) No person having an interest in any institution otherwise
than as a depositor, and no officer, servant or agent of any institution
shall be eligible for appointment as an approved auditor for that
institution; and any person appointed as such auditor to any institution
BANKS AND DEPOSIT COMPANIES ACT 1999
43
who subsequently acquires such interest or becomes an officer, servant
or agent of that institution shall cease to be an approved auditor.
Duty to audit etc.
47 (1) Notwithstanding anything to the contrary in any other Act,
an institution shall prepare annual financial statements of its business
copies of which shall be laid before the institution in general meeting.
(2) An institution shall cause the financial statements of its
business to be audited annually and shall at each of its offices in
Bermuda
(a) keep a copy of its most recent audited financial
statements together with the auditor's report on the
financial statements ;
(b) during normal business hours make that copy of the
financial statements and report available for inspection
by any person on request.
(3) An institution shall provide the Authority with a copy of the
audited financial statements and report not later than four months
after the close of each financial year of an institution.
(4) An institution which fails to prepare annual financial
statements or which fails to cause the financial statements to be audited
annually as required by subsection (1), or fails to comply with subsection
(2)(a) or fails to comply with a request made in accordance with
subsection (2)(b)or fails to comply with subsection (3) shall be guilty of an
offence and shall be liable on summary conviction to a fine of $75,000.
Auditor's report
48 (1) An approved auditor shall make a report to the institution's
members on all annual financial statements of the institution of which
copies are to be laid before the institution in general meeting during his
tenure of office.
(2) The auditor shall conduct his audit and prepare his report
pursuant to the provisions of section 90 of the Companies Act 1981.
Communication by auditor, etc. with Authority
49 (1) No duty to which
(a) an auditor of an institution;
(b) a person appointed to make a report under section
39(1)(b),
BANKS AND DEPOSIT COMPANIES ACT 1999
44
may be subject shall be regarded as contravened by reason of his
communicating in good faith to the Authority, whether or not in response
to a request made by the Authority, any information or opinion on a
matter to which this section applies and which is relevant to any
function of the Authority under this Act.
(2) In relation to an auditor of an institution this section
applies to any matter of which he becomes aware in his capacity as
auditor and which relates to the business or affairs of the institution or
any associated company.
(3) In relation to a person appointed to make a report under
section 39(1)(b) this section applies to any matter of which he becomes
aware in his capacity as the person making the report and which
(a) relates to the business or affairs of the institution in
relation to which his report is made or any associated
company of that institution;
(b) if by virtue of section 40(4) the report relates to an
associated company of an institution, to the business or
affairs of that company.
(4) In this section "associated company" , in relation to an
institution, means any such company as is mentioned in section 40(4).
RESTRICTION ON INSTITUTIONS ACTIVITIES
Restriction on advances on institution shares
50 (1) An institution shall not accept any form of security over its
own shares as security for any advances, credit facilities or guarantee
given to it by any person.
(2) An institution that contravenes subsection (1) commits an
offence and is liable on summary conviction to a fine of $50,000.
Restriction on commercial activities of institutions
51 (1) Subject to this section, an institution shall not without
obtaining the prior approval of the Authority
(a) in the case of all institutions
(i) engage in manufacture;
(ii) trade in any goods;
(iii) acquire or hold any interest in land;
(b) in the case of an institution holding a banking licence,
provide any services other than the business of banking
BANKS AND DEPOSIT COMPANIES ACT 1999
45
or dealing in money or securities of any kind, including
all services normally associated with such business;
(c) in the case of an institution holding a deposit company
licence, provide any services other than deposit-taking
business including all services normally associated with
such business,
except in so far as may be necessary with respect to any interests the
institution may acquire in the course of the satisfaction of debts due to
it, and provided such interests are disposed of at the earliest suitable
opportunity.
(2) An institution may acquire and hold an interest in any
undertaking to a value not exceeding such percentage of the amount of
the paid-up capital and published reserves of the institution as the
Minister acting on the advice of the Authority may prescribe by order.
(3) An order made under subsection (2) shall be subject to
negative resolution procedure.
(4) An institution may acquire and hold an interest or estate in
land
(a) for the purpose of accommodating its business; or
(b) as security for any advances, credit facilities or
guarantees given to it by any person.
(5) An institution that contravenes the provisions of subsection
(1) commits an offence and is liable on summary conviction to a fine of
$50,000.
RESTRICTION ON DISCLOSURE OF INFORMATION
Restricted information
52 (1) Except as provided by sections 53, 54 and 55
(a) no person who under or for the purposes of this Act
receives information relating to the business or other
affairs of any person; and
(b) no person who obtains such information directly or
indirectly from a person who has received it as aforesaid,
shall disclose the information without the consent of the person to whom
it relates and (if different) the person from whom it was received as
aforesaid.
BANKS AND DEPOSIT COMPANIES ACT 1999
46
(2) This section does not apply to information which at the time
of the disclosure is or has already been made available to the public from
other sources or to information in the form of a summary or collection of
information so framed as not to enable information relating to any
particular person to be ascertained from it.
(3) Any person who discloses information in contravention of
this section commits an offence and is liable
(a) on summary conviction to a fine of $50,000 and to
imprisonment for two years or to both;
(b) on conviction on indictment to a fine of $100,000 or to
imprisonment for five years or to both.
Disclosure for facilitating the discharge of functions of the
Authority
53 (1) Section 52 does not preclude the disclosure of information
in any case in which disclosure is for the purpose of enabling or assisting
the Authority to discharge
(a) its functions under this Act; and
(b) its functions under the Bermuda Monetary Authority Act
1969.
(2) Without prejudice to the generality of subsection (1),
section 52 does not preclude the disclosure of information by the
Authority to the auditor of an institution if it appears to the Authority
that disclosing the information would enable or assist the Authority to
discharge the functions mentioned in that subsection or would otherwise
be in the interests of the depositors.
Disclosure for facilitating the discharge of functions by other
authorities
54 (1) Section 52 does not preclude the disclosure of information
to the Minister or other authority in Bermuda in any case in which the
disclosure is for the purpose of enabling or assisting him to discharge his
regulatory functions.
(2) Section 52 does not preclude the disclosure of information
for the purpose of enabling or assisting an authority in a country or
territory outside Bermuda to exercise functions corresponding to the
functions of the Authority under this Act.
(3) Subsection (2) does not apply in relation to disclosures to
an authority unless the Authority is satisfied that the authority is subject
BANKS AND DEPOSIT COMPANIES ACT 1999
47
to restriction on further disclosure at least equivalent to those imposed
by sections 52, 53 and this section.
(4) Section 52 does not preclude the disclosure of informa-
tion
(a) for the purpose of enabling or assisting a person to do
anything which he is required to do in pursuance of a
requirement imposed under section 39(1)(b);
(b) with a view to the institution of, or otherwise for the
purposes of , any criminal proceedings, whether under
this Act or otherwise;
(c) in connection with any other proceedings arising out of
this Act.
(5) Section 52 does not preclude the disclosure by the
Authority to the Director of Public Prosecutions or a police officer not
below the rank of inspector of information obtained pursuant to section
42, 43 or 44 or of information in the possession of the Authority as to
any suspected contravention in relation to which the powers conferred by
those sections are exercisable.
(6) Information which is disclosed to a person in pursuance of
this section shall not be used otherwise then for the purpose mentioned
in this section.
Information supplied to the Authority by relevant overseas
authority
55 (1) Section 52 applies to information which has been supplied
to the Authority for the purposes of any relevant functions by the
relevant supervisory authority in a country or territory outside Bermuda.
(2) Information supplied to the Authority as mentioned in
subsection (1) shall not be disclosed except as provided by section 52
(a) for the purpose of enabling or assisting the Authority to
discharge its functions under this Act; or
(b) with a view to the institution of, or otherwise for the
purpose of, criminal proceedings, whether under this Act
or otherwise.
(3) In this section
"relevant functions" in relation to the Authority means its
functions under this Act and the Bermuda Monetary
Authority Act 1969;
BANKS AND DEPOSIT COMPANIES ACT 1999
48
"relevant supervisory authority" means the authority
discharging in that country or territory functions
corresponding to those of the Authority under this Act.
MISCELLANEOUS AND SUPPLEMENTAL
Offences by companies
56 (1) Where an offence under this Act committed by a company is
proved to have been committed with the consent or connivance of, or to
be attributable to neglect on the part of, any director, senior executive,
secretary or other similar officer of the company, or any person who was
purporting to act in any such capacity, he, as well as the company, shall
be guilty of that offence and be liable to be proceeded against and
punished accordingly unless such person shows that he took all
reasonable steps to avoid the commission of an offence.
(2) Where the affairs of a company are managed by its
members, subsection (1) shall apply in relation to the acts and defaults
of a member in connection with his functions of management as if he
were a director of the company.
Restriction on use of word "bank"
57 No person carrying on business in Bermuda shall use any name
which indicates or may reasonably be understood to indicate (whether in
English or in any other language) that he is a bank or banker or is
carrying on deposit-taking business authorised under a banking licence
unless it is an institution holding a banking licence under this Act.
Notices
58 (1) This section has effect in relation to any notice, direction or
other document required or authorised by or under this Act to be given
to or served on any person other than the Authority.
(2) Any such document may be given to or served on the
person in question
(a) by delivering it to him;
(b) by leaving it at his principal place of business; or
(c) by sending it to him at that address by facsimile or other
similar means which produce a document containing the
text of the communication.
(3) Any such document may in the case of a company be given
to or served
BANKS AND DEPOSIT COMPANIES ACT 1999
49
(a) by delivering it to the company's principal place of
business or registered office in Bermuda; or
(b) by sending it by registered post addressed to the
company's principal place of business.
Service of notice on Authority
59 (1) No notice required by this Act to be given or served on the
Authority shall be regarded as given or served until it is received.
(2) Subject to subsection (1), such notice may be given by
facsimile or other similar means which produce a document containing
the text of the communication.
Regulations
60 (1) The Minister acting on the advice of the Authority, may
make regulations prescribing anything which may be prescribed under
this Act and generally for the implementation of this Act.
(2) Without prejudice to the generality of subsection (1),
regulations may in particular—
(a) prescribe forms, fees and charges;
(b) regulate advertising and the soliciting of deposits by
whatever means (including electronic soliciting).
(c) prescribe penalties not exceeding $10000 for any breach
of the regulations.
(3) Regulations made under this section are subject to negative
resolution procedure.
Repeals
61 The following enactments shall cease to have effect and are
hereby repealed—
The Banks Act 1969; and
The Deposit Companies Act 1974.
Consequential amendments
62 (1) The Minister may by order amend any enactment as he
thinks fit in consequence of this Act and the repeal of the enactments
listed in section 61.
(2) An order made under this section shall be subject to
affirmative resolution procedure.
BANKS AND DEPOSIT COMPANIES ACT 1999
50
Transitional
63 (1) Notwithstanding the provisions of this Act, where, upon the
commencement of this Act a person is carrying on a deposit-taking
business
(a) under a licence issued by the Minister under the
repealed Banks Act 1969; or
(b) under a licence issued by the Minister under the
repealed Deposit Companies Act 1974,
the Authority shall issue to the person holding the licence referred to in
paragraph (a) a banking licence, and to a person holding the licence
referred to in paragraph (b) a deposit company licence.
(2) Subject to this section and section 64, upon the issue of the
licence the provisions of this Act shall apply to the institution as if such
licence were granted under section 14.
(3) Except where the Authority directs otherwise in the
interests of the depositors or potential depositors, for the period of twelve
months from the date of commencement of this Act, or such other longer
period as the Authority may in any particular case specify, paragraph 7
of the minimum criteria specified in the Second Schedule shall not apply
to an institution licensed under this section.
(4) Section 37(2)(a)(ii) and Section 37(2)(b)(ii) shall apply to
institutions licensed under this section as if for "since the incorporation
of the institution" there were substituted "since the commencement of
this Act".
Savings
64 Nothing in this Act shall require an institution licensed under
section 63 to provide any services to the public in Bermuda that it did
not provide before the commencement of this Act.
FIRST SCHEDULE (section 12(1))
EXEMPTIONS
1 The following are exempt from all of the provisions of this Act—
(a) the Government of Bermuda;
(b) the Bermuda Monetary Authority;
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(c) every public authority in Bermuda.
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SECOND SCHEDULE (section 14(2) )
MINIMUM CRITERIA FOR LICENSING
Directors etc. to be fit and proper persons
1 (1) Every person who is, or is to be, a director, controller or
senior executive of the institution is a fit and proper person to hold the
particular position which he holds or is to hold.
(2) In determining whether a person is a fit and proper person
to hold any particular position, regard shall be had to his probity, to his
competence and soundness of judgement for fulfilling the responsibilities
of that position, to the diligence with which he is fulfilling or likely to
fulfill those responsibilities and to whether the interests of depositors or
potential depositors of the institution are, or are likely to be, in any way
threatened by his holding that position.
(3) Without prejudice to the generality of the foregoing
provisions, regard may be had to the previous conduct and activities in
business or financial matters of the person in question and, in
particular, to any evidence that he has—
(a) committed an offence involving fraud or other dishonesty
or violence;
(b) contravened any provision made by or under any
enactment appearing to the Authority to be designed for
protecting members of the public against financial loss
due to dishonesty, incompetence or malpractice by
persons concerned in the provision of banking,
insurance, investment or other financial services or the
management of companies or against financial loss due
to the conduct of discharged or undischarged
bankrupts;
(c) engaged in any business practices appearing to the
Authority to be deceitful or oppressive or otherwise
improper (whether lawful or not) or which otherwise
reflect discredit on his method of conducting business;
(d) engaged in or has been associated with any other
business practices or otherwise conducted himself in
such a way as to cast doubt on his competence and
soundness of judgement.
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Business to be directed by at least two individuals
2 At least two individuals effectively direct the business of the
institution.
Composition of board of directors
3 The directors include such number (if any) of directors without
executive responsibility for the management of its business as the
Authority considers appropriate having regard to the circumstances of
the institution and the nature and scale of its operations.
Business to be conducted in prudent manner
4 (1) The institution conducts, or, in the case of an institution
which is not yet carrying on a deposit-taking business, will conduct its
business in a prudent manner.
(2) An institution shall not be regarded as conducting its
business in a prudent manner unless it maintains or, as the case may
be, will maintain capital which, together with other financial resources
available to the institution of such nature and amount as considered
appropriate by the Authority, are—
(a) of an amount which is commensurate with the nature
and scale of the institution's operations; and
(b) of an amount and nature sufficient to safeguard the
interests of its depositors and potential depositors,
having regard to the particular factors mentioned in
subparagraph (3) and any other factors appearing to the
Authority to be relevant.
(3) The particular factors referred to above are—
(a) the nature and scale of the institution's operations; and
(b) the risks inherent in those operations and in the
operations of any other undertaking in the same group
so far as capable of affecting the institution.
(4) An institution shall not be regarded as conducting its
business in a prudent manner unless it maintains or, as the case may
be, will maintain adequate liquidity, having regard to the relationship
between its liquid assets and its actual and contingent liabilities, to the
times at which those liabilities will or may fall due and its assets mature,
to the factors mentioned in subparagraph (3) and to any other factors
appearing to the Authority to be relevant.
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(5) For the purposes of subparagraph (4) the Authority may, to
such extent as it thinks appropriate, take into account as liquid assets,
assets of the institution and facilities available to it which are capable of
providing liquidity within a reasonable period.
(6) An institution shall not be regarded as conducting its
business in a prudent manner unless it makes or, as the case may be,
will make adequate provision for depreciation or diminution in the value
of its assets (including provision for bad or doubtful debts), for liabilities
which will or may fall to be discharged by it and for losses which it will or
may incur.
(7) An institution shall not be regarded as conducting its
business in a prudent manner unless it makes or, as the case may be,
will maintain adequate accounting and other records of its business and
adequate systems of control of its business and records.
(8) Those records and systems shall not be regarded as
adequate unless they are such as to enable the business of the
institution to be prudently managed and the institution to comply with
the duties imposed on it by or under this Act and in determining whether
those systems are adequate the Authority shall have regard to the
functions and responsibilities in respect of them of any such directors of
the institution as are mentioned in paragraph 3 .
(9) Subparagraphs (2) to (8) are without prejudice to the
generality of subparagraph (1) .
Consolidated supervision
5 The position of the institution within the structure of any group
to which it may belong or its links with any related companies shall be
such that it will not obstruct the conduct of effective consolidated
supervision.
Integrity and skill
6 The business of the institution is or, in the case of an institution
which is not yet carrying on a deposit-taking business, will be carried on
with integrity and the professional skills appropriate to the nature and
scale of its activities.
Minimum net assets
7 The institution will at the time when the licence is granted to it
have initial net assets amounting to not less than $10 million in the case
of a bank and $1 million in the case of a deposit company (or an amount
of equal value denominated wholly or partly in another unit of account.
