Singapore legislation
Regulation 23C
Regulation 23C
Prescribed joint purchase and periodic sale business
Subregulation 1
For the purposes of section 30(1)(d) of the Act, and subject to paragraph (2), the business of jointly purchasing and selling (on a periodic basis) assets (whether in the form of movable or immovable property) is prescribed as a business that any bank in Singapore may carry on, or enter into any partnership, joint venture or other arrangement with any person, if such business is carried on under the following arrangement:
the bank, or the bank’s agent, jointly purchases an asset with the customer at the request of the customer and contributes an amount of money towards the purchase price (the contribution) for the purposes of financing the use or purchase, or both, of the asset by the customer;
the bank, or the bank’s agent —
sells a portion of its share of the asset on a periodic basis to the customer for an amount of money determined at the start of the arrangement (the redemption); and
leases the unsold portion of its share of the asset to the customer for an amount of money determined at the start of the arrangement (the rental);
in a case where the asset is not in existence at the time of the joint purchase and the bank, or the bank’s agent, leases the unsold portion of its share of the asset to the customer, an amount of money (the advance payment) may be paid by the customer to the bank, or the bank’s agent, for the subsequent use of that portion of the asset;
the bank, or the bank’s agent, appoints the customer, or a third party, to take on the obligations in connection with the use of the asset, including its maintenance and insurance;
in the event of an early termination of the arrangement, the customer shall purchase from the bank, or the bank’s agent, the remainder of the unsold portion of the bank’s, or the bank’s agent’s, share of the asset at a price determined at the start of the arrangement (the early termination price);
upon expiry of the arrangement, the customer shall have purchased from the bank, or the bank’s agent, the whole of the bank’s, or the bank’s agent’s, share of the asset and obtained full ownership of the asset;
the total amount payable by the customer for the asset comprising —
the advance payment;
the redemption; (iii)the rental; and
the early termination price,is greater than the contribution, and the difference between the total amount payable and the contribution is the profit or return to the bank for providing such financing to the customer;
the bank, or the bank’s agent, does not derive any gain or suffer any loss from any movement in the market value of the asset, including total loss of the asset, other than as part of the profit or return referred to in sub-paragraph (g), except in circumstances provided in sub-paragraph (i); and
in a case where the customer is unable to pay the bank, or the bank’s agent, the early termination price, the bank, or the bank’s agent, may sell the asset to a third party at a price lower than the outstanding amount payable by the customer.
Subregulation 2
The bank shall notify the Authority of its —
intention to commence the business referred to in paragraph (1); or
commencement of such business within 14 days after the commencement of such arrangement.