Clause 5

Subject to this Act, a company shall not be granted or hold a licence unless —

in the case of a finance company which holds a licence to carry on financing business on the appointed day, its capital funds are, subject to this section, not less than $50 million; and

in the case of a finance company which is granted a licence to carry on financing business after the appointed day, its issued and paid-up capital is not less than $50 million and its capital funds are not less than that amount.(2) Notwithstanding subsection (1)(a), the Authority may, at any time, after 8 years from the appointed day, by order require the issued and paid-up capital of a finance company to which that subsection applies to be not less than $50 million within such time as may be specified in that order.(3) Subject to subsection (4), a finance company to which subsection (1)(a) applies which has capital funds of less than $50 million on the appointed day shall be exempt from the requirement of that provision for 8 years from the appointed day and shall not during that period allow its capital funds to be less than its capital funds on that day.(4) If 20% or more of the issued and paid-up capital of a finance company is acquired by one or more persons who, alone or acting together with any associate or associates, by virtue of such acquisition becomes a substantial shareholder of the finance company on or after the appointed day, the finance company —

shall have not less than $50 million in issued and paid-up capital; and

shall cease to be eligible for the exemption under subsection (3),unless all the new substantial shareholders are finance companies each with capital funds of not less than $50 million at the time of the acquisition.(5) A finance company shall not reduce its paid-up capital during the currency of its licence without the approval of the Authority.(6) The Authority may restrict or suspend the operations of a finance company which fails to comply with subsection (2), (3), (4) or (5).(7) In this section and section 7A, “appointed day” means the date of commencement of the Finance Companies (Amendment) Act 1994.(8) In this section, “substantial shareholder” has the same meaning as in section 81 of the Companies Act [Cap. 50].Capital ratio7A.—

The Authority may require every finance company to maintain capital funds in Singapore in proportion to its total assets or to every category of assets at such ratio or ratios as may from time to time be determined by the Authority by notice in writing.(2) A finance company shall maintain a capital adequacy ratio of not less than 12% or such other percentage as may be determined by the Authority from time to time, as calculated in accordance with such form, content and manner as may be determined by the Authority by notice in writing.(3) A finance company which on the appointed day is unable to comply with the capital adequacy ratio requirement of 12% in subsection (2) shall, within one year from that day, comply with the ratio but the finance company’s capital adequacy ratio shall not at any time during that period be less than its capital adequacy ratio on the appointed day.(4) The Authority may suspend or restrict the operations of a finance company which fails to comply with subsection (2) or (3) or any requirement of the Authority under subsection (1).”.