Clause 18

Subject to this Part, the fidelity fund shall be held and applied for —

compensating any person who suffers pecuniary loss from any defalcation committed by a member company or any of its directors or dealer’s representatives or employees in relation to any money or property which in the course of or in connection with the business of that member company —

was entrusted to or received by that member company or any of its directors or dealer’s representatives or employees for or on behalf of any other person; or

was entrusted to or received by the member company as sole trustee or trustees or as trustee or trustees with any other person, or any of its directors or dealer’s representatives or employees as trustee or trustees or for or on behalf of the trustees of that money or property; and

paying to a liquidator of a member company that is being wound up an amount not greater than the amount that the liquidator certifies is required to make up or reduce the total deficiency arising because the available assets of the member company are insufficient to satisfy the debts arising from dealings in securities that have been proved in the winding up by creditors of the member company.(2) Where a claim has been made for compensation in respect of a pecuniary loss under subsection (1)(a), no claim shall be made for a payment under subsection (1)(b) in respect of the same pecuniary loss.(3) Where a claim has been made for a payment in respect of a deficiency referred to in subsection (1)(b), no claim shall be made for compensation under subsection (1)(a) in respect of the same deficiency.(4) Moneys paid under subsection (1)(b) may only be applied by the liquidator for the purpose of satisfying debts arising from dealings in securities, and for no other purpose.(5) Subject to the provisions of this section, the amount or the sum of the amounts that may be paid out of the fidelity fund for the purpose of —

compensating pecuniary loss under subsection (1)(a); or (b)making a payment under subsection (1)(b),shall not, in respect of each member company, exceed the prescribed amount.(6) Subject to the provisions of this section —

the amount that may be paid out of the fidelity fund to each claimant under subsection (1)(a); or

the amount that a liquidator may pay to each creditor of a member company from any amount paid to the liquidator out of the fidelity fund under subsection (1)(b),shall not exceed the prescribed amount.(7) For the purposes of subsections (5) and (6), any amount paid from the fidelity fund shall, to the extent to which the fund is subsequently reimbursed therefor, be disregarded.(8) If, in any particular case after taking into account all ascertained or contingent liabilities of the fidelity fund, the committee considers that the assets of the fund so permit, the committee may apply out of the fund such amount in excess of the total amount limited by or under this section as the committee in its discretion thinks fit, in or towards the compensation of any person who has suffered pecuniary loss as referred to in subsection (1)(a) or the making of a payment under subsection (1)(b).(9) Notwithstanding any provision in subsection (1)(b), (5), (6), (7) or (8), the Minister may, by order, direct the committee to increase the total amount which shall be applied from the fidelity fund to a member company for the compensation of any person who suffers pecuniary loss from any defalcation committed by that member company or any of its directors or dealer’s representatives or employees.(10) For the purposes of this section, “director”, in relation to a member company, includes a person who has been, but at the time of any defalcation in question has ceased to be, a director of a member company if, at the time of the defalcation, the person claiming compensation has reasonable grounds for believing that person to be a director of the member company.”.