Finance Companies Bill

“auditor” means any person approved by the Commissioner as a finance company auditor for the purposes of this Act;

“Commissioner” means the person appointed by the Minister under section 28 of this Act to hold the office of Commissioner of Finance Companies;

“company” means a company incorporated or registered under the Companies Act, 1967 (Act of 1967), or pursuant to any corresponding previous written law;

“deposit” means a loan of money at interest or repayable at a premium but does not include a loan to a company or other body corporate upon terms involving the issue of debentures or other securities;

“depositor” means a person entitled, or prospectively entitled, to repayment of a deposit whether made by him or not;

“director” includes any person occupying the position of director of a finance company by whatever name called and includes a person in accordance with whose directions or instructions the directors of a finance company are accustomed to act and an alternate or substitute director;

“finance company” means any company licensed under this Act, to carry on financing business, and all branches and offices in Singapore of such a company shall be deemed to be one finance company for the purposes of this Act;

“financing business” means the business of —

“public company” means a company incorporated in Singapore other than a private company.

Every finance company shall maintain a minimum holding of liquid assets, as defined in subsection (4) of this section but a period of six months after the date of the coming into operation of this Act shall be allowed for compliance with this requirement.

The minimum amount of liquid assets to be maintained by finance companies shall be determined from time to time by the Commissioner and shall be expressed as a percentage of the liabilities of each finance company on account of deposits.

The Commissioner shall prescribe the method of computing the amount of liquid assets to be held by finance companies.

For the purposes of this section “liquid assets” means all or any of the following: —

Any finance company that fails to comply with any requirement of this section shall be liable, on being called upon to do so by the Commissioner (in addition to any other penalty that may be imposed under this Act) to pay a penalty interest charge not exceeding one-fifteenth of one per centum of the amount of the deficiency for every day during which the default continues and shall not while the default continues accept any deposits without the approval of the Commissioner.

No financing business shall be transacted in Singapore except by a company that is in possession of a valid licence granted by the Commissioner, with the approval of the Minister, authorising it to conduct financing business in accordance with the provisions of this Act.

Any person who contravenes the provisions of subsection (1) of this section shall be guilty of an offence under this Act and shall be liable on conviction to imprisonment for a term not exceeding three years or to a fine not exceeding five thousand dollars or to both such imprisonment and fine.

Whenever the Commissioner has reason to believe that a person is conducting financing business without a licence, he may call for the books, accounts and records of such person in order to ascertain whether or not such person has violated or is violating any provisions of this Act, and any person wilfully refusing to submit such books, accounts and records shall be guilty of an offence under this Act and shall be liable on conviction to imprisonment for a term not exceeding one year or to a fine not exceeding one thousand dollars or to both such imprisonment and fine.

Upon the conviction of any person under subsection (1) of this section a District Court shall have power to order the production of any books, accounts and records to the Commissioner and any person failing to comply with such order shall be guilty of an offence under this Act and shall be liable on conviction to imprisonment for a term not exceeding one year or to a fine not exceeding one thousand dollars or to both such imprisonment and fine and, in the case of a continuing offence, to a fine not exceeding one hundred dollars for each clay during which the offence continues.

As from the date of the coming into operation of this Act, any public company proposing to conduct financing business in Singapore shall, before commencing any such business, apply in writing to the Commissioner for a licence under this Act.

In considering any application by a public company for a licence the Commissioner may require to be satisfied as to —

The Commissioner, with the approval of the Minister, may grant a licence with or without conditions, or refuse to grant a licence.

The Commissioner may at any time vary or revoke any existing conditions of a licence or impose additional conditions.

Where a licence is granted subject to conditions the finance company shall comply with those conditions and any finance company that fails to comply with any conditions of its licence shall be guilty of an offence under this Act and shall be liable on conviction to a fine not exceeding five thousand dollars.

No finance company shall open any new branch, agency or office, whether inside or outside Singapore, without submitting an application in writing to the Commissioner.

In considering such application, the Commissioner may require to be satisfied by an inspection under section 25 of this Act or otherwise, as to —

Upon being so satisfied as to the matters referred to in subsection (2) of this section, the Commissioner may —

Any finance company that fails to comply with subsection (1) of this section shall be guilty of an offence under this Act and shall be liable on conviction to a fine not exceeding five hundred dollars for every day during which the default continues.

No finance company carrying on business in Singapore shall be merged or consolidated with or acquire a majority interest in any other finance company without the prior approval of the Commissioner.

In considering such an application, the Commissioner shall have power to call for such information as he may require.

The Commissioner may —

Any finance company whose application has been refused by the Commissioner may within one month of being notified of the refusal by the Commissioner appeal against his refusal to the Minister whose decision thereon shall be final.

Every finance company that intends to alter its memorandum of association or articles of association shall, before proposing any special resolution in this regard, furnish to the Commissioner for his approval particulars in writing (verified by a statutory declaration made by the secretary of the finance company) of that proposed alteration.

The Commissioner may thereupon —

If the Commissioner approves the proposed alteration with modification, the finance company shall adopt the proposed alteration as so modified or not proceed with the proposed alteration and if the Commissioner refuses to approve the proposed alteration he may request the finance company to withdraw the proposed alteration and the finance company shall comply with the Commissioner’s request.

Any finance company which fails to comply with the requirements of subsection (1) of this section or with any request by the Commissioner made under subsection (3) of this section shall be guilty of an offence under this Act and shall be liable on conviction to a fine not exceeding five hundred dollars for every day during which the default continues.

The Commissioner —

Where the Commissioner has revoked a licence under the provisions of subsection (1) of this section, he shall forthwith inform the finance company by notice in writing of such revocation.

The finance company may, within fourteen days of the receipt of the notice referred to in subsection (2) of this section, or such extended period as the Minister may allow, appeal in writing against such revocation to the Minister whose decision thereon shall be final.

Every finance company shall furnish to the Commissioner at such time and in such manner as the Commissioner may prescribe, all such information and data as he may reasonably require for the proper discharge of his functions under the provisions of this Act.

Every finance company that fails or neglects to furnish any information required by the Commissioner under subsection (1) of this section and within the time specified by the Commissioner shall be guilty of an offence under this Act and shall be liable on conviction to a fine not exceeding one thousand dollars for every day during which the default continues.

No finance company shall —

In paragraph (c) of subsection (1) of this section, the expressions “unsecured advances”, “unsecured loans” or “unsecured credit facilities” mean advances, loans or credit facilities made without security or, in respect of any advance, loan or credit facility made with security, any part thereof which at any time exceeds the market value of the assets constituting that security, or where the Commissioner is satisfied that there is no established market value, on the basis of a valuation approved by the Commissioner.

In sub-paragraph (i) of paragraph (c) of subsection (1) of this section, the word “directors” includes the wife, husband, father, mother, son or daughter of a director.

All the directors of a finance company shall be liable jointly and severally to indemnify a finance company against any loss arising from the making of any unsecured advance, loan or credit facility under sub-paragraph (i) of paragraph (c) of subsection (1) of this section.

Except as is otherwise expressly provided by this Act, no finance company shall give, whether directly or indirectly and whether by means of a loan guarantee or the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of, or for, any shares in the finance company or, where such company is a subsidiary, in its holding company, or in any way purchase, deal in or lend money on its own shares.

Nothing in subsection (1) of this section shall prohibit —

If there is any contravention of this section, the finance company and every officer of such company who is in default shall be guilty of an offence under this Act and shall be liable on conviction to imprisonment for a term not exceeding one year or to a fine not exceeding two thousand dollars.

Nothing in this section shall operate to prevent the finance company from recovering the amount of any loan made in contravention of this section or any amount for which it becomes liable on account of any financial assistance given in contravention of the provisions of this section.

The Minister may, by order, prescribe —

Any order made under subsection (1) of this section shall apply uniformly to all finance companies, or to any class or classes of finance companies, and shall, together with its effective date, be published in the Gazette.

The Commissioner may periodically, or at his discretion, cause an inspection to be made by one or more of his officers of any finance company and its books, accounts and documents.

It shall be the duty of every director or other officer of a finance company to produce to any officer making an inspection under subsection (1) of this section all such books, accounts and other documents that are in his custody or control and to furnish the inspecting officer with such statements or information relating to the affairs of the finance company as the inspecting officer may require of him and within such reasonable time as the inspecting officer may specify.

For the purpose of subsection (1) of this section, the Commissioner may appoint any auditor, other than any auditor appointed by a company under the provisions of section 172 of the Companies Act, 1967 (Act of 1967), to carry out those inspections. The cost of such an inspection shall be paid by the finance company.

Any director or officer of the finance company who wilfully refuses to produce to any inspecting officer or to furnish such statements or information relating to the affairs of the finance company as the inspecting officer may require under subsection (2) of this section shall be guilty of an offence under this Act and shall be liable on conviction to a fine not exceeding two hundred and fifty dollars.

If the Commissioner finds upon an inspection under section 25 of this Act that the affairs of a finance company are being conducted in a manner likely to be detrimental to the interests of the depositors or prejudicial to the interests of the finance company, the Commissioner may by order require the finance company to take such corrective action as the Commissioner considers to be necessary or require the finance company to discontinue such practices or procedures.

No order shall be issued under subsection (1) of this section unless the finance company has been given a reasonable opportunity to present its views to the Commissioner.

The Commissioner may, upon representation being made to him, or on his own motion, modify or cancel any order issued under subsection (1) of this section, and, in so modifying or cancelling any order, may impose such conditions as he thinks fit.

Every director of a finance company shall submit to the Commissioner a copy of the profit and loss account and balance-sheet made out pursuant to subsections (1) and (3) of section 169 of the Companies Act, 1967 (Act of 1967).

Every auditor of a finance company shall submit to the Commissioner a copy of his report as to every balance-sheet and profit and loss account (including every consolidated balance-sheet and consolidated profit and loss account) that he is required under section 174 of the Companies Act, 1967, to make to members of the finance company.

For the purposes of this Act there shall be a Commissioner for Finance Companies who shall be appointed by the Minister.

The Commissioner shall be charged with the general administration of this Act and the exercise of the functions imposed on him by this Act.

In the exercise of his functions the Commissioner shall act in accordance with the general directions of the Minister.

The Commissioner may, if he considers it to be in the interests of the depositors of a finance company, by order —

So long as an order under subsection (1) of this section remains in force, any licence granted to such finance company under this Act shall be suspended.

Every company that was not carrying on financing business in Singapore before the date of the coming into operation of this Act shall, before it is granted a licence by the Commissioner to carry on financing business under this Act, include in its memorandum of association or articles of association the restrictions, limitations and prohibitions contained in sections 17, 18, 19, 20 and 21 of this Act.

Every company that —

To the extent that any such restriction, limitation or prohibition so deemed to have been included in those memorandum of association or articles of association under subsection (2) of this section, is inconsistent with any provision already included in the memorandum of association or articles of association that restriction, limitation or prohibition shall prevail over such provision.

Without prejudice to anything contained in the Companies Act, 1967 (Act of 1967), any person who is a director, manager or other officer concerned with the management of a finance company shall cease to hold office —

No person who has been a director of, or directly concerned in the management of, a finance company licensed under this Act which has been wound up by a court shall without the express authority of the Minister, act, or continue to act, as director of, or be directly concerned in, the management of any finance company.

Any person acting in contravention of subsection (1) or (2) of this section shall be guilty of an offence under this Act and shall be liable on conviction to imprisonment for a term not exceeding three years or to a fine not exceeding five thousand dollars or to both such imprisonment and fine.

Any person who, being a director, managing director or manager of a finance company —

In any proceedings against a person under paragraph (b) of subsection (1) of this section it shall be a defence to prove that he had reasonable grounds to believe and did believe that a competent and reliable person was charged with the duty of securing that those statements were accurate and correct and that the person was in a position to discharge that duty.

A person shall not be sentenced to imprisonment for any offence under paragraph (b) of subsection (1) of this section unless in the opinion of the court the offence was committed wilfully.

Without prejudice to the provisions of the Companies Act, 1967 —

In the winding up of a company that has been carrying on financing business, the depositors shall be deemed to be holders of debentures issued to them by the company and secured by a floating charge over all the property and undertaking of the company.

As soon as practicable after the making of an order for the winding up of a finance company, the liquidator of such company shall publish in the Gazette a notice requiring every debtor of the finance company to redeem any property he has deposited with the company as security for any loan that he has obtained from the finance company, and shall also send by registered post such notice to every debtor whose security is held by the finance company and whose name is mentioned in the statement of affairs made out under section 234 of the Companies Act, 1967 (Act of 1967).

The notice shall specify the latest date up to which any security may be redeemed, which date shall not be less than three months from the date of the notice.

After the latest date for redeeming any security held by the finance company specified in the notice, the liquidator may proceed to realise any security held by the finance company forthwith, notwithstanding any agreement setting out any other period of redemption previously entered into between the finance company and the debtor.

Notwithstanding the provisions of section 6 of this Act, any company which on the 5th day of December, 1967, was carrying on financing business in Singapore may, within one month after the date of the coming into operation of this Act, apply for a licence and shall be granted a licence by the Commissioner which shall be valid up to and including the 30th day of June 1968.

Thereafter, such licence may be renewed for such further period, or periods, as the Commissioner may decide and be subject to such conditions as he may impose.

A private company which has been granted a licence under subsection (1) of this section shall not be entitled to claim to be an exempt private company under the Companies Act, 1967 (Act of 1967).

Notwithstanding section 6 of this Act, any firm that has been carrying on financing business in Singapore before the 5th day of December, 1967, may apply for and may be granted a licence if such firm incorporates itself as a public company within three months of the date of the coming into operation of this Act.

A licence granted under subsection (1) of this section may be valid for such period as the Commissioner may decide and be subject to such conditions as the Commissioner may impose.