Commencement: 29 December 1989

REPUBLIC OF VANUATU

THE BANKING REGULATION (AMENDMENT) ACT

No. 41 OF 1989

Arrangement of Sections

1. Replacement of section 12 of the Banking Regulation Cap. 8
2. Insertion of new section 21A in the principal Act.
3. Commencement.

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THE BANKING REGULATION (AMENDMENT) ACT

No. 41 of 1989

ASSENT: 19/12/89
COMMENCEMENT: 29/12/89

An Act to amend the Banking Regulation Cap 8.

BE IT ENACTED by the President and Parliament as follows:-

REPLACEMENT OF SECTION 12 OF THE BANKING REGULATION CAP 8

1. Section 12 of the Banking Regulation Cap 8 is repealed and the following section is substituted -

"Restriction on certain activities by licensed financial institutions

12. (1) Subject to the provisions of this Regulation, without the written approval of the Reserve Bank of Vanuatu, given with concurrence of the Minister, no licensed financial institution shall grant to -

(a) any individual, firm, corporation or company;

(b) any holding company and any one or more of its subsidiaries; or

(c) any group comprising any combination of individuals, firms, corporations or companies which is under the control of the same individual, firm, corporation or company,

any advance or credit facility or any financial guarantee or incur any other liability on behalf of such individual, firm, corporation or company or group, so that the total value of such advance, credit facility, financial guarantee or other liability is at any time more than twenty five per centum of the paid up capital and published reserves of that licensed financial institution.

For the purpose of this subsection an advance by a licensed financial institution to company shall include the value of all shares, stocks and debentures issued by that company and held by the licensed financial institution.

(2) The provisions of subsection (1) shall not apply to the following:-

(a) transactions between licensed financial institutions or between the branches of licensed financial institution;

(b) purchase of telegraphic transfer or any advance made against such transfer;

(c) purchase of bills of exchange or documents of title to goods where the holder of such bills or documents is entitled to payment outside Vanuatu, for exports from Vanuatu, or to any advance made against such bills or documents;

(d) any advance or credit facility made to or guaranteed by the Government;

(e) transactions with respect to bankers acceptance, bills of exchange or any other commercial paper, of the kinds and maturities authorised by the Reserve Bank of Vanuatu;

(f) any advance or credit facility granted against security, covered by insurance to such extent and in such manner as the Reserve of Vanuatu may approve and such security having a value of at least 25% more than the amount of the obligation secured thereby.

(3) A licensed financial institution shall not grant any advance or credit facility against -

(a) the security of its own shares;

(b) the security of the shares of any other licensed financial institution without the written approval of the Reserve Bank of Vanuatu.

(4) A licensed financial institution shall not grant or permit to be outstanding unsecured advances or unsecured credit facilities of an aggregate amount in excess of VT300,000 or of centum of the sum of the paid up capital and published reserves of such licensed financial institution, whichever is the greater, or give any financial guarantees in excess of such amount without security, or incur any other liability in excess of such amount without security -

(a) to or on behalf of anyone of its directors, whether such advances, facilities, guarantees or other liabilities are obtained by or on account of such director jointly or severally;

(b) to or on behalf of any firm, corporation, or company in which it, or any one or more of its directors is interested as director, partner, manager or agent, or to or on behalf of any individual, firm, corporation or company of which any one or more of its directors is a guarantor.

For the purposes of this subsection a director includes the wife, husband, father, mother, a son or a daughter of a director.

(5) A licensed financial institution shall not grant or permit to be outstanding to its officials and employees unsecured advances or unsecured credit facilities, including guarantees or other liabilities incurred on their behalf which in aggregate exceed one year's emoluments of such official or employee.

For the purpose of this subsection -

"unsecured advances or unsecured credit facilities" means advances or credit facilities granted without security, or, in respect of any advance or credit facility granted with security, any part thereof which at any time exceeds four fifths of the market value of the assets constituting such security.

(6) Any licensed financial institution which, prior to the relevant date, has entered into any transaction incompatible with the provisions of subsections (1) to (5) inclusive, shall, within three months after the relevant date submit a statement thereof to the Reserve Bank of Vanuatu and shall liquidate all such transactions within such period as shall be determined by the Reserve Bank of Vanuatu.

For the purpose of this subsection-

"relevant date" means the date on which this section comes into force.

(7) Any person who contravenes the provisions of this section shall be liable to a fine not exceeding ten million vatu or to imprisonment for a term not exceeding 5 years or to both.

(8) For the purpose of this section -

"holding company" means a holding company as defined by section 158 of the Companies Act No. 12 of 1986;

"individual" means a natural person and shall not include a body of persons corporate, or unincorporated."

INSERTION OF NEW SECTION 21A IN THE PRINCIPAL ACT

2. The following section is inserted after section 21 of the principal Act.

"21A. PENALTY ON LATE PAYMENT

Where any fee provided by section 21(2) is not paid on or before the date specified in that section, the licensed financial institution which is liable to pay such fee shall in addition to the fee payable, pay as penalty -

(a) where such fee remains unpaid for a period not exceeding 60 days, 10% of the fee payable;

(b) where such fee remains unpaid for a period exceeding 60 days, 25% of the fee payable."

COMMENCEMENT

3. This Act shall come into force on the date of its publication in the Gazette.

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